Банкеръ Weekly

Briefs

BULGARIAN FURNITURE MOST DEMANDED

The furniture market in Bulgaria is one of the most dynamically developing over the last few years, mostly due to the increased output of lumber and the higher demand for furniture on the part of leisure industry companies. Equipment and furbishing of most of the new hotels and entertainment establishments in the Bulgarian winter and seaside resorts has been entrusted to domestic producers. Usually small and medium-sized companies are contracted for 10-12 months to implement large-scale orders. Almost all raw materials for the production are Bulgarian, and the share of imported inputs is between 16% and 19%, claims Kalin Simeonov, Chairman of the Chamber of Wood-processing and Furniture Industry. A research of the Chamber shows that 35,500 people are employed in the branch. Some 7,500 furniture companies were registered in the country till 2002, and a little more than half of them are operating. Most of them (45.7%) employ between 11 and 50 people and were established within the 1989-1995 period. Nevertheless, only 40% of the sectors' potential is utilized at present. According to a poll carried out by Alfa Research among 280 business clients and 1,100 private consumers, the furniture of each second Bulgarian household is over 16 years old. Almost 56% of the polled point out the high price of furniture as the main hindrance to its more frequent replacement. Otherwise, 87% prefer Bulgarian products to imported ones due to the lower prices, the good quality and the materials. More affluent clients value the aesthetic of furniture, while those more modest financial resources look for functionality. Since mid-2003, however, there has been increased demand for sets of furniture of different rooms at home. The same trends can be noticed in the sector of office furniture. Companies replace parts of their furniture and seldom order entirely new refurbishing. Companies in the hotel and restaurant business spend most lavishly on new furniture: 59.2% of them spend about BGN1,000 annually and 38% set aside between BGN1,000-5,000 for the purpose. The conclusion of Alfa Research is that the image of Bulgarian furniture is quite high in Bulgaria. It is interesting to note that individual orders have increased recently at the expense of ready-made furniture. More and more clients prefer to have furniture, produced especially for the particular home or office instead of buying and fixing standard configuarations in the premises. The export of Bulgarian furniture is also constantly increasing. According to data of the Bulgarian Industrial Association, the sector accounts for 2% of the GDP, and the export of ready products represents 2% of Bulgaria's total export. The EU is the biggest trade partner of the branch, where 60% of the output goes. The largest number of tables and chairs go to the USA and Great Britain, while wooden elements are most demanded in Italy, the neighbour Balkan countries and the Middle East. The EU market offers the best opportunities for Bulgarian furniture exporters. But in order to gain firm hold on it, domestic entrepreneurs should overcome the competition of 40 leading producers whose market share in the EU is 42.3% and their deliveries in 2002 alone amounted to EUR12BN. The major rival of Bulgarian small and medium-sized enterprises are furniture manufacturers from Poland, China, the Czech Republic, the USA and Romania. The outlook for 2004 is optimistic. Most experts forecast an increase of sales on the domestic market and increase of exports, mainly to the EU. A drop in the volume of exports to the USA is possible if the US dollar's depreciation continues. Bulgarian furniture stands real chances of returning onto some traditional markets as the Russian and that in Central Europe. The export of office furniture has a great portential. Sales will also increase thanks to new production capacities, due to be commissioned by mid-2004. No drastic change is expected ragarding prices. Bulgarian furniture will remain 20%-60% cheaper than the imported.

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