Thursday, February 02, 2012

FURNITURE INDUSTRY IN BRAZIL

 

Brazil holds an important podium in the furniture industry today. It is the main producer and exporter in the Latin America region and contributes to 2% of overall global production. Movelsul Brazil 2010, the largest trade fair in Latin America announced a record breaking pending sales of US$300 million. The fair, held in Bento Goncalves, a city in the state of Rio Grande do Sul, had attracted 34,100 visitors from over 60 countries from all the corners of the world.

Production in the Brazilian furniture industry can be broken down into segments i.e. furniture for: upholstered, living room, dining room, office, bedroom, modular furniture and mattresses etc. Brazil has a number of modernized factories; they are accomplishing by offering new products every year and finding alternative distribution channels. Brazil furniture industry is comprised of traditional as well as foreign companies; this assimilation of the modern, foreign and traditional styles makes it come up with innovative and trendy pieces. On the whole it can be said that this combination conventional and contemporary is one of the main characteristics of this industry; the other characteristics being, utilization of its manual labour. Brazil has skilled labor base which provides for the need of adroit workforce.

Alternativa Editoral Ltda., is a publishing house which has its headquarters in Curitiba (PR) which publishes magazines and manages web portals related to Brazilian furniture industry has established an upper hand in its know of the market. Mr. Valcidio Perotti, president-director of Alternativa Editorial Ltda., takes out his precious time to answer our questions pertaining to the industry. Here a replication of the interview, we have taken:

FAW: Can you shed light on the current Latin American furniture sector, Brazil being the pivotal figure in it?

Mr. Perotti: Among Latin American countries, Brazil is the first furniture consumer market and also the largest furniture producer and exporter, according to the report "World Furniture Outlook", released by CSIL – Centre for Industrial Studies, from Milan (Italy), in December 2009 and updated in April 2010. According to this report, Brazilian furniture production represents about 2% of world furniture production (which was about US$ 376 billion in 2008). About exports, Brazil represents 1% of world furniture exports.

In the worldwide furniture consumption, Brazil ranks 15th among the 60 countries covered by the CSIL report, answering for 1% of the total furniture consumption in the world.

Actually, Brazil is a reference to the Latin American countries in the furniture market, having a strong furniture serial industry, structured and organized, which supplies items for the other Latin American countries, specially from South America. In this recent period of worldwide crisis, for instance, the largest external market to Brazilian furniture has been Argentina, surpassing United States demand (historically the largest external furniture market of Brazil). Brazil is also the South American headquarter to the largest supply industries of the world, which from Brazil supply the furniture industry of the other countries.

Considering the Brazilian market in general, the country has attracted substantial investments, not only from the traditional investors, as United States and European countries, but also from the emergent countries, as China. The expectations are that the Chinese, Who have become already the first commercial partner of Brazil, can become also the biggest international investors in the country in 2010.

Specifically about the furniture market, we observe great companies coming to the country, as the Italian Natuzzi, which despite of having a factory in Brazil since the last decade opened its first store in Brazil, under Italsofa brand, in last May. We also had notice during the High Point Market, in April in the United States, that the Chinese brand Kuka has plans to install a facility in Brazil in the next two years.

FAW: Brazilfurniture is recently creating an epoch-making presence in the Middle-East. What led you decide on opting for this part of the world?

Mr. Perotti:Middle-East is a target-market of “Brazilian Furniture” exporting programme, conducted by Abimóvel (Brazilian Association of Furniture Industries) and by the Government exporting agency Apex-Brasil, for being considered a market with great potential, in terms of investments, and also a large market dealer in the surrounding area. According to the business general-manager of Apex-Brasil, Sérgio Costa, other target-markets, together with Middle-East countries, are Angola, Chile, United States, France, Mexico, Panama and Peru.

FAW: Exports to European countries have always been of significance. What are the primary target markets for Brazilian furniture industry?

Mr. Perotti:Since before the worldwide crises, Brazilian furniture sector has been trying, without leaving the traditional commercial partners, diversify its exports, searching for partners especially in the emergent markets. According to the “Sectorial Report on the Furniture Industry in Brazil”, released by the end of 2009 year by IEMI – Institute of Studies and Industrial Marketing, with data from 2008, the main destinations of Brazilian furniture exports in that year have been: United States (16.5%), Argentina (11.9%), France (9.7%), United Kingdom (7.5%), Angola (7.4%), Chile (4.6%), Spain (4.4%), Germany (3.7%), Netherlands (3.3%) and Venezuela (2.6%), from a total of US$968.219 million exported in 2008. After the worldwide crises, the picture of the largest buyers has been already changed, arriving to the current situation in which Argentina has become the largest furniture external market to Brazil.

FAW: Do you think the recent announcement of tax-cut has led to great surge in the furniture business? How do you think the Government can help to boost up the furniture manufacturers?

Mr. Perotti:The temporary exemption of the IPI (Tax on Industrialized Products), between November 2009 and March 2010, worked as a great impulse to the Brazilian internal market, which had before a reduction in the business movement as a reflection of the worldwide crisis. When the exemption was finished, at March 31, the Government announced the reduction/equalization of the IPI for all the furniture lines and also for the panelboards sector in 5%. These measures certainly contributed to the Brazilian furniture sector, but there are still many taxes charged of the Brazilian furniture industry that interfere in the competitiveness of furniture from Brazil in a global context. To overcome this obstacle, furniture manufacturers have been reinforcing investment in productivity. The project of investing in design as a differential element is also getting stronger for this reason. Some companies, as the furniture manufacturer Saccaro (have been doing this very well.

FAW: What are the possible ways to bring the entire scattered furniture industry of the region under one roof? What are your strategies/ concerns for it?

Mr. Perotti:According to the “Sectorial Report on the Furniture Industry in Brazil”, by IEMI – Institute of Studies and Industrial Marketing, Brazil has around 14.4 thousand furniture companies. The major furniture clusters in Brazil are concentrated in the South, Southeast and Northeast regions, distributed as follows:

South Region

Southeast Region

Northeast Region

 

State of Rio Grande do Sul:

• Local: Bento Gonçalves/Serra Gaúcha

• Local: Lagoa Vermelha

 

State of São Paulo:

• Local: São Paulo city and metropolitan region

• Local: interior of São Paulo state (Mirassol and Votuporanga cities, among others)

 

 

State of Ceará:

• Local: Marco

• Local: Fortaleza and metropolitan region

 

State of Santa Catarina:

• Local: São Bento do Sul/North Upland

• Local: Santa Catarina West region

 

 

State of Minas Gerais:

• Local: Ubá

• Local: Uberlândia

 

State of Sergipe:

• Local: Nossa Senhora da Glória

 

State of Paraná:

Localidade: Arapongas/North of Paraná

 

 

State of Espírito Santo:

• Local: Linhares

 

State of Maranhão:

• Local: Imperatriz

 

 

Each one of these clusters counts on local associations who help to organize themselves sectorial and politically. The work of national articulation is made, specially, by Abimóvel (Brazilian Association of Furniture Industries); with headquarter in Brasília (federal capital) and an office also in São Paulo city. In the market since the 80´s, the Móbile Magazine, published by the company Alternativa Editorial Ltda., has followed the constitution and rising of these clusters and contributed to its political and productive organization and development.

FAW: Brazilfurniture manufacturers are in high hopes with the furniture fairs drawing numerous visitors from across the globe. How do you think the fairs are going to play instrumental in elevating the performance of the entire sector?

Mr. Perotti:Furniture Exhibitions as Movelsul (www.movelsul.com.br), Casa Brasil (www.casabrasil.com.br), Abimad (www.abimad.com.br) and Salão Abimóvel (www.salaoabimovel.com.br), together with the Suppliers Exhibitions to the furniture industry, as ForMóbile (www.feiraformobile.com.br) and Fimma Brasil (www.fimma.com.br) give projection to the Brazilian furniture industry in the international market. They are also reference to buyers from all over the world, especially from Latin America. The high level of professionalism of these exhibitions works as a promising business card to the Brazilian furniture production.

 

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