a case study of the turkish furniture industry 1 ...

AN OVERVIEW OF WORLDWIDE COMPETITIVENESS: A CASE STUDY OF THE TURKISH FURNITURE INDUSTRY Hamza ÇINAR1*, Nihat DONGEL1, Musa ATAR1 , Hayrettin MERIC2, 1

Gazi University, Technology Faculty, Wood Products Industrial Engineering Department, 06500, Beşevler, Ankara, Turkey 2 Adıyaman University, Technical Science, Material Science and Processing Technology Department, Adıyaman, Turkey Key words Worldwide Furniture Trade, Turkish Furniture Industry, Competitiveness.

Abstract The Turkish furniture industry has become a branch of information and capital weighted manufacture by the accession of medium and large scale enterprises in the 1990s to traditionally operating workshop type, small scale enterprises. Today, the sector has become the production capacity of 10 billion Dollars with the exportation of 2,421 billion to 210 countries and the importation of 0,991 billion from 122 countries. The Turkish furniture industry has no foreign trade deficits with gradually increasing export value since 2001. Being in a quick development and change period, the sector presents a potential in domestic and foreign markets in the direction of factors such as brands, quality, small–large scale enterprises in the sector, geographical position, general growth policy of the Country, young population, improvement of national income per capita etc. This study discusses and gives an overview of worldwide furniture competitiveness with particular reference to the Turkish furniture industry and looks for possibilities for its ranking in the worldwide furniture trade in case of reaching 2023 targets. As a result of the study, the Turkish furniture industry shows a strong possibility for entering among the first 10 top furniture producers in the World and the first 5 in Europe with the expectation of 25 billion dollars production value and 10 billion dollars exportation value in 2023.

Corresponding author: [email protected]. Gazi University, Technology Faculty, Department of Wood Products Industrial Engineering Department, 06500 Besevler, Ankara, Turkey.

1. INTRODUCTION Furniture production is made in the sector in a wide range such as panel furniture, solid furniture, sofa, seating group, modular furniture (kitchen, bathroom, office, and bedroom), garden furniture, furniture sections and parts, vehicle furniture, hospital furniture, hotel furniture, accessories oriented to national and international markets, the usage of imported product/materials is limited. In this aspect, it is amongst the sectors with high added value. Being one of the significant sectors in Turkey with highest employment capacity, furniture industry is distributed in the countrywide to any province and district. Economical and social development in Turkey after 1980s has increased the demand for quality, functional and modern furniture especially in the big Metropolises and such development has accelerated the economy the country.

Çınar et al. (2015). “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”

Proceedings of the 27th International Conference

Research for Furniture Industry

September 2015, Turkey

National income per capita in Turkey was 6.500 dollars in 2005 in current prices and it has become 11.318 dollars in 2013 with an increase of %74. In parallel, the share of furniture sector in the national income has increased in amount and provided the achievement of investments required for the growth of the sector. Furniture is ranked in the fifth line with a share of 5, 9 % within the cost items of household in terms of its share in expenses according to the TUIK research “incomes and living conditions”. Large-scale enterprises in the sector Page | 496 benefit from advanced manufacturing technologies. Activities with the participation of large scale enterprises for research and development, design and branding have become the most important elements of the competition. These indicators are directly related to the development of the sector.

2. RESEARCH AND MEDHODOLOGY This study discusses and gives an overview of worldwide furniture competitiveness with particular reference to the Turkish furniture industry and looks for possibilities for its ranking in the worldwide furniture trade in case of reaching 2023 targets. The data was obtained from ITC, Trademap, Trade statistics for international business development and Turkish Statistics Institute.

3. FINDINGS AND DISCUSSIONS 3.1. Number of enterprise and employment in the Turkish furniture industry The number of enterprises and employment levels in the furniture industry by years follows a bumpy course. The number of enterprises and employment within the furniture sector are given in Table 1. Table 1. Number of Enterprise and Employment Parametres 2006 2007 Number of enterprises 35.854 32.994 Rate to general production % 11.57 10.42 Employees 106.807 106.407 Rate to general employment % 4,51 4.32 Furniture production average Number of enterprises 39.036 4,07 Number of employees 159.246 TUIK 2014

Years 2008 2009 2010 2011 34.438 34.427 31.089 35.883 10.71 10.73 10.36 10.77 115.898 97.105 120.580 140.772 4.57 4.29 4.70 4.95 Country production average 336.862 9,2 3.126.540

2012 39.036 11.59 159.246 5.09

According to Table 1, there are over 39.000 enterprises and almost 160.000 employees. The rate of employees to general employment is about 5,09 % while the rate of enterprises to general production is 11,59 %. The numbers of initiatives have provided a significant increase from 106 thousand to 159 thousand last seven years; industry employment has increased from 35 thousand to 39 thousand. 3.2. Furniture Production and Consumption in Turkey The development of stable growth throughout the Country is an important movement for the industry; also the significant increase in residential and office buildings is thought to trigger Çınar et al. (2015) “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”




the production of significant growth. Turkey furniture production and consumption is given in Table 2. Table 2. Turkey Furniture Production and Consumption (Million TL) NACE CODE 31 Indicators 2006 31 Production 7.322 31 Consumption * 7.064 Consumption rate % 96,4 Last 7 years average % TUIK, Work Statistics, 2013 * Data related to furniture consumption production values.

2007 8.150 7.798 95,6

Years 2009 8.436 7.820 92,6 94.05

2008 9.811 9.217 93,9

Page | 497 2010 10.486 9.810 93,5

2011 14.074 13.357 94,9

2012 15.963 14.612 91.5

was determined by calculating the import and export value through

According to last seven years average, the country consumes 94% of the furniture produced in the Country. Changes of consumer habits, needs and the increase of income level directly affect the consumption which pushes the production. According to the report of MUSIAD, 2013; in recent years, the frequency of the consumers for changing furniture is claimed to increase. This trend is said to be one of the factors affecting the furniture consumption. The frequency of furniture changing of consumer is given in Figure 1.

furniture changing frequency 33,8 35 27,3

percentage

30

23,7

25 20 15

9,4

10

5 0,7

5 0

1-3 Years 3-5 Years 5-7 Years F

5

23,7

33,8

7-10 Years 27,3

10-15 Years 9,4

over 15 years 0,7

Figure 1. Furniture Changing Frequency (MUSIAD 2013)

According to Figure 1, it can be argued that 85% of consumers change their furniture in 3 and 10 years. In spite of being this ratio quite high, consumers’ decision possibly affects production and consumption; however, when considered as the environmental life circle assessment, furniture should have a longer life circle.

Çınar et al. (2015) “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”




3.3. Capacity Utilization in the Turkish Furniture industry Evaluating the production capacity ratios, it is observed that the sector has difficulties to operate in full capacity in last years. The ratios of capacity utilization for furniture production are provided in Table 3. Table 3. Rates of Furniture Production Capacity 2006 71.6 81.0

2007 70.9 - 0.98 80.2

-

0.99

-4.56

Industry Furniture Annual Change General Production Annual Change TCMB 2014.

Page | 498

Capacity rates (%) Years 2008 2009 2010 68.5 66.9 70,4 -3.50 -2.39 4.93 76.7 65.2 72.7 -17.6

10.31

2011 72.6 3.03 75.4

2012 69.8 -4.01 74.2

2013 71.4 2.24 74.6

3.58

-1.61

0.53

Total Average 70,2 75

The sector operates with a production capacity under 70 % in the direction of the last 8 years. This condition is under the production capacity level of competitive countries which Turkey competes. Reasons for the sector not being able to operate in full capacity could be many reasons but raw material, design, marketing, organizational weakness, lack of advertisement, qualified labor force, finance, presence of extremely small and non-conscious actors, problems concerning the employees seem to be important. 3.4. Foreign Trade Balance Table 4. The Foreign Trade Balance of Turkish Furniture Industry Years (1.000 USA Dollars) Factors

1997/2005 2006

2007

2008

2009

2010

2011

2012

2013

2014

Total 2.422 12.134 992 7.592

Export

2.506

798

1.032

1.332

1.153

1.414

1.658

1.898

2.237

Import

1.630

540

680

738

537

738

941

817

968

Trade Balance

1.070

258

352

594

616

676

716

1.081

1.268

1.430

4.542

32

34

45

53

50

47

57

57

59

63

Balance Rate % 43 TUIK, 2015, DTM 2012.

When the last 18 years of Turkey’s foreign trade is analyzed, a sum of 12 billion dollars in export and of 7.5 billion in import were made with the positive trend of 4,5 billion for export.





Furniture Current Deficit

80% 60%

Page | 499

40% 20% 0% -20% -40% -60% -80% -100% -120%

Figure 2. Turkey Furniture Current Account Deficit Trend With an exception of the current deficit between 1997 and 2000, Turkey furniture trade balance is followed by a positive trend since the year 2001. The sector in 2014 has a sum of 1,4 billion dollars net foreign currency and has 4.5 billion dollars over the last 18 years. The Turkish furniture sector has become one of the rare sectors in the trade of country without giving foreign trade deficit in the direction of its last 14 years performance. Excluding 2009, the regular increase in the annual export and import ratios attracts attention and export increase is greater than import increase. However, especially, garden/exterior furniture, which is brought from China and other Far East countries, may cause an increase in import. 3.5. Status of the Sector in Worldwide 3.5.1. World Furniture Production and Consumption World furniture production was about 284 billion and consumption about 273 billion dollar in 2004. After ten years, these values are almost double. The production was 446 billion and the consumption 440 billion dollar in 2013. In the last ten years, a total volume of production of 3.5 trillion and consumption of 3.1 trillion dollar is reached. These numbers indicate the future expectation with an estimated value of 1 trillion in 2030. According to Table 5 and 6, China produces a quarter of the world furniture with 112 billion dollars in volume production and consumes 75 billion dollars in its domestic market. However, China has over 36,7 billion dollar production surplus. The other countries with production surpluses, respectively; Italy (14 billion), Poland (6,6 billion), Vietnam (4,2 billion), Canada (1,4 billion), Germany (1 billion), Brazil (0,6 billion) and Turkey (0,4 billion ) are in the list. The second biggest producer is USA with the volume of 68,5 billion dollar. However, almost every year the State imports furniture over the production.





The values for furniture production and consumption in Table 5, the distribution of production and consumption for countries are given in Table 6. Table 5. Production - consumption Years 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -

Last ten years Billion $ Production Consumption Value Value 284 273 291 297 325 318 340 355 350 386 352 340 341 353 376 403 434 421 446 440 -

-

Table 6.Worldwide distributions Countries China USA Italy Germany Japan France Canada England Poland Brazil Vietnam Turkey* O. developed Countries O. developing Countries Total

2013 Billion $ Production Consumption Value Share Value Share 112,5 25,2 75,8 17,2 68,5 15,3 88,4 20,0 35,0 7,8 21,0 4,7 30,5 6,8 29,5 6,7 14,3 3,2 16,6 3,7 14,1 3,1 16,9 3,8 14,0 3,1 12,6 2,9 13,5 3,0 21,1 4,8 13,0 3,0 6,4 1,5 9,0 2,0 8,4 1,9 8,4 1,8 4,2 0,95 7,2 1,6 6,8 1,3 68,0

15,2

80,0

18,2

Trade Balance 36,7 -19,9 14 1 -2,3 -2,8 1,4 -7,6 6,6 0,6 4,2 0,4 -12

-15,4 38,0 8,5 53,4 12,1 Last 10 3,539 3,146 445,8 100 440,0 100 5,8 Year Source: Csil 2014, TUIK, 2013. *Turkey values are processed according to TUIK 2014, and 1 dollar was exchanged to 2,25 Turkish lira.

The countries, whose production is under consumption, are the USA (- 20 billion dollar) England (-7,6 billion), Japan (-2,3 billion) and France (-2,8 billion), the other developed countries (-12 billion) and other developing countries (-15,4 million). The volume of Turkish furniture production is 7,2 billion dollars and the country takes the approximate rate of 1,6 % of world furniture production levels. For targets of the country for 2023, furniture production is predicted to increase the volume of 25 billion dollars (TOBB 2014). World’s furniture consumption increases every year in parallel to production. Although the major consumers are mostly from the developed countries, the developing countries and undeveloped countries are also effective consumers of furniture. Worldwide furniture production and consumption balance is given in Figure 3.


Page | 500




Production and Consumption Balance Other developing countris Other developed countries Turkey* Vietnam Brazil Poland England Canada France Japan Germany Italy USA China

Page | 501

Consumption Production

0

5

10

15

20

25

30

Figure 3. Worldwide Furniture Production and Consumption Balance 3.5.2. World Furniture Trade In 2009, a total of 227 billion dollar was in Worldwide trade; 115 billion for export and 112 billion dollar for Import. In the following years, positive trend continued and became 326 billion dollar in 2014. The first 25 countries accounted for approximately 90 % of this amount in exportation and 84% in importation. Figure 4 gives five years export and import values.

Worldwide furniture trade 350.000.000 300.000.000 147.783.206 150.845.658

250.000.000 200.000.000

134.037.034 115.649.115

150.000.000 100.000.000 50.000.000

159.954.384

112.204.650

131.922.240

170.524.239 149.127.670 159.713.518

0 2009

2010

2011

2012

2013

Figure 4. World Furniture Export and Import Trend World’s furniture trade realized a meaningful growth until 2009 after 2% decrease in 2001. However, the global crisis experienced in 2009 caused a definite decrease of 20% and stable Çınar et al. (2015) “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”




re-growth is attained following the year 2010. The values on the basis of furniture groups, the ranking of top 25 and the position of Turkey is given below: Worldwide furniture exporters, the position of Turkey are given in Table 7. Table 7. Furniture exporters, balance, increase and share (Product groups for 9401-9404) Years (1.000 $) 2012 2013

Page | 502

2014

Balance (1.000 $) 2013-14

Increase % 2013-14

World Share % 2014

No

Exporters

2011

1

China

45.188.795

56.736.056

60.082.540

60.631.557

549.017

0,9

33,5

2

Germany

14.479.882

12.698.414

13.622.048

14.198.055

576.007

4,2

7,8

3

Italy

11.792.773

10.887.679

11.683.551

12.087.072

403.521

3,5

6,7

4

Poland

9.394.828

8.695.695

9.737.364

11.116.976

1.379.612

14,2

6,1

5

USA

6.986.857

7.799.349

8.153.126

8.726.095

572.969

7,0

4,8

6

Mexico

4.909.452

5.959.697

6.681.857

7.719.086

1.037.229

15,5

4,3

7

Viet Nam

4.264.794

4.946.954

5.513.854

6.542.727

1.028.873

18,7

3,6

8

Canada

3.888.263

3.989.244

3.950.644

4.159.288

208.644

5,3

2,3

9

Czech Rep.

2.811.956

2.617.467

3.102.900

3.636.123

533.223

17,2

2,0

10

France

3.019.958

2.815.501

2.961.023

2.965.059

4.036

0,1

1,6

11 U.Kingdom

2.204.067

2.188.972

2.419.880

2.543.967

124.087

5,1

1,4

12

Denmark

2.271.070

2.298.557

2.396.772

2.322.708

-74.064

-3,1

1,3

13

Malaysia

2.589.447

2.663.808

2.352.736

2.791.500

438.764

8,6

1,5

14

Sweden

2.595.894

2.443.271

2.246.708

2.773.854

527.146

23,5

1,5

Turkey 16 Netherlands

1.658.389 2.229.128

1.899.017 2.239.914

2.237.302 2.224.856

2.421.905 2.522.473

184.603 297.617

8,3 13,4

1,3 1,4

17

Romania

1.841.658

1.774.584

2.193.981

2.417.241

223.260

0,2

1,3

18

Spain

2.023.149

1.824.177

2.169.064

2.293.176

124.112

5,7

1,3

19

Portugal

1.501.806

1.753.855

1.998.193

1.818.269

-179.924

- 9,0

1,0

20

Indonesia

1.767.244

1.809.350

1.787.595

1.826.880

39.285

2,2

1,0

21

Belgium

2.128.581

1.864.401

1.632.855

1.844.602

211.747

13,0

1,0

22

Lithuania

1.231.120

1.413.041

1.571.480

1.806.288

234.808

14,9

1,0

23

Austria Taipei, Chin Hungary

2.203.342

1.800.757

1.531.106

1.661.300

130.194

8,5

0,9

1.459.665

1.541.785

1.511.210

1.739.308

228.098

15,1

1,0

1.328.388

1.246.270

1.475.204

1.484.516

9.312

0,6

0,8

8.812.176

5,7

90,7

131.922.240 149.127.670 159.713.518 180.881.443 21.167.925 World total Source: Trademap 2015.

13,3

100,0

15

24 25

List total

135.770.506 145.907.815 155.237.849 164.050.025

On the basis of product description, the first 25 country among 227 countries have realized 90 % of 180 billion dollars in the market. According to the evaluations of the last years, exportation has tendency to increase in total general total. The first five exporters in the list are China, Germany, Italy, Poland and USA. The exportation of Demark (-3,1) and Protugal (-9) are decreasing countries for exportation in 2014. Çınar et al. (2015) “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”




Turkey is among the growing countries providing 8,3 % increase and 1,3 share in the world furniture market. Turkey’s export is 2,421 billion dollars according to Trademap data and is at 15th position in rank. Although Turkey’s share and location in the general ranking recently increases, it is not at the desired level. About 2,421 billion dollars volume and 1,3% share out of 180 billion dollars export market is low for the Turkish furniture sector. Considering the results in the world’s furniture export such as China factor and decreasing export values of Page | 503 European furniture producers, the production centre can be said to shift eastwards. However, excessive increase in workmanship prices influences the power of at China to establish a competitive price although its decisiveness continues in the last years. Table 8. World furniture import and the position of Turkey (Product groups for 9401-9404) Years (1.000 $) 2012 2013

2014

Balance (1.000 $) 2013-14

Increase % 2013-14

World Share % 2014

No

Importers

2011

1

USA

35.971.951

39.514.951

40.079.580

45.642.398

5.562.818

13,9

26,3

2

Germany

15.761.443

14.906.878

15.327.486

16.934.531

1.607.045

10,5

9,8

3

U. Kingdom

7.553.529

7.528.247

7.911.207

8.958.171

1.046.964

13,2

5,2

4

France

9.061.429

8.562.490

7.997.735

8.419.908

422.173

5,3

4,9

5

Canada

6.349.793

6.856.226

6.808.097

6.977.639

169.542

2,5

4,0

6

Japan

6.338.859

7.016.666

6.926.799

7.008.950

82.151

1,2

4,0

7

Netherlands

3.969.231

3.629.918

3.538.964

4.108.224

569.260

16,1

2,4

8

Switzerland

3.562.060

3.413.813

3.621.424

3.656.746

35.322

1,0

2,1

9

Australia

2.927.065

3.072.973

3.140.760

3.367.077

226.317

7,2

1,9

10

Belgium

3.514.258

3.154.243

3.829.967

3.451.384

-378.583

-9,9

2,0

11

Russian Fed.

2.765.344

3.398.591

3.592.388

3.292.427

-299.961

-8,3

1,9

12

Austria

3.047.637

2.846.929

2.640.656

2.866.242

225.586

8,5

1,7

13

U.Arab Emir

1.742.003

2.271.443

2.739.530

2.636.253

-103.277

-3,8

1,5

14

Spain

3.369.447

2.539.713

2.633.321

3.038.204

404.883

15,4

1,8

15

Italy

2.909.323

2.390.679

2.453.075

2.726.664

273.589

11,2

1,6

16

Mexico

2.039.239

2.404.233

2.771.715

2.884.048

112.333

4,1

1,7

17

China

2.251.831

2.334.421

2.547.163

2.796.026

248.863

9,8

1,6

18

Saudi Arabia

1.617.088

2.232.349

1.710.634

2.473.115

762.481

44,6

1,4

19

Norway

2.046.310

2.159.512

2.130.631

2.232.563

101.932

4,8

1,3

20

Sweden

2.301.779

2.118.720

2.230.207

2.365.598

135.391

6,1

1,4

21

Poland

1.521.368

1.334.179

1.520.232

1.887.490

367.258

24,2

1,1

22

Korea, Rep.

1.608.965

1.587.914

1.736.861

2.052.999

316.138

18,2

1,2

23

Czech Rep.

1.470.792

1.429.765

1.639.929

2.033.194

393.265

24,0

1,2

24

Denmark

1.572.909

1.521.567

1.448.381

1.703.529

255.148

17,6

1,0

25

Hong Kong

863.316

884.044

2.242.746

943.840

-1.298.906

-57,9

0,5

27

Turkey

941.394

817.323

968.656

991.709

23.053

2,4

0,6

List total

127.078.363

129.927.787

134.188.144

145.448.929

11.260.785

8,4

83,9

World total

150.135.064

153.020.087

159.843.064

173.398.927

13.555.863

8,5

100,0

Trademap 2015.





On the basis of product description, the first 25 country among 231 countries have realized 83,9 % of 173 billion dollars in world furniture import. The first five importers in the list are USA, Germany, United Kingdom France, and Canada. These countries realize the half of the world furniture import. The import of Turkey has been increased (2,4 %) in 2014 with the volume of 992 million dollars. The position of Turkey is 27th in the list. Page | 504

3.6. Environmental Analysis Although Turkish furniture sector consists of 1,6 % share of the world’s furniture production with its total production capacity, it is not at the desired level and goal. The sector has exported 2.421 billion dollars furniture to 203 countries by 2014 and is located 15th in the world ranking and 9th in European ranking. It has imported furniture with a value of 992 million dollar from 115 countries and is located 2tth in the world ranking and 17th in European ranking. However, the share of Turkey’s export for furniture is low in the worldwide perspective. The country uses its domestic market more than international markets. A clear example of this could be the trade for neighboring and Arabic countries. Although there are markets of neighborhood with the capacity of 9.7 billion and Arab countries around Turkey, the sum of Turkish furniture export is extremely found low. Particularly, it is seen that Turkey do not benefit from Russia, Saudi Arabia, U.A.E and Austria. Turkey's export to these neighboring and Arabic countries is for 1.5 billion dollar and corresponds to the rate of 11.2% of consumption of these countries. Exportation, in total in 2013 compared to the previous year, though prone to increase their imports of furniture to meet the Arab countries with the average share of 11% of the total imports of these countries is rather low for the target of Turkey’s furniture industry. The most striking countries are Iraq and Libya. Turkey exports half of their importations. The countries with highest capacity of import are Saudi Arabia with 1,8 billion and U.A.E 2,7 billion. However, Turkey shares 4,6% for Saudi Arabia and 1,5% for U.A.E. Consequently, the market size of Arabic countries and Near Neighbors is 18 billion dollars. The country achieves only benefit of 1,5 billion dollars. Turkey should have policies to develop the trade with the Arabic and neighborhood countries to get the targets of 2023. In order that the sector reaches its expectations in the future, improvement of the commercial relations and increase of market share with the neighboring countries, Middle East, Africa and Arab countries and nearest neighbors shall provide positive contribution to the Turkish furniture export. The existing values show that the world’s furniture sector has an increase trend. General perspective of the last 14 years has put forth the growth potential of Turkish furniture sector with its production volume and export volume, but this is not at the desired level. Turkey must solve her problems and increase the production capacity and competitive power to get her share in the world furniture market which is expected to exceed the volume of 1 trillion USD by 2030. There are things which must be done and policies must be produced on this subject both by the sector and the government. Çınar et al. (2015) “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”




3.7. Analysis of Competitiveness of the Sector The brief assessments, developments and competitiveness of Turkey’s furniture industry are given Table 9. Table 9. Competitiveness Indicators for Furniture Production Industry Page | 505 Indicators Raw Material Production

Technology Activities

Marketing – Sales

Financial Structure Human Resources Market and Industry conditions

Decisive competitive factors The existence and quality of the raw material resources, Sub-contracting/Sub-industry Raw material costs, Organized producing regions, Product standards, Product quality, Branding and image, Design Capacity, Environmentally friendly production, Logistics infrastructure, Distribution network, Transportation costs, Promotion and fairs Profitability Credit facilities and costs, Investment and export incentives, The presence of trained and qualified human resources, Labor and employment law and regulations, Import and domestic surveillance, Fair and ethical competition conditions,

Raw Material: The report of Wood and Forest Products Exporter Unions (2011) states that daily 30 thousand m3, annually 15 million m3 industrial woods is needed in the furniture sector. 9 million m3 of this quantity is met from the domestic market and the remaining part via importation. The sector used 11 million m3 industrial woods in 2011 only in the production of panel furniture and it is thought that domestic industrial wood production must be increased to at least 20 million m3 to reach the goals of 2023 by considering the market species and efficiency of the forests. While particle board / chipboard and MDF is produced at Turkey with advanced technology, the problems encountered in the supply of the raw material required for the production influences the production, decreases the capacity ratios and this condition affects the pricing. Industrial wood is cheaper in rates up to 50-60 % in foreign markets than Turkey and this becomes prominent as a factor which continuously weakens competition especially in export. Competitive market conditions are not formed in our country on the subject of raw material and a significant part of forest resources are directly used as fuel wood. In addition, use of wood as fuel due to reasons such as decrease in the quality of industrial wood as a result of wrong wood chopping, dote as a result of wrong storage, decay is an important problem. Sub-contracting/Sub-industry: In furniture industry, sub-industry completely works under the orientation of main industry and isn’t able to be released from serving in the logic of contract producing. This situation does not make long term transformation possible in the sector and the development of the understanding of making value added works. Although a bottle neck is not expected on the subject of input in all sub-industry products (textile, iron, Çınar et al. (2015) “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”




glass, etc.) used in the furniture sector, it seems possible to experience some troubles in the future if measures are not taken in industrial wood raw material. In our country which races against world’s giants on the subject of textile, which is in first ranks in steel production and which leads on the subject of glass, predominant import of semi manufactured products of such main sectors in the production of furniture becomes a contradiction and means that there is a miscommunication between the sectors. Quality accessory materials which are the further Page | 506 needs of the furniture industry are predominantly brought from abroad and domestic subindustry is not effective in this field. Technology Activities: Large-scale enterprises in the sector use advanced manufacturing technologies. Product standards, quality, brands and design considerations gain value every year in the sector. However, studies for eco-friendly production are not yet at the desired level. The technology, research and development, design and branding have become the most important elements for the competition with the involvement of large-scale enterprises in the furniture industry The number of patents, trademark and design registrations are important indicators for high value-added production on the way of becoming an innovative and branding sector. For the sector in 2000, the numbers are 52 for patents, 200 for trademarks and 402 for design registrations. For general production, the numbers are 720 for patents, 10.736 for trademarks and 1.679 for design registrations. It is possible to say that the numbers are significantly low in comparison to the developed countries. However, the number of 2013 shows positive changes for both furniture and general production of Turkey. In the sector, the number of patents has increased to 317, trademarks to 2,663, design registrations to 1.719. These parameters, which tend to increase steadily in the recent years, are expected to have positive impact on the sector’s competitiveness in national and international markets (TOBB 2014). Financial Structure: Capital / finance shortage of the sector and high credit costs are included among important problems. Since the enterprises are forced to provide credits from money markets, especially commercial banks in suitable conditions, they usually finance their activities from their equities. As a result of this, shortage of operating capital is continuously experienced. Marketing – Sales: Fairs prepared by the sector directly affect the market effectiveness, marketing and advertisement. On the other hand, within domestic market, the furniture demand increasing due to population increase at Turkey, shortening of furniture replacement period caused by getting richer, urbanization keeps the domestic market continuously in motion and alive. However, this condition is not valid in the whole sector. The channels which provide to get the experience, behavior and voice of the customer in market knowledge, brand perception of the consumer, furniture replacement frequency, and many other matters cannot be used effectively. This situation is rather important both from the point of the improvement of the sector and from the point of protecting the consumer rights, consumer satisfaction and preventing unfair competition. Human Resources: Looking at the general structure and basic problems of the sector, one of the most important problems shows up that the new generation is not qualified for the needs of time in the field of general education and occupational education and becomes insufficient Çınar et al. (2015) “An overview of worldwide competitiveness: A case study of the Turkish furniture industry”




to develop creative ideas. The inadequacy in education is accompanied by the lack of qualified labor force, employment and experience. This situation adversely influences the improvement of sector and competitive power. The problems in occupational education are evaluated as the schools, employees and managers. Market and Industry conditions: It is possible to talk about a furniture sector in our country Page | 507 which is open to development and which presents potential. Today Turkey is regarded to be able to compete with countries such as Germany, Italy, and Poland which are seen as powerful furniture producers of Europe with its number of enterprises, available human and natural resources. As stated in this study, Turkey is among the top 12 manufacturing countries and the 15th exporter and 28th importer of furniture in the world. The sector is thought to be a strong power both in European furniture market and world market as a result of putting on the agenda the problems handled in the previous section and finding suggestions to them by the related sector organizations and public bodies.

4. CONCLUSIONS The Turkish furniture sector is among the 12 producers with the share of 1,6 % world furniture production, the 15th in the world and 9th in European ranking with the export capacity of 2,422 billion dollar to 203 countries and the 27th in the world and 17th in Europe with import capacity of 926 billion from 115 countries. The sector puts targets to be among the 10 exporters in the World and 5 exporters in Europe with the 10 billion dollar export capacity by the year of 2023. In the light of the data compiled in this study, the sector is an effective industry both national and international markets. The sector is able to get the targets of 2023 and can have better positions in the international furniture market by increasing the existing potential and effectiveness of promotional activities and should understand the importance of the strategic position of one to one relationship and continuity. In conclusion, the sector, which keeps its goals extremely high for 2023, has to increase its production capacity and market shares besides protecting its present status. The sector must reinforce its production network in the direction of the expectations of 21st century with the extents of new formations, smart furniture, electro-furniture, environment friendly furniture, human and environment awareness.

Acknowledgements This work is a portion of the Sector Report of the Turkish Furniture Products Assembly, the

Union of Chambers and Commodity Exchanges of Turkey (UCCET / TOBB) and prepared by Hamza ÇINAR. We would like to record our sincere thanks to TOBB.





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