You are on page 1of 6


The Bangladesh furniture industry is one of the most promising growth sectors. According to a Household Income and Expenditure Survey of 2005, the domestic consumption growth rate is around 20% and export markets are almost entirely untapped. There are approximately 40,000 furniture SMEs all over the country, employing around 180,000 people. Nevertheless, the furniture sector is struggling to reach its full potential due to various factors inhibiting its growth. One of the oldest and most popular clusters of these small furniture shops is in Panthapath. This is where we chose to carry out our exposure visit. We visited 6 such shops that manufacture furniture in their own factories, and interviewed them to attain an understanding of the current scenario of this industry. The industry is mainly dominated by three types of furniture- steel, partex and wooden. Our focus for the survey was solely on wooden furniture sector. Thus, shops we visited specialized mainly on producing wooden furniture. A brief overview of the shops we visited is presented below: Name of Shop Alif Furniture Unite Furniture Samira Furniture Owners Chowdhury Md. Rahi Dulal Chandra Mazumder M.H. Salam Maula Educational Qualifications HSC 2nd Division Bachelor in Commerce(B.Com) HSC Pass Years of Operation 16 14 How they Entered Industry As a Sales Manager As a Family Business Taking over the shop and adding more investment As a partnership Owned several saw-mills, that eventually led entering the industry Has multiple branches; Investment from small business owners Expansion Plans No such plans Have plans to open new branches Can open a new branch based on location No such plans yet Plans in expanding the current branch Open new branches outside Dhaka


Panthapik Furniture City Furniture

Hazi Fazlul Kazi Mohammed Amin

B.Com (Flunked) SSC Pass

10 11

Modern Furniture

Ikhlas Ahmed

HSC 2nd Division


Value Chain for Wooden Furniture Industry

Machinery Machinery Machinery

Seeds Seeds Seeds Forestry


Chemicals Sawmills


Design Furniture Manufacturers Machinery

Logistics, Quality

Adhesives, Paint etc. Importers







Figure: Value Chain for Wooden Furniture Industry

The value chain of wooden furniture industry actually starts from forestry and collection of woods. Shegun is highly demanded wood for furniture. Sawmill owners generally collect shegun woods from Chittagong and Sylhet. The price is also relatively higher compared to other woods. Per cubic feet Shegun wood is priced from 2000 to 6000 depending upon quality. Among the other woods Mahogony is collected from northern districts like Rangpur, Dinajpur, Nilphamari. Karoi, Garjan, Eucalyptus, Kerosine etc. are mainly grown in Jeshore, Magura, Madhupur & Vaoal Garh. Kerosine is the cheapest wood among these. It is priced at 900-1200/- per month. Trees Shegun Mahogany Karoi Garjan Eucalyptus Kerosine Oak Source Khagrachari, Rangamati, Bandarban North Bengal Jeshore, Magura Greater Chittagong Various sources Various sources North Bengal Price (per cubic feet) 2000-6000 1500-2500 300-1200 700-1200 22-30 (per kg) 2000-3000

Table: Raw Materials (wood), their source and price Generally, timber is used in manufacturing outdoor furniture, boat decks and other articles where weather resistance is necessary. It is also used for indoor flooring and as a veneer for indoor furnishings. Of various timber types low and high cost shegun has natural oils that make it suitable for use in exposed locations, where it is durable even when not treated with oil or varnish. Shegun-cut from matured trees grow slowly in natural forests is more durable and harder, while shegun from young trees grown in plantations is more prone to splitting and water damage. However, the demand for imported shegun is still high among the careful buyers. The supply of timber from shegun, especially of chapalish, garjan, gamari and many other varieties from Rangamati, Chittagong, Bandarban and Sylhet forests, has almost stopped for years. Oak and mahogany are also preferred for making cabinets and drawers. The local sources are not capable of meeting the demand. The shortage has been caused by the restrictions imposed on felling young tree resources in Bangladesh for the countrys declining forest resources. This shortfall has been traditionally met by imports from Myanmar and Malaysia. The recent restriction on raw timber export by the Malaysian government has also hit the imports hard, while the cost of the Myanmar shegun is too high for the Bangladeshi buyers. These factors have forced local importers to look to the African and Latin American countries to ensure an improved supply, which they hope will help contain the present price rise. After the collection of various trees, woods are shaped in buyable sizes in sawmills. Sawmills are mainly situated near furniture factories or vice versa. In the Dhaka city, sawmills are generally located in Badda, Sutrapur (Old Town) and Narayanganj.

Furniture factories collect the woods from sawmills and importers. Most of the factories of Dhaka city are situated near the locations of sawmills as mentioned earlier. Furnitures are usually made by hand in these factories except model designs. To design the basic model of furnitures, factories use machines which are also locally made. Some other raw materials that are used in production process are paint, spirit, gala, plywood, foam, cloth, glue, screw nails etc. All are collected from local market except plywood. Factories buy plywood from dealers who import it from China, Taiwan etc. For foam market, Badda is famous and elephant road is famous for clothing market. The finished products are sold to two different parties. Retailers (who have their own factories) Dealers

Most of the factories have their own retail shops at furniture market. At first they sell furnitures to their own retail shops. The other buyer is the dealer. Dealers buy the furniture products from factories and sell them in retail market. In Dhaka city the largest retail market is situated in Panthapath, near Bashundhara City shopping Complex. Also there are small scale furniture producers in almost every area of the city. These producers make and buy furniture products and meet the demand of local people.

Problems and Challenges within the Industry

The immergence of Chinese furniture

The market is now filled with imported Chinese furniture. Although these are not of good quality compared to local furniture, they are superior in design and aesthetics, while being cheaper. This has had a profoundly negative effect on the local industry. Imported materials

Imported materials (steel, partex and Malaysian MDF boards) both in the form of finished goods and raw materials have created a cheap substitute for wooden furniture in the local market. As the wooden furniture continue to be of superior quality, the majority of a market mostly consisting of lower and middle class buyers opts for imported goods

Large producers and economy of scale

Large Scale Local producers such as Otobi, Navana, Hatil have revolutionized the arena by availing better products at lower prices. It is impossible for the small local producers to match the finesse of these mass producers. Brand awareness of people

Due to the overall improvement in communications, the customers are aware of the presence of all the producers in the market. It is natural that people prefers a countrywide producer over a local store limited to a particular region Affinity towards finer finishing in machines

The machine produced products have better finishing and quality compared to the handmade ones. It is needless to say that these issues are critical from the customers perspective in cases of consumer durables Increase in raw materials price

The raw materials price has increased more than fifty percent over the last one year or so. The increase in fuel cost has raised the transportation cost. To make it worst the average cost of labor doubled within the last two years. But the cost of the finished products cannot the raised in these ratios due to lower demands Decrease in general income

Consumers opt for these sorts of products once all the basic requirements are full filled. The cost of food, medicine, housing etc has increased so much that the average households are unable to save any money for buying durables like furniture Variations in quality

Several shops have complained that owing to a few dishonest duelers in the market, the whole industry has been affected adversely. There are no quality control measures from any authorities whatsoever. Because of this the customers are cheated through the sale of low quality products and hence the goodwill of the entire industry is damaged Overall decrease in sale of wooden products

Emergence of Steel and Partex has provided the consumers a hassle free mode of furniture. These substitute products are easy to carry and can be broken down into pieces. Therefore the wooden furniture is losing grounds to the substitutes which are cheaper, better designed and more convenient.

Corruption within the Industry

Extortion has also been reported as an issue by many of our interviewees. Those who have factories in Badda reported serious cases of corruption and extortion. Moreover in some cases the local law enforces are also allegedly involved. There was also market wide practice of corruption when it comes to paying VAT. One owner confessed to paying a fraction of his VAT by using various loopholes. Another owner confessed to a deal with tax officials whereby they pay a fixed amount less than the actual VAT. They also admitted to sometimes selling furniture by lying about the quality/type of wood. A few shops also complained of harassment from traffic polices during transportation, which regularly results in having to pay bribes.

Protection of Small producers

The small producers are creating employment opportunities as well as cheap sources of furniture for the general public. The growth of these SMEs would be helped enormously if there is some sort of incentive from the part of the Government in terms of tax rebate, convenient loans etc Regulate raw material prices

Due to fluctuation in raw material price it is hard for the small shops to offer prices which are acceptable for the target customers. Therefore it would be of great benefit if there are some regulations from the authorities to monitor prices, reduce hoardings etc

Increase taxes for substitute imports

The imported products, according to the shop owners, are a legal form of dumping. These products are cheap because they are prepared from low quality raw materials. If the imports of these products can be discouraged the local manufacturers can be protected and the consumers can be saved from being cheated Improve road transport

The overall transport infrastructure in the country is well below satisfactory level. Because of this raw material price is going up, distribution price is also high and most importantly the market is limited. The whole industry will be affected positively if this scenario is improved.