Setting The International Stage for Singapore Furniture

In recent times, the emergence of the new middle-class in Asia – with their strong consumer purchasing power – has spurred greater demand for well-designed and well-made furniture. Here, we look at how the furniture sector in Singapore has successfully made inroads into overseas markets, while restructuring itself to be more productive and competitive than before. 



Growing Asian Affluence Spurring Demand

While the global economy has witnessed greater turbulence in 2015, the Asia region is still seeing robust economic growth rates. In October 2015, the Asian Development Bank (ADB) reported that economic growth for the whole Asia region this year would be 5.8 per cent, still a relatively strong pace.  
 
With Asia’s economic outlook remaining largely positive, it is expected that middle class incomes will continue to grow along with their purchasing power. This rising tide of affluence will also spur greater demand for quality furniture, as consumers look to elevate their quality of living. In fact, the Asian middle class is expected to account for an estimated 80 per cent of the growth in global spending from 2014 to 2030. 

Singapore Furniture Staying Ahead, Looking Abroad 

Despite Singapore’s emergence to become a First World economy in recent times, the fact remains that its domestic market is still a relatively small one. This has prompted Singapore furniture companies early on to look towards international and regional markets for business growth. Efforts to internationalise and grow have been successful so far, with the industry punching significantly above its weight. 
 
According to data provided by industry grouping Singapore Furniture Industries Council (SFIC), the Republic has a total of 1,921 companies engaged in the furniture business with 19,700 personnel within the workforce. Singapore furniture companies also trade with over 80 countries worldwide and have a presence in more than 19 countries, including top markets like the United States of America (US), China and Europe. In terms of international profile, local firms have also been exhibiting at top international furniture fairs in Italy, Germany and China. In 2014, Singapore’s furniture sector saw overall revenue rise by 2.8 per cent from 2013 to reach an estimated $6.24 billion.

Making Better Furniture by Design 

For Singapore furniture companies expanding overseas, quality design is an important means by which to differentiate themselves. In his opening speech at the 2014 International Furniture Fair Singapore, Minister for Trade & Industry Lim Hng Khiang echoed this sentiment, noting that furniture firms can gain competitive advantage in the long term when they incorporate design thinking in their strategies.
 
To that end, the lead industry association SFIC has also identified design thinking as one of the key thrusts to help furniture firms improve, integrate and innovate. The Singapore government also provides much support in this area, through assistance programmes such as the DesignSingapore Council’s Design Innovation Assistance (DIA). The scheme supports enterprises in using design as a strategic differentiator and enabler for innovation, productivity and business growth.
 
In July 2015, then Senior Minister of State for National Development Lee Yi Shyan, spoke at the major launch of a leading local furniture retail, pointing out that leveraging design thinking in furniture can extend to its styling, use of quality materials, functional utility, user experience and even incorporating infocomm technology (through the emergent Internet of Things trend). In many ways, Singapore furniture companies are at the forefront in terms of incorporating design to make their products more marketable. 

Bringing Singapore Furniture to Overseas Lands 

In order to expand their business and achieve greater economies of scale, it has been imperative for furniture companies to venture beyond Singapore’s domestic market and target international markets. To date, many Singapore furniture firms have achieved relative success in this area, setting up stores in Asia and beyond. 
 
This internationalisation has been strongly supported by IE Singapore, the lead Government agencies for the external economy. One area has been its funding support of trade shows and business missions, as well as helping to facilitate the establishment of trade contacts in important markets such as Germany, China and the USA.
 
International Enterprise (IE) Singapore is also supporting companies with internationalisation plans by helping them develop new capabilities under the Global Company Partnership (GCP). Under this programme, firms expanding overseas can receive up to 70 per cent funding to defray the costs of external consultants providing support in internationalisation, branding, design, intellectual property (IP) management, franchising and licensing, and more.

Enhancing Productivity and Overcoming Resource Limitations 

With Singapore in the midst of an economic restructuring, the furniture industry has also been actively pursuing new ways to enhance its own productivity and reduce reliance on manpower. In general, companies in Singapore can count on a number of government assistance plans to help them grow their productivity. 
 
One of these is the Productivity and Innovation Credit (PIC) Scheme, which provides either a cash payout or tax rebate on investments in technologies and equipment that can help increase productivity. Another is the Capability Development Grant (CDG), which helps companies defray the costs of investment in consultancy, training, certification and equipment to acquire capabilities across 10 different areas, including branding and marketing, and intellectual property (IP) protection. 
 
To overcome space and manpower limitations in Singapore, many Singapore furniture companies have also set up manufacturing plants and sales offices in overseas countries. According to the SFIC, Malaysia, Indonesia and China remain the most favoured locations for furniture companies to set up operations abroad. In fact, these three countries account for almost half of all manufacturing facilities.
 
One notable measure that has been taken by industry grouping SFIC is helping its members benchmark their productivity against their peers. In its Singapore Furniture Outlook 2014, the association outlined the average revenue and value add per worker for furniture manufacturers, furniture contract manufacturers and furniture retailers, thereby providing  members with a reference point to compare themselves against international counterparts.

Raising the Next Generation of Talent for Singapore Furniture   

The Singapore government and furniture sector has looked to ensure that the industry continues to flourish by cultivating the next generation of talent too. In that respect, the SFIC continues to play a key role in its partnership with the Singapore Labour movement and Singapore Workforce Development Agency (WDA) to launch the Creative Craftsman Apprenticeship Programme in Feb 2014. The programme matches potential craftsmen with participating employers, and they can look forward to improving their technical skills with on-the-job training and mentorship sessions from their new employers.
 
A sum of S$3.5 million has been set aside to place and train about 180 Singaporeans through the structured apprenticeship programme lasting six months. Some 25 companies are said to have signed up for the programme. In conjunction with the programme, the industry has introduced a voluntary Progressive Wage Model, which aims to help employers redesign jobs from carpenters to creative craftsmen. 
 
Another talent development initiative by the three parties is a Professional Conversion Programme called Project Creation, which aims to build a pipeline of skilled designers for the furniture industry. The SFIC Institute targets to train and certify 1,700 workers through 16 new courses under this programme by 2016. With this pool of furniture design talent, the programme looks to sustain the growth and development of the furniture sector. Through it all, underscoring both these programmes is the newly-announced SkillsFuture movement, a long-term government initiative to put in place pathways for Singaporeans to deepen their skills mastery.

Building on a Strong Foundation, Crafting a Better Future 

Despite its considerable achievements, the Singapore furniture industry continues to push for further growth and development, especially in the areas of design, internationalisation, productivity and talent and manpower development. This refusal to rest on its laurels is characteristic of the Singapore business mentality, as it looks to build on its current success, while shaping future platforms for growth in a farsighted manner. Looking ahead, the outlook for the industry is positive, with the potential to ride on Asia’s consumer growth to greater heights.  

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