ASEAN & China’s Upgraded Strategic Partnership: Positive Impact on Furniture Business

At the special summit commemorating the 30th anniversary of ASEAN-China dialogue held on 22nd November 2021, ASEAN & China have officially announced the upgrade of relations to tap into more high-quality cooperation potential - including technology transfers and enhanced trade ties [1a] [1b]

Member states of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and China established dialogue relations in 1991 [2] and have continued to strengthen our partnership. As we shift into post Covid19’s endemic new normal, it is indeed timely for ASEAN and China to upgrade our strategic comprehensive partnership.

Positive Impact on furniture business

The above is expected to bring about enhancements to the existing ASEAN-China Free Trade Agreement, as well as the ASEAN-China Air Transport Agreement to support civil aviation and tourism.

Alongside the Regional Comprehensive Economic Partnership (RCEP) agreement that will come in force on 1st January 2022, which ASEAN is a party to and under China’s Schedule of Tariff?Commitments,?China?will ultimately cut tariffs to zero on 90.5% of ASEAN products. [3]

This means companies that import furniture from furniture manufacturing powerhouses China and Vietnam, can expect to have lower prices of furniture, because combining productions in different countries and moving productions should become easier and safer.

Collectively furniture brands are expected to benefit from this development, as it will be easier and cheaper to move productions around ASEAN/China countries. This would also mean it will also be easier to distribute furniture to their shops intra ASEAN/ China countries. We must not forget the enormous market China and ASEAN offers, being the world second [4] and fifth largest economies [5]. ?

HHC Smart Furniture Original Design Manufacturing Capacities within ASEAN

In the past 10 years, HHC Group Corp (301061.SZ) has transitioned to smart furniture ODM (Original Design Manufacturing), who through automated technology and operational sophistication are better equipped to undertake lean design conceptualization besides the typical product assembly and production seen in the traditional manufacturing processes.

Not only big furniture brands, but also small furniture brands can benefit from ASEAN-China free trade. This is because design and?research and development (R&D) are taken over and massively invested by HHC Group Corp ourselves. This is in large part possible, due to China’s massive advancement in economics, education level, production quality & R&D standards.

With enhanced operational capabilities, HHC Group Corp is now able to create industrial outputs from scratch based on our own design and sell them to furniture brands which would brand them off as their own prior to the retail sale.?This is also known as white labeling as these are typically smaller orders. Still, it is more cost-effective because we can sell to more B2B clients since it’s not exclusive.

This means our clients can make use of ready-made generic designed products at reduced costs, which are nevertheless available for further customization based on their specifications and branded with their own company logos.?Concurrently, HHC Group Corp also offers private labeling services, selling finished products that are produced and sold?exclusively?to a particular furniture brand. Both white label and private label?allow our clients to benefit from much lower costs in bringing a product to market, letting our clients focus on other core parts of their business.

Surfing the ASEAN-China wave together with HHC

ASEAN’s longer-term growth will be driven by its sound fundamentals, including its rising middle class, defined by daily expenditure of US$10 to US$100. Sixty-five per cent of the region’s population is expected to be middle class by 2030, with 60 per cent under 35 years of age. In fact, one of the region’s rising stars, Vietnam, took just 10 years from 2010. [6]

On the other hand, China’s global middle class has grown rapidly and has been catching up with that in developed countries. By 2018 China’s global middle class constituted 25 percent of China’s population; in absolute size it was nearly double the size of the global middle class in the US and similar in size to that in Europe. [7]

Each strategic partnership is a step forward and means opportunity for increasing furniture brands. ASEAN-China strategic partnership is one of them. Many furniture brands will profit and many will as usual sit beside and watch it happen. ?

What is your furniture brand waiting for? Ride the ASEAN-China wave with HHC Group Corp today. Contact [email protected] for a preliminary discussion.

References:

[1a] Timely for ASEAN, China to work on reopening borders to one another: PM Lee ?https://www.straitstimes.com/singapore/politics/timely-for-asean-china-to-work-on-reopening-borders-to-one-another-pm-lee [Accessed 22nd November 2021]

[1b] China to prioritise Southeast Asia with upgraded relations, development aid https://www.scmp.com/news/china/diplomacy/article/3156941/china-prioritise-southeast-asia-upgraded-relations-development [Accessed 23rd November 2021]

[2] China, ASEAN expected to upgrade ties to comprehensive strategic partnership at special summit, as US provocation fails in region https://www.globaltimes.cn/page/202111/1239414.shtml ?[Accessed 22nd November 2021]

[3] China Briefing, Trading opportunities available under the RCEP https://www.china-briefing.com/news/rcep-trading-opportunities-available-plurilateral-fta-beneficial-provisions [Accessed 22nd November 2021]

[4] China is 2nd largest economy in the world https://www.scmp.com/economy/china-economy/article/3128562/china-economy-2021-latest-economic-data-about-worlds-second?[Accessed 22nd November 2021]

[5] ASEAN is 5th largest economy in the world https://www.business.hsbc.com/asean/the-economist-group/asean-country-snapshots%20 [Accessed 22nd November 2021]

[6] ASEAN’s rising middle class offers long-term potential https://www.uobgroup.com/asean-insights/markets/aseans-rising-middle-class.page?path=data/ai/29&cr=segment?[Accessed 22nd November 2021]

[7] The Rise of China’s Global Middle Class in International Perspective https://ftp.iza.org/dp14531.pdf ?[Accessed 22nd November 2021]?