Challenges remain for Thai furniture exports in 2013 due to stagnation in major trade partner economies like the US and EU. Baht appreciation has caused Thai products to cost more comparatively, and consequently causing them to face fiercer competition with China and Vietnam.
KResearch believes that Japan will likely remain the largest export destination of Thai furniture in terms of value for the third consecutive year since 2011. In 2013, it is expected that Thai furniture exports to Japan will sustain growth close to 1.5 percent YoY as seen in 2012. This is the result of manufacturers' adjustment through focusing more on premium products to meet various needs of consumers and avoid price competition.
Aside from maintaining their market share in Japan, momentum from robust growth in markets like ASEAN and other emerging economies, e.g., BRICS countries – Brazil, Russia, India, China and South Africa – should support Thai furniture exports in 2013 to register 0-3 percent growth.
To continue growing during these difficult times, manufacturers should think about plans to cope with harmful impacts such as labor shortages, higher production costs due to the daily wage hike to THB300, instability in wood prices, the rising Baht, which affects their price competitiveness directly. In this scenario, businesses should capitalize on the appreciating Baht to import advanced machinery and other technology to compensate for workforce shortages and to lower input costs. Potential operators with sufficient resources may expand their businesses abroad, or scout for new production bases in neighboring countries, e.g., in Laos and Myanmar, where raw materials and labor are in abundance, while wages remain conducive to profitability.
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