Furniture. Sample p e only. Essential sourcing intelligence. Philippines supplier profiles. Product gallery. Industry trends

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1 BUY NOW Furniture Essential sourcing intelligence December 2013 US$150 Philippines supplier profiles Detailed profiles of 20 suppliers with verified manufacturing and export credentials Product gallery Specifications and full-color lor images of 163 top-selling export products ranging from beds to beach chairs Industry trends Coverage of current issues, plus insights into supply centers, products and pricing Pampanga MANILA Bulacan Cavite Negros Occidental Cebu Sample p e only Global Sources is offering this series of Developing Country Sourcing Reports as part of its corporate social responsibility undertakings in partnership with the Hinrich Foundation, a philanthropic development organization whose mission is promoting sustainable global trade. The aim is to give international buyers new sourcing opportunities from experienced exporters, generating orders and creating lasting jobs in developing economies.

2 Executive Summary Supplier capability in the Philippines FURNITURE The furniture industry in the Philippines anticipates favorable prospects in the coming year as the recovery of the US economy results in burgeoning demand. In addition to this key destination, growing revenue from alternative markets such as the Middle East and South America is a major factor driving the sector. The industry emphasizes the midrange and upscale segments to sustain development and avoid intense competition in the low end with neighboring sourcing centers, particularly China. Because of the popularity of such models in emerging markets, many manufacturers are able to maintain their profit margins. A number of advantages benefit the sector. The most important of these is the steady availability of plant-based inputs such as bamboo and Manila hemp. Strong OEM capability is another strength possessed by the industry. mp Objective, e, methodology & scope This Philippines Sourcing Report is part of a series designed d to provide buyers with information on new products from export manufacturers in supply markets that specialize izeinhin handmade merchandise. The Developing Country Sourcing Report series is part of Global Sources corporate social responsibility initiatives. It is offered in conjunction with the Hinrich Foundation, whose mission is promoting sustainable global trade. One of its objectives is to help create jobs in developing Asia through export promotion. To produce this report, large, midsize and emerging manufacturers, all with substantial export experience, were surveyed. The selection of suppliers is designed to reflect the composition of the industry in the Philippines in terms of geographic location, materials used and range of products offered. Key findings 1. A crucial challenge facing the industry is the government s adoption of stringent policies on the sourcing of locally harvested wood. Several enterprises are compelled to import lumber because of this directive, pushing up raw material costs by as much as 20 percent. The lack of a certification system that complies with EU requirements also presents a considerable difficulty to makers with clients in the bloc. 2. Due to obstacles in timber procurement, product design focuses on the utilization tion of natural materials such as bamboo, rattan and Manila hemp. Releases also feature elements that enhance visual appeal, including complex carvings and woven patterns. 3. Overseas revenue in the coming year is expected to generally climb, For in-depth profiles, our researchers visited the facilities of each company and interviewed senior executives who discussed their recent performance and provided forecasts for the next 12 months. All other makers in this report were either visited or contacted by phone. In each case, companies were required to answer specific questions designed to verify their manufacturing and export credentials, including a breakdown of exports by product type and market. Suppliers also participated in a survey designed to provide insight into the industry. This report covers different types of furniture available in the Philippines, including living room, dining and kitchen, bedroom, bar and bistro, and outdoor pieces. Each product category has its own price guide that describes features of the low end, midrange and high end. with more than two-thirds of featured companies projecting an improvement in shipments. Most will continue to concentrate on the US or the EU, although a growing number are expanding their reach in alternative markets. 4. The majority of manufacturers urers featured in this report expect to keep prices stable over the next six months to maintain competitiveness and dretain buyers. A considerable minority will raise quotes to counter escalating production expenses. The rate of increase is generally seen to be within 10 percent. 5. Metro Manila and the provinces of Cebu and Pampanga are the key supply hubs in the country. Makers in these areas specialize in pieces made of plant-based inputs and metal and marble. In this report 18 in-depth company profiles 163 top-selling export products Supplier demographics Supplier survey Industry statistics and charts The Industry Overview section discusses key issues affecting export manufacturers. It provides insight on the composition of the industry and elaborates on the important supply centers within the Philippines. The Products & Prices section details the features and price ranges of furniture. It also examines the design and manufacturing processes, main materials used, and sourcing centers where components are procured. 3

3 Contents CONTENTS EXECUTIVE SUMMARY 3 Key findings Objective, methodology & scope INDUSTRY OVERVIEW 11 Exports Products & prices 13 Production & export statistics Typical parts & components Price guides Supplier survey 20 Export prices Export sales Export markets Major challenges R&D focus SUPPLIER PROFILES 23 Supplier matrix: Comparison p of supplier location, sales revenue & export capability Profiles of 18 verified suppliers PRODUCT GALLERY 67 Living ing room furniture Dining ng & kitchen furniture Bedroom furniture Bar & bistro furniture Outdoor furniture mple page only DETAILS 97 SamCONTACT Copyright 2013 Trade Media Limited. All rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Trade Media Holdings Limited and Trade Media Limited is prohibited. Published by Publishers Representatives Limited (on behalf of Trade Media Limited) 4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O. Box SMB, George Town, Grand Cayman, Cayman Islands c/o 22/F Vita Tower, 29 Wong Chuk Hang Road, Aberdeen, Hong Kong ISBN Disclaimer: Any recommendation contained in this report may not be suitable for all investors or businesses. Moreover, although the information contained in this report is obtained from sources believed to be reasonably reliable, the accuracy or completeness of such information cannot be guaranteed. The author and the publisher of this report (and the publisher s affiliates, agents, sales representatives and service contractors) do not make any representation or warranty whatsoever (whether express or implied) in relation to any of the contents of this report (including any information, opinion, recommendation or conclusion contained in this report) (collectively, Contents ), whether as to the accuracy, completeness, quality, fitness, suitability or reliability of such Contents (or any portion thereof ) or otherwise, and shall not be liable under any circumstances whatsoever for any error, omission, defect or deficiency in, or for any use of or reliance on, such Contents (or any portion thereof ). All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. Products that are not the specific topics of editorial articles are shown for illustrative and/or demonstrative purposes only. We, our affiliates, and our affiliates respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof ) which infringe on any intellectual property or other rights of a third party. 4 Philippines Sourcing Reports

4 Industry Overview Industry Overview Furniture suppliers in the Philippines maintain an optimistic outlook on exports despite a slight drop in outbound shipments last year. Although foreign revenue shrunk roughly 1 percent to $160 million in 2012, domestic makers are confident of registering higher turnover in 2013 because of robust sales in emerging destinations. Estimates point to growth reaching 5 percent amid strong demand from the Asia-Pacific region, particularly Southeast Asia. Shipments to Indonesia jumped from $7.7 million to $13.2 million, making it the industry s second-biggest market last year. Earnings from deliveries to Thailand expanded from $1.3 million to $2.8 million. Income from Singapore soared 40 percent to $2.2 million. The US remains the line s largest importer, with deliveries accelerating 8 percent to $77.3 million last year. After Indonesia, Japan an rounds out the top three, contributing $12 million to foreign sales. s. Other key destinations are the UK, Germany and the UAE. Exports to China and Australia each went down to $2.6 million in 2012, a decline of 78 and 28 percent, respectively. Sales to South Korea dipped 73 percent to $1.1 million. The drop was blamed on intensifying price competition in the region, particularly from suppliers in Vietnam and Indonesia. Makers in both sourcing hubs are able to reduce quotes because of lower production costs. With these developments, domestic enterprises are expanding their clientele in emerging markets such as South America and the Middle East to make growth conducive. Saudi Arabia, the UAE, Brazil and Panama are cited as the top targets for the year ahead. Stable domestic demand is also fuelling the outlook of manufacturers. Companies have been receiving more orders for customized pieces from hotels, resorts and department stores. Local customers are usually based in Metro Manila, and the provinces of Cebu, Bohol and Palawan, where resorts frequented by tourists are mostly located. Competitive advantages One of the industry s strengths is the ready availability of natural materials such as bamboo, rattan, Manila hemp and water hyacinth. As such, companies no longer need to import these components, allowing them to produce models at competitive prices. Estimates show that there are 52,000 hectares of land planted with bamboo across the archipelago. Recently, the government has committed to add up to 166,000 hectares of bamboo farms by 2015 to meet the growing demand for this plant. Another edge enjoyed by makers is the presence of a large pool of workers proficient in various manufacturing steps such as weaving and carving. Because of this, suppliers can easily subcontract some of the production processes that require their expertise. Craftsmen are also hired to highlight traditional themes in new models, thereby strengthening local enterprises Exports Value $ million $151 $161 $ Source: Bureau of Export Trade Promotion Value by month $ thousand J F M A M J J A S O N D Source: International Trade Centre competitiveness against their foreign counterparts. Acceptance of small orders is another advantage possessed by the industry. Some manufacturers allow MOQs of one piece for large items such as gazebos, and five pieces for stools, chairs and tables. Challenges Price competition is considered as the most crucial difficulty affecting the industry. Suppliers are losing orders to their foreign rivals because they find it hard to match quotes offered by makers in China, Vietnam, Myanmar and Indonesia. To cope, domestic makers are shifting their focus on midrange and highend versions, which are popular in developed economies in the Middle East. Companies are also boosting fabrication of models that adopt indigenous materials such as Manila hemp, bamboo, buri fiber and capiz shell. Demand for these items is rising, especially in the US and the EU. Sample page only Another roadblock facing the sector is the implementation of stricter timber sourcing policies. Because of an existing logging ban, some enterprises are forced to use imported wood, which is typically 10 to 20 percent more

5 Supplier Profiles SUPPLIER MATRIX Company Year established Head office location Factory location(s) Ownership Full-time employees Part-time employees ISO certified Avanti 2012 Mandaue Carved Marble 1999 Angeles Cebu Fil 1986 Lapu-Lapu City Country Accents 1994 Bacolor Cymru 2004 Mandaue Diamond Cane 1986 Mandaue Ezra 2006 Makati Golden Fortune 2008 Quezon City John Joven Handicraft 2011 Paete (Laguna) Kahoyan 2007 Calumpit (Bulacan) Lakan 2008 Marikina Markline 2008 Muntinlupa Maturan Stone 2007 Liloan Mandaue Angeles Lapu-Lapu City Bacolor Mandaue Mandaue Las Piñas Quezon City (Metro Manila) Santa Maria (Laguna) Calumpit (Bulacan) Marikina Muntinlupa Liloan Foreigninvested ly Sample epage eo only Peter s 1980 San Fernando San Fernando 48 4 Ronnie Handicraft 2009 Angeles Angeles Silahis 1967 Parañaque Parañaque Tumandok 1988 Bacolod (Negros Occidental) Bago (Negros Occidental) 46 Winners 1993 Bacoor (Cavite) Bacoor (Cavite) Philippines Sourcing Reports

6 Supplier Profiles Avanti Philippine Furniture Inc. INQUIRE NOW Established in 2012, Avanti specializes in synthetic rattan furniture. It generates $600,000 in total annual revenue. About two-thirds of output is sent abroad. France takes up 70 percent of shipments. The Middle East absorbs one-fifth of exports, with Bahrain, the UAE and Saudi Arabia as the key markets. The rest goes to Australia. Outdoor models contribute 50 percent to foreign sales. The best-sellers in the line are chaise lounges and garden dining sets. Products for all price segments are available. Basic dining chairs are offered for at least $60. Living room sets start at $900 and reach $2,500. The company buys teak, synthetic rattan and aluminum from Indonesia. Two designers release up to five models every year. Company facts Year established 2012 Head office location Mandaue Factory location(s) Mandaue Ownership Full-time employees 15 Part-time employees 40 Total annual sales (all products) $600,000 Sales & output: Furniture mp Annual sales $600,000 Share of total sales 100% Annual export sales $360,000 Total monthly capacity 500 pieces Average monthly output 300 pieces Capacity utilized 60% Average monthly exports 200 pieces Export ratio 67% Major export customers All manufacturing steps are performed in a 1,100sqm factory in Mandaue city of Cebu province. The plant is equipped with locally purchased welding and sewing machines. Avanti employs 10 full-time and 40 temporary staff members. They can turn out 500 pieces every month. The peak season is from August to December. Ten inspectors make up the QC team. Visual checks focus on the quality of assembly and weaving. Bubble wrap and cartons are normally used as packaging. The minimum order requirement is one set per model. Delivery is within 30 days. The supplier is a member of the Philippine Exporters rs Confederation and Cebu Furniture ure Industries Foundation. It plans to further expand its market presence in the EU in Hazel Furniture (Bahrain), Stylish Outdoors (Australia), Sicomex N.C. (New Caledonia) e Capability Materials used Mahogany Teak Bamboo Rattan Water hyacinth Other wood types Contact details Exports by product Living room furniture 25% Dining & kitchen furniture 25% Bedroom furniture Bar & bistro furniture ure Outdoor furniture 50% on Exports by market North America EU 70% Europe (non-eu) Asia-Pacific 10% Middle East 20% Other Business contact BORDEN Sherimae Phone (63-32) Fax (63-32) info@avantiphilippine.com URL Address S.E. Jaime Street, Paknaan, Mandaue, Cebu, Philippines 28 Philippines Sourcing Reports

7 Executive Supplier Profiles Sum- Popular export models Model: Breeza Price: $986 Description: Outdoor furniture set; synthetic rattan body and aluminum frame; powdercoated; 82x82x72cm sectional sofa, 82x82x30cm ottoman and 60x120x30cm table Model: Cassandra Price: $2,575 Description: Outdoor furniture ure set; synthetic tic rattan body and aluminum frame; powder- coated; two 107x96x72cm sofas, two 97x96x72cm armchairs and 90x90x31cm coffee table Model: Palau MOQ: 1 set Packaging: Bubble wrap, carton Delivery: 30 days Price: $3,625 Description: Outdoor furniture set; synthetic rattan body and aluminum frame; powdercoated; 92x305x72 and 92x123x72cm modular sofa, and 100x148x48cm coffee table ple page e only Model: Paulina Price: $520 Description: Outdoor dining set; synthetic rattan body and aluminum frame; 80x80x75cm table and four 56x60x88cm chairs Model: Romana Price: $907 Description: Outdoor furniture set; synthetic rattan body and aluminum frame; powder-coated; 83x154x73cm loveseat; two 83x85cmx73cm armchairs and 60x120x38cm coffee table Model: Paris Price: $2,605 Description: Outdoor furniture set; synthetic rattan body and aluminum frame; powder-coated; 190x90x72cm sofa; two 71x 90x72cm armchairs and 120x80x40cm coffee table 29

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