27 Aug 2014
Demographics and Legislation Re-shape China's Child Furniture Sector
In just 10 years, the mainland children's furniture market has grown from zero to 18% of the whole furniture sector, now strict new industry standards and the two-child policy have triggered a major shake-up in this infant industry.
The mainland market for children's furniture barely existed just 10 years ago. Today, though, it is said to account for almost 18% of all furniture sales in China. The stimulus for this enormous market growth largely stems from dramatic improvements in urban housing conditions over the last decade, with far more children now having their own bedrooms.
Today, it is de rigueur among affluent mainland parents to provide their children with a dedicated living space. According to recently-conducted interviews with 30 families in tier one cities, all but five had provide their offspring with their own bedroom, with each one typically fitted out with one-three pieces of specially-designed furniture. In most cases, this consisted of a bed, a desk and chair set, and a bookcase. All of the five children still sharing a room with their parents were under three years of age.
Among the families interviewed, one in three had actively involved their child in specifying bedroom design and furniture selection. Seven of the parents involved had also opted to invest in specialist children's furniture sets.
Commenting on the growth in this sector, one industry player said: "As children grow older and family living conditions improve, parents are actively encouraging their children to manage their own affairs. This has seen a growing number of families allocate their children a separate room as part of this process."
One such parent is Yan Lizheng, 29. She is currently decorating a "princess room" for her three-month-old daughter. Explaining her motivation, she said: "Given my own family situation, having a 'princess room' was an impossible dream when I was a child. I now want to make my own unfulfilled childhood dream come true through for my child." Such delayed wish-fulfillment is said to play a surprisingly large role in the growth of the sector.
Current developments on the mainland have led many to believe that the children's furniture sector is on the cusp of yet more explosive growth and likely to be a key beneficiary of the "demographic dividend". According to the China Statistical Yearbook 2013, there are around 220 million children aged 0-14 on the mainland, representing some 16.5% of the total population.
With China's selective two-child policy now in place, an estimated eight million babies are expected to be born over the next five years. It is predicted that this new baby boom will last until 2030. In another reassuring sign for the sector, it is said to be immune to likely fluctuations in the real estate sector, with demographic factors and overall economic stability likely to prove more decisive factors.
Aside from a number of specialist children's furniture brands – notably A-OK and ColorLife – many mainstream furniture manufacturers are also now looking to target the sector. Among the traditional furniture manufacturers now entering the sector are Huari Furniture (with its "Blue Blue" range) and Sunhoo with its own dedicated children's series. In terms of pricing, children's furniture items are said to be at least as expensive as conventional items. Despite this, many manufacturers are now reporting that sales continue to look promising.
In addition to the domestic players, the growth in the sector has, inevitably, caught the attention of overseas manufacturers. In recent years, this has seen Skanvea, China's largest children's furniture retail chain, stocking a number of international brands, including Lifetime, Flexa, Manis-h and Suwem among others. As part of its marketing activities, the chain is majoring on the "Nordic raw materials" and "European standards" aspects of its range, an approach that is said to be proving highly successful.
New standard for children's furniture
Despite the rapid development of the sector, the mainland children's furniture industry is, appropriately enough, still very much in its infancy. Overall, the sector is seen as composed of a number of robust businesses, coupled with a substantial layer of relatively-unsophisticated operators.
In the latter case, many of these businesses are characterised by low levels of investment in proprietary products and a relative lack of brand recognition. Assessing the less developed side of the industry, one commentator said: "Very often, such businesses simply copy what is current in the international market. "Two years ago, for example, when coloured panel furniture became popular, almost every manufacturer adopted the 'blue for boys and pink for girls' approach. This resulted in the market being flooded with identical products.
"More recently, in light of growing environmental awareness, children's solid wood has been very much in demand, with European-style items proving particularly popular. This immediately saw many manufacturers dump their coloured panel units and switch to solid wood. Now things have changed again, with 'Prince' and 'Princess' rooms currently the most in demand."
Overall, this lack of original design is said to be causing a glut of "me-too" products in the market. There is also a lack of segmentation that is further stifling the growth of the sector.
There are, however, signs of increasing sophistication beginning to emerge in the industry. Previously, children's furniture was largely only differentiated from its mainstream counterparts in terms of look and colour. Now, though, a number of brands are beginning to explore more ergonomic possibilities, tailoring such items to a child's specific needs and preferences.
These incipient signs of maturity are timely, given the opportunities now emerging in the sector. The relaxation of the one-child policy, in particular, will inevitably prove a huge boost. With more and more mainland couples now likely to have two children, this will have a decided impact on the design of future furniture items.
Early signs of the likely impact came in interviewers with shoppers who were making plans in accordance with the new legal framework. One such shopper was a "Mrs Wu", who was looking to buy a bunk bed in a Beijing shopping mall.
She said: "Of course you have to think about the child's bedroom when you are planning to have a baby. In our three-bedroom home, my husband and I have one room, my parents have another and my son has the third. If we have a second child, then ideally we would have four bedrooms. That, though, may not be financially viable, especially as a having a large family would inevitably be more expensive anyway."
In line with these concerns, Wu's family is planning to refurbish the existing children's bedroom when they have a new baby. Explaining her thinking, she said: "We will replace the current bed with a bunk bed, with the elder child sleeping on the upper bunk. We will also get a slightly larger wardrobe and replace the single-seater sofa with a double one. In terms of the desk, well they will just have to share."
Two-child policy and me-too marketing
Aside from the demographic shift, the other major change affecting the sector is legislation. In response to growing parental concern over the safety and eco-friendly aspects of children's furniture, 2012 saw the introduction of a new industry standard – Children's Furniture: General Technical Requirements.
This new standard details, for the first time, specific requirements regarding furniture designed for use by children in the 3-14 age group. This includes a series of safety protocols relating to detailed requirements with regard to sharp edges and points, protruding components, the diameter and spacing of holes and gaps and the stability of such items, as well as the mechanical properties of the products. It also stipulates that maximum level of potentially toxic substances that can be specified in such products. Additionally, there are specific requirements relating to upholstered furniture colourants and PH value.
The introduction of this standard has resulted in something of a shakedown in the sector. A number of the smaller, more marginal players have ceased trying, while overall pricing has gone up. This has even led to several domestic brands proving more expensive than imported ones.
According to one manager at ColorLife, a leading mainland manufacturer in the sector, the legislation has had a direct impact in terms of raising prices. He believes that the more stringent requirements for material selection, harmful substance control, production processes and equipment have inevitably increased production costs.
Overall, though, the new national standard has certainly raised safety levels and driven environmentally-friendly compliance in the sector. It is expected that, following the initial spike in prices, as the industry came to terms with the new requirements, a more competitive approach will duly emerge.
Ren Yuan, Special Correspondent, Beijing