(Editor: Leona)

 

Singapore Furniture Outlook 2014 is a research prepared by BDO, commissioned by Singapore Furniture Industries Council (SFIC) and supported by SPRING Singapore.

 

Overview

 

It has been a long way since the 2008 economic crisis that threatened to cripple the financial stability of the world. 5 years have passed and it seems that we are fast coming to the first sight of global recovery in the coming years.

 

For one, Singapore has kept up well despite the global turmoil and we have seen these translate into modest growth in 2013. As reported by the Singapore Ministry of Trade and Industry (MTI), “For the whole of 2013, the Singapore economy expanded by 4.1 per cent, higher than the 1.9 per cent growth in 2012.” Going forward, the Singapore economic outlook is expected to continue on its recovery, and is expected to have significant spillover effects into the furniture industry.

 

The Annual Furniture Industry Survey 2013-14 is spearheaded by both Singapore Furniture Industries Council and SPRING Singapore and it is with great honor that BDO Consultants Pte Ltd. has been selected to help execute this round of surveys in 2013-14.

 

Contingent with the market conditions of 2013-14, it is heartening to see that the furniture industry has regained its growth momentum, with total furniture trade amounting to an estimated S$6.01 billion for 2013, and clocking a positive growth of 3.3% from 2012.

 

Going forward, industry players do expect this growth to persist to reach a total trade value of S$6.34 billion by 2014, resulting in a cumulative growth of around 9% for the period of 2012 to 2014.

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Where do we expect most growth to come from?

 

Interestingly, amongst the various classifications that were chosen to represent the furniture industry in Singapore, designers are expected to possess the greatest growth potential going forward (+75% by 2014). Contract manufacturers and retailers are expected to contribute positive growth, whilst manufacturing and wholesale sectors are expected to flat-line in the coming period of 2014.

 

Singapore industry set to outpace global counterparts

 

Despite the general positive outlook, it is cautioned that the older years of dramatic growth are over. It is interesting to note that the industry has performed considerably well in the earlier years, with a year on year growth rate of about 16% for the period 2010 – 11 and about 7.50% for the period 2011-12.

 

Industry players expect much more modest growth within the Singapore furniture industry going forward. Nevertheless, current expectations do still better global averages projected, and it is affirmative to say that there is considerable potential in the industry in the next few years.

 

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Internationalisation Trends

 

Internationalisation has long been a focal feature of Singaporean businesses; with a country measuring one full marathon across and a half marathon from top to bottom, the country offers limited expansion possibilities domestically. In view of this, many furniture companies have since sought their fortunes overseas.

 

Consistent with previous year findings, Malaysia and China remain the top overseas locations for operations. Industry players have long lamented the lack of access to necessary resources, especially in seeking land and necessary labor for production facilities in Singapore, and have thereby relocated the majority of their productions overseas.

 

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In fact, many Singaporean businesses’ appetites for internationalisation extends beyond merely shifting their production capabilities to low-cost regions. Amongst those surveyed in this round of surveys, 49% of the firms have expressed their intentions to further their expansion overseas with much more focus on establishing permanent operations such as sales offices or physical outlets.

 

In terms of reaching out to new markets through sales, Myanmar and Indonesia remain popular choices this year. Europe is clearly the most attractive region for Singapore furniture businesses, and of those who cited Europe, 28% expressed particular interest in Germany. This was followed by interest in the UK, which sat at 22%.

 

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Where are the markets for future growth?

 

As expected, the larger the business, the higher the probability of having existent overseas operations. Of the various existent overseas operations recorded, 85% belonged to Singapore furniture businesses with a revenue of SGD 5 million and above. In fact, 44% of these establishments belong specifically to firms with revenues of SGD 20 to 79.9 million. It is apparent that internationalisation is highly related to the business’s size, and it scales up rapidly when firms reach the mark of SGD 5 million and beyond.