Imports on Upswing

October 16, 2015  by in Business Strategy, Industry   

China’s devaluation of the yuan earlier this year was done in hopes of stabilizing the country’s shaky economy. The impact such a move could have on the U.S. furniture industry remains unclear and opinions vary from expert to expert.

Although economists differ on the depth of the impact, China hopes to prevent its economy from slowing further by making its exports less expensive. China currently dominates 60.8 percent of household furniture imports to the U.S. and cheaper imports could strengthen that hold.

The world totals of both U.S. imports and exports in the household furniture industry have been on the rise since the recession (Table A). In 2014 imports totaled $23.8 billion at wholesale or about 74 percent of U.S. furniture and bedding consumption. This compares to 62 percent in 2007, as reported in the April issue of Home Furnishings Business.

Imports to the U.S. experienced high growth of 53.6 percent from 2002 to 2007 before plummeting 24.3 percent by 2009. Since 2009, furniture imports increased to 53.1 percent in 2014—growing an additional 10.9 percent from the second quarter of 2014 to the second quarter of this year to date. While U.S. exports total just a fraction of imports, exports of furniture have been steadily increasing since the peak of the recession in 2009. Up 50.1 percent since dropping 5.9 percent in 2009, the furniture export industry has increased from $1.5 billion in 2002 to $3.5 billion in 2014—a jump of 141 percent.

 

Imports by Country

China’s exports to the U.S. have grown to more than 60 percent of total U.S. imports—up 20.6 points from 2002 to the second quarter of this year (Table B).  Since the peak of the recession in 2009, the value of imports from China has grown 52.4 percent to $14 billion.

Canada’s decline alongside Vietnam’s rise is quite noticeable. Vietnam jumped from a half percent to more than 10 percent of U.S. imports in the past 13 years while Canada has dropped from 18.3 percent in 2002 down to 5.5 percent in the second quarter of thie year—a decline of 12.8 points. As the fourth largest importer, Mexico accounted for 4.8 percent of total imports in the second quarter of this year— 0.8 points shy of 2002.

 

Major Furniture Imports

Wood household furniture is the largest imported furniture product, but in 2014 the category had not yet reached pre-recession import levels. Conversely both upholstery and metal have been increasing at a high rate, and combined, now account for more than 50 percent of total furniture imports (Table C).

Purchases of upholstery and metal household furniture from around the world have increased more than 29 percent since 2007.  The smallest imported product category is bedding. At $464 million in 2014, the category is a small fraction the total. However, bedding has increased by 140 percent from 2009 to 2014 and more than 20 percent in the first six months of 2015 compared to the same period last year.

Current 2015 second quarter year-to-date performance for all broad categories shows that Metal is the only category not experiencing double-digit growth this year (Table D).

Wood household furniture imports totaled $9.8 billion in 2014 and are up 10 percent in the second quarter of this year compared to 2014 (Table E). China still owns the wood category at $3.7 billion wholesale in 2014, but has lost significant share over the last 10 years to Vietnam.

Vietnam’s 2014 imports have increased to $2.2 billion, up from $60 million in 2002. Through the second quarter of this year, China’s wood imports have grown 7 percent compared to Vietnam’s 23.9 percent, closing the gap even further. Malaysia and Indonesia continue their steady wood niches but control less than 6 percent of wood imports each.

Unlike the wood category, China has virtually no competitors in upholstered goods in the U.S. marketplace (Table F).

In the early 2000s, China began to make its move with upholstery imports of only $543 million in 2002 and grew to $3.9 billion by 2014. Essentially, China has taken market share from U.S. producers as the secondary countries—Mexico and Canada—have struggled to maintain shipment levels. Through the second quarter of this year, China upholstery imports are up another 15.2 percent over the same period last year. Vietnam has slowly tried to enter the U.S. upholstery market, but only grew to $293 million in 2014.

Even more so than upholstery, China has a stronghold on metal furniture—accounting for 78 percent of all metal furniture imported into the U.S. in 2015 at mid-year (Table G).

China increased from $1.7 billion in 2002 to $4.7 billion in 2014—a jump of 172 percent in 12 years. While imports from Canada, Taiwan and Mexico have grown since the bottom of the recession in 2009, they continue to lose U.S. market share to China.

Exports by Country

Although the U.S. exports a fraction of furniture compared to imported goods, exports have continued to rise since 2009 and surpass the peak highs of 2007 (Table H). More than half of the $3.4 billion in U.S. exports are to Canada.

Although exports have been growing, they are not approaching the growth in imports being fueled by China.  While the furniture industry in China has been threatened over the last few years due to rising labor costs and labor shortages, U.S imports continue to increase from China alongside a growing Vietnam Wwood manufacturing presence. The recent devaluing of the yuan could go a long way to strengthen China’s hold on U.S.

Methodology: Household furniture imports and exports are compiled by the U.S. Census Bureau, Foreign Trade Division from more than 200 countries by product type and material.