PRODUCT MARKET STUDY MATRADE MEXICO CITY MEXICAN FURNITURE INDUSTRY OVERVIEW

INDEX INTRODUCTION INDUSTRY OVERVIEW PRODUCTION STRUCTURE OF THE INDUSTRY GEOGRAPHICAL DISTRIBUTION DESIGN &OFFER FURNITURE SITUATION IN JALISCO DEMANDED INPUTS WOOD PRECIOUS WOOD METAL COMPONENTS FABRICS EQUIPMENT IMPORTS & EXPORTS STATISTICS COMPETITION CONSUMERS PREFERENCES SWOT & COMPETITIVE ANALYSIS MARKET ACCESS TARIFF STRUCTURE REQUIRED DOCUMENTS LABELING & STANDARDS DISTRIBUTION / BUSINESS PRACTICES FINANCIAL PRACTICES CONCLUSIONS & RECOMMENDATIONS EVENTS 3 5 8 10 11 12 14 16 16 17 17 17 18 19 22 25 27 29 32 32 33 33 35 36 37 39

INTRODUCTION Furniture sector in Mexico has been traditionally an activity that has used a high percentage of labor hand and manual work. Industrialized countries have managed to substitute human work for

machinery, given the high cost of the human resources. In Mexico, on the other hand, salaries have been considerably low, making it rentable and competitive in past times and employing more people. But nowadays situation is different and the world markets require larger production volumes and quality standards for this type of products that human labor hand cannot achieve without proper machinery

Globalization and the lack of purchasing power of a great percentage of the Mexican population is pushing domestic furniture manufacturers either into acquiring cutting edge equipment and

technology, or to impulse the production of traditional furniture with attractive designs, low cost and what has more value is the artisan way of production and high content of work hand.

Furniture industry in Mexico is composed by micro and small companies, 97.6% (94% of them are micro business) 2% medium size and the rest being large companies. Installed capacity is used in average around at 60%. Production is basically artisan , even in those furniture that could be totally manufactured by machines, given as a result that Mexican furniture are not competitive in price and quality.

Mexican wood and metal furniture are based mainly on in-bond (maquila) industry , which accounts almost 70% of the total furniture production in the country . This segment allows the trade balance to be positive in a certain way.

Traditionally furniture manufacturing in Mexico has been devoted towards exports, to North America. It is important to note that roughly 42% of Mexican furniture production is exported, mainly to the USA. Basically Mexican furniture companies face the competition of Asian, mainly Chinese furniture entrance into the U.S. market and also domestically. With the increase and growth of Chinese furniture exports to the U.S. several Mexican manufacturers have encountered fierce competition and even bankruptcy.

This is probably the largest weakness for Mexican furniture industry. The strong dependence on the U.S. as a market for Mexican furniture has created vulnerability. Even with this

dependence, Mexico is the leading furniture exporter to Central and South America.

The robust Mexican housing market has been the generator for a furniture boom over the past four years - but critics believe local furniture suffers tired designs and old fashioned production, putting local manufacturers under threat to faster, cheaper competition from overseas. A case in point is the market for cheaper furniture that can fit into 50 square units, including couches, chairs, beds and mattresses.

The demand is certainly there, but missing are the right kinds of furniture at lower prices, the very sort that manufacturers in Brazil, China and India are beginning to discover represent opportunities for mass production.

Pessimists believe that the Mexican furniture industry, which represents 1.8% of the country's manufacturing GDP and 0.4% of the total GDP, will be hard pressed to survive externallyproduced industrial models, with the top end represented by the U.S. and Italy and the economy end by Brazil, China and India. Indeed, despite the fact that Mexicos furniture exports around $5, 894 U.S. million dollars annually almost three times the value of its furniture imports - styles are said to be in urgent need of upgrading to suit modern requirements. Of the 19,000 furniture manufacturers in Mexico, about 86% are small companies with few resources to upgrade their products. So far, only 13% of imported furniture come from Asian countries, with 39% imported from North American Free Trade Area (NAFTA) partners, the U.S. and Canada, with the same percentage from Europe.1 It would suggest that the Mexican marketplace can be profitable to explore, particularly the medium and lower-priced sectors.
1

Source: Ministry of Economy

INDUSTRY OVERVIEW Wooden furniture industry is widely considered of family tradition , relatively young, with few resistance to change and almost a handcraft style. However in order to maintain its national presence and to compete with international markets, this activity has required to adopt its processes from a commercial opening , where strong competition with imported furniture caused companies using less its

installed capacity and along with the fall in the internal market, that more manufacturers penetrated international markets. Mexico's furniture

industry had traditionally been supported through protectionist measures aimed at job creation. These measures closed the door to foreign products for many years. However, sweeping changes have occurred, and after NAFTA (1994) elimination of numerous tariffs and reduction of many others for NAFTA members allowed entry to different products in style and price. In recent years, there has been very significant growth in imports. The furniture industry is built on both the centuries-old Mexican tradition of artisanal handicrafts and new production facilities in northern border-state cities. The industry is overwhelmingly one of widely dispersed small producers. When Mexico initiated free-market reforms in the late 1980s, a half-decade ahead of NAFTA, 65% of furniture manufacturers closed, unable to compete with inexpensive imports from the United States. Forecasters predicted greater incursions of American manufacturers into the Mexican market with the passage of NAFTA, which augured further doom for the artisanal Mexican furniture industry. However, production of wooden furniture in Mexico grew by 7 % in 1999. Sales of Mexican furniture in the United States rose by more than 73 %between 1993 and 1997. The most popular import Into the U.S. was and continue to be rustic wooden furniture, usually made of pine. 2
2

To find out why rustic furniture have become such an important export for Mexico despite the predictions of

failure due to market reforms is explained later within this study.

In 1999 Mexico was the third furniture supplier of the world, its products were handled in 70 countries, it managed to account 20,000 companies and employed around 150,000 people. Today the furniture industry is in a recession situation, getting over little by little and impulsed directly with the construction boom of the past years. Several factors are crucial for the recession of this sector:

Lack of design Obsolete technology Chinese furniture competition.

All the share that Mexico has lost in respect to furniture exports to the U.S., China has taken it over. There are still around 1,000 Mexican companies that still export, 50 of them are very successful, though with lower shares. Some of these successful companies exporting than $1 Million USD are: more

Mueblera La Rivera (Office furniture) Terciopelera Nacional Camas Lamas

Furniture sector managed in the past to be one of the 20 more efficient sectors in Mexico, representing 2.6% of the GDP. But it is an almost artisan and family industry and some in-bond (maquila) companies that were added to the industry during the 90s. Both add up almost $6,000 million U.S. dollars in exports. Manufacturers participate roughly with $2,000 Million U.S. dollars with home furniture and in-bond companies exporting around $4,000 million U.S. dollars, mainly for car and airplane seats manufacturing. Around 70% of the total furniture exports are wooden furniture and the rest are metallic and forged iron. 90% of the exports are directed towards the USA and in a minor scale to Europe, Caribbean, Central & South America.

During the late 80s and 90s, Mexicos rustic style furniture became fashionable. This allowed the entrance of its products to 70 countries through a brand called SEGUCINO, located in Chipilo, Puebla.

Today Mexico has not been able to get over the rustic furniture style stigma, neither has it invested in design nor in technology. Market diversification could be a good way to improve it, and Europe is one true destination, though not in enormous export volumes as China is doing nowadays, but in smaller amounts and keeping existing segments that were created during the booming industry in the 90s. This is the reason why BANCOMEXT (Mexican Bank for Foreign Trade) furniture producers open up two distribution centers in Valencia, Spain. along with Mexican

Increase in furniture imports into Mexico, 14% annually in average , indicates increasing penetration of foreign products, and this threatens the national industry. According to a report conducted in 2003, (All Data Processing Ltd.) Jalisco
3

furniture

manufacturers witnessed a 70% decline in sales to the U.S. that year. Another source that showed pessimism (Zayas, 2005) reported that 67% of Jalisco manufacturers perceived their economic environment adverse rather than favorable, (5%).

The Chinese furniture imported by Mexico have risen from $5.3 Million USD in 1997 to $229 Million U.S. dollars in 2006. Just in the first half of 2005, the overall furniture imports rose at an annual rate of 32.5%, and the trend continued until the present , the growth in the JanuaryApril 2007 period grew 37.8% compared with the same period in 2006.

Jalisco is one of the main furniture producers sates in Mexico, carrying put several Trade Fairs a year devoted tom this sector.

PRODUCTION Today, the furniture industry accounts for 1.8% of the manufacturing industry's GDP and 0.4% of that of Mexico as a whole. Around 75 % of the value of the production is devoted to home furniture. 10 % of the sector belongs to office furniture and the rest is focused towards collectivities and others. Mexican furniture production is as follows:

home furniture 75% office furniture 10% institutional furniture (hotels, restaurants, schools, etc.) around 15%

Despite being a small percentage of the total , it handles around 3.3% of the employed staff in the manufacturing sector and represents 270,000 manufacturing establishments officially existing , according to INEGI (National Statistics and Geographic Institute) data. The furniture industry accounts around 19,000 societies , and is composed as follows: 92% of furniture manufacturers in Mexico are micro business, specifically small workshops and carpentry shops. They supply national demand for finished furniture and along with China and Canada, are the most important exporters of furniture to the U.S. The sector is comprised of around 19,000 business. Out of that total 1,100 are manufacturers and the rest are small workshops and carpenters. FURNITURE INDUSTRY (Company size) 92% micro

5.6 % small 2% .4% medium large enterprises

This explains the low competitiveness of these companies towards imported furniture that manufacture in big scale and have mechanized processes. Installed capacity is only used at 60% and basically it is an artisan way of production. Reason why those furniture that necessarily require machinery for its production
8

are out of

competitiveness considering price and quality. This shows that products is not only limited by the offer, but also for the demand as well. In-bond industry has a great share in the furniture industry, ranked as the third position in

the number of establishments and the 5th in number of employees (after electronics, textile and electrical sectors) The growth in the furniture sector not only depends on the population expansion, but also is defined by the development of the housing construction, and since this was showing slow indexes during the first years of this decade, showing a turning in 2004-2006, the sector saw a temporary recession, that has partially recovered.

A favorable point for this sector was pushed by the Government policies of housing construction booming in the last years, where 475, 000 new houses were built in 2004 and 750,000 in 2006. Construction boom in several cities was evident, though it has decelerated during 2007. Still there are thousands of new houses that have to be furnished. Most of these new houses belong to the social interest scheme that is why furniture to be used in most of them are extremely simple and economic. There are credit institutions that finance credits for furniture acquisition, many of these institutions operate in popular stores devoted to medium-low income classes. Malaysian companies manufacturing simple and economic furniture could penetrate this market, which is widely taken by Chinese furniture, much of it illegal.

Raw materials used for this industry are the following: Commercial woods: Pine. Holm oak, Oak, Parota, Ocote (Pinus montezumae) Oyamel and Mezquite (Prosopis). Precious woods: Mahogany, White & red cedar, ebony and maple. (Many of this are imported) Agglomerated woods: Which result of the compressing or pressing sawdust and barks leftovers.

Partners

United States, top supplier with 50% China Spain Canada Germany

STRUCTURE OF THE INDUSTRY Mexicos furniture manufacturing industry is highly fragmented, with a bit more than 19,000 establishments in 2006, and only around 7% of these export their products. The vast majority of these companies have less than 50 employees. Geographical location of manufacturing is similarly dispersed. Wooden furniture is widely produced in Mexico.

A problem for Mexican manufacturers is the lack of technology and the lack of investment to maintain their national ranking and overall, overseas, specially having the U.S. as the main trading partner. According to Zayas study (2005) 76% of Jalisco manufacturers did not plan to invest in the near future, 19% of the manufacturers reported problems with their existing technology. This is another weakness for the Mexican industry making them not as competitive as other Asian countries industries. There are only 4 or 5 Mexican manufacturers that can meet the volume produced in the Chinese factories.

Furniture retail industry play a vital role in the furniture distribution in Mexico. Large players such as Wal-Mart account for increasingly enormous amount of sales. With 400 Wal-Mart stores and 250 other supermarkets formats this group owns , the firm posted annual sales in Mexico for $11 billion U.S. in 2005.4 Though at present Wal-Mart sells primarily particle-board furniture, it could broaden its offerings in the future.

DSN retailing Today, 2005)

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Two major department stores are El Puerto de Liverpool and El Palacio de Hierro. While these stores likely receive a higher percentage of their sales from furniture, overall, their market shares are lower. The top ten retailers in Mexico control around 15-20% of the Mexican furniture market. Furniture of varying quality does not compete directly. Overall the market furniture in Mexico is competitive. Wholesalers and retailers should not be able to pass through price increases, and the least expensive sales segment is very competitive. This trend is also driven by the arrival and penetration of low-priced Chinese furniture imports into Mexico. Conditions seem to be better for furniture retailers than furniture manufacturers in Mexico.

A decisive factor for furniture industry in Mexico is the growth of the medium class and the access and diversification of the credit schemes, as well as the construction boom that took place during the last years. Yet the construction has decreased their growth indexes (2007) , but still there are many housing complexes, building apartments and renovated constructions that are to be furnished. GEOGRAPHICAL DISTRIBUTION Those companies not having manufacturing operations in Mexico have distributors in the major Mexican cities. Mexico City, Monterrey, Aguascalientes, and

Guadalajara are the Mexican cities having the largest number of international manufacturers and distributors of wooden furniture. The principal manufacturers of furniture of wood are located as follows : Jalisco Mexico City Nuevo Leon Estado de Mexico Chihuahua Baja California Puebla 16 % 11 % 8% 7% 7% 5% 4%
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Coahuila Michoacn

3% 1%

There are 498 furniture maquiladoras (in-bond), of which 461 located in frontier states, with capital mostly from Mexican and American investors. Only 8 % of the maquiladoras include capital of Japanese, Lebanese, British, Taiwanese or Spanish origin.

DESIGN AND OFFER The furniture industry capitalizes on a centuries-old tradition of artisanal handicrafts in Mexico, Their furniture and crafts have been exported throughout New Spain / Mexico for centuries. The colonial style developed into a vernacular furniture, blocky, weighty; and generally crafted of hardwoods (although neocolonial furniture produced today in Mexico has a more ornate and less sturdy form). Colonial furniture incorporated Spanish and Moorish motifs. Grooving, cutouts, and hand-carved ornamentation, inspired by the wrought-iron window grills common to parts of Spain, offered relief from an otherwise massive construction.

Rustic Furniture Mexican rustic furniture evolved from the Spanish- and Moorish-influenced colonial furniture. They represent an application atop an Arabic technique. Rustic furniture evidence heavy, rather unpolished, and simple features, clearly of handmade craftsmanship. The

furniture is almost always made of pine, but some manufacturers use oak and, at times, juniper, mesquite, or tropical wood. Typical pieces are armoires, tables, chairs, chests, dressers, and cabinets for television sets and stereos.

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The rise of Mexican rustic furniture is an outgrowth of the larger craft industry of Mexico. Today handcrafts are a major industry in Mexico, part of the very identity of many Mexican places, particularly the United States--Mexico border towns and some indigenous communities. The attraction of American consumers to Mexican folk art began with a flourishing of cultural interaction between the two countries in the 1920s. Hand-produced, vernacular goods give American consumers the exotic feeling of Mexican material folk culture, a taste of Mexico that they can bring home. Inexpensive and unique, the rustic furniture are especially popular. Consumer products become part of personal identity: They define uniqueness in a consumeroriented society; Furniture is a more sizable investment and more functional than many other artisanal craft. But a piece of rustic furniture, brought home, also represents an exotic artistic artifact that testifies to the purchaser's taste for something more than mass-produced goods. Through their purchases consumers establish a symbolic relationship with simpler lifestyles, an escape from Western modernity--and an illusion of authenticity that suggests contact with local artisans who work in a realm separate from and unattached to capitalism.

The most important centers that produce colonial-style furniture are Mexico City, Taxco, Puebla and Jalisco. The most popular woods that are used in creating the beautiful pieces of furniture are the Spanish Cedar, Mahogany, Springbells (primavera) and the White Pine (ayacahuite).

Modern Approaches The Mexican culture has brought this country fame again by being expressed in the furniture industry. One of the most peculiar inventions of the modern furniture technology in Mexico is the unfinished furniture. This usually refers to sets of tables and chairs that are intentionally created to look as if they have been left unfinished. This look has had quite a huge success and it has made the artistic minds of the Mexican furniture creations go further and further with their designs

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FURNITURE SITUATION IN JALISCO Every year, a survey of manufacturers belonging to AFAMJAL is conducted. Based on the fact that Jalisco is one of the furniture manufacturing leading states , is quite representative of the national industry. The following are some results of the last survey 2006.

According to AFAMJAL (Jalisco Furniture Manufacturers association), factors that affect the industry are: Economic situation: For the period 2001-2003 the furniture sector did not grow, the number of manufacturers decreased as well as the number of distributors. Reasons behind market stagnation are: overall national economic situation, absence of cut end technology, low level of competitiveness Lack of credit programs Strong external competition

Mexican External Commerce Bank (BANCOMEXT) manufacturers produce :

reports that Jaliscos furniture

51% home furniture (living rooms, bedrooms, dining rooms) 33% diverse pieces (table sets, phone tables, cabinets, etc) 10% Office furniture 6% kitchens

In Jalisco, the main products manufactured were: Other Bedroom sets Dining Rooms Living rooms Accessories Mattresses 26% 18% 14% 14% 9% 6%
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Bathroom furniture Office furniture Entertainment centers Patio and beach furniture

5% 4% 3% 2%

The most used raw materials were solid wood, metal components, tube shaped and plastic (used or outdoor, patio garden and pool furniture)

Main factors affecting the costs of production increase in Jalisco are: Energy Raw materials Labor 11% 10% 7%

Service and transport 6% Marketing 5%

Sales price was increased by an average of 15%. Costs for all manufacturers have gone up, but they are absorbing the increases in order to stay competitive with larger companies and, as a result, are cutting into their own utility.

Productive sectors in Jalisco have not been able to develop to their full potential, and industry leaders, for the most part , do not have a positive vision of the future due to their lack of competitiveness. For 67% of these furniture manufacturers, the economic environment for business is adverse, and only 5% consider the environment favorable.

15

DEMANDED INPUTS & BEST SALES PROSPECTS There is a strong market for the inputs used in the furniture production. Main imported inputs are textiles, woods and boards. (MDF and plywood). Mexico most imported wood is plywood, and many companies are currently, others are considering it, importing Malaysian plywood. According to AFAMJAL, inputs with the best possibilities include: solid woods (pine,

mahogany, cedar, poplar) boards, textiles, leather, metal components, control routers and gang drills. Main raw materials used in the furniture manufacturing in Jalisco and Mexico in general are5:

WOOD Mexico is the fourteenth destination for Malaysian plywood. For Mexico Malaysia is by far the main supplier of this type of wood, main destination after the U.S. in the Americas purchasing $24, 962,000 U.S. dollars in plywood during 2006. Malaysia is the 6th Wood supplier for Mexico. Malaysia is actually not the only supplier of plywood to Mexico, it is currently supplying only 15% of Mexicos wood needs. There is a potential market of $156,480,000 USD. Mexico is the largest importer of Malaysian furniture in the Americas after U.S. and Canada. Woods in demand in Mexico are as follows:
5

Pine Agglomerate Other woods Pine plywood Poplar Okume Mahogany Cedrello Cedar Alder Meranti

27% 18% 11% 9% 8% 8% 7% 4% 4% 2% 1%

Figure represents percentage of the total surveyed manufacturing companies in Jalisco state.

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PRECIOUS WOOD The market is ample for this type of wood . Furniture manufacturers are supplied by production from southeastern Mexico (Chiapas, Campeche and Quintana Roo) as well as a significant part being imported from other countries. The demand for precious wood imports is currently strong but could decrease in the future if the commercial planting system in Mexico prospers. The trusteeship of the Forest Development Program and the public sector are promoting development of the commercial planting of precious wood. In Jalisco, they have identified great demand in the market, specifically for parota, rosamorada, primavera amarilla, hebillo (tropical American timber trees) and red cedar. Currently, in Jalisco state there are

approximately 1,730 acres of precious wood, but from planting they require up to 12 years to be harvested.

METAL COMPONENTS Knobs Metal components Various Hinges Sliding panels Press stud Locks Sheet Steel 27% 21% 21% 7% 7% 5% 5% 4% 3%

FABRICS Overall, Mexican furniture manufacturers are installed with their current fabric. The fabric demand is supplied by many small businesses. There exists opportunities for reliable Malaysian fabric suppliers who can provide quality fabrics in diverse and innovative designs.

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Various Canvas Jacquard Plianas Cotton Chenille Polyester Linen

32% 14% 18% 11% 6% 8% 5% 3%

Coarse cotton cloth 3%

EQUIPMENT Potential to export finished furniture to Mexico is medium-high. Mexico supplies their

domestic market with low cost furniture, mainly Asian. This situation provides potential opportunities for Malaysian companies, that would like to compete with design with other Asian furniture manufacturers. Another potential opportunity are supplies and machinery for furniture manufacturing.

Machinery: Lacking technology is one of the main disadvantages in the national industry, and a great need to import and update exists. A little less than half of all machinery used in furniture manufacturing is imported, but much is used or refurbished because many Mexican manufacturers lack capital to invest in new technology. In Jalisco, 19% of furniture

manufacturers reported problems with technology they currently use. Challenges they find are: quality, numeric control, associated costs, old and obsolete machinery, maintenance, limits to increase production and production time , flexibility for new designs.

The trend in demand for machinery depends on the availability of funds. This continues to be a challenge, although there is increased support from the government to assist small and medium sized businesses. Purchasing decisions for machinery rely on the availability of service

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and financing. The trend in demand for inputs depends on quality, diverse and innovation designs, and supplier reliability.

Mexican furniture manufacturers need urgently to update machinery and technology, which place the national industry at a competitive disadvantage. Manufacturers often deem assistance from government, organizations to get financing and working capital to buy new machinery, usually sold without the technical information and without the possibility of renovation. Often the operators are not well trained, and few know about electronics since they are more experienced with mechanical issues. High performance machinery such as CAD/CAM technology, which allows for complex design and virtual products is a relatively new concept in the Mexican furniture industry. Germany, USA and Japan are leaders in CAD/CAM production and also are the providers of new developments and adaptations. Mexico aims at modernizing these machines in order to strengthen its industrial development.

Machines that are in greater demand and fundamental for production are: Numeric control routers. Gang drills.

IMPORTS & EXPORTS High financing costs and a lack of technology have meant that the Mexican furniture industry has registered a 2% growth in production, while foreign purchases have increased by 40% in 2005 Nationally only 25% of furniture products are made up completely in Mexico. The rest include imported components, like moldings and other spare parts. Without an adequate capital base. It is difficult for Mexican furniture manufacturers to achieve a large scale strategy of expansion in the biggest markets. They also have problems with design, quality, price, certain minimum quantities, and overall compliance with delivery death lines. These issues continue to cause difficulties for Mexican furniture exporters.
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Roughly, around 24% of manufactured furniture is devoted for export ant the rest 76% is for the internal market. Most recent data shows that Mexicos furniture exports in 2006 reached $5,894 Million USD.

Among the most important exporting companies in Mexico are: Diseos Antigua S.A. S.A. de C.V. , Espino de Mxico S.A. de C.V. Muebles Rsticos Segusino S.A. de C.V. Fbrica de muebles El Portn S.A. de C.V. Factor Antiguo Muebles Rsticos San Rafael, S.A. de C.V. Muebles Finos y Artesanales de Erongaricuaro S.A de C.V. Maderas y Muebles de San Pedro S.A de C.V. Douglas Furniture de Mxico S.A. de C.V. Industrial Mueblera Shelby Williams S.A. de C.V.

These are just some of the largest exporting companies identified by PROMEXICO (Former BANCOMEXT) Among the strategies that are actually following medium companies regarding production are the subcontracting with micro enterprises, this ensures a wider spare parts choice and design supply. On the other hand, regarding the distribution, some are also exploring franchise scheme. Most of furniture exports are destined to NAFTA countries: 96 % USA 2.3% Canada Home furniture Office furniture TV centers Entertainment centers Kitchens
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Main exports for in bond industry are:

In Jalisco, 80% of furniture manufacturers reported no imports. Of those who do, they started back in 1996, and half of them import directly, the other half do it indirectly. Origin of imports is as follows:

NAFTA countries: European Union Asia Latin America

39% 39% 13% 8%

Manufacturers report importing : Machinery Primary materials Finished products Technology Other 18% 60% 13% 10% 3%

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TOTAL FURNITURE IMPORTS (Thousand U.S. dollars)

2006 Total $ 2,294,047 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2005
1,831,992 952,299 286,427 150,562 70,159 62,359 45,578 22,057 31,418 39,603 8,689 1,411 24,777 11,978 21,925 11,330 8,276 9,857 9,126 7,370 7,782 4,666 3,378 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2004
1,606,549 943,490 191,954 87,004 52,782 48,420 43,222 20,406 14,322 30,148 23,829 1,018 21,547 10,085 9,514 37,027 10,289 6,343 6,705 5,213 2,374 5,534 2,160 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2003
1,474,105 953,190 163,922 45,632 31,189 39,922 46,938 11,372 1,852 15,025 43,964 2,082 21,685 8,160 4,742 21,688 10,335 5,121 6,331 4,753 3,075 3,558 1,717 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2002
1,461,557 1,007,460 145,101 40,304 27,285 46,498 43,179 13,672 979 11,138 16,669 877 29,363 9,128 1,698 6,712 12,345 4,957 6,406 4,718 2,951 3,642 1,632

United States China Spain Canada Germany Italy France Netherlands Brazil Argentina Sweden Taiwan Japan Israel Costa Rica Korea Malaysia Indonesia Denmark UK Thailand India

$ 1,149,568 $ 398,228 $ 143,488 $ 96,595 $ 69,456 $ 60,540 $ 40,190 $ 36,504 $ 36,133 $ 28,654 $ 26,244 $ 26,164 $ 23,539 $ 19,976 $ 18,309 $ 16,781 $ 14,892 $ 12,662 $ 7,711 $ 7,070 $ 6,491 $ 5,709

Figure 1. Main furniture suppliers for Mexico.

Source: Ministry of Economy.

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TOTAL FURNITURE EXPORTS (Thousand U.S. dollars)

2006
Total $ 5,894,846 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2005
5,725,205 5,523,402 119,098 1,818 7,598 6,642 3,006 7,164 5,163 5,030 3,240 1,538 7,495 1,840 2,907 2,017 2,612 2,701 2,027 2,333 1,523 364 1,401 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2004
5,151,202 5,013,508 52,728 176 11,542 5,704 1,835 7,897 2,814 2,388 3,944 191 3,970 67 1,490 1,636 2,710 1,676 3,067 1,172 2,067 424 1,268 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2003
4,769,614 4,675,920 13,227 35 12,238 4,108 1,793 7,491 1,926 3,972 3,106 171 2,148 509 1,308 892 1,781 1,503 1,257 410 1,936 662 1,029 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2002
4,296,189 4,216,519 15,126 13 15,975 5,409 3,241 5,496 1,459 4,880 2,972 156 1,245 527 1,204 977 1,243 1,950 1,968 533 1,630 273 1,070

United States Canada China Germany Guatemala Venezuela Spain Colombia UK Costa Rica Southafrica El Salvador Australia Cuba Honduras Donimican Rep. Chile Panama Japan Ireland Taiwan Belgium

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

5,661,032 137,984 7,861 7,717 7,468 6,205 6,013 5,971 5,767 4,703 4,376 4,154 4,078 3,113 3,036 2,876 2,499 2,374 1,816 1,635 1,220 1,142

Figure 2. Main furniture markets for Mexico.

Source: Ministry of Economy.

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Inputs used in furniture manufacturing in Mexico in 2006 were primarily national. Wood was 60% national and 40% imported, metal components were 61% national and 39% imported, fabrics were 74% national and 26% imported.

Wood is imported from the U.S., Chile and Canada. The majority of MDF boards are imported from the U.S. and other types of boards are imported from the U.S. and Chile.

Lacquers and paint are imported from Spain Most of fabric and carpets are imported from the U.S. Furniture stuffing and foam rubber are from national suppliers Metal components are produced in Mexico and also imported from Spain Glue is produced in Mexico.

In Jalisco 53% of the machinery and equipment in use is of national origin, and 48% from foreign origin, mainly from U.S. 35%, Italy 27%, Germany 9%, Brazil 8% and Spain 8%.

Source: AFAMJAL (Jalisco Furniture Manufacturers Association) Industry report 2006.

Large used machines or reconstructed machines are imported from Italy, Spain and China.

Hand machinery is imported from U.S. Machinery and metal components are imported from Brazil

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COMPETITION Mexican distributors try to sell as many brands as possible. They try to avoid an exclusive agreement with a particular brand. The Mexican market for wooden furniture is very competitive. Price is the main factor that end-users even take into and reduced account restrains for purchase in costs decisions. Such This makes as offer

competition

stronger and

growth

prices. help

factors

economies of

scale

manufacturing

manufacturers

affordable prices to end-users. Service is a close second in purchasing decisions and can be traded for price. Service includes fast delivery, availability of the product in sufficient

quantities during peaks in demand, prompt replacement of defective products, and willingness to customize batches of products. Brand positioning with also plays an important prefer role. Usually, that the have brand is

associated

reliability.

End-users

those

brands

provided

desired performance in terms of durability and working under adverse conditions.

Mexico is the country with the largest network of Free Trade Agreements in the world. Including the most recent agreement negotiated with Japan (2005), Mexico has FTAs signed with 33 countries, including the European Union, European Free Trade Area, Israel and 10 countries in Latin America. Significance of this situation for Malaysian companies is that main suppliers of machinery and other accessories for furniture industry into Mexico are trading partners, enjoying a preferential tariff rate. This is a drawback for Malaysian companies willing to penetrate Mexican market. Though there is a potential and profitable opportunity for Malaysian companies willing to export finished furniture in Mexico.

Mexico still maintains its third place as a furniture exporter towards the USA, but far behind from China and Canada during 2006.

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According to NOTIMUEBLE a specialized publication for furniture industry, Mexico cannot compete in volumes with Asian countries, but it can compete with design , innovation, quality and service. Chinese furniture sales to the USA grew from $10, 557 Million US dollars in 2005, to $12, 061 Million U.S. dollars in 2006 for a total growth of 14%. Total imports from USA last year were $21,994 million U.S. dollars, China took 54% of the share. Mexico still observed a marginal growth of 2%. Mexico is still above Italy that registered a decrease of its sales to the USA. Main Mexican exports to the USA are: Sofas Upholstered seats with wooden structure Spare parts for furniture Metallic furniture and thereof.

According to the statistics and trends USA has continued its importing impulse during 2007, but also China has increased its exports. Brazil continues to see a rise in exports, including furniture. The main market for Brazil is the U.S., France, UK, Holland and Chile. Brazilian analysts forecast the export continue for the furniture sector and they will target new foreign markets, such as Mexico.

Asian manufactured furniture is rapidly penetrating all markets in the NAFTA area. This also widely applies to Mexico There are only 4 or five plants in Mexico that can meet volumes that can be produced in Chinese factories, but Mexico has the advantages of geographic proximity and NAFTA agreement. AFAMJAL notes that illegal imports into Mexico, including furniture, occur mostly using a false certificate of origin to take advantage of the preferential status under NAFTA. These illegal imports have increased in the last years, up to 50% in some cases, with clear losses on invoices for the national industry. Most of these illegal imports come from China.

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CONSUMER PREFERENCES As a result of the housing growth that took place in Mexico in the last years, furniture consumption in the country significantly increased. All those houses need furniture, though the owners do not pretend to have anything exquisite, or lifetime lasting, they know it and they prefer some very cheap, few screws and numerous staples. Furniture to be placed in these houses have to accomplish and offer dimensions enough to fit in 50 square meters.

There are 3 types of consumers in Mexico:

1.- 70% of the Mexican population can barley purchase furniture due to their low income levels, and therefore they purchase traditional furniture, of a crude and durable style. This segment renovates their furniture in average less than once in a life. 2.- Population with medium incomes represents 20-25% and their preferences are oriented towards classic medium-quality furniture featuring dark woods, upholstered, crystal mirrors and bright finishings. 3.- For the 80% of the population, the most decisive factor when choosing furniture is price, followed by quality and then design. Consumer purchasing power

Purchasing power markedly higher than the average: 3% of the population, preferring high-quality imported goods. Only these consumers consider quality the main purchase factor. Purchasing power higher than the average: 18% of the population, choosing mid-range and some luxury products. Purchasing power at par or lower than the average: roughly 80% of the population, mainly interested in low-end furniture, generally, made in China or Taiwan.

When Mexican average consumer purchases furniture, is making an investment and expects that it will be for several years. Few importance to the products design shown at the first purchase, is dissolute until vanishing as a motivating element for a second purchase. Average Mexican Consumers likes are similar to their North American neighbors, so beds follow the patron of twin , queen and king size.
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Less than 15% of the population can indulge in getting high quality furniture, with a specific design, that is why most of these consumers obtain their product from the imported choice. Though its the smallest market segment is the most profitable, accounting high income levels and open to new trends. Despite the first impression of the figures, it must be considered that Mexican market is composed of 106 million inhabitants, even though the percentages are not high , they

represent some 16 million people for the high income segment. The demand for lower-to-mid-range furniture has seen a marked rise in sales of DIY products, particularly among the younger demographic set: over the past six years, 3.5 million younger couples were recorded as having set up home. Few local companies have tackled the DIY sector, but there is word that Swedish giant IKEA may be ready to enter the Mexican marketplace. IKEA-type products are sold by the Liverpool chain under the Club 8 trademark. According to AFAMJAL, greatest demand exists for living rooms. It is one of the first things that households purchase, since it is what visitors see right after they come into the house. For households with financial constraints, other furniture can wait and this trend will continue in the future. Other finished products in demand are bedrooms sets, entertainment centers and computer furniture (due to the continuing growth of home computers). In the largest cities, as is the case of Mexico City , Guadalajara, Monterrey, etc. furniture consumers have quickly changed their taste to the contemporary style. In the last few years, preferences have turned to modern furniture without ornamentation, or being it very basic, as a result of the search for a cleaner image for their home and lifestyle. There is good demand for furniture made from fibers in Asian and modernist style. As MATRADE could confirm during a visit to Guadalajara, where in some decoration and furniture shops Thai exotic furniture are sold, and according to the owner they are distributing them for trendy and fashionable new and upscale hotels and restaurants, that is a national top-end trend.

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Tone and material preferences for living rooms, dining rooms and bedrooms include chocolate and maple colors. Some manufacturers of rustic furniture have switched to the new contemporary style or a combination of both styles , using straight lines and simple combinations of rustic materials (like solid pine and iron) and hand painting. Some other manufacturers continue to produce classical lines and even colonial type of furniture, which still account for their share in the market, though they are becoming generations. A sector that is growing is furniture from warehouse-type retailers, including Wal-Mart, SAMS CLUB and COSTCO. Consumer preferences may be impacted by the cheaper, do-ityourself variety that is sold at these stores, which are generally of good quality and relatively inexpensive. less popular , especially among top-end younger

SWOT & COMPETITIVE ANALYSIS Most common excuse for Mexican manufacturers when it comes to competitiveness compared with other countries are the low salaries and bad labor practices of Asian manufacturers. But if that were the real excuse, then Italian carpenters, workers and designers could not also compete, and they perceive three to ten times more than their Mexican counterparts. However, Italian producers still admit that Mexican artisans are among the best in the world, but unfortunately they are not organized and are not taught to produce new designs and products. Many Mexican workers still produce and work as Spanish monks taught the Mexican Indigenous in colonial times during the XVI century. One, if not to say the crucial weakness of Mexican manufacturers is the lack of innovation and design when in most of the countries producers adapt to consumer preferences.

Traditionally the star product of national industry was rustic furniture that drove mad some foreign buyers looking for some exotic product. Nowadays, the demand of contemporary style in the international markets, and in the domestic market, rustic furniture became less popular and for many is synonym of low quality, cheap and outdated.

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According to the CEO of a Mexican furniture store, DICO, a very good percentage of young couples prefer minimalistic style when it comes to chose furniture, which are also suitable for small spaces like the new houses built in the country in this decade.

Organize and work in team sounds simple, but it is not in an industry formed by 19,000 companies, most of them family businesses, with an average of 6-7 operators by

establishment, plus thousands of carpenter shops where only the family members work. Most of the people devoted to this industry are not industrial operators, but artisans

passionate to their way of manufacturing and not willing to accept industrial processes. They use machines and tools well kept but obsolete and outdated, and if they do not replace them is not only because of the lack of resources but also because those are the tools they know. A fine example of adaptation is Segusino company, a domestic company established in Puebla that started manufacturing rustic furniture and now they have diversified their lines for different style preferences. This company exports its products to 56 countries.

Mexican manufacturers have not indulged into the DIY furniture type, but there is one exception to this rule, RTA which most of its production belongs to this category. Despite all this situation, the sale of furniture in Mexico is experiencing a growth, and a decisive factor for this is credit promotion, 12 months without interest that big distributors offer. This discount war is possible because of the extraordinary utility margins , since prices to the public are 80- 100% above of what is paid to the producer in most of the cases, especially when it comes to Asian manufacturers. STRENGHTS o International markets where Mexican furniture are shipped are highly diversified, though in small volumes. o Young industry with a wide choice of products from different wood types, quality, size and prices. o Artisan work hand of high creativity at low cost. o Quality

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WEAKNESSES o It depends more and more on commercial woods imports (conifers) o Sector is menaced by Asian competition and the strong dependence to North American market.

TRENDS Furniture enterprises mainly small and medium, are consolidating actions with their main distributors in the USA and Canada. Basically in order to cover Trade fairs and exhibitions that visit the distributors, and on the other hand they are concreting strategic alliances with furniture enterprises in the European Union that could guarantee training and a wider model and design choice. Furniture being very successful in Mexico according to their materials:

access to technology,

Pine, the most popular Steel Plastic PVC

Furniture made from the latter three materials is gaining because of its low price, new style, and availability.

RISKS Currently the most important risk is the capacity to modernize since the opening of the economy in order to achieve a larger competitiveness towards furniture manufactured in other areas.

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MARKET ACCESS Under NAFTA terms, Mexico eliminated tariffs on all remaining and most agricultural products imported from the USA on January 2003, including furniture and related items. Companies exporting into Mexico should face the following tariff structure:

Products

Harmonized Numbers Gyratory seats of height adjustable in metal Office Transformable Seats in bed, metal Seats of Rotate, Wicker, Bamboo and similar Seats draped with framework of wood, rooms Seats without drapes, with framework of wood, declinable Seats draped with metal framework Seats of plastic / other similar materials Other seats of wood / others similar materials Other furniture and its parts metallic furniture for office Other metallic furniture, cabinets, office counters Furniture of wood for office Furniture of wood for kitchen Bedrooms of wood Dining rooms, tables, centers of entertainment Furniture of plastic Furniture of Rotate, Wicker, Bamboo and similar Divide from wood, plastic and other materials related With at least one outer ply of the following tropical wood: Dark Red Meranti, Light Red Meranti, White Lauan, Sipo, Limba, Okoum, Obech,Caoba Africana, Sapelli, Baboen,Mahogany, Palisandro de Brasil,Bois derose femelle Other, with at least one outer ply of non-coniferous wood Coniferous, denominated plywood

NAFTA

Malaysia

9401.30 9401.40 9401.50 9401.61 9401.69 9401.71 9401.80 9401.90 9403.10 9403.20 9403.30 9403.40 9403.50 9403.60 9403.70 9403.80 9403.90 4412.13.01

Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex. Ex.

15% 15% 15% 15% 15% 15% 15% 7% 20% 20% 15% 15% 15% 20% 20% 20% 7%

Ex.

28.5%

4412.13.99

Ex Ex.

23.5% 23.5%

4412.19.01

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REQUIRED DOCUMENTATION FOR IMPORTING PRODUCTS The basic Mexican import document is the Pedimiento de Importacion (import pediment). This document must be accompanied by:

A commercial invoice (in Spanish) A bill of lading Documents demonstrating guarantee of payment of additional duties for undervalued goods, if applicable.

The

import

duty

is

calculated

on

plant

value

(invoice)

of

the

product(s) plus the freight charges, and any other costs listed separately on the invoice and paid by the importer, such as export packing. In addition, inland freight cost, other fees (export packaging), plus duty paid and the customs broker's fee, if this service is employed is assessed on the total sales price of the product. The participation of a customs broker is strongly suggested when the exporter is not familiar with Mexican standards and Customs processing procedures and in order to avoid delays, hassles and barriers.

LABELING AND STANDARDS In addition, wooden furniture must comply with NOM-050-SCFI-2004, general labeling information for general products, published January 24, 1996 in the Official Gazette. When there is not an applicable NOM for a specific product, it must comply with the general labeling requirements specified in NOM-050-SCFI-2004. This labeling requirement applies only to goods intended for retail sales. Otherwise, the bulk packaging should have the required labeling information. Labeling must be in Spanish with the following information:

Generic name and brand Type of product

33

 Warnings or precautions on hazardous products Accessories information and description Guarantee term Method of use, handling, and care instructions for the product as required Specifications Name, and all data information in Spanish of the importer and/or distributor. A legend stating the target age of the consumer Net contents (as specified in NOM-030-SCFI-1993). Importer's RFC (Registro Federal de Causantes) number and/or

their industry association registration number

All products intended for retail sale in Mexico must bear a label in Spanish prior to their importation to Mexico. Products that must comply with commercial and commercial/ sanitary information NOMs (Mexican Official Standards) must follow the guidelines as specified in the applicable NOM. Technical regulations, including labeling requirements, issued by government agencies and ministries. Compliance is mandatory. These are some of the NOMs to consider for furniture exporters

NOM 117 SCFI-2003 (4/28/1997) Non compulsory commercial standards for retail and custom made furniture.

PROY-NOM-117-SCFI-2003 (3/18/2004) commercial practices, standards for retail and custom made furniture. (modification of the Mexican Official Standard NOM-117SCFI-1995.

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DISTRIBUTION/BUSINESS PRACTICES The best strategy for penetrating the Mexican market is to focus on identifying and working that with Mexican the distributors that market. All are of aware these of trends and know crucial the

changes

affect

distributors

decision-makers and competitors personally.

Wooden boutiques, quality

furniture and

is

sold

through

specialized

furniture

stores,

furniture

department furniture

stores, are

as well

as some in

supermarket

chains. High close store to is

wooden

more (their

popular target

specialized This

stores kind of

high-income

population

areas

customers).

always looking for new products to offer to their clients. Most of these stores purchase directly from the manufacturers in Mexico or from the Mexican

representatives of foreign firms. The furniture stores owned by manufacturers of wooden furniture such as Frey, DEurope, Hermanos Vazquez, Elektra, and Dico sell their own brands of domestic and imported wooden furniture. Department stores sell both domestic and imported brands of furniture. There are department stores covering vast areas in the country, these can be considered top end stores (Palacio de Hierro, Liverpool, Muebles Dico, Chippendale) and medium to low segments (Salinas y Rocha, Hermanos Vzquez, Electra, Famsa, Singer, Viana) that dominate the formal distribution market. Furniture distribution of low quality and rustic style it is done mainly, through street markets, state and local fairs, road stores, etc. Recommendations to enter this sector are to strongly identify and work with Mexican partners, that are up to date about the sector and trends that could affect the market. They would know in many cases, the decision takers within companies and the competition. Recently, as a representative of the new Mexican design, small design furniture stores are popping up constantly in urban areas where the very creatives exhibit try to sell their furniture

35

A local distributor or agent is often the best market intermediary. The main local distributors are:

Specialized stores. Firenze, Chippendale, Points, Marconi, Carrera, Tentation, Ligne Roset, Grange, Muebleras Frey, Muebles Lomas, Mueblera Gerard, Lpez Norton, etc. Quality superstores. Liverpool, Fbricas de Francia and Palacio de Hierro Mid-range superstores. Sears, d'Europe, Vadu, Briones, Home-Mart, Salinas y Rocha, etc. Low-end superstores. Wal-Mart, Elektra, Sam's Club, Costco, Gala Diseos, Hermanos Vzquez, Viana, etc.

FINANCING PRACTICES Success depends on the product and sector, but most sales to furniture manufacturers are made through direct contact. Making associations within the commercial chain and getting recommendations from chain members are the best ways to make sales. Sales calls made to small and micro businesses by sales representatives traveling along routes are also effective. Financing is important, as many buyers do not have liquidity or access to funds. Firms will for 30, 60 or 90 day payment terms. Commonly, manufacturers sell on 30-day terms. Distributors sell on 15, 30 or 45 day terms. Distributors give discounts of up to 15 percent to their best customers. In Mexico, only the largest and most credit worthy companies have access to commercial retailers bank financing stores) for and business furniture operations. This For includes these the large

(department

wholesalers.

companies,

an irrevocable letter of credit is the preferred means to pay when dealing with foreign manufacturers. The majority of companies in Mexico (small and medium size) operate on a cash basis and seek to buy on an open account basis from foreign supplier suppliers. until These they companies have may re-sold not make payment to local the foreign payment.

and

received

Department stores and specialized furniture stores like to receive credit from suppliers. Common practice is to extend 90-day credit terms. Larger suppliers

36

offer discounts of 20-30 percent off the suggested retail prices, depending on volume and payment terms. Smaller distributors may offer up to 60 percent off. Most chains of furniture stores and department stores centralize

purchasing. Usual payment terms vary from 30 to 90 days, depending on given discounts.

The government of Mexico operates two business development banks that provide trade financing to a relatively small universe of Mexican firms. These are

Nacional Financiera (NAFIN) and the Foreign Trade National Bank (Banco Nacional de Comercio Exterior - BANCOMEXT).

CONCLUSIONS AND RECOMMENDATIONS Furniture industry in Mexico is in a high percentage, artisan family business, and therefore not very competitive, despite the advantage of the low labor hand cost . Investment in technology has been and currently is really low , therefore processes that require machinery are rare rather than common. Lack of technology within the sector that has to be substituted with labor hand is a serious problem. Mexican entrepreneurs are conscious of this situation. That is why most common national products found in Mexico are rustic, economical, long lasting furniture with a very peculiar design that is even attractive to Europe or North America as country furniture, but that has lost popularity in the internal market and faced Chinese competition. Import Market is largely dominated by U.S. registering $21,149,568 Million USD in 2006, 50.11% of Mexicos total furnitures imports. An observation must be done considering that many of the furniture sold by the USA to Mexico are form Asian origin. Traders in the USA and some in Mexico use this scheme in order to enjoy preferential NAFTA tariffs. Chinas share grow rapid reaching 17.35% of Mexicos furniture imports. Italy is the leader in designer furniture sector, while Spain is tie close to Italy within this sector, offering both quality furniture, acceptable price according to their features and a more appreciated design.

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Formal distribution channels is departmental and furniture retail stores, though it exists a wide less formal distribution network , specially for low-end product that are sold through markets, fairs, road stores and some other informal circuits.

Tariffs for home furniture oscillate within 7% and 20% in 2007, depending on the tariff line, and the only NOM to accomplish is NOM-050-SCFI-2004.

Despite the fact that only 15% of the population account with a medium high income rate or even very high, it is advisable that behind that there is a potential market of 15 million people.

The top end market segment prefers imported and designer furniture. Other consumers purchase more economical and durable furniture, generally rustic style, since it is the one available at low prices. Finally and despite what could be taken for granted, it is observed a strong similarity with North American likes when it comes to furniture.

Malaysian companies have a high potential of market share in the Mexican market, observing competitive prices and penetrating with simple, contemporary and also low end markets.

Malaysian furniture are becoming well known among the Mexican market.

Several Malaysian furniture can be seen in department and specialized stores.

Interest for Malaysian furniture can be perceived within the sector.

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EVENTS

TECNO MUEBLE (June) It is a sister from EXPO MUEBLE , but it only exhibits machinery and supplies for furniture production. . It is organized by the Jalisco Wood and furniture suppliers Association and AFAMJAL ( Furniture Manufacturers Association) Products exhibited include abrasives,

adhesives, chipboard, anti pollutants,, saws, varnish, edges, closures, veneers, components, design, transport equipment, packaging, machinery, staples, metal components, tools, rubber foam, lighting, lacquers, laminates, wood, moldings, paint, software, boards, carpet, fabrics, etc. It is carried out in EXPO GUADALAJARA towards the middle of the year.

EXPO MUEBLE (INVIERNO& VERANO) (February & August) These twin Trade fairs are carried out twice a year, Invierno (winter edition) takes place I February and is by far the largest (size and exhibitors) Trade Fair devoted to furniture in the country. Summer edition is slower and smaller, still accounting a good participation. It is organized by AFAMJAL ( Jaliscos Furniture Manufacturers Association) and therefore the strong participation of Jaliscos companies is evident in this Fair. AFAMJAL is very protective of regional industry and no entrance to foreign exhibitors is allowed, unless they account with a established branch or office in Mexico.

This Trade Fair is devoted mainly towards Central American and North American buyers that attend the Fair seeking for new trends, accessories and obviously furniture. EXPO MUEBLEs exhibitors, come mainly from a regional basis, mainly Jalisco, San Luis Potosi and Aguascalientes; central Mexico states where furniture industry is big and consolidated, especially in Jalisco.

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International exhibitors are virtually nonexistent, and proportionally to the size if the fair, few finished furniture importers are found here. Though plenty of Mexican manufacturers do import raw materials and some machinery for furniture production.

EXPOMOBILIARIO/ PROMUEBLE (January) Carried out in Mexico Citys Centro Banamex, this fair is devoted to, both machinery and supplying materials to finished furniture. This is the largest international Trade fair regarding the buyers origin and as well, the exhibitors origin, but not the size of the exhibition floor. This Trade Fair is recommended for Malaysian companies wanting to explore the Mewxian market.

EXPO OCOTLAN MUEBLERA INDUSTRIAL (February & August) Carried out in Ocotln, Jalisco, a small city where a cluster of furniture manufacturers is located, this fair is organized by the Ocotln Firniture Manufacturers Association.

EXIMUEBLE (August) Carried out in Monterrey, Nuevo Leon, it is organized by the Nuevo Leon Furniture Manufacturers Association. , devoted to international buyers but not to international exhibitors. It observes same scheme as EXPOMUEBLE in Guadalajara.

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BIBILIOGRAPHY

ALL DATA PROCESSING LTD. 2004, Mexico , December, 2004. Zayas, Alicia, 2005. Industry Sector Analysis: Mexico-Furniture Manufacturing Industry. Mxico, Guadalajara. MOBLAJE MAGAZINE WORLD TRADE ATLAS

INTERNET RESOURCES www.inegi.gob.mx INEGI: Instituto Nacional de Estadsticas, Geografa e Informtica. (National Institute for Informatics, Statistics and Geography) www.siem.gob,.mx SIEM: Sistema de Informacin econmica Mexicana. (Mexican Economic Information system) www.afamjal.org.mx www.economia.gob.mx AFAMJAL (Jalisco Furniture Manufacturers Association) MINISTRY OF ECONOMY

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