Midsize and large players focus on cutting freight fees, while small companies invest in basic machines to ease spending.
China suppliers of outdoor furniture are adopting different cost-cutting strategies to trim operating expenses.
For midsize and large companies, the focus is on reducing shipping fees. This is because unlike smaller counterparts, these makers do not need to boost manufacturing efficiency as factories already house automated equipment.
The approach, however, is not viable for most novelty items. Generally, R&D teams change measurements of all designs minimally to maintain comfort and functionality.
Apart from modifying dimensions, suppliers are reducing models' weight by using lighter materials.
TMC Joy Sports & Leisure Products Co. Ltd employs aluminum tubes in place of steel for frames, bringing down each furniture piece by 2kg. This enables the company to save about 5 percent in shipping expenses.
Assembly-oriented small makers, meanwhile, are concentrating on improving manufacturing capability. But because only a few of these tier 3 players can affordautomated machines, many are procuring basic versions.
Some suppliers, for example, are buying semiautomatic cutting equipment. Costing $5,700 to $6,000, such units can raise efficiency by 20 to 30 percent.
Although initially an expensive measure, investing in these machines will help makers save money in the long run.
Products & prices
Models made of PE rattan and steel or aluminum tubes dominate the selection of outdoor furniture in China. More expensive releases employ stainless steel and wood for frames whereas in the low-end segment, some suppliers offer models made of fabrics such as Textilene.
The components used are the main quote determinants. PE strips adopted in high-end designs are at least 100 percent costlier than those in low-end versions. They last up to four years, which is double the maximum life span of the latter. Such types are also safer because they do not contain cadmium and other toxic substances.
At $25, a 55x69x91cm chair using the material is more than twice the price of models in lower-quality PE strips.
As for frames, steel is commonly utilized in less expensive releases, which go for $10 to $15.
Midrange and high-end versions employ aluminum alloy as it is lightweight and durable. Quotes range from $20 to $25. Some suppliers also use stainless steel frames for upscale pieces. These are $30 each.
Apart from materials, the weaving method and product design determine prices. A two-piece sofa set with a simple pattern starts at $200 while releases featuring intricate details are between $250 and $300.
The price for a regular table set consisting of four chairs ranges from $200 to $250, while versions with novelty designs are $300 to $350.
China is home to about 300 rattan and aluminum bistro set suppliers, more than 90 percent of which are privately owned small and midsize companies.
Approximately one-tenth of the industry is composed of large corporations with annual sales of $10 million to $50 million and a labor force between 1,000 and 2,000. A number of these companies are US-invested with yearly revenue amounting to $300 million and employees numbering 5,000.
Large companies offer various types of outdoor furniture and focus mainly on upscale production. They often adopt higher quality materials and have separate factories for various processes.
Moreover, these businesses attract many skilled laborers as they provide better compensation.
Large corporations have R&D teams of more than 100 members. They can develop over 200 designs each year, while US-invested companies can create 1,000.
Small players have 100 to 200 workers and annual sales of between $200,000 and $1 million.
Generally, midsize suppliers have 200 to 500 employees and generate $1 million to $10 million in revenue each year. Some of these enterprises are backed by Hong Kong and Taiwan financiers.
Concentrating on low-end and midrange releases, small and midsize makers use less-expensive materials. They normally subcontract painting and powder coating to local specialists.
Product development teams at these factories have two to 25 personnel. They focus mainly on countersampling and release at least 10 models annually.
Irrespective of size, suppliers are mostly OEM-oriented.
Guangdong and Zhejiang provinces are the main sourcing hubs for outdoor furniture in China.
The former is the largest manufacturer, backed by more than 10 years of experience. With an ample supply of skilled labor and materials, it is home to about 200 companies, most of which are small and midsize. More than 40 percent of China's exports of the line come from the province.
Makers in Guangdong focus on midrange and high-end production. The cities of Foshan and Dongguan are the key hubs. Large US-invested Agio has set up factories in the former.
There are an estimated 100 makers in Zhejiang that benefit from a rich supply of materials and components. Most are located in Linhai and Ningbo. The latter is the province's largest production center of outdoor furniture.
Hangzhou is another emerging hub in Zhejiang. Under efforts to help the growing industry, the local government is encouraging companies to participate in an international trade show to be hosted by the city.
On average, Guangdong bistro sets are 5 to 10 percent more expensive than Zhejiang versions. This is due to higher quality, and labor and material costs.This article "Outdoor wicker furniture: Makers underscore cost-saving measures" is originally posted in Global Sources.
Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
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