2014-03-14

We export because we expand at a greater pace than our market

According to Egidijus Valentinavičius, the “SBA” concern vice-president of Strategic Development, the Lithuanian furniture industry is growing in double-digit rates, thus surpassing the rising rates of the country’s market itself.

The total export of furniture and furniture parts during the fourth quarter of 2013 amounted to LTL 1.1 billion, i.e., one tenth more when compared to the same quarter of the previous year. Since 2007, the furniture export increased by impressive 84%. These figures show that Lithuanian manufacturers are successfully making inroads into the foreign markets where they are able to compete in. However, these manufacturers demonstrate a noticeable gradual retreat from the local Lithuanian market. Why do they establish their brands and image in foreign markets while turning their back on a Lithuanian consumer? Mr Valentinavičius shares his contemplations on the topic with the readers of 15min.lt:

There is a noticeable tendency that the biggest Lithuanian furniture manufacturers are establishing their trademarks and image mainly in foreign markets. How does it come that our major manufacturers are rather export-oriented?

We have a few large Lithuanian companies in the furniture industry, some of them have been established as far back as in the 19th century. This determines the branch experience, qualified specialists, developed infrastructure, and sizeable industrial capacity of our country. By consistent investments to the production modernisation we managed to reach a level where the quality of the furniture manufactured in Lithuania is able to rival the production of the European furniture industry giants. This is also illustrated by Lithuania, such a small country, being in the 5th position of the “IKEA” largest manufacturers list – right after China, Poland, Italy and Sweden.

Do Lithuanian manufacturers have equal conditions in the Lithuanian market to compete with the imported production? Maybe they lack some stimulus?

Indeed, we don’t receive any significant incentives for the promotion of a local production. A timber sale system is currently the major matter for us, the furniture manufacturers. In the neighbouring countries, for instance, Latvia, Poland, and Estonia, the local wood processors are the first to be provided with timber from state forests. There are no primary auctions for local manufacturers in Lithuania, therefore timber that could be used for generating products with a higher added value within the country, go up in smoke somewhere in China. For our furniture manufacturers this results in a higher component price and handicaps their competition with other companies of the region.

Is it possible to sell timber in foreign markets at a higher price than in the Lithuanian market?

Lithuania is not a country of cheap labour force anymore – the level of wages is rapidly increasing in the country. However, we cannot compete on expenses only – we constantly invest in modern technologies, the effectiveness of production, and progressive management decisions. Within the last two years we have invested about LTL 100 million into the furniture group’s development projects alone. A greater part of investments is assigned to the new technologies and manufacturing solutions. For example, an innovative “wrapped” carcass furniture technology was installed in “Germanika” factory. The technology has been introduced a few years ago and is currently being applied only by some European furniture factories. Such furniture looks aesthetically pleasing and is more resistant to humidity, therefore it is so inviting to the European customers.

Do you think that furniture made by the Lithuanian manufacturers is preferred in the foreign markets than in Lithuania? Or maybe our consumers buy foreign markets’ production more willingly than the local production?

The Lithuanian market is dominated by the cheap production. In addition, the Lithuanians rarely replace their furniture – mainly only when the old one is no longer usable. However, in Western Europe and Scandinavia consumers pay more attention to the design and functionality when choosing furniture. Admittedly, such types of furniture are more expensive, but frequently serve longer, furthermore, they are exceptional, not the same as the neighbour’s. For example, the “SBA” trademark “Parra” is especially appreciated in foreign market due to its natural and ecological qualities – natural materials of high quality are used for the manufacture of this particular type of furniture. The decision to purchase is also determined by the design and functionality. The designs of “Parra” soft furniture are created by a famous Italian designer Stefano Bonavite, who earned the 1st place in Cologne Design Awards and created design concepts for such companies as “Fendi”. By merging our long experience, good design, ergonomics, and by investing into quality we can compete with the famous Italian or German trademarks abroad. For instance, each year we participate at the biggest furniture exhibition in the world – “iSaloni”, held in Milan. At the last year’s exhibition the “Parra” exposition was installed beside the famous Italian furniture manufacturer expositions – it proves that we don’t submit to the acknowledged foreign companies where furniture solutions are concerned.

Return to news archive