China is the largest manufacturer and consumer of furniture and home decor products in the world. Consumers are found mostly in rapidly urbanizing areas where disposable income is increasing. By 2020 furniture and home decor are expected to hold a 3.3% share in the total retail market sales. The large demand for furniture and home decor products in China arises from three key factors; rapid economic growth, a rapid furniture replacement cycle and an increasing demand for housing. Rapid economic growth has increased prosperity and urbanization increasing disposable income available to spend on furniture and home decor products. A rapid furniture replacement cycle of between 6-8 years and an increasing demand for housing both maintain the demand for furniture and home decor products at high levels. There is evidence to suggest that the increased prosperity of many Chinese nationals leads to a consumption upgrade (consumers are now willing to pay higher prices for better quality furniture and home decor).
Average spend per person
Per capita annual expenditure on furniture in China is expected to reach RMB 1,568 in 2018. Due to a rapid refurbishment cycle which sees households replacing their furniture on a 6-8 year cycle the furniture replacement market is considered to be worth up to RMB 63 billion based upon an average expenditure of RMB 1,000 per household. The increased per capita expenditure on furniture and home decor products is partly due to the increase in disposable income of many Chinese nationals. China's per capita disposable income increased from RMB 11760 in 2006 to RMB 33616 in 2016. At the same time the proportion of furniture consumption in the total retail sales also increased from 0.21% in 2006 to 0.84% in 2016.
Key players in the market
Domestic brands are well-supported in China with eight of the top 10 furniture brands in 2016 being local ones. There are a number of key players within the Chinese furniture market, home furniture and homeware retailers contributed 76.4% of spending on furniture and floor coverings in 2015.
Current and future trends
With the number of children below the age of 15 in China increasing to 230 million in 2016, the children's furniture market is growing rapidly, with beds, desks and chairs making up the biggest share. Online spending on overall furniture and floor coverings is forecast to reach 11.9% by 2020. The online furniture market is fragmented but highly competitive. Of a survey which polled more than 1000 consumers across China, more than 60% said that they are willing to use internet based platforms to purchase furniture and home decor products. However, the online reputation of a brand is by far the most important decision-making factor for Chinese customers. According to a survey by HKTDC, over 90% of respondents are interested in green and eco-friendly furniture and home decor and are willing to pay a premium of 14% extra for such items. Due to the increasing presence of young couples in smaller properties there is a growing demand for multi-function furniture. Sofa bed sales amounted to 32% of total seating furniture sales in 2016, around RMB 19 billion. Custom made furniture is expected to increase at an annual rate of 18% and be valued at 160.6 billion by 2020.
The demand for furniture and home decor products in China is vast and can be expected to continue to grow due to the large emerging middle class in this country. While domestic retailers such as QuanU Furniture and Red Apple Furniture currently dominate the market, there is expected to be increases in both the online furniture and home decor markets as well as the demand for green and eco-friendly products.