Thailand's furniture and component exports began to pick up during January-August 2010, thanks to improving conditions in the global economy. But that promising outlook has been clouded by the continuing appreciation of the Baht against USD and Euro – key export market currencies – since August. The situation may worsen if the Baht continues to climb.
KResearch forecasts that the Baht's rise will dent Thai furniture and component exports in 4Q10. As a result, such overall export value may reach only THB35.5 billion, growing 10 percent YoY, as our furniture industry is heavily dependent on exports, especially to the USA and Europe, whose currencies have depreciated considerably against the Baht. In addition, our pricing competitiveness has been undermined further by the currencies of our rivals (e.g., China and Vietnam, who already use aggressive pricing strategies) that have also weakened against the Baht.
To mitigate these forex risks, Thai exporters are advised to diversify to other emerging markets that have strong demand and large customer bases, so that it would be easier for them to market their products. Potential markets that should be concentrated on in 2011 would include Africa, ASEAN (Indonesia, the Philippines and Malaysia) and Australia.
Meanwhile, domestic sales of furniture and home decorative products in 2010 continue to thrive in line with the property market. KResearch expects that sales should reach THB53-54 billion, increasing 5 percent YoY. To further expand sales, entrepreneurs should focus on quality improvements and designs that are more practical and durable. They should offer interior design consulting services as a channel for prospective customers to become better acquainted with their products. Moreover, they must closely monitor their rivals' moves and use the research derived therefrom as guidelines for defensive business strategies.
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