Written By Syed Md. Rakeen, Team MBR

Export basket diversification has emerged as a critical discussion for some years due to Bangladesh’s overreliance on the readymade garments sector for foreign earnings. With the foreign reserves depleting every month, finding new avenues for exports and emphasising their expansion are considered crucial areas of focus for the country. In a bid to diversify the export basket, the furniture industry can play an instrumental role by racking up substantial foreign earnings. The furniture industry has delved into diverse international markets, and its exports have grown steadily in the last decade. The rise of the global demand for furniture from Bangladesh has been sharp in the last few years, attributable to advancements in product quality, financial incentives, design varieties, labour availability, and low labour costs. The furniture industry has experienced remarkable growth in the last financial year, registering approximately USD 110 million from exports in comparison to approximately USD 79 million in the financial year 2020–21.

According to a recently published report on The Daily Star, the sector’s contribution to the gross domestic product is around 1.2%, while the total market size is about BDT 30,000 crore, among which non-branded furniture constitutes 65%. Most of the businesses involved in the sector among the 40,000 enterprises fall into the cottage, micro, or small category.

Global Outlook of the Furniture Industry

According to Statista, an online platform specialising in market and consumer data, the estimated value of the global furniture market in 2022 was USD 557 billion, and it is projected to rise steadily to a value of around USD 726 billion by 2027. The International Trade Centre reported that China exported USD 139.48 billion worth of furniture in 2021, accounting for 42.44% of the global furniture export market.

According to a report published by the Bangladesh Investment Development Authority, the United States ranked as the top furniture importer worldwide in 2021, having imported furniture worth USD 81.38 billion in that year, and Germany stood in the second position, importing USD 25.62 billion worth of furniture, as shown in Table 01. Albeit the United States contributes a massive portion to Bangladesh’s foreign earnings from furniture exports, Bangladesh only managed to fulfil 0.035% of the demands for imported furniture in the United States in 2021. Similarly, Bangladesh also failed to capitalise on the massive markets in Germany, the United Kingdom, France, the Netherlands, and so on.

The rise in the development of new residential spaces is contributing to the growth of the global furniture market. Also, consumer demands are changing regarding interior design and living room furnishing. The continuous development of smart cities and the massive growth in the construction sector have the potential to create enormous demands for furnishing solutions in the forthcoming years. The creative marketing campaigns of readymade furniture for commercial and residential accommodations, along with good discounts and excellent customer service, can help propel the growth in this sector. Technological developments in the space of furnishing and decoration will also help escalate market growth globally. All these, in turn, will increase the global demand for furniture and will present a massive opportunity for Bangladesh to significantly ramp up its export activities and bring in revenues for the country.

In the financial year 2021–22, Bangladesh exported furniture to 61 countries, including India, Canada, Switzerland, Spain, France, Japan, Italy, Saudi Arabia, Poland, the United States, and many others.

Leading Market Players in the Furniture Industry

The Daily Star reported that Hatil Furniture, Otobi, Akhtar Furnishers, Brothers Furniture, Partex Furniture, and Navana Furniture account for the majority of the export earnings from furniture exports among the 17 members of the Bangladesh Furniture Exporters Association.

Hatil is the pioneer in Bangladesh when it comes to exporting furniture in an organised way, with its modern machines and competent artisans playing a vital role in smoothing the company’s operations. Hatil currently exports to the United States, Canada, Australia, Saudi Arabia, Kuwait, Thailand, Egypt, Russia, etc. In addition to being a popular furniture brand in Bangladesh, Hatil is the only furniture brand from Bangladesh that operates brand shops in Australia and Canada.

Navana Furniture is one of the leading furniture manufacturers and retailers in Bangladesh. It currently has more than 80 franchise dealers all over Bangladesh and a footprint in the global market.

One of the top furniture manufacturers in Bangladesh, Otobi, offers desirable options for middle- and upperclass households. This furniture company is renowned for its cutting-edge production facilities, advanced and creative designs, and extensive distribution network, which allow it to export its products to international markets successfully.

Partex Furniture has made its name popular in Bangladesh by offering a diverse range of furniture. The company, founded in 1999, has its own unique styles and designs.

Brothers Furniture has a history of more than 40 years of successful commercial operations in Bangladesh. The company has begun exporting its products outside of Bangladesh recently. With superior customer service, this well-known local furniture manufacturer aims to produce furniture that fits a modern lifestyle.

Akhtar Furniture initiated its journey with a small furniture shop in the 1970s and is currently recognised as one of the country’s best furniture manufacturing companies. Its high-quality products and innovative and unique designs have established the brand as a key consideration among customers looking for furniture.

Factors Fuelling the Growth in Exports

Cheaper Manufacturing Costs

There is abundant cheap labour in Bangladesh, and domestic furniture manufacturers enjoy better competitive advantages than other furniture exporting countries, as the labour costs are significantly cheaper than those of other exporting nations. That eventually brings down the total manufacturing costs.

Government Support

The government of Bangladesh has recognised the potential of the furniture manufacturing sector and actively supports its development. As the government offers a 15% cash incentive to furniture exporters, which helps offset the duties on imported raw materials, making the sector more attractive to manufacturers. If bonded warehousing facilities are implemented, the industry can become a significant export powerhouse for the country.

Growing Demands

As the country experiences rapid urbanisation and an increase in disposable income, there will be rising demands for quality furniture. This, in turn, will create more opportunities for domestic manufacturers to cater to the local market while also targeting international markets.

Technological Advancements

Although many of the manufacturing processes are still manual or semi-automated, there has been an increase in the adoption of advanced robotics and automated machines by Bangladeshi furniture manufacturers. This shift towards automation is helping improve efficiency, reduce labour costs, and meet growing demands.

Skilled Workforce

The furniture manufacturing industry requires a combination of skilled artisans, designers, and engineers to create unique and innovative products. The country's rich cultural heritage and government initiatives to promote skill development make Bangladesh an ideal location for furniture manufacturing.

The furniture manufacturing sector in Bangladesh has immense export potential due to its ability to produce high-quality products at competitive prices. With the implementation of bonded warehousing facilities, the industry can emerge as an important player in the global market.

Prospects of the Furniture Industry

The furniture manufacturing industry rapidly transformed from a cottage industry to a heavily mechanised mass-production industry in the early 1990s and is known primarily for producing home and office furniture. Global industrialisation has led to a continued rise in demand for home and office furniture all around the world. DATABD.CO, industry data and reports provider in Bangladesh, claims that there is a vast market for office furniture in a good number of countries, including the United States and Japan. There is no doubt that the global and local demands for high-quality furniture will only increase with the growth in population and improvement in living standards.

To stand out, some furniture manufacturing companies, apart from the significant market players, have come up with innovative designs and themes. ISHO, for example, is working on addressing the gap in the market for stylish and minimalistic furniture. The brand's fundamental principle is to redefine how people use space in their homes and workplaces. ISHO offers a diverse range of products that meet global standards at a much lower price than imported furniture.

Wood Tech Solution assists businesses that produce wooden doors and furniture in finding solutions to their craftsmanship issues. The company has directly contributed to the modernisation of factories for many renowned furniture brands in Bangladesh. The company provides services ranging from designing a modern factory layout to training the factory staff to operate the production facility. The company is even producing modern machinery under the banner of its own brand, WTS.

The furniture manufacturing industry is currently the second-largest job provider after the garments and textiles sector. With abundant, low-cost labour, it signals an enormous potential to establish Bangladesh as a global manufacturing hub for furniture.

Obstacles to Export Growth

The furniture industry in Bangladesh faces several challenges when it comes to exporting its products. 60% of the raw materials, such as timber, wood coating materials, fabrics, hardware, accessories, etc., are imported from different countries. High import duties on some raw materials make manufacturing costs go up significantly. Moreover, a more skilled and trained workforce in handling modern machinery and equipment is needed to ensure the consistent growth of this sector. In addition, high-interest rates on bank loans make it difficult for businesses to invest in advanced technologies and training for their workers. The lack of research and development further adds to the challenges faced by the industry. Despite efforts by furniture manufacturers to market their products globally through international fairs, the need for access to necessary resources is holding back the industry’s potential in the export market.

Additionally, there is a greater need for backward linkage, mechanisation, and automation, which can help reduce high lead times. Establishing a separate economic zone for furniture manufacturers can mitigate some of these challenges and help the industry grow. Furthermore, the woods and boards used for making furniture for export markets require certification for environmental protection, but a local policy to issue certification for furniture manufacturers is yet to be developed. These challenges are hindering the growth of the furniture industry in Bangladesh and should be given more attention by the stakeholders.

The furniture industry has experienced consistent growth in exports in the last decade, and the trend is up. According to The Business Standard, this sector is managing to meet 95% of the local demands, and its focus is now revolving around expanding the volume of exports. The country's furniture manufacturers are producing high-quality products at competitive prices in response to the rising demand for quality furniture in global markets. Alongside this, the government's assistance and measures are helping the furniture export business thrive. Then again, even with an increase in exports, Bangladesh still needs to address a considerable portion of the international markets, especially the top importers, namely the United States, Germany, the United Kingdom, etc. Catering to the demands for furniture in those countries by as little as 1% of their total imports can bring massive foreign earnings for Bangladesh. Despite the industry's potential for growth, issues such as escalating raw material prices and unpredictability in the global economy can limit its transition to a large extent. Nonetheless, Bangladesh has the potential to grow into a significant exporter of furniture on the world market in the next few years if proper plans and regulations are in place.