SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT THE OFFICIAL OPENING OF THE INTERNATIONAL FURNITURE CENTRE, ON THURSDAY, 13 DECEMBER 2007, 11.40 AM, AT62 SUNGEI KADUT LOOP, 11.30 AM
Mr. Andrew Ng, President, Singapore Furniture Industries Council (SFIC),
Distinguished guests,
Ladies and gentlemen,
Good morning.
I am delighted to join you today at the opening of the International Furniture Centre or IFC.As an initiative supported by the Government through the Local Enterprise and Association Development (LEAD) programme, the successful launch of the IFC is a significant milestone for Singapore and our local furniture industry.
Overview of the Furniture Industry
Globally, furniture manufacturing output has been growing at between 6 to 8% a year since 2002 and is now worth more than US$265 billion [1]. The global furniture industry has undergone significant structural change over the past 10 years. Asia's share of global furniture exports grew from 18% in 1996 to 30% in 2005, while Europe’s share, shrank from 66% to 54% in the same period.
Against this global industry backdrop, furniture output by Singapore-owned factories grew by an average of 15% per annum [2]. This is almost twice the global average! In fact, our furniture manufacturers are optimistic about hitting a 20% annual growth for the next few years.
Our furniture industry’s growth in the global market can be attributed to two factors. Singapore’s furniture companies are known internationally for their capabilities and ability to deliver creative and high quality products and solutions. More importantly, they are also known as trustworthy and reliable partners.
Nonetheless, with industry trends, markets and know-how changing so rapidly, it is of utmost importance that our companies be ready to take on new challenges and tap on emerging opportunities ahead.
We are now seeing strong competition from two fronts. The first is from established European and American manufacturers who are producing high quality and well-designed furniture. The second is from the mass furniture manufacturers of emerging markets who engage in aggressive price-cutting strategies.
In addition to this intensifying competition, another challenge is the growing worldwide concern over environmental sustainability. Furniture companies are now beginning to look at incorporating environment-friendly processes in their production as well as to explore alternative sustainable sources of raw materials.
To overcome these challenges, our local furniture players must continue to capitalize on existing strengths while also building new capabilities. I would like to propose three strategies that our furniture companies can leverage on to stay ahead of competition, namely, innovation and design, branding and internationalisation. Let me elaborate.
First, in the face of increasing global competition, innovation and design will become a key differentiation strategy for furniture companies. Consumers are also becoming more sophisticated and are paying close attention to the design of furniture pieces. Enhancing design capabilities should, therefore, be a priority for Singapore companies. Also, embracing innovation and design is a strategic tool to help develop Singapore into a center for furniture design activities. For example, designers could tap on our own ethnic traditions to come up with furniture that is authentic and unique.
The SFIC’s Designer Co-Development Programme helps to develop local design talents by partnering them with established furniture companies. For example, Getz Brothers, a local office furniture specialist, recently partnered Hybrid Matters, a young design company, to create a new home furniture collection that focuses on an East-West fusion concept. This partnership has opened up more opportunities for both companies.
Second, branding can be a key strategy for our companies to distinguish themselves from their competitors.
In this regard, SPRING and IE Singapore have developed a branding programme – Brand Pact – targeted at our local enterprises. Brand Pact has helped many companies rejuvenate their brands and develop new brand strategies. Over the past three years, more than 130 companies have been supported under Brand Pact, and among them are 12 furniture companies. I encourage more furniture companies to make use of Brand Pact to strengthen your branding strategy.
I understand that SPRING and IE are also working with the SFIC on a Furniture Industry Branding Project. The Project aims to further help our local furniture industry create a unique Singapore brand and position our companies for stronger international marketing, I look forward to seeing the Project when it is unveiled in early 2008.
Third, given our small local market, internationalization is a key strategy for our local companies to grow and expand. I am glad to know that many of our local furniture companies have already expanded into overseas markets, with some having gained vital footholds in new and emerging markets.
Sitra Holdings was one of our first companies to penetrate emerging markets in Eastern Europe such as Ukraine and Croatia. It was also the first company in Singapore to be certified by the Tropical Forest Trust (TFT), an organization that works to conserve threatened tropical forests through sustainable management. Sitra is fast becoming the largest supplying member of the TFT. Its commitment to sustainable harvesting of forest resources has helped the company to form strong business alliances with West European countries and open doors to North America.
Haley wood, an established manufacturer of high quality wooden furniture, has also recently ventured into the relatively untapped markets in the Baltic region such as Estonia, Latvia and Lithuania, to further fuel their export growth.
I hope these pioneering furniture companies, and others which have blazed the trails of success in new markets, can share their invaluable experience with other companies. I also hope that their successes will encourage and inspire other furniture companies to follow in their footsteps.
IFC – a key strategy to make Singapore an international furniture hub
To counter competition, many of our major furniture manufacturers have moved their manufacturing operations to neighboring countries where fixed costs are lower and raw materials are more readily available.
In your quest to become major global players, however, I hope you will continue to leverage on Singapore’s advantages to transform your operations into high value-added business activities, with emphasis on international marketing, corporate finance, design studios and high-value manufacturing. Let Singapore be your nerve center.
In this respect, the IFC will further enhance Singapore as an ideal location for your company headquarters. The IFC will be the premier one-stop platform to showcase local and international furniture. Apart from boosting Singapore’s furniture exports, the IFC aims to drive more furniture design and development activities within Singapore. Over time, we hope to attract more international buyers and position IFC as the ideal location in South-East Asia to do business with local and regional manufacturers.
I am confident that the IFC will be able to achieve its aims. The 100% occupancy of the IFC’s export showroom space is testimony to the strong support from the industry. Leading Singapore manufacturers like Lorenzo, Star Furniture and Nobel Design, for examples, have showrooms in other parts of Singapore, but they have chosen to locate their export showroom within the IFC.
IFC2: The next step
In addition, I heard that the success of the IFC has attracted great interest and numerous enquiries from foreign furniture companies. This has prompted SFIC to explore setting up a second IFC, this time for regional furniture players planning to use Singapore as their gateway to the international furniture markets. I look forward to hearing SFIC’s plans for the second IFC.
Conclusion
Our furniture companies have been growing very well over the past few years. Singapore’s share of the world furniture export market currently stands at 0.7%.I would like to challenge the industry to increase it to 2% by 2015. I believe that this goal is within our reach if companies stretch themselves through innovation and design, branding, and internationalization.
I would also like to take this opportunity to commend SFIC for your efforts and achievements. SFIC is an example of an industry association whose dedication and commitment to its members has continued to bring the furniture industry to greater heights.
It is now my pleasure to declare the IFC open. I wish SFIC and our furniture industry many good years of success.
Thank you.
[1] World trade of furniture, World Furniture Outlook 2007, CSIL Milano. The US$265b figure, from the same report, is based on 2005 data.
[2] SFIC/SPRING Survey 2007.