Shaping The Future Through Innovations & Services

With companies shifting their focus to the lucrative ASEAN market, Daniele Campetella, MD of Biesse Group Asia, shared the motivations behind the company’s new facility in Malaysia and how the market will continue to evolve forging forward. By Jackie Wong

 

Global furniture production has been growing constantly in the last five years. According to the CSIL World Furniture Outlook, the market is estimated to be worth around US$480 billion this year, an increase from US$437 billion in 2013. 

Most of this growth comes from the Asia Pacific region with China more than doubling their production volume between 2009 and 2014. Last year, over half of the world’s furniture production was in China. 

With market saturation and slowing growth in China, Southeast Asia has become the next business hot spot. Featuring a population of over 600 million, including a rapidly growing middle-class, the region has been earmarked to become the manufacturing hub of the world. 

The establishment of the ASEAN Economic Community (AEC) by 2015 will remove almost all tariffs for intra-ASEAN trades. By 2025, it is projected that more than half of the world’s consumers would live within a five to six hour flight from the ASEAN region.

Naturally, this has led many companies to start venturing into Southeast Asian countries. “Southeast Asia is growing fast,” Daniele Campetella, MD of Biesse Group Asia says. “I think it will benefit from the slowing down of the China market.”

Strategic Expansion

Biesse, an Italian manufacturer of woodworking technologies, has recently strengthened its presence in the region with the opening of a 4,500 sq m showroom and warehouse in Malaysia, just 25 minutes away from Kuala Lumpur International Airport.

The strategic move was more of an expansion  rather  than  relocation  plan. "The office in Singapore is still running, and  we  have  decided  to  relocate  the small  office  we  had  in  Malaysia  to  a much  bigger  facility,  with  space  for  a showroom and a warehouse." he adds. 

"One  of  the  reasons  is,  of  course,  the great resources we can find in Malaysia that  makes  it  an  ideal  location  as  a regional hub."

Recognising the growth potential of the region, the company felt that it was necessary to have a local facility to showcase its technologies and enable customers to interact with the machines before making any purchase decision. 

“We started thinking how and where. Malaysia has good infrastructure,” he explains. “We wanted a place that is close to an international airport. The Kuala Lumpur International Airport is a very efficient hub and it helps us to get close to our Asian customers.”

The facility’s close proximity to the airport also makes it easier for the company to ship components directly from the warehouse. “Malaysia is an English speaking country. It makes it easier to attract talented people and [for overseas staff] to adapt to this country. We have built a wonderful team with competent and committed professionals. That is a very important starting point to a complicated project.”

The Malaysia office will service nine Asia countries including Japan, South Korea, Thailand, Malaysia, Singapore, Indonesia, Vietnam, the Philippines and Taiwan. 

Explaining the company’s decision to have different business entities working on the China and Asia markets, Mr Campetella said that “China is a complex market. In China, we have a production unit in Dongguan. We have our own organisation dedicated to China. We are doing a lot in China. We believe that we can get market share [there] in a short time, and China needs a dedicated organisation.”

Our area is quite huge with nine countries and each country is different with a different set of culture. In my short stint in Asia, ... I understand that from country to country, you have differences in ideas, cultures and habits. We have our strategies and we have to adapt our strategies to every different market. It is a matter of respect to each country. We do not want to change anything, we want to serve them.”

Although the two markets are kept separated, the company ensured that the two areas would share the same common standards. The company offers machines that are designed to meet specific regional needs. “We always say that whether the machines are made in Italy, China or India, they are made with the same philosophy, quality standards, and the same critical components. The core of the machines is always the same. We want to preserve our quality for our customers.” 

Creating Local Presence

Managing markets across such expanse can be a challenging task, making it essential to have competent local teams in each market to provide faster response time. “We are working a lot on our network to provide service assistance. We are training people and increasing the competence of our technicians. We have put a lot of effort on spare part management, especially on training the team because the warehouse itself is not  enough, the difference always lies with the people.” 

The Asia office is a commercial unit and the company’s research and development is done in Italy. The objective of the Asian headquarters is clear and simple: to increase market share and sell machines through good services. “I think that aftersales service is the key, so we are leveraging a lot on services,” Mr Campetella said.

Southeast Asia has traditionally been a tough nut to crack in terms of the introduction of automation technology. However, with factors such as rising labour costs, there are more and more interest in technology and automation. “There are still a lot of companies that are without automation and base their production on low-cost labour,” he explains. “This is something that is changing. There are more and more automation solutions available now.”

Asia is also affected by the lack of raw material supply as the region tightens its regulations and control over environmental issues such as sustainability and pollution. 

“It is much more difficult to find solid wood and more customers are shifting to other materials such as medium density fibreboards (MDF). The way of manufacturing furniture will be different. There is more focus on board furniture, which, in my opinion, makes it more sustainable. From the energy point of view, I do not think it is a major concern in terms of cost structure of production to customers in Asia.”

Looking ahead, Mr Campetella believes that with greater purchase power, consumers would want more personalised products. “The industry must be prepared from the logistics and production point of view to answer to the demand. They must update their processes and production to be flexible. I think that flexibility is important.”

Flexibility can only be achieved through technology. This bodes would bode well for the company whose strength, as Mr Campetella described, lies in its ability to “stay ahead and be innovative.”

 

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  • Last modified on Wednesday, 22 July 2015 03:02
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