CHINESE FURNITURE INDUSTRY SURVEY

Chinese Furniture Industry Survey

Chinese Furniture Industry Survey

Abstract

We investigate the manufacturing strategy of 72 Chinese furniture companies based on a nationwide survey conducted in mid-2001, just prior to WTO accession. We provide an overview of the industry and its context before reporting on the operations objectives of the firms — focusing on their relationship to financial performance and technology. We report on the current status of, and future plans for, manufacturing technology implementation and initiatives (such as computer-aided design, safety improvement, new product introduction, and reducing changeover times). We make comparisons with other studies, in particular in the US — where Chinese furniture imports are increasingly viewed as a competitive threat.

Introduction

With increasing attention focused on the Chinese economy, it is useful to consider the state of manufacturing (which comprises half of China's GDP), particularly in industries where exports are growing rapidly. This paper presents the results of a survey of the practices and performance of 72 furniture manufacturers located throughout China. The survey, conducted just prior to China's WTO accession in late 2001, considers both manufacturing strategy (with a particular interest in manufacturing technology) and performance (including financial).

There are currently some 30,000 furniture manufacturers in China, employing a total of 3 million people . While the industry constitutes only 1.6 per cent of total Chinese manufacturing and Chinese exports, some of its features render it particularly interesting. For instance, its very rapid growth, in both domestic and export markets, and its relatively low labour productivity are worth noting.

The remainder of the paper provides a review of manufacturing strategy in the furniture industry and in China, and characteristics of Chinese furniture manufacturing. Following a discussion of the survey instrument and administration, we present the results of the survey, which focuses on competitive objectives and financial performance, and their relationship to manufacturing, technology, and human resource management practice.

Survey Methodology

Questionnaire

The questionnaire closely followed previous instruments used in Chinese manufacturing studies. The Chinese version of the survey (used by all but one respondent) was back-translated into English to establish translation accuracy.

Sampling and Administration

The survey was conducted in mid-2001, just prior to the announcement of China's World Trade Organization Accession. We mailed 30 surveys to each of twelve provinces selected to reflect a variety of regions and income levels (see Table 2). In each province 20 surveys went to companies randomly selected from the 2001 directory of the 4000-member China National Furniture Association and 10 surveys went to non-CNFA members. Seeking to overcome the very low, often single digit, response rates associated with mail surveys in China, each survey included a reply paid envelope and a letter of endorsement from the CNFA.

Responses (Note Responses in the High Income Regions include 13 Responses from 55 Phone Calls in the Beijing Area).

With the level of analysis being the plant, the survey was sent to the General Manager at each plant, but asked if they wanted to forward it to someone else in the plant (e.g. a Senior Production/Manufacturing/Plant ...