Thailand's furniture industry looks to intra-Asean

Thailand's furniture industry should increasingly depend on intra-Asean markets in order to move away from Europe and the US, which have been experiencing economic downturns.

"Intra-Asean trade is set to increase, especially once the Asean Economic Community kicks off in 2015. For Thailand, it's an opportunity to expand the market, in which our strength lies in the reputation of the quality of the products," said Dhanakorn Kasetrsuwan, vice-chairman of the Asean Furniture Industries Council and the chief executive of La-Z-Boy Asia Co Ltd.

"Thailand has never been accused of sending substandard products. Also, we can import labour [from other Asean countries], as Thai manufacturers are having trouble with a labour shortage."

Vongkot Tangsubkul, president of the Federation of Thai Industries' furniture club, said Asean countries should emphasise the uniqueness of their products in order to stand out from competitors. Thailand's main competitor in Asia is China.

The Export Promotion Department reported furniture exports from January to October last year totalled 29.3 billion baht, down by 5.46% year-on-year.

The flood cut exports last October by 20%, and the situation failed to improve later in the year as exporters still faced logistics problems, causing buyers to source from other countries.

Thailand's main export markets in 2009 and 2010 were the US, Japan, the UK, Australia and Germany, but last year Japan moved ahead of the US due to the latter's economic crisis.

Jirawat Tangkijngamwong, president of the Thai Timber Association and secretary-general of the Thai Furniture Industries Association, expects a 10% decline in 2011 exports from 37.1 billion baht in 2010, failing to meet the earlier projection of 10% growth.

Both associations predict an inactive export market in this year's first quarter, as most Thai exporters are small and medium-sized enterprises that are still be recovering from the floods.

They forecast the market will resume normal activity by the second quarter.

Costs may go up by 10-20% this year due to an increase in the minimum daily wage and possible rises in the cost of raw materials, which could reduce exports by 20% from last year.

Mr Jirawat estimates the domestic furniture market will amount to 40-50 billion baht for 2011, growing well into this year on the strength of low- to mid-priced pieces.

He believes consumers will shift from buying built-in pieces to knock-down furniture.