During the past fifteen years, the panel furniture industry has experienced significant transformation—from its initial rise, through a period of rapid development, to a stage of widespread popularity. However, it now faces major challenges such as low production standards, excessive product similarity, and shrinking profit margins. As a result, panel furniture companies are forced to rethink their strategies and explore new paths for sustainable growth.
**The Rise of the Industry**
In the mid-1990s, when solid wood furniture dominated the market, a few pioneering companies began focusing on modern panel furniture. At that time, most manufacturers had to rely on imported equipment, raw materials, and hardware components. Only a few enterprises managed to establish themselves and scale up operations. Due to the limited number of brands and high demand, early panel furniture companies enjoyed substantial profits.
Mr. Xue, an industry insider, recalled: "In 1997 and 1998, well-known brands like Guangming and Huahe came to visit our factory, hoping to collaborate on OEM projects. They inspected our technology, but negotiations didn’t always lead to agreements. In the end, they were just seeking guidance, and soon after, they launched their own products."
The main reason these companies rushed into panel furniture was the potential for quick profits. Mr. Xue mentioned that one store in Yufangying Dongfangjiayuan Furniture Square could generate over 1 million yuan in sales per month. Back then, this amount was unimaginable, showing how profitable the industry was at the time. As a result, more and more companies entered the market, and by the late 1990s and early 2000s, the industry reached its peak.
**Fierce Competition and Thin Margins**
Over time, what once seemed like a promising opportunity has turned into a highly competitive space. Today, there are dozens of panel furniture brands in the north and over 20 in the south, dominating most furniture exhibitions. The technology has matured, and the market has shifted from a seller’s market to a buyer’s market.
Raw materials are now largely localized, production is transparent, and profit margins have shrunk. While domestic furniture once pushed foreign competitors out of the Chinese market, today’s competition is brutal, with only the strongest surviving. The rise in the number of brands has led to severe product homogenization. Additionally, many export-oriented companies have shifted focus to the domestic market, further intensifying competition and triggering price wars.
During holidays like May Day or National Day, discounts have increased significantly. What used to be 8.8% or 10% off has now dropped to 7.8% or even 20%. Many leading brands are participating in these promotions, squeezing profit margins even further.
Moreover, rising rental costs in furniture stores have added pressure. A typical panel furniture store needs at least 250 square meters, with monthly rent exceeding 100,000 yuan. This means a store must generate over 100,000 yuan a month just to break even. It's clear that making money in this industry is far more difficult than it was 15 years ago.
**Finding Differentiation to Open New Markets**
Amidst declining profits, many companies are now seeking a “blue ocean†by differentiating themselves. Netlier, for example, has taken a unique approach by targeting the 80s generation with customizable panel furniture. Consumers can choose from various color combinations, structures, and functions, meeting personalized needs. According to Netlier, this flexible design model could remain relevant for at least five more years.
Green Island Furniture recently introduced three new product lines tailored to different lifestyles—“White-Collar Life,†“Tied Vanilla Hall,†and “Chief Loveâ€â€”to stand out from the competition.
Industry experts recommend that panel furniture companies should innovate not only in product design but also in marketing and management. The industry must evolve with the times, focusing on individual consumer needs by offering customization, online shopping options, and other value-added services. By doing so, the panel furniture sector can unlock its full potential and continue to thrive in a challenging market. (Editor: Peter)
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