Innovation in China's furniture industry

Abstract

Innovation is considered the ultimate drive for business success. In the face of a fast-growing Chinese furniture industry, low-cost advantages have been widely acknowledged by industry observers as the main advantage for Chinese manufacturers in global competition. The industry's innovation capabilities are, however, less studied. This study explores the industry's recent development and measures its innovativeness via a combination of qualitative and quantitative approaches. Management-level interviews were conducted with 18 Chinese companies known as innovation leaders. Based on this first, qualitative stage of the study, a quantitative, second stage gathered data from 120 respondents at a large, China-based trade show. Correlations among four key variables of interest - innovation, competitiveness, company size, and export intensity - are assessed. Results suggest that Chinese furniture firms are pursuing innovation with three equal focuses on product, process, and business systems. Incremental innovation is more pursued by the Chinese firms than radical innovation. Judging from innovation sources, a responsive-type market orientation has been adopted by the industry. Innovation is significantly correlated with competitiveness and company size, suggesting that large firms are likely to become innovation leaders which may, in turn, improve the overall competitiveness of the industry. The industry is known for its high export intensity; however, export intensity is only found to be correlated with process innovation, suggesting that gaps between the domestic and overseas markets are narrowing in terms of product and business strategies. An innovation-profitability relationship, which has been widely acknowledged in the literature, was not found in this study. Implications are discussed.

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