It's important to note that due to the relatively lower consumption levels and purchasing power in third- and fourth-tier markets, first-tier brands—used to dominating first- and second-tier cities—often hesitate. Some companies even believe that entering these regions might lower their brand image, making it seem more affordable or low-end. Therefore, developing and launching products tailored to the needs of these markets is crucial for long-term success.
In Beijing, well-known international brands such as American Standard, Baxi, and others have come together in a villa complex, offering luxury home décor and furniture. This alliance has formed a cooperative marketing model, targeting high-end real estate projects, villas, and premium apartments by collectively packaging and promoting their products. Through this collaboration, they’ve established strong relationships with top real estate developers and interior designers, organizing on-site promotions and leveraging online sales channels to secure more project opportunities.
Beyond this "warmth" approach, market segmentation and gradual entry have helped furniture companies navigate through economic challenges. The children’s furniture market, in particular, has emerged as a promising sector. With China's growing middle class and increasing focus on children's well-being, parents are investing more in quality furniture for their kids' rooms. Brands like Qumei, Yifeng, and Totem Baojia have started to tap into this trend, launching child-friendly designs that rival specialized brands.
With over 300 million children under 16 in China, the potential for growth in the children’s furniture market is immense. According to Zhu Changling from the China Furniture Association, this segment has grown significantly since the late 1990s, now accounting for about 10% of the total furniture market. Unlike traditional furniture, children’s furniture is not directly affected by the real estate market but grows alongside population trends. Its target audience spans from infants to teenagers, with purchasing power coming mainly from parents aged 35–45.
Despite its promise, the industry still faces challenges such as a lack of standards, high production costs, and inconsistent management. There is currently no dedicated research institution, and regulations are still being developed. Production requires higher safety and environmental standards, as well as thoughtful design that accommodates children's developmental needs.
Custom furniture is also gaining popularity, especially among younger consumers who value personalization and efficiency. While initially popular among the working class, it has now reached white-collar professionals. Companies like Hao Laike and Dinggu have entered the custom furniture space, offering tailored solutions that better fit individual living spaces and preferences.
Currently, custom furniture makes up about 10% of the market, but its potential is vast. As more people seek unique, functional furniture, the demand for customization will only grow. European brands like Sophia and others have also expanded into this space, offering a wider range of customized options.
The third- and fourth-tier markets, though less developed, represent a significant opportunity. With over 150 million households in these regions, and rising incomes, the market potential could reach 1.5 trillion yuan. Many furniture companies are now shifting their focus to these areas, seeing them as key growth drivers.
However, logistics and after-sales services remain challenging due to the dispersed nature of these markets. Companies need to carefully analyze local data and ensure product quality to reduce costs and increase profitability. Effective sales strategies, including regional branding and training for sales staff, are essential for success in these areas.
For more information, visit the official website of Xianghe Furniture City.
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