Analytical: Living status of furniture leather materials

In recent years, the furniture industry has faced numerous challenges, and material innovation has emerged as a potential solution. However, it is not a one-size-fits-all approach. In 2011, government regulations on real estate had a direct impact on the furniture sector, which in turn affected the demand for furniture materials. Amid these changes, how are leather businesses responding? What is the current state of the furniture leather market? And what do small and medium-sized leather companies think about the topic of "material innovation"? The real estate control policies have significantly influenced the furniture industry, with many leather companies feeling the pressure. Additionally, traditional Chinese beliefs, such as the idea of "widow years," along with the industry’s "three-year fire once" pattern, and the appreciation of the yuan, all contributed to market fluctuations in 2010. Some believe that furniture depreciation and second-hand purchases follow a three-year cycle, meaning that after a strong year, the next two may be weaker. This cycle seems to be playing out, with some viewing it as normal. Given the continued high-pressure stance of real estate policies, the transaction volume in the second half of the year remained weak. Looking at the source of leather materials, the domestic market was heavily impacted by real estate regulation in 2010. I've spoken with various industry players, including leather, metal, sponge, and fabric suppliers. Half of them were optimistic about the market, while the other half were more cautious. Those who remained positive believed that the suppressed real estate demand in the first half of the year would eventually lead to a rebound in the second half. According to traditional Chinese customs—“after the New Year, move into a new house”—the real estate market was expected to improve, which would also boost the furniture sector. Even if 2010 was slightly weaker than 2009, it was seen as a return to normalcy after an unusually hot year. Yaxin Leather reported that the market for second-grade leather would likely improve in 2010. With the supply of top-grade hides becoming increasingly scarce, prices were expected to rise. Meanwhile, the demand for head hides in the furniture industry continued to decline. Over the past two years, the leather used for luggage and shoes saw a rising demand, and these sectors had a competitive edge due to higher profit margins. For example, shoe leather could generate a profit of one to two yuan per unit, while furniture leather only brought in six to eight cents. As a result, many suppliers preferred to focus on shoe leather. This shift created opportunities for the development of second-grade leather. On the international front, the appreciation of the yuan was seen as a major challenge. Many feared that this could lead to business closures, making some skeptical about the foreign market outlook. The domestic leather industry is largely composed of small and medium-sized enterprises, which makes it difficult to invest in material innovation and industrial upgrades. However, many of these SMEs have recognized the importance of innovation and have already begun exploring new materials. They are developing their own strategies and ideas to stay competitive in a changing market.

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