mexican furniture industry
TRANSCRIPT
1
PRODUCT MARKET STUDY
MATRADE MEXICO CITY
MEXICAN FURNITURE INDUSTRY
OVERVIEW
2
INDEX
INTRODUCTION 3
INDUSTRY OVERVIEW 5
PRODUCTION 8
STRUCTURE OF THE INDUSTRY 10
GEOGRAPHICAL DISTRIBUTION 11
DESIGN &OFFER 12
FURNITURE SITUATION IN JALISCO 14
DEMANDED INPUTS 16
WOOD 16
PRECIOUS WOOD 17
METAL COMPONENTS 17
FABRICS 17
EQUIPMENT 18
IMPORTS & EXPORTS 19
STATISTICS 22
COMPETITION 25
CONSUMERS PREFERENCES 27
SWOT & COMPETITIVE ANALYSIS 29
MARKET ACCESS 32
TARIFF STRUCTURE 32
REQUIRED DOCUMENTS 33
LABELING & STANDARDS 33
DISTRIBUTION / BUSINESS PRACTICES 35
FINANCIAL PRACTICES 36
CONCLUSIONS & RECOMMENDATIONS 37
EVENTS 39
3
INTRODUCTION
Furniture sector in Mexico has been traditionally an activity that has used a high percentage of labor
hand and manual work. Industrialized countries have managed to substitute human work for
machinery, given the high cost of the human resources. In Mexico, on the other hand, salaries have
been considerably low, making it rentable and competitive in past times and employing more people.
But nowadays situation is different and the world markets require larger production volumes and
quality standards for this type of products that human labor hand cannot achieve without proper
machinery
Globalization and the lack of purchasing power of a great percentage of the Mexican population is
pushing domestic furniture manufacturers either into acquiring cutting edge equipment and
technology, or to impulse the production of traditional furniture with attractive designs, low cost and
what has more value is the artisan way of production and high content of work hand.
Furniture industry in Mexico is composed by “micro” and small companies, 97.6% (94% of them are
micro business) 2% medium size and the rest being large companies.
Installed capacity is used in average around at 60%. Production is basically artisan , even in those
furniture that could be totally manufactured by machines, given as a result that Mexican furniture are
not competitive in price and quality.
Mexican wood and metal furniture are based mainly on in-bond (maquila) industry , which accounts
almost 70% of the total furniture production in the country . This segment allows the trade balance to
be positive in a certain way.
Traditionally furniture manufacturing in Mexico has been devoted towards exports, to North
America. It is important to note that roughly 42% of Mexican furniture production is exported,
mainly to the USA. Basically Mexican furniture companies face the competition of Asian, mainly
Chinese furniture entrance into the U.S. market and also domestically.
With the increase and growth of Chinese furniture exports to the U.S. several Mexican
manufacturers have encountered fierce competition and even bankruptcy.
4
This is probably the largest weakness for Mexican furniture industry. The strong dependence
on the U.S. as a market for Mexican furniture has created vulnerability. Even with this
dependence, Mexico is the leading furniture exporter to Central and South America.
The robust Mexican housing market has been the generator for a furniture boom over the past
four years - but critics believe local furniture suffers tired designs and old fashioned production,
putting local manufacturers under threat to faster, cheaper competition from overseas.
A case in point is the market for cheaper furniture that can fit into 50 square units, including
couches, chairs, beds and mattresses.
The demand is certainly there, but missing are the right kinds of furniture at lower prices, the
very sort that manufacturers in Brazil, China and India are beginning to discover represent
opportunities for mass production.
Pessimists believe that the Mexican furniture industry, which represents 1.8% of the country's
manufacturing GDP and 0.4% of the total GDP, will be hard pressed to survive externally-
produced industrial models, with the top end represented by the U.S. and Italy and the
economy end by Brazil, China and India.
Indeed, despite the fact that Mexico’s furniture exports around $5, 894 U.S. million dollars
annually – almost three times the value of its furniture imports - styles are said to be in urgent
need of upgrading to suit modern requirements.
Of the 19,000 furniture manufacturers in Mexico, about 86% are small companies with few
resources to upgrade their products.
So far, only 13% of imported furniture come from Asian countries, with 39% imported from
North American Free Trade Area (NAFTA) partners, the U.S. and Canada, with the same
percentage from Europe.1
It would suggest that the Mexican marketplace can be profitable to explore, particularly the
medium and lower-priced sectors.
1 Source: Ministry of Economy
5
INDUSTRY OVERVIEW
Wooden furniture industry is widely considered of family
tradition , relatively young, with few resistance to change
and almost a handcraft style. However in order to maintain
its national presence and to compete with international
markets, this activity has required to adopt its processes
from a commercial opening , where strong competition with
imported furniture caused companies using less its
installed capacity and along with the fall in the internal
market, that more manufacturers penetrated international markets. Mexico's furniture
industry had traditionally been supported through protectionist measures aimed at job
creation. These measures closed the door to foreign products for many years. However,
sweeping changes have occurred, and after NAFTA (1994) elimination of numerous tariffs and
reduction of many others for NAFTA members allowed entry to different products in style and
price. In recent years, there has been very significant growth in imports.
The furniture industry is built on both the centuries-old Mexican tradition of artisanal
handicrafts and new production facilities in northern border-state cities. The industry is
overwhelmingly one of widely dispersed small producers. When Mexico initiated free-market
reforms in the late 1980s, a half-decade ahead of NAFTA, 65% of furniture manufacturers
closed, unable to compete with inexpensive imports from the United States.
Forecasters predicted greater incursions of American manufacturers into the Mexican market
with the passage of NAFTA, which augured further doom for the artisanal Mexican furniture
industry.
However, production of wooden furniture in Mexico grew by 7 % in 1999. Sales of Mexican
furniture in the United States rose by more than 73 %between 1993 and 1997. The most
popular import Into the U.S. was and continue to be rustic wooden furniture, usually made of
pine. 2
2 To find out why rustic furniture have become such an important export for Mexico despite the predictions of
failure due to market reforms is explained later within this study.
6
In 1999 Mexico was the third furniture supplier of the world, its products were handled in 70
countries, it managed to account 20,000 companies and employed around 150,000 people.
Today the furniture industry is in a recession situation, getting over little by little and impulsed
directly with the construction boom of the past years.
Several factors are crucial for the recession of this sector:
• Lack of design
• Obsolete technology
• Chinese furniture competition.
All the share that Mexico has lost in respect to furniture exports to the U.S., China has taken it
over. There are still around 1,000 Mexican companies that still export, 50 of them are very
successful, though with lower shares. Some of these successful companies exporting more
than $1 Million USD are:
• Mueblera La Rivera (Office furniture)
• Terciopelera Nacional
• Camas Lamas
Furniture sector managed in the past to be one of the 20 more efficient sectors in Mexico,
representing 2.6% of the GDP. But it is an almost artisan and family industry and some in-bond
(maquila) companies that were added to the industry during the 90’s.
Both add up almost $6,000 million U.S. dollars in exports. Manufacturers participate roughly
with $2,000 Million U.S. dollars with home furniture and in-bond companies exporting
around $4,000 million U.S. dollars, mainly for car and airplane seats manufacturing.
Around 70% of the total furniture exports are wooden furniture and the rest are metallic and
forged iron. 90% of the exports are directed towards the USA and in a minor scale to Europe,
Caribbean, Central & South America.
7
During the late 80’s and 90’s, Mexico’s rustic style furniture became fashionable. This allowed
the entrance of its products to 70 countries through a brand called SEGUCINO, located in
Chipilo, Puebla.
Today Mexico has not been able to get over the rustic furniture style stigma, neither has it
invested in design nor in technology.
Market diversification could be a good way to improve it, and Europe is one true destination,
though not in enormous export volumes as China is doing nowadays, but in smaller amounts
and keeping existing segments that were created during the booming industry in the 90’s.
This is the reason why BANCOMEXT (Mexican Bank for Foreign Trade) along with Mexican
furniture producers open up two distribution centers in Valencia, Spain.
Increase in furniture imports into Mexico, 14% annually in average , indicates increasing
penetration of foreign products, and this threatens the national industry.
According to a report conducted in 2003, (All Data Processing Ltd.) Jalisco 3 furniture
manufacturers witnessed a 70% decline in sales to the U.S. that year. Another source that
showed pessimism (Zayas, 2005) reported that 67% of Jalisco manufacturers perceived their
economic environment adverse rather than favorable, (5%).
The Chinese furniture imported by Mexico have risen from $5.3 Million USD in 1997 to $229
Million U.S. dollars in 2006. Just in the first half of 2005, the overall furniture imports rose at an
annual rate of 32.5%, and the trend continued until the present , the growth in the January-
April 2007 period grew 37.8% compared with the same period in 2006.
3 Jalisco is one of the main furniture producers sates in Mexico, carrying put several Trade Fairs a year devoted tom
this sector.
8
PRODUCTION
Today, the furniture industry accounts for 1.8% of the manufacturing industry's GDP and 0.4%
of that of Mexico as a whole.
Around 75 % of the value of the production is devoted to home furniture.
10 % of the sector belongs to office furniture and the rest is focused towards collectivities
and others.
Mexican furniture production is as follows:
• home furniture – 75%
• office furniture – 10%
• institutional furniture (hotels, restaurants, schools, etc.) – around 15%
Despite being a small percentage of the total , it handles around 3.3% of the employed staff in
the manufacturing sector and represents 270,000 manufacturing establishments officially
existing , according to INEGI (National Statistics and Geographic Institute) data. The furniture
industry accounts around 19,000 societies , and is composed as follows:
92% of furniture manufacturers in Mexico are micro business, specifically small workshops and
carpentry shops. They supply national demand for finished furniture and along with China and
Canada, are the most important exporters of furniture to the U.S. The sector is comprised of
around 19,000 business. Out of that total 1,100 are manufacturers and the rest are small
workshops and carpenters.
FURNITURE INDUSTRY (Company size)
• 92% micro
• 5.6 % small
• 2% medium
• .4% large enterprises
This explains the low competitiveness of these companies towards imported furniture that
manufacture in big scale and have mechanized processes.
Installed capacity is only used at 60% and basically it is an artisan way of production. Reason
why those furniture that necessarily require machinery for its production are out of
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competitiveness considering price and quality. This shows that products is not only limited by
the offer, but also for the demand as well.
In-bond industry has a great share in the furniture industry, ranked as the third position in
the number of establishments and the 5th in number of employees (after electronics, textile
and electrical sectors)
The growth in the furniture sector not only depends on the population expansion, but also is
defined by the development of the housing construction, and since this was showing slow
indexes during the first years of this decade, showing a turning in 2004-2006, the sector saw a
temporary recession, that has partially recovered.
A favorable point for this sector was pushed by the Government policies of housing
construction booming in the last years, where 475, 000 new houses were built in 2004 and
750,000 in 2006. Construction boom in several cities was evident, though it has decelerated
during 2007. Still there are thousands of new houses that have to be furnished. Most of these
new houses belong to the social interest scheme that is why furniture to be used in most of
them are extremely simple and economic.
There are credit institutions that finance credits for furniture acquisition, many of these
institutions operate in popular stores devoted to medium-low income classes. Malaysian
companies manufacturing simple and economic furniture could penetrate this market, which
is widely taken by Chinese furniture, much of it illegal.
Raw materials used for this industry are the following:
• Commercial woods: Pine. Holm oak, Oak, Parota, Ocote (Pinus montezumae) Oyamel
and Mezquite (Prosopis).
• Precious woods: Mahogany, White & red cedar, ebony and maple. (Many of this are
imported)
• Agglomerated woods: Which result of the compressing or pressing sawdust and barks
leftovers.
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Partners
• United States, top supplier with 50%
• China
• Spain
• Canada
• Germany
STRUCTURE OF THE INDUSTRY
Mexico’s furniture manufacturing industry is highly fragmented, with a bit more than 19,000
establishments in 2006, and only around 7% of these export their products. The vast majority
of these companies have less than 50 employees. Geographical location of manufacturing is
similarly dispersed. Wooden furniture is widely produced in Mexico.
A problem for Mexican manufacturers is the lack of technology and the lack of investment to
maintain their national ranking and overall, overseas, specially having the U.S. as the main
trading partner. According to Zayas study (2005) 76% of Jalisco manufacturers did not plan to
invest in the near future, 19% of the manufacturers reported problems with their existing
technology. This is another weakness for the Mexican industry making them not as competitive
as other Asian countries industries. There are only 4 or 5 Mexican manufacturers that can
meet the volume produced in the Chinese factories.
Furniture retail industry play a vital role in the furniture distribution in Mexico. Large players
such as Wal-Mart account for increasingly enormous amount of sales. With 400 Wal-Mart
stores and 250 other supermarkets formats this group owns , the firm posted annual sales in
Mexico for $11 billion U.S. in 2005.4
Though at present Wal-Mart sells primarily particle-board furniture, it could broaden its
offerings in the future.
4 DSN retailing Today, 2005)
11
Two major department stores are “El Puerto de Liverpool” and “El Palacio de Hierro”. While
these stores likely receive a higher percentage of their sales from furniture, overall, their
market shares are lower.
The top ten retailers in Mexico control around 15-20% of the Mexican furniture market.
Furniture of varying quality does not compete directly. Overall the market furniture in Mexico
is competitive. Wholesalers and retailers should not be able to pass through price increases,
and the least expensive sales segment is very competitive. This trend is also driven by the
arrival and penetration of low-priced Chinese furniture imports into Mexico. Conditions seem
to be better for furniture retailers than furniture manufacturers in Mexico.
A decisive factor for furniture industry in Mexico is the growth of the medium class and the
access and diversification of the credit schemes, as well as the construction boom that took
place during the last years. Yet the construction has decreased their growth indexes (2007) , but
still there are many housing complexes, building apartments and renovated constructions
that are to be furnished.
GEOGRAPHICAL DISTRIBUTION
Those companies not having manufacturing operations in Mexico have distributors
in the major Mexican cities. Mexico City, Monterrey, Aguascalientes, and
Guadalajara are the Mexican cities having the largest number of international
manufacturers and distributors of wooden furniture.
The principal manufacturers of furniture of wood are located as follows :
• Jalisco 16 %
• Mexico City 11 %
• Nuevo Leon 8 %
• Estado de Mexico 7 %
• Chihuahua 7 %
• Baja California 5 %
• Puebla 4 %
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• Coahuila 3%
• Michoacán 1%
There are 498 furniture maquiladoras (in-bond), of which 461 located in frontier states, with
capital mostly from Mexican and American investors. Only 8 % of the maquiladoras include
capital of Japanese, Lebanese, British, Taiwanese or Spanish origin.
DESIGN AND OFFER
The furniture industry capitalizes on a centuries-old tradition of artisanal handicrafts in Mexico,
Their furniture and crafts have been exported throughout New Spain / Mexico for centuries.
The colonial style developed into a vernacular furniture, blocky, weighty; and generally crafted
of hardwoods (although neocolonial furniture produced today in Mexico has a more ornate and
less sturdy form). Colonial furniture incorporated Spanish and Moorish motifs. Grooving,
cutouts, and hand-carved ornamentation, inspired by the wrought-iron window grills common
to parts of Spain, offered relief from an otherwise massive construction.
Rustic Furniture
Mexican rustic furniture evolved from
the Spanish- and Moorish-influenced
colonial furniture. They represent an
application atop an Arabic technique.
Rustic furniture evidence heavy, rather
unpolished, and simple features, clearly
of handmade craftsmanship. The
furniture is almost always made of
pine, but some manufacturers use oak and, at times, juniper, mesquite, or tropical wood.
Typical pieces are armoires, tables, chairs, chests, dressers, and cabinets for television sets and
stereos.
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The rise of Mexican rustic furniture is an outgrowth of the larger craft industry of Mexico.
Today handcrafts are a major industry in Mexico, part of the very identity of many Mexican
places, particularly the United States--Mexico border towns and some indigenous communities.
The attraction of American consumers to Mexican folk art began with a flourishing of cultural
interaction between the two countries in the 1920s. Hand-produced, vernacular goods give
American consumers the exotic feeling of Mexican material folk culture, a taste of Mexico that
they can bring home. Inexpensive and unique, the rustic furniture are especially popular.
Consumer products become part of personal identity: They define uniqueness in a consumer-
oriented society; Furniture is a more sizable investment and more functional than many other
artisanal craft. But a piece of rustic furniture, brought home, also represents an exotic artistic
artifact that testifies to the purchaser's taste for something more than mass-produced goods.
Through their purchases consumers establish a symbolic relationship with simpler lifestyles, an
escape from Western modernity--and an illusion of authenticity that suggests contact with local
artisans who work in a realm separate from and unattached to capitalism.
The most important centers that produce colonial-style furniture are Mexico City, Taxco, Puebla
and Jalisco. The most popular woods that are used in creating the beautiful pieces of furniture
are the Spanish Cedar, Mahogany, Springbells (primavera) and the White Pine (ayacahuite).
Modern Approaches
The Mexican culture has brought this country fame again by being expressed in the furniture
industry. One of the most peculiar inventions of the modern furniture technology in Mexico is
the unfinished furniture. This usually refers to sets of tables and chairs that are intentionally
created to look as if they have been left unfinished. This look has had quite a huge success and
it has made the artistic minds of the Mexican furniture creations go further and further with
their designs
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FURNITURE SITUATION IN JALISCO
Every year, a survey of manufacturers belonging to AFAMJAL is conducted. Based on the fact
that Jalisco is one of the furniture manufacturing leading states , is quite representative of the
national industry. The following are some results of the last survey 2006.
According to AFAMJAL (Jalisco Furniture Manufacturers association), factors that affect the
industry are:
• Economic situation: For the period 2001-2003 the furniture sector did not grow, the
number of manufacturers decreased as well as the number of distributors. Reasons
behind market stagnation are: overall national economic situation, absence of cut end
technology, low level of competitiveness
• Lack of credit programs
• Strong external competition
Mexican External Commerce Bank (BANCOMEXT) reports that Jalisco’s furniture
manufacturers produce :
• 51% home furniture (living rooms, bedrooms, dining rooms)
• 33% diverse pieces (table sets, phone tables, cabinets, etc)
• 10% Office furniture
• 6% kitchens
In Jalisco, the main products manufactured were:
• Other 26%
• Bedroom sets 18%
• Dining Rooms 14%
• Living rooms 14%
• Accessories 9%
• Mattresses 6%
15
• Bathroom furniture 5%
• Office furniture 4%
• Entertainment centers 3%
• Patio and beach furniture 2%
The most used raw materials were solid wood, metal components, tube shaped and plastic
(used or outdoor, patio garden and pool furniture)
Main factors affecting the costs of production increase in Jalisco are:
• Energy 11%
• Raw materials 10%
• Labor 7%
• Service and transport 6%
• Marketing 5%
Sales price was increased by an average of 15%. Costs for all manufacturers have gone up, but
they are absorbing the increases in order to stay competitive with larger companies and, as a
result, are cutting into their own utility.
Productive sectors in Jalisco have not been able to develop to their full potential, and industry
leaders, for the most part , do not have a positive vision of the future due to their lack of
competitiveness. For 67% of these furniture manufacturers, the economic environment for
business is adverse, and only 5% consider the environment favorable.
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DEMANDED INPUTS & BEST SALES PROSPECTS
There is a strong market for the inputs used in the furniture production. Main imported inputs
are textiles, woods and boards. (MDF and plywood). Mexico most imported wood is plywood,
and many companies are currently, others are considering it, importing Malaysian plywood.
According to AFAMJAL, inputs with the best possibilities include: solid woods (pine,
mahogany, cedar, poplar) boards, textiles, leather, metal components, control routers and
gang drills.
Main raw materials used in the furniture manufacturing in Jalisco and Mexico in general are5:
WOOD
Mexico is the fourteenth destination for Malaysian plywood. For Mexico Malaysia is by far the
main supplier of this type of wood, main destination after the U.S. in the Americas purchasing
$24, 962,000 U.S. dollars in plywood during 2006.
Malaysia is the 6th Wood supplier for Mexico. Malaysia is actually not the only supplier of
plywood to Mexico, it is currently supplying only 15% of Mexico’s wood needs. There is a
potential market of $156,480,000 USD. Mexico is the largest importer of Malaysian furniture in
the Americas after U.S. and Canada. Woods in demand in Mexico are as follows:
• Pine 27%
• Agglomerate 18%
• Other woods 11%
• Pine plywood 9%
• Poplar 8%
• Okume 8%
• Mahogany 7%
• Cedrello 4%
• Cedar 4%
• Alder 2%
• Meranti 1%
5 Figure represents percentage of the total surveyed manufacturing companies in Jalisco state.
17
PRECIOUS WOOD
The market is ample for this type of wood . Furniture manufacturers are supplied by production
from southeastern Mexico (Chiapas, Campeche and Quintana Roo) as well as a significant part
being imported from other countries. The demand for precious wood imports is currently
strong but could decrease in the future if the commercial planting system in Mexico prospers.
The trusteeship of the Forest Development Program and the public sector are promoting
development of the commercial planting of precious wood. In Jalisco, they have identified
great demand in the market, specifically for parota, rosamorada, primavera amarilla, hebillo
(tropical American timber trees) and red cedar. Currently, in Jalisco state there are
approximately 1,730 acres of precious wood, but from planting they require up to 12 years to
be harvested.
METAL COMPONENTS
• Knobs 27%
• Metal components 21%
• Various 21%
• Hinges 7%
• Sliding panels 7%
• Press stud 5%
• Locks 5%
• Sheet 4%
• Steel 3%
FABRICS
Overall, Mexican furniture manufacturers are installed with their current fabric. The fabric
demand is supplied by many small businesses. There exists opportunities for reliable Malaysian
fabric suppliers who can provide quality fabrics in diverse and innovative designs.
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• Various 32%
• Canvas 14%
• Jacquard 18%
• Plianas 11%
• Cotton 6%
• Chenille 8%
• Polyester 5%
• Linen 3%
• Coarse cotton cloth 3%
EQUIPMENT
Potential to export finished furniture to Mexico is medium-high. Mexico supplies their
domestic market with low cost furniture, mainly Asian. This situation provides potential
opportunities for Malaysian companies, that would like to compete with design with other
Asian furniture manufacturers.
Another potential opportunity are supplies and machinery for furniture manufacturing.
Machinery: Lacking technology is one of the main disadvantages in the national industry, and a
great need to import and update exists. A little less than half of all machinery used in furniture
manufacturing is imported, but much is used or refurbished because many Mexican
manufacturers lack capital to invest in new technology. In Jalisco, 19% of furniture
manufacturers reported problems with technology they currently use. Challenges they find
are: quality, numeric control, associated costs, old and obsolete machinery, maintenance, limits
to increase production and production time , flexibility for new designs.
The trend in demand for machinery depends on the availability of funds. This continues to be a
challenge, although there is increased support from the government to assist small and
medium sized businesses. Purchasing decisions for machinery rely on the availability of service
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and financing. The trend in demand for inputs depends on quality, diverse and innovation
designs, and supplier reliability.
Mexican furniture manufacturers need urgently to update machinery and technology, which
place the national industry at a competitive disadvantage. Manufacturers often deem
assistance from government, organizations to get financing and working capital to buy new
machinery, usually sold without the technical information and without the possibility of
renovation. Often the operators are not well trained, and few know about electronics since
they are more experienced with mechanical issues.
High performance machinery such as CAD/CAM technology, which allows for complex design
and virtual products is a relatively new concept in the Mexican furniture industry.
Germany, USA and Japan are leaders in CAD/CAM production and also are the providers of
new developments and adaptations. Mexico aims at modernizing these machines in order to
strengthen its industrial development.
Machines that are in greater demand and fundamental for production are:
• Numeric control routers.
• Gang drills.
IMPORTS & EXPORTS
High financing costs and a lack of technology have meant that the Mexican furniture industry
has registered a 2% growth in production, while foreign purchases have increased by 40% in
2005
Nationally only 25% of furniture products are made up completely in Mexico. The rest include
imported components, like moldings and other spare parts.
Without an adequate capital base. It is difficult for Mexican furniture manufacturers to achieve
a large scale strategy of expansion in the biggest markets. They also have problems with design,
quality, price, certain minimum quantities, and overall compliance with delivery death lines.
These issues continue to cause difficulties for Mexican furniture exporters.
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Roughly, around 24% of manufactured furniture is devoted for export ant the rest 76% is for
the internal market. Most recent data shows that Mexico’s furniture exports in 2006 reached
$5,894 Million USD.
Among the most important exporting companies in Mexico are:
• Diseños Antigua S.A. S.A. de C.V. ,
• Espino de México S.A. de C.V.
• Muebles Rústicos Segusino S.A. de C.V.
• Fábrica de muebles El Portón S.A. de C.V.
• Factor Antiguo
• Muebles Rústicos San Rafael, S.A. de C.V.
• Muebles Finos y Artesanales de Erongaricuaro S.A de C.V.
• Maderas y Muebles de San Pedro S.A de C.V.
• Douglas Furniture de México S.A. de C.V.
• Industrial Mueblera Shelby Williams S.A. de C.V.
These are just some of the largest exporting companies identified by PROMEXICO (Former
BANCOMEXT)
Among the strategies that are actually following medium companies regarding production are
the subcontracting with micro enterprises, this ensures a wider spare parts choice and design
supply. On the other hand, regarding the distribution, some are also exploring franchise
scheme.
Most of furniture exports are destined to NAFTA countries:
• 96 % USA
• 2.3% Canada
Main exports for in –bond industry are:
• Home furniture
• Office furniture
• TV centers
• Entertainment centers
• Kitchens
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In Jalisco, 80% of furniture manufacturers reported no imports. Of those who do, they started
back in 1996, and half of them import directly, the other half do it indirectly.
Origin of imports is as follows:
• NAFTA countries: 39%
• European Union 39%
• Asia 13%
• Latin America 8%
Manufacturers report importing :
• Machinery 18%
• Primary materials 60%
• Finished products 13%
• Technology 10%
• Other 3%
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TOTAL FURNITURE IMPORTS
(Thousand U.S. dollars)
2006 2005 2004 2003 2002
Total $ 2,294,047 $ 1,831,992 $ 1,606,549 $ 1,474,105 $ 1,461,557
United States $ 1,149,568 $ 952,299 $ 943,490 $ 953,190 $ 1,007,460
China $ 398,228 $ 286,427 $ 191,954 $ 163,922 $ 145,101
Spain $ 143,488 $ 150,562 $ 87,004 $ 45,632 $ 40,304
Canada $ 96,595 $ 70,159 $ 52,782 $ 31,189 $ 27,285
Germany $ 69,456 $ 62,359 $ 48,420 $ 39,922 $ 46,498
Italy $ 60,540 $ 45,578 $ 43,222 $ 46,938 $ 43,179
France $ 40,190 $ 22,057 $ 20,406 $ 11,372 $ 13,672
Netherlands $ 36,504 $ 31,418 $ 14,322 $ 1,852 $ 979
Brazil $ 36,133 $ 39,603 $ 30,148 $ 15,025 $ 11,138
Argentina $ 28,654 $ 8,689 $ 23,829 $ 43,964 $ 16,669
Sweden $ 26,244 $ 1,411 $ 1,018 $ 2,082 $ 877
Taiwan $ 26,164 $ 24,777 $ 21,547 $ 21,685 $ 29,363
Japan $ 23,539 $ 11,978 $ 10,085 $ 8,160 $ 9,128
Israel $ 19,976 $ 21,925 $ 9,514 $ 4,742 $ 1,698
Costa Rica $ 18,309 $ 11,330 $ 37,027 $ 21,688 $ 6,712
Korea $ 16,781 $ 8,276 $ 10,289 $ 10,335 $ 12,345
Malaysia $ 14,892 $ 9,857 $ 6,343 $ 5,121 $ 4,957
Indonesia $ 12,662 $ 9,126 $ 6,705 $ 6,331 $ 6,406
Denmark $ 7,711 $ 7,370 $ 5,213 $ 4,753 $ 4,718
UK $ 7,070 $ 7,782 $ 2,374 $ 3,075 $ 2,951
Thailand $ 6,491 $ 4,666 $ 5,534 $ 3,558 $ 3,642
India $ 5,709 $ 3,378 $ 2,160 $ 1,717 $ 1,632
Figure 1. Main furniture suppliers for Mexico.
Source: Ministry of Economy.
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TOTAL FURNITURE EXPORTS
(Thousand U.S. dollars)
2006 2005 2004 2003 2002
Total $ 5,894,846 $ 5,725,205 $ 5,151,202 $ 4,769,614 $ 4,296,189
United States $ 5,661,032 $ 5,523,402 $ 5,013,508 $ 4,675,920 $ 4,216,519
Canada $ 137,984 $ 119,098 $ 52,728 $ 13,227 $ 15,126
China $ 7,861 $ 1,818 $ 176 $ 35 $ 13
Germany $ 7,717 $ 7,598 $ 11,542 $ 12,238 $ 15,975
Guatemala $ 7,468 $ 6,642 $ 5,704 $ 4,108 $ 5,409
Venezuela $ 6,205 $ 3,006 $ 1,835 $ 1,793 $ 3,241
Spain $ 6,013 $ 7,164 $ 7,897 $ 7,491 $ 5,496
Colombia $ 5,971 $ 5,163 $ 2,814 $ 1,926 $ 1,459
UK $ 5,767 $ 5,030 $ 2,388 $ 3,972 $ 4,880
Costa Rica $ 4,703 $ 3,240 $ 3,944 $ 3,106 $ 2,972
Southafrica $ 4,376 $ 1,538 $ 191 $ 171 $ 156
El Salvador $ 4,154 $ 7,495 $ 3,970 $ 2,148 $ 1,245
Australia $ 4,078 $ 1,840 $ 67 $ 509 $ 527
Cuba $ 3,113 $ 2,907 $ 1,490 $ 1,308 $ 1,204
Honduras $ 3,036 $ 2,017 $ 1,636 $ 892 $ 977
Donimican Rep. $ 2,876 $ 2,612 $ 2,710 $ 1,781 $ 1,243
Chile $ 2,499 $ 2,701 $ 1,676 $ 1,503 $ 1,950
Panama $ 2,374 $ 2,027 $ 3,067 $ 1,257 $ 1,968
Japan $ 1,816 $ 2,333 $ 1,172 $ 410 $ 533
Ireland $ 1,635 $ 1,523 $ 2,067 $ 1,936 $ 1,630
Taiwan $ 1,220 $ 364 $ 424 $ 662 $ 273
Belgium $ 1,142 $ 1,401 $ 1,268 $ 1,029 $ 1,070
Figure 2. Main furniture markets for Mexico.
Source: Ministry of Economy.
24
Inputs used in furniture manufacturing in Mexico in 2006 were primarily national. Wood was
60% national and 40% imported, metal components were 61% national and 39% imported,
fabrics were 74% national and 26% imported.
• Wood is imported from the U.S., Chile and Canada. The majority of MDF boards are
imported from the U.S. and other types of boards are imported from the U.S. and
Chile.
• Lacquers and paint are imported from Spain
• Most of fabric and carpets are imported from the U.S.
• Furniture stuffing and foam rubber are from national suppliers
• Metal components are produced in Mexico and also imported from Spain
• Glue is produced in Mexico.
In Jalisco 53% of the machinery and equipment in use is of national origin, and 48% from
foreign origin, mainly from U.S. 35%, Italy 27%, Germany 9%, Brazil 8% and Spain 8%.
Source: AFAMJAL (Jalisco Furniture Manufacturers Association) Industry report 2006.
• Large used machines or reconstructed machines are imported from Italy, Spain and
China.
• Hand machinery is imported from U.S.
• Machinery and metal components are imported from Brazil
25
COMPETITION
Mexican distributors try to sell as many brands as possible. They try to avoid
an exclusive agreement with a particular brand.
The Mexican market for wooden furniture is very competitive. Price is the main
factor that end-users take into account for purchase decisions. This makes
competition even stronger and restrains growth in prices. Such factors as
economies of scale and reduced manufacturing costs help manufacturers offer
affordable prices to end-users.
Service is a close second in purchasing decisions and can be traded for price.
Service includes fast delivery, availability of the product in sufficient
quantities during peaks in demand, prompt replacement of defective products,
and willingness to customize batches of products.
Brand positioning also plays an important role. Usually, the brand is
associated with reliability. End-users prefer those brands that have provided
desired performance in terms of durability and working under adverse conditions.
Mexico is the country with the largest network of Free Trade Agreements in the world.
Including the most recent agreement negotiated with Japan (2005), Mexico has FTA’s signed
with 33 countries, including the European Union, European Free Trade Area, Israel and 10
countries in Latin America.
Significance of this situation for Malaysian companies is that main suppliers of machinery and
other accessories for furniture industry into Mexico are trading partners, enjoying a preferential
tariff rate. This is a drawback for Malaysian companies willing to penetrate Mexican market.
Though there is a potential and profitable opportunity for Malaysian companies willing to
export finished furniture in Mexico.
Mexico still maintains its third place as a furniture exporter towards the USA, but far behind
from China and Canada during 2006.
26
According to NOTIMUEBLE a specialized publication for furniture industry, Mexico cannot
compete in volumes with Asian countries, but it can compete with design , innovation, quality
and service. Chinese furniture sales to the USA grew from $10, 557 Million US dollars in 2005,
to $12, 061 Million U.S. dollars in 2006 for a total growth of 14%. Total imports from USA last
year were $21,994 million U.S. dollars, China took 54% of the share. Mexico still observed a
marginal growth of 2%. Mexico is still above Italy that registered a decrease of its sales to the
USA.
Main Mexican exports to the USA are:
• Sofas
• Upholstered seats with wooden structure
• Spare parts for furniture
• Metallic furniture and thereof.
According to the statistics and trends USA has continued its importing impulse during 2007, but
also China has increased its exports.
Brazil continues to see a rise in exports, including furniture. The main market for Brazil is the
U.S., France, UK, Holland and Chile. Brazilian analysts forecast the export continue for the
furniture sector and they will target new foreign markets, such as Mexico.
Asian manufactured furniture is rapidly penetrating all markets in the NAFTA area. This also
widely applies to Mexico There are only 4 or five plants in Mexico that can meet volumes that
can be produced in Chinese factories, but Mexico has the advantages of geographic proximity
and NAFTA agreement.
AFAMJAL notes that illegal imports into Mexico, including furniture, occur mostly using a false
certificate of origin to take advantage of the preferential status under NAFTA. These illegal
imports have increased in the last years, up to 50% in some cases, with clear losses on invoices
for the national industry. Most of these illegal imports come from China.
27
CONSUMER PREFERENCES
As a result of the housing growth that took place in Mexico in the last years, furniture
consumption in the country significantly increased. All those houses need furniture, though the
owners do not pretend to have anything exquisite, or lifetime lasting, they know it and they
prefer some very cheap, few screws and numerous staples. Furniture to be placed in these
houses have to accomplish and offer dimensions enough to fit in 50 square meters.
There are 3 types of consumers in Mexico:
1.- 70% of the Mexican population can barley purchase furniture due to their low income
levels, and therefore they purchase traditional furniture, of a crude and durable style. This
segment renovates their furniture in average less than once in a life.
2.- Population with medium incomes represents 20-25% and their preferences are oriented
towards classic medium-quality furniture featuring dark woods, upholstered, crystal mirrors
and bright finishing’s.
3.- For the 80% of the population, the most decisive factor when choosing furniture is price,
followed by quality and then design.
Consumer purchasing power
• Purchasing power markedly higher than the average: 3% of the population, preferring
high-quality imported goods. Only these consumers consider quality the main purchase
factor.
• Purchasing power higher than the average: 18% of the population, choosing mid-range
and some luxury products.
• Purchasing power at par or lower than the average: roughly 80% of the population,
mainly interested in low-end furniture, generally, made in China or Taiwan.
When Mexican average consumer purchases furniture, is making an investment and expects
that it will be for several years. Few importance to the product’s design shown at the first
purchase, is dissolute until vanishing as a motivating element for a second purchase.
Average Mexican Consumers likes are similar to their North American neighbors, so beds follow
the patron of twin , queen and king size.
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Less than 15% of the population can indulge in getting high quality furniture, with a specific
design, that is why most of these consumers obtain their product from the imported choice.
Though it’s the smallest market segment is the most profitable, accounting high income levels
and open to new trends.
Despite the first impression of the figures, it must be considered that Mexican market is
composed of 106 million inhabitants, even though the percentages are not high , they
represent some 16 million people for the high income segment.
The demand for lower-to-mid-range furniture has seen a marked rise in sales of DIY products,
particularly among the younger demographic set: over the past six years, 3.5 million younger
couples were recorded as having set up home.
Few local companies have tackled the DIY sector, but there is word that Swedish giant IKEA may
be ready to enter the Mexican marketplace. IKEA-type products are sold by the Liverpool chain
under the Club 8 trademark.
According to AFAMJAL, greatest demand exists for living rooms. It is one of the first things that
households purchase, since it is what visitors see right after they come into the house. For
households with financial constraints, other furniture can wait and this trend will continue in
the future. Other finished products in demand are bedrooms sets, entertainment centers and
computer furniture (due to the continuing growth of home computers).
In the largest cities, as is the case of Mexico City , Guadalajara, Monterrey, etc. furniture
consumers have quickly changed their taste to the contemporary style. In the last few years,
preferences have turned to modern furniture without ornamentation, or being it very basic,
as a result of the search for a cleaner image for their home and lifestyle. There is good
demand for furniture made from fibers in Asian and modernist style. As MATRADE could
confirm during a visit to Guadalajara, where in some decoration and furniture shops Thai exotic
furniture are sold, and according to the owner they are distributing them for trendy and
fashionable new and upscale hotels and restaurants, that is a national top-end trend.
29
Tone and material preferences for living rooms, dining rooms and bedrooms include chocolate
and maple colors.
Some manufacturers of rustic furniture have switched to the new contemporary style or a
combination of both styles , using straight lines and simple combinations of rustic materials
(like solid pine and iron) and hand painting. Some other manufacturers continue to produce
classical lines and even colonial type of furniture, which still account for their share in the
market, though they are becoming less popular , especially among top-end younger
generations.
A sector that is growing is furniture from warehouse-type retailers, including Wal-Mart,
SAM’S CLUB and COSTCO. Consumer preferences may be impacted by the cheaper, do-it-
yourself variety that is sold at these stores, which are generally of good quality and relatively
inexpensive.
SWOT & COMPETITIVE ANALYSIS
Most common excuse for Mexican manufacturers when it comes to competitiveness compared
with other countries are the low salaries and bad labor practices of Asian manufacturers. But if
that were the real excuse, then Italian carpenters, workers and designers could not also
compete, and they perceive three to ten times more than their Mexican counterparts.
However, Italian producers still admit that Mexican artisans are among the best in the world,
but unfortunately they are not organized and are not taught to produce new designs and
products. Many Mexican workers still produce and work as Spanish monks taught the Mexican
Indigenous in colonial times during the XVI century.
One, if not to say the crucial weakness of Mexican manufacturers is the lack of innovation and
design when in most of the countries producers adapt to consumer preferences.
Traditionally the star product of national industry was rustic furniture that drove mad some
foreign buyers looking for some exotic product. Nowadays, the demand of contemporary style
in the international markets, and in the domestic market, rustic furniture became less popular
and for many is synonym of low quality, cheap and outdated.
30
According to the CEO of a Mexican furniture store, “DICO”, a very good percentage of young
couples prefer minimalistic style when it comes to chose furniture, which are also suitable for
small spaces like the new houses built in the country in this decade.
Organize and work in team sounds simple, but it is not in an industry formed by 19,000
companies, most of them family businesses, with an average of 6-7 operators by
establishment, plus thousands of carpenter shops where only the family members work.
Most of the people devoted to this industry are not industrial operators, but artisans
passionate to their way of manufacturing and not willing to accept industrial processes. They
use machines and tools well kept but obsolete and outdated, and if they do not replace them
is not only because of the lack of resources but also because those are the tools they know.
A fine example of adaptation is Segusino company, a domestic company established in Puebla
that started manufacturing rustic furniture and now they have diversified their lines for
different style preferences. This company exports its products to 56 countries.
Mexican manufacturers have not indulged into the DIY furniture type, but there is one
exception to this rule, RTA which most of its production belongs to this category.
Despite all this situation, the sale of furniture in Mexico is experiencing a growth, and a
decisive factor for this is credit promotion, 12 months without interest that big distributors
offer. This discount war is possible because of the extraordinary utility margins , since prices to
the public are 80- 100% above of what is paid to the producer in most of the cases, especially
when it comes to Asian manufacturers.
STRENGHTS
o International markets where Mexican furniture are shipped are highly diversified,
though in small volumes.
o Young industry with a wide choice of products from different wood types, quality, size
and prices.
o Artisan work hand of high creativity at low cost.
o Quality
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WEAKNESSES
o It depends more and more on commercial woods imports (conifers)
o Sector is menaced by Asian competition and the strong dependence to North American
market.
TRENDS
Furniture enterprises mainly small and medium, are consolidating actions with their main
distributors in the USA and Canada. Basically in order to cover Trade fairs and exhibitions that
visit the distributors, and on the other hand they are concreting strategic alliances with
furniture enterprises in the European Union that could guarantee access to technology,
training and a wider model and design choice.
Furniture being very successful in Mexico according to their materials:
• Pine, the most popular
• Steel
• Plastic
• PVC
Furniture made from the latter three materials is gaining because of its low price, new style,
and availability.
RISKS
Currently the most important risk is the capacity to modernize since the opening of the
economy in order to achieve a larger competitiveness towards furniture manufactured in
other areas.
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MARKET ACCESS
Under NAFTA terms, Mexico eliminated tariffs on all remaining and most agricultural products
imported from the USA on January 2003, including furniture and related items. Companies
exporting into Mexico should face the following tariff structure:
Products Harmonized NAFTA Malaysia
Numbers
9401.30 Gyratory seats of height adjustable in metal Office Ex. 15%
9401.40 Transformable Seats in bed, metal Ex. 15%
9401.50 Seats of Rotate, Wicker, Bamboo and similar Ex. 15%
9401.61 Seats draped with framework of wood, rooms Ex. 15%
9401.69 Seats without drapes, with framework of wood, declinable Ex. 15%
9401.71 Seats draped with metal framework Ex. 15%
9401.80 Seats of plastic / other similar materials Ex. 15%
9401.90 Other seats of wood / others similar materials Ex. 7%
9403.10 Other furniture and its parts metallic furniture for office Ex. 20%
9403.20 Other metallic furniture, cabinets, office counters Ex. 20%
9403.30 Furniture of wood for office Ex. 15%
9403.40 Furniture of wood for kitchen Ex. 15%
9403.50 Bedrooms of wood Ex. 15%
9403.60 Dining rooms, tables, centers of entertainment Ex. 20%
9403.70 Furniture of plastic Ex. 20%
9403.80 Furniture of Rotate, Wicker, Bamboo and similar Ex. 20%
9403.90 Divide from wood, plastic and other materials related Ex. 7%
4412.13.01 With at least one outer ply
of the following tropical wood:
Dark Red Meranti, Light
Red Meranti, White Lauan,
Sipo, Limba, Okoumé,
Obeché,Caoba Africana,
Sapelli, Baboen,Mahogany,
Palisandro de Brasil,Bois
derose femelle Ex. 28.5%
4412.13.99 Other, with at least one
outer ply of non-coniferous wood Ex 23.5%
4412.19.01 Coniferous, denominated plywood Ex. 23.5%
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REQUIRED DOCUMENTATION FOR IMPORTING PRODUCTS
The basic Mexican import document is the Pedimiento de Importacion (import pediment). This
document must be accompanied by:
• A commercial invoice (in Spanish)
• A bill of lading
• Documents demonstrating guarantee of payment of additional duties for
undervalued goods, if applicable.
The import duty is calculated on plant value (invoice) of the
product(s) plus the freight charges, and any other costs listed separately on the invoice and
paid by the importer, such as export packing. In addition, inland freight cost, other fees (export
packaging), plus duty paid and the customs broker's fee, if this service is employed is assessed
on the total sales price of the product.
The participation of a customs broker is strongly suggested when the exporter is not familiar
with Mexican standards and Custom’s processing procedures and in order to avoid delays,
hassles and barriers.
LABELING AND STANDARDS
In addition, wooden furniture must comply with NOM-050-SCFI-2004, general labeling
information for general products, published January 24, 1996 in the Official Gazette. When
there is not an applicable NOM for a specific product, it must comply with the general labeling
requirements specified in NOM-050-SCFI-2004. This labeling requirement applies only to goods
intended for retail sales. Otherwise, the bulk packaging should have the required
labeling information.
Labeling must be in Spanish with the following information:
• Generic name and brand
• Type of product
34
• Warnings or precautions on hazardous products
• Accessories information and description
• Guarantee term
•Method of use, handling, and care instructions for the product as required
• Specifications
•Name, and all data information in Spanish of the importer and/or distributor.
•A legend stating the target age of the consumer
•Net contents (as specified in NOM-030-SCFI-1993).
•Importer's RFC (Registro Federal de Causantes) number and/or
their industry association registration number
All products intended for retail sale in Mexico must bear a label in Spanish prior to their
importation to Mexico. Products that must comply with commercial and commercial/ sanitary
information NOM’s (Mexican Official Standards) must follow the guidelines as specified in the
applicable NOM.
Technical regulations, including labeling requirements, issued by government agencies and
ministries. Compliance is mandatory. These are some of the NOM’s to consider for furniture
exporters
• NOM 117 SCFI-2003 (4/28/1997) Non compulsory commercial standards for retail and
custom made furniture.
• PROY-NOM-117-SCFI-2003 (3/18/2004) commercial practices, standards for retail and
custom made furniture. (modification of the Mexican Official Standard NOM-117-
SCFI-1995.
35
DISTRIBUTION/BUSINESS PRACTICES
The best strategy for penetrating the Mexican market is to focus on identifying
and working with Mexican distributors that are aware of trends and crucial
changes that affect the market. All of these distributors know the
decision-makers and competitors personally.
Wooden furniture is sold through specialized furniture stores, furniture
boutiques, and department stores, as well as some supermarket chains. High
quality wooden furniture are more popular in specialized stores close to
high-income population areas (their target customers). This kind of store is
always looking for new products to offer to their clients. Most of these stores
purchase directly from the manufacturers in Mexico or from the Mexican
representatives of foreign firms.
The furniture stores owned by manufacturers of wooden furniture such as Frey,
D´Europe, Hermanos Vazquez, Elektra, and Dico sell their own brands of domestic
and imported wooden furniture. Department stores sell both domestic and imported brands
of furniture.
There are department stores covering vast areas in the country, these can be considered top
end stores (Palacio de Hierro, Liverpool, Muebles Dico, Chippendale) and medium to low
segments (Salinas y Rocha, Hermanos Vázquez, Electra, Famsa, Singer, Viana) that dominate
the formal distribution market. Furniture distribution of low quality and rustic style it is done
mainly, through street markets, state and local fairs, road stores, etc.
Recommendations to enter this sector are to strongly identify and work with Mexican
partners, that are up to date about the sector and trends that could affect the market. They
would know in many cases, the decision takers within companies and the competition.
Recently, as a representative of the new Mexican design, small design furniture stores are
popping up constantly in urban areas where the very creative’s exhibit try to sell their
furniture
36
A local distributor or agent is often the best market intermediary.
The main local distributors are:
• Specialized stores. Firenze, Chippendale, Points, Marconi, Carrera, Tentation, Ligne
Roset, Grange, Mueblerías Frey, Muebles Lomas, Mueblería Gerard, López Norton, etc.
• Quality superstores. Liverpool, Fábricas de Francia and Palacio de Hierro
• Mid-range superstores. Sears, d'Europe, Vadu, Briones, Home-Mart, Salinas y Rocha,
etc.
• Low-end superstores. Wal-Mart, Elektra, Sam's Club, Costco, Gala Diseños, Hermanos
Vázquez, Viana, etc.
FINANCING PRACTICES
Success depends on the product and sector, but most sales to furniture manufacturers are
made through direct contact. Making associations within the commercial chain and getting
recommendations from chain members are the best ways to make sales. Sales calls made to
small and micro businesses by sales representatives traveling along routes are also effective.
Financing is important, as many buyers do not have liquidity or access to funds. Firms will for
30, 60 or 90 day payment terms.
Commonly, manufacturers sell on 30-day terms. Distributors sell on 15, 30 or
45 day terms. Distributors give discounts of up to 15 percent to their best customers.
In Mexico, only the largest and most credit worthy companies have access to
commercial bank financing for business operations. This includes the large
retailers (department stores) and furniture wholesalers. For these companies,
an irrevocable letter of credit is the preferred means to pay when dealing with
foreign manufacturers. The majority of companies in Mexico (small and medium
size) operate on a cash basis and seek to buy on an open account basis from
foreign suppliers. These companies may not make payment to the foreign
supplier until they have re-sold and received local payment.
Department stores and specialized furniture stores like to receive credit from
suppliers. Common practice is to extend 90-day credit terms. Larger suppliers
37
offer discounts of 20-30 percent off the suggested retail prices, depending on
volume and payment terms. Smaller distributors may offer up to 60 percent
off. Most chains of furniture stores and department stores centralize
purchasing. Usual payment terms vary from 30 to 90 days, depending on given
discounts.
The government of Mexico operates two business development banks that provide
trade financing to a relatively small universe of Mexican firms. These are
Nacional Financiera (NAFIN) and the Foreign Trade National Bank (Banco Nacional
de Comercio Exterior - BANCOMEXT).
CONCLUSIONS AND RECOMMENDATIONS
Furniture industry in Mexico is in a high percentage, artisan family business, and therefore not
very competitive, despite the advantage of the low labor hand cost . Investment in technology
has been and currently is really low , therefore processes that require machinery are rare
rather than common. Lack of technology within the sector that has to be substituted with
labor hand is a serious problem. Mexican entrepreneurs are conscious of this situation.
That is why most common national products found in Mexico are rustic, economical, long
lasting furniture with a very peculiar design that is even attractive to Europe or North America
as country furniture, but that has lost popularity in the internal market and faced Chinese
competition.
Import Market is largely dominated by U.S. registering $21,149,568 Million USD in 2006,
50.11% of Mexico´s total furniture’s imports. An observation must be done considering that
many of the furniture sold by the USA to Mexico are form Asian origin. Traders in the USA and
some in Mexico use this scheme in order to enjoy preferential NAFTA tariffs.
China´s share grow rapid reaching 17.35% of Mexico’s furniture imports. Italy is the leader in
designer furniture sector, while Spain is tie close to Italy within this sector, offering both
quality furniture, acceptable price according to their features and a more appreciated design.
38
Formal distribution channels is departmental and furniture retail stores, though it exists a wide
less formal distribution network , specially for low-end product that are sold through markets,
fairs, road stores and some other informal circuits.
Tariffs for home furniture oscillate within 7% and 20% in 2007, depending on the tariff line,
and the only NOM to accomplish is NOM-050-SCFI-2004.
Despite the fact that only 15% of the population account with a medium –high income rate or
even very high, it is advisable that behind that there is a potential market of 15 million people.
The top end market segment prefers imported and designer furniture. Other consumers
purchase more economical and durable furniture, generally rustic style, since it is the one
available at low prices.
Finally and despite what could be taken for granted, it is observed a strong similarity with
North American likes when it comes to furniture.
Malaysian companies have a high potential of market share in the Mexican market, observing
competitive prices and penetrating with simple, contemporary and also low end markets.
Malaysian furniture are becoming well known among the Mexican market.
Several Malaysian furniture can be seen in department and specialized stores.
Interest for Malaysian furniture can be perceived within the sector.
39
EVENTS
TECNO MUEBLE
(June)
It is a sister from EXPO MUEBLE , but it only exhibits machinery and supplies for furniture
production. . It is organized by the Jalisco Wood and furniture suppliers Association and
AFAMJAL ( Furniture Manufacturers Association) Products exhibited include abrasives,
adhesives, chipboard, anti pollutants,, saws, varnish, edges, closures, veneers, components,
design, transport equipment, packaging, machinery, staples, metal components, tools, rubber
foam, lighting, lacquers, laminates, wood, moldings, paint, software, boards, carpet, fabrics,
etc.
It is carried out in EXPO GUADALAJARA towards the middle of the year.
EXPO MUEBLE (INVIERNO& VERANO)
(February & August)
These twin Trade fairs are carried out twice a year, Invierno (winter edition) takes place I
February and is by far the largest (size and exhibitors) Trade Fair devoted to furniture in the
country. Summer edition is slower and smaller, still accounting a good participation. It is
organized by AFAMJAL ( Jalisco’s Furniture Manufacturers Association) and therefore the
strong participation of Jalisco’s companies is evident in this Fair. AFAMJAL is very protective of
regional industry and no entrance to foreign exhibitors is allowed, unless they account with a
established branch or office in Mexico.
This Trade Fair is devoted mainly towards Central American and North American buyers that
attend the Fair seeking for new trends, accessories and obviously furniture.
EXPO MUEBLE’s exhibitors, come mainly from a regional basis, mainly Jalisco, San Luis Potosi
and Aguascalientes; central Mexico states where furniture industry is big and consolidated,
especially in Jalisco.
40
International exhibitors are virtually nonexistent, and proportionally to the size if the fair, few
finished furniture importers are found here.
Though plenty of Mexican manufacturers do import raw materials and some machinery for
furniture production.
EXPOMOBILIARIO/ PROMUEBLE
(January)
Carried out in Mexico City´s Centro Banamex, this fair is devoted to, both machinery and
supplying materials to finished furniture. This is the largest international Trade fair regarding
the buyers origin and as well, the exhibitors origin, but not the size of the exhibition floor.
This Trade Fair is recommended for Malaysian companies wanting to explore the Mewxian
market.
EXPO OCOTLAN MUEBLERA INDUSTRIAL
(February & August)
Carried out in Ocotlán, Jalisco, a small city where a “cluster” of furniture manufacturers is
located, this fair is organized by the Ocotlán Firniture Manufacturers Association.
EXIMUEBLE
(August)
Carried out in Monterrey, Nuevo Leon, it is organized by the Nuevo Leon Furniture
Manufacturers Association. , devoted to international buyers but not to international
exhibitors. It observes same scheme as EXPOMUEBLE in Guadalajara.
41
BIBILIOGRAPHY
ALL DATA PROCESSING LTD. 2004, Mexico , December, 2004.
Zayas, Alicia, 2005. Industry Sector Analysis: Mexico-Furniture Manufacturing Industry.
México, Guadalajara.
MOBLAJE MAGAZINE
WORLD TRADE ATLAS
INTERNET RESOURCES
www.inegi.gob.mx INEGI: Instituto Nacional de Estadísticas, Geografía e Informática.
(National Institute for Informatics, Statistics and Geography)
www.siem.gob,.mx SIEM: Sistema de Información económica Mexicana. (Mexican
Economic Information system)
www.afamjal.org.mx AFAMJAL (Jalisco Furniture Manufacturers Association)
www.economia.gob.mx MINISTRY OF ECONOMY