Thai Furniture and Part Exports, 2011: Rising Demand in India (Business Brief No. 3156)

Thai exports of furniture and parts in 2011 are expected to show decelerating growth YoY. KResearch views that the value of Thai furniture exports in 2011 will likely be around USD1.140-1.160 billion, growing 3-5 percent YoY. Our more refined product quality as well as production flexibility should support Thai furniture export growth further. The deceleration in export growth this year (against the relatively high growth of 17.4 percent in 2010) is due to the economic crises in major export markets, i.e., USA and EU. Also, US manufacturers are expanding their furniture production base to Mexico for more efficiently supporting their domestic market, thus dampening Thai exports to the USA somewhat. In addition, Thai exports may experience tougher price competition from Chinese and Vietnamese furniture. Promising export markets in 2H11 should include Japan and India. Brighter prospects seem to be ahead for Thai furniture exports to the Indian market, where growth of up to 14 percent was achieved during 1H11, thanks to the relatively high economic expansion there, particularly in construction, tourism, shopping venues and other business sectors. Additionally, Thai furniture becomes popular and record satisfactory sales in Indian market because local products cannot exactly meet the Indian customer needs, especially on modern designs. Thus, the demand on imported furnishings is rising there, particularly for bedroom and living room. Moreover, more efficient distribution channels should largely assist in broader access to targeted customer segments. Then, Thai SME manufacturers starting to ship their products to India should seek for opportunities to participate in furniture expositions held in Thailand and India as important marketing channels to introduce their products to major distributors, retailers and relevant franchisers that are regarded as the best distribution channels for our high-end products and can help facilitate their early stages of market expansion there without high costs of media advertising. However, manufacturers should study the details of minimum wage hikes domestically that may increase their production costs, thus possibly leading to higher product prices, which will likely affect their competitiveness in the future.