Italian Design Furniture across Borders: an Analysis of the Chinese Market.

Abstract

China’s economy has been growing at a fast pace for the last twenty-five years, the reform and opening-up policy started in the late ‘80s has made it possible for foreign companies to enter this big and potentially very profitable market. However, given the geographic, cultural, administrative and economic distance, Western companies who wish to enter this market have to devise a country-specific business strategy. Italian Small and Medium Enterprises (SMEs), mainly belonging to the worldwide renown “made in Italy” industries (food and beverage, fashion, automation and machinery, furniture) have more or less successfully tried to enter this market. The Chinese furniture industry represents an interesting case study as it is fast developing and it reached an overall value of USD 84 billion in 2011, with a 37,7% increase compared to 2010. In 2005, China surpassed Italy as the first exporter of furniture in the world. And, although Italian furniture is widely acknowledged for its high quality and high-end design all over the world, import from Italy accounts for 7.9% of China’s total import, whereas import from another European country like Germany accounts for more than the double (2011 Italian Trade Agency data). Why is it so? What problems Italian companies face when entering the market? How can they be more competitive? The answers to these questions are very complex and there are, in fact, not many studies on SMEs operating in the Chinese market as the international management literature comes mainly from English-speaking countries whose firms’ business model differs greatly from the Italian one. Therefore, this study aims at understanding the complexities and the development potentialities of the Chinese market for Italian companies. It, specifically, focuses on the competitiveness of companies specialized in design furniture, they represent the best of the “Italian way of living” in the world , and they target the wealthy upper middle class consumers who are increasing in number and acquiring a more refined taste for home furnishing. The consumers’ lack of understanding of the market paired with the companies’ lack of resources to invest in branding and marketing are the two main obstacles to the business growth of Italian companies in the industry. What is needed is a common effort to build an Italian “country of origin” awareness as strong as the one built in the fashion industry, which has proven successful for many companies. The work is structured in an market and consumer level analysis, followed by an in-depth study of the distribution and marketing strategies of a number of Italian SMEs, after which the conclusions of the study are presented. The research has been conducted in Italy and in China through face to face interviews with managers, designers and industry experts, collection of data from companies and institutions, consumers surveys and was possible thanks to the scholarship award of Venice International University.