Chat with any “old school buyer” of Chinese antiques about the late eighties/early nineties and stories of 200 RMB rosewood tables and Ming dynasty porcelain for a few hundred RMB will bubble quickly to the surface. In recent times, this period might be considered the modern birth of the industry, with western buyers in Hong Kong at the forefront. Ten years later, Chinese mainland buyers have become the dominant force with Hong Kong playing backseat to Beijing, Ningbo and Zhongshan – all playing equally major roles in the industry. How times have since changed! The last three years however, have seen lighting fast changes within many of  China’s industries. And the  antiques/reproductions segment has in no means, escaped this. So what can we expect in the future?

For suppliers, factories and workshop

Labor Shortages:There has been much coverage in the media attesting to fact that, despite its 1.3 billion strong population, China is experiencing labor shortages in many industries/areas (particularly in the pearl river delta). In the furniture industry, the effect is evident in the average age of a carpenter with a glance inside any workshop revealing most are well into their 40ies. As many young people today have no desire to pursue a career perceived as dirty, backwards, low paid and labor intensive, expect this imbalance to continue.  Its no secret within these circles that each year it becomes increasingly difficult to find/employ skilled Chinese carpenters and within five to ten years this will become a major problem for the industry.

Higher labor costs: In 2007, the starting salary of a college graduate ( w/computer and language skills) working in a foreign company was equal to or exceeded that of a Chinese carpenter. Its important to realize that office staff are generally  individuals who live/work in the city, have college degrees, computer skills and likely foreign language skills as well. Yet by 2010, the monthly salary of  carpenter from the countryside, with a middle school or high school education living and working in the factory will exceed (in many cases be double or more) that of entry level office worker.  Therefore its no surprise the average monthly salary of a carpenter is a hot topic among workshops this year. Once treated as unskilled labor, carpenters and antique restorers are now essentially taking their rightful place as skilled craftsmen with compensation to match.

Diminished bargaining power: Chinese treat business as war and negotiating for a raise is no exception. Stories of the Nouveau riche coal miners snapping up high priced antiques,  car buyers paying for their buicks with cash, the international spectacles of the Beijing Olympics, twenty years of strong growth and even the local media’s heavy propaganda coverage of the “communist economic miracle” have given rise to a “sky’s the limit” mentality. This combined with massive social pressure to get rich have turned many workers into mercenaries. Despite the global economic crisis and subsequent slow recovery, workers continue to demand increases and stories of workers defecting to the factory down the road for a mere extra 50 RMB are very common. In China loyalty in not earned but rather purchased.

Improve/Innovate or go under :   In other words, all the things which should occur in a maturing market. Of course, this will also present both opportunities and challenges. Some general trends:

• Both Chinese and foreign customers have a multitude of choices and are gradually demanding better quality-better value for their money.
• Foreign customers particularly import buyers, reluctant to pay higher costs will need extra incentives or greater value added. In cases where customers are unwilling to pay more, producers may need to operate under thinner margins, provide better value for the money or seek out new customers.
• Price was once the dominant (only) factor. Good design has now become an additional buying factor.
• Its no secret (or shame in) that China wants to climb up the value chain. In practical terms, this means industries perceived as unskilled, labor intensive or resource heavy can expect no assistance from the government in the form of tax breaks, incentives or loose regulations.
• The Lacy Act: More paperwork for exporters who are sending product to the US. See here for more info.

Don’t ignore the domestic market:

Searches for “Chinese antique furniture” have decreased on Google since 2004, yet on Baidu (Google’s chinese language competitor) an equivalent Chinese language term has held steady and now after the economic crisis appears to be once again rising.

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