Analysis of going overseas! What opportunities are there in the overseas furniture market?

         Many people say that the economy is bad and business is difficult, but it is actually different from what you think. The furniture industry is in a development cycle after 2000, and it is in another trough cycle after 2008 and 2018.
         Many people are not afraid of the trough period. Many of them have experienced the previous trough period, sticking to their business and achieving greater development. However, this time they are facing more uncertainties, which is the focus of everyone's confusion.

         The uncertainty of trade policies in the Sino-US confrontation, the constant wars around the world, and the fact that their own economic development currently needs to rely more on consumption, rather than foreign trade, real estate, etc. in developed countries before, because of more uncertainty, more businessmen begin to invest in the short term, or passively respond to lying flat. How can furniture practitioners make good use of this opportunity of reverse thinking?
         To this end, looking at the global economic development, what kind of investment opportunities are there in China, the United States, Mexico and Southeast Asia, let me share my views.

         Speaking of Mexico, it is well known that China has increased its investment in Mexico. There are three direct reasons:
          First, the global shipping "traffic jam" during the epidemic. Under the influence of the Red Sea War, shipping companies have continued to raise prices in the off-season on the US line, and the logistics costs of manufacturing plants have skyrocketed again. They need to build factories nearby to avoid risks;
         Second, the trade friction between China and the United States has escalated. North America is the largest market for many Chinese manufacturing companies. Buyers also expect or even require Chinese companies to build factories in Mexico if they want to maintain cooperation to improve the resilience and efficiency of the supply chain;

        Third, from the perspective of Chinese companies, Mexico is adjacent to the United States, and logistics have certainty of land delivery. Although the cost is not cheap, the delivery time is much faster than sea transportation. At the same time, due to the US-Mexico-Canada Trade Agreement, Mexico's exports to North America are duty-free. This is an important cost factor compared to China's current 25% tariff to the United States, which may be 60% in the future.

       The wave of Chinese companies going overseas has just begun. From 2018 to 2022, the average share of global foreign investment in GDP is 1.39%, while China's is only 0.97%.
       Enterprises cannot influence the general trend of the country and the times, they can only follow the trend and not be eliminated. Chinese factories like Gujia and Shengao have set up factories in Mexico. Although cultural integration is difficult, it cannot stop the jungle law of survival of the fittest. As more Chinese companies set up factories overseas and focus on the North American market, if Trump comes to power next, the tariff policy will be raised to 60%, which will inevitably bring a wave of order dividends to companies setting up factories overseas.

        It will be difficult to localize the large-scale supply of raw materials for furniture in the short term. If it is supplied from China, everyone is also worried that the policy regarding the origin of the raw materials will also be affected. For this reason, overseas factories targeting the North American market are planning to de-sinicize, walking on two legs.

       Previously, China's raw material supply chain followed the pace of finished product factories, investing in factories for steel processing, sponge foaming, fabric production, and plate processing in Southeast Asia. Since 2008, it has gradually matured and stabilized.
        In the past one or two years, the US market has been weak, direct orders have shrunk, and more and more raw material factories have set up factories in Vietnam. However, there will be a big opportunity for the North American market, which is to provide raw material supply for the new market manufacturing market. For this, are you ready for factories in Southeast Asia? Go to these places to expand business opportunities?

        At present, due to the factors of procurement, there will be new manufacturing factories in these places that actively contact me to seek docking with raw material factories, including the hope to help with procurement, inspection, warehouse booking, and advance payment services in these Southeast Asian regions in the future.
        In addition to the development opportunities of raw material production and export targeting new markets, with the import of more materials and finished products, setting up warehouses in Mexico, especially warehouses on the US-Mexico border, to help Chinese companies better improve delivery efficiency is also a rigid growth point needed in this opportunity.

       For this reason, companies that originally operated third-party overseas warehouses in the United States are actively deploying warehouses in Mexico, better linking warehouses in the United States and Mexico, and turning over business in places with the strongest consumption power such as the United States and Canada, reducing the impact of the sharp increase in shipping capacity and costs.
       This is the opportunity I saw after running around many warehouses in the United States and Mexico. These are all relatively low-cost things to deploy during the economic downturn.