Furniture Sector in

Nepal

Product Market Study

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Table of Contents
1.0 INTRODUCTION.................................................................................. 3
2.0 INDUSTRY OVERVIEW & OUTLOOK..................................................6
3.0 SEGMENTATION............................................................................... 11
3.1 PRODUCT SEGMENTATION................................................................................. 11
3.2 PRICE SEGMENTATION WITHIN PRODUCT....................................................... 12
4.0 ROLE AND FUNCTION OF FURNITURE VALUE CHAIN....................15
4.1 RAW MATERIAL SUPPLIERS................................................................................15
4.2 SAW MILLS.............................................................................................................16
4.3 LOG TRADERS.......................................................................................................17
4.4 CATEGORIZED FURNITURE INDUSTRIES..........................................................17
4.5 CONSUMERS..........................................................................................................19
4.6 ENABLERS............................................................................................................. 20
5.0 DISTRIBUTION & LOGISTICS...........................................................23
6.0 ISSUES AND CONSTRAINTS.............................................................25
7.0 IMPORTED FURNITURE IN NEPAL...................................................30
8.0 ONLINE FURNITURE MARKET..........................................................33
9.0 OPPORTUNITIES & PROMOTIONAL STRATEGIES FOR
MALAYSIAN FURNITURE MANUFACTURERS..........................................35
9.1 OPPORTUNITIES....................................................................................................35
9.2 PROMOTIONAL STRATEGIES..............................................................................36
10.0 TRADE STATISTICS – NEPAL (FURNITURE).....................................40
10.1 NEPAL’S IMPORTS FROM THE WORLD (TOP 10 IMPORT SOURCES)............40
10.2 MALAYSIA’S FURNITURE EXPORTS TO NEPAL (BY TYPES)...........................41
11.0 LIST OF FURNITURE IMPORTERS IN NEPAL...................................43

1
INTRODUCTION

2
1.0 INTRODUCTION

 Nepal, a landlocked country in South Asia region is still recovering from

the devastating effect of earthquake which struck at it on April 2015.

 Many people had become homeless after the earthquake, which slowed
down almost all the sectors in the country. However, with time things
have started to improve and there is a lot of reconstruction and rebuilding
happening in Nepal.

 Furniture was one amongst all the sectors that got badly affected and is
slowly recovering from it at the moment. Furniture coupled with furnishing
requirement normally starts only after completion of reconstruction and
rebuilding. Hence, as the process of reconstruction and rebuilding is at
the completion stage at some places in Nepal, the business in furniture
industry is gradually picking up.

 According to the Nepal Furniture and Furnishing Association (NFFA), the

country’s furniture market has an investment of approximately 25 billion
NRs (US$ 2.31 billion) and has been employing over 150,000 individuals
in this sector. It is estimated to be growing at an annual rate of 25%.
Furniture industries in the country are diverse in size, with their total
capital ranging from as low as NRs 30,000 (US$ 278) to as high as NRs
250 million (US$ 2.31 million) . These industries are fulfilling the demand
of both rural communities and urban dwellers.

 Customers prefer domestic furniture for its durability and quality of wood.
However, inadequate technology to create a superior finish and to
manufacture knock down furniture (pieces that can be assembled later)
limits the scope of furniture industries in Nepal.

 It is perceived that the influx of imported furniture has not really badly
affected the demand of rural furniture industries. The scenario is quite

3
 similar for furniture industries situated in urban areas and their periphery
that have targeted their products for city dwellers with limited resources.

 With increasing purchasing power, most consumers in big cities are

demanding designer and imported furniture, and the demand for these
high-end products has been rising significantly. This shift in preference
can be attributed to the fact that imported furniture is elegant, has a
superior finish and the product offerings match the demand of urban
dwellers.

 The total value of furniture imported from January to December of 2015

was US$ 10.6 million (ITC Trademap shows US$11.2 million) and for
wooden furniture imported was US$ 5.3 million. Import of wood and wood
based products (rough wood, swan wood, veneer, play wood, particle
boards etc.) by Nepal was about US$ 33.8 million for the same period.
( Source: www.tepc.gov.np).

 Most of this imported furniture comes from China because of its cheap
price. Demand for furniture imported from China presently is said to
account for more than 60% of the imported furniture market. Furniture
from Thailand, USA, India, Malaysia, Finland, Indonesia, UK and Turkey
are also popular in the domestic market.

 While the import of furniture has adversely affected domestic furniture

industries, it has also created opportunities for domestic manufacturers to
upgrade their skills to remain competitive in the market. Sensing the
potential for high-end furniture, a number of domestic furniture industries
in urban areas have started focusing on developing durable designer
products. However, not many players are focused in this development, as
the technology being used by these industries is expensive and it is
difficult for small and medium sized industries to afford this technology.

4
INDUSTRY OVERVIEW &

OUTLOOK

5
2.0 INDUSTRY OVERVIEW & OUTLOOK

 The Nepalese furniture & furnishing market consist of furniture, home

textiles and other home décor products.

Furniture

NEPALESE FURNITURE &

FURNISHING MARKET

Home Textiles Other Home

Décor Products

Figure 1: Nepalese Furniture & Furnishing Market

 The above defined furniture & furnishings market in Nepal is pegged to

be around US$ 119 million in the year 2015 and is estimated to be
around US$ 137.2 million by the end of year 2016, as per the report
published by Global Research & Data Services.

 The furniture manufacturing sector in Nepal makes a marginal

contribution to the GDP.

 As per the report published by Global Research & Data Services, the
market data that they have had included sofas, sofa sets, sofa beds,
chairs and seats for domestic and public premises, restaurants, hotels,
workrooms, offices, cinemas, theatres, transport equipment and gardens,
kitchen furniture, office furniture, bedroom furniture, living room furniture,
garden furniture, display cases, shelves, counters and other furniture for

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 shops, furniture for restaurants, schools and churches, other furniture
and furniture parts.

 According to the same report, more than 85 % of the Nepalese furniture

market is pretty much unorganised and the collected data is divided into
the following product groups:

i. Seats
 This group includes aircraft seats, motor vehicle seats, swivel
seats with variable height adjustments, seats which gets
convertible into beds, upholstered seats with wooden frames,
other seats with wooden frames, upholstered seats with metal
frames, other seats with metal frames, seats of bamboo, osier,
cane and other materials and seat parts. The market size of
this group was US$ 5.4 million in the year 2015 and it had a
contribution of 4.54% share of the total furniture sector. The
market size for this product group is expected to grow to US$
6.0 million by the end of the year 2016.

ii. Mattresses
 This group included uncovered cellular plastic or rubber
mattresses, stuffed mattresses, spring interior mattresses,
mattresses internally fitted with a supporting material and
mattress supports. However, it excludes inflatable rubber
mattresses. The market size for this group was US$ 17.3
million in the year 2015 and is expected to grow to US$ 18.8
million by the end of year 2016. The contribution by this
product group was approximately 14.54% share of the total
furniture sector in 2015.

iii. Office Furniture of Metal

 As the title suggest this product groups indicates to all office
furniture made out of metals. The market size for this group
was US$ 17.1 million in the year 2015 and it is estimated to
grow to US$ 19.6 million by end of 2016. The contribution of

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 this group was approximately 14.37% share of the total
furniture sector in 2015.

iv. Other Furniture of Metal

 This product group consists of all other furniture made of
metals which are used in various industries. The market size
for this section was US$ 25.2 million in the year 2015 and is
expected to grow to US$ 31.5 million by the end of the year
2016. This group contributed to 21.18% share of the total
furniture sector in 2015.

v. Bedroom Furniture of Wood

 This product group basically consists of all bedroom furniture
made out of wood such as bed steads and other wooden
bedroom furniture. The market size of this group was US$ 2.5
million in the year 2015 and is expected to grow only
marginally to US$ 2.6 million by end of the year 2016. The
contribution of this group was just 2.1% share of the total
furniture sector in 2015.

vi. Kitchen Furniture of Wood

 This product group consists of all kitchen furniture made out of
wood such as cabinetware and other wooden kitchen
furniture. The market size of this group was the lowest
amongst others and was just US$ 1.7 million in the year 2015
and is expected to grow to US$ 2.1 million by end of the year
2016. Contribution by this group was the lowest with 1.4%
share of the total furniture sector in 2015.

vii. Office Furniture of Wood

 As the title suggests all office furniture made out of wood is
considered in this product group. The market size of this group
was US$ 6.9 million in the year 2015 and surprisingly this is the
only product segment which shows a decline in growth

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 and is expected to fall to US$ 6.1 million by end of year 2016.
The contribution of this group was around 5.8 % share of the
total furniture sector inv2015.

viii. Other Furniture of Wood

 This product group consists of all other furniture’s made out of
wood. The market size of this group was US$ 19.4 million in
year 2015 and is expected to grow to US$ 23.1 million by end
of the year 2016.The contribution of this group was 19.41%
share of the total furniture sector in 2015.

ix. Other Furniture of Plastic

 This product group consists of all furniture’s that are made out
of plastic. The market size of this group was US$ 6.3 million in
the year 2015 and is expected to grow to US$ 7.2 million by
end of year 2016. This group contributed to 5.3% share of the
total furniture sector in 2015.

x. Parts for Furniture

 This has been categorized as a separate group. The
manufacturers are focused in manufacturing various parts
which are needed in the furniture sector such as table legs,
plugs, etc. The market size for this group was US$ 5.2 million
in the year 2015 and is expected to grow to US$ 5.7 million by
end of 2016. This group contributed to 4.34% share of the total
furniture sector in 2015.

xi. Other Furniture

 This is product group which mainly focuses on furniture’s
made out of various other raw materials such as from osier,
cane, bamboo and other materials. The market size for this
group was US$ 12.1 million in the year 2015 and is expected
to US$ 14.5 million by the end of 2016. This group contributed
to 10.2% share of the total furniture sector in 2015.

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SEGMENTATION

10
3.0 SEGMENTATION

3.1 PRODUCT SEGMENTATION

 Furniture in general assigned to HS Code 9403, which includes

wood furniture, metal furniture, plastic furniture, and furniture made
from other materials including cane, osier, and bamboo. Wood
furniture products are further segmented into office furniture, kitchen
furniture, bedroom furniture, and dining/living and shop furniture
with separate HS codes. Along with the segments mentioned
above, there is another important segment in Nepal i.e. door and
window frames. Almost all rural entrepreneurs, furniture industries
situated in and around district headquarters and market centres,
and even saw mills are manufacturing these frames.

Figure 2: Market segmentation as per the demand of customers.

(Source: The Multi Stakeholder Forestry Programme)

 A total of 59 furniture industries of all scales (as per the capital

invested) were consulted during a study conducted during a Multi
Stakeholder Forestry Programme (MSFP). It was observed that the
frames comprise more than 51% of the products of consulted
furniture industries. Moreover, rural furniture industries mostly
manufacture the frames as a service, with customers bringing their
own wood and the entrepreneurs manufacturing the frames.
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  Door and window frames are the major segment of rural furniture
industries, and are providing substantial employment opportunities
for rural entrepreneurs.

 Bedroom and living room furniture (low beds, conventional beds,

cupboards, box beds, and tables) constitute 22% of the products,
followed by kitchen furniture (kitchen cupboard, simple dining
tables), shops (partition, shop rack) and wood carvings.

 Furniture industries rarely manufacture office furniture because

offices generally demand high volumes and industries find it hard to
meet this demand on time with their existing capacity and human
resources.

 However, office furniture will be a major segment in the coming

years therefore frames, bedroom and living room furniture and
office furniture are selected as important segments

3.2 PRICE SEGMENTATION WITHIN PRODUCT

 The price segmentation within product has been analysed using the
breakdown of costs in manufacturing that particular product. The
study conducted during MSFP compared manufacturing costs of
low beds and cupboards. The price segmentation is almost similar
in both the cases. Plywood and labour costs share the highest
percentage of cost (23% each), followed by timber (22%). Except
for paint, all the other costs are retained in Nepal in case of the
furniture industries.

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Figure 3: Price segmentation as per the cost of production.
(Source: The Multi Stakeholder Forestry Programme)

13
ROLES & FUNCTIONS OF

FURNITURE VALUE CHAIN

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4.0 ROLE AND FUNCTION OF FURNITURE VALUE CHAIN

4.1 RAW MATERIAL SUPPLIERS

 The Federation of community Forestry Users Nepal (CFUGs) and

private forest owners are the primary suppliers of raw materials for
furniture production, mostly supplying wooden logs. There is a
specific mechanism to provide the wooden logs in case of
Community Forestry (CF), and the process is governed by District
Forest Office (DFO). CFUGs can allocate a specified quantity of
wood/logs to its users as per their operational plan. Private forest
owners have to get permission from DFO to cut their standing trees
and sell to processors (saw mills) or log traders.

 Another source of the raw material (wood logs) would be the

government forest. DFO and the Timber Corporation of Nepal
(TCN) are involved in the collection and sale of timber from
government managed forests.

 However, in the recent years, the supply of timber is hindered by a

circular issued by the Commission for Investigation of Abuse of
Authority (CIAA), policy maker’s conservative approach which
eschews scientific forest management, discretion of DFO officials,
and so on. The District Development Committee (DDC) is involved
in selling the seized timber via auction.

 As per a news report published in June 2016 by Federation of

Forest Based Industry and Trade Nepal (FENFIT ), the current
annual demand for wood is about 50 million cu. ft. but only 200,000
to 300,000 is supplied from Nepal. This shortage is fulfilled by
importing material in the form of wood, aluminium, steel, UPVC,
rounded wood, readymade doors and furniture.

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  It was reported that at least 29,344,422 cubic feet of timber was
imported from Malaysia, Indonesia, Myanmar, Viet Nam, New
Zealand, Denmark, Africa and Australia in the previous fiscal year at
the cost of NRs 88 billion (US$ 0.82 billion). It was also noted that
after 2015 devastating earthquakes, about 130 million cubic feet of
timber was imported.

 However, members of the FENFIT was unhappy that at least 37.6

million cubic feet of timber from the country’s forest decayed and
was wasted owing to strict regulations against extracting dead
trees. The existing provision prioritises imported timber, as there are
no customs charges on timber in Nepal.

 One of the FENFIT members has claimed that in today’s present

scenario, it is too hard and too expensive to buy timber from Nepali
forests. According to him, most warehouses have at least 80% of
their stock imported. He also added that Nepali Sal timber (i.e.
Balau or Selangan Batu in Malaysia) cost around NPRs 5,800 (US$
53.74) per cubic feet, whereas Malaysian version (Balau) only cost
around NPRs 4,200 (US$ 38.92) per cubic feet and it’s easily
accessible. This has also encouraged supply of wood through illegal
practices and smuggling.

 Nepal currently imports timber from Myanmar, Indonesia and

Malaysia. According to a Programme Coordinator at FENFIT,
recently a procedure to import sawn timber from South Africa has
also been approved as importing sawn timber results in lower prices
for timber, as well as relatively simple legal procedures. These
imported timbers are semi hardwood (inferior to Sal, similar in
quality to Asna, and superior to Salla).

4.2 SAW MILLS

 Wooden logs for saw mills within the country are mostly sourced
from the Terai and mid hills. Wood of varying quality (Sal, Sissoo,
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 Saj, Kadam, Utis, Salla and etc.) is collected from Government
Forestry (GFs), Community Forestry (CFs), and private lands. Saw
mills then process these logs into timber of different sizes, and sell
the timber to furniture industries. The price of the timber is
determined by the type of the timber, with Sal, wild Sissoo and
Satisal being the most valuable. In some cases, saw mills
themselves manufacture the furniture including door and window
frames to diversify their product, and to generate additional income.

4.3 LOG TRADERS

 In some cases, log traders purchase logs via auction mostly from
Community Forestry (CFs), Government Forestry (GFs) and Timber
Corporation of Nepal (TCN) and sell them to saw mills. Anyone who
is PAN and VAT registered as dealers in forest-based products
(including Kattha) can be a log trader.

4.4 CATEGORIZED FURNITURE INDUSTRIES

 At present, about 5,000 industries and trade businesses dependent

on forestry have invested of approximately NRs 25 billion (US$ 2.31
billion) and about 150,000 individuals (mostly skilled and unskilled
labourers) are employed. In furniture industries, the skilled labour or
contractors often hire the semi-skilled or unskilled labour.

 This sector has been contributing about NRs 5,000 million (US$
46.33 million) annually to the government as per FENFIT.
Depending upon their scale and area of operation, the furniture
industries can be categorized into four types as follows:

i. Industries that focus their products for rural communities:

- Different organizations have provided basic furniture-making
training to rural community members. These trained
individuals are operating wood furniture enterprises to meet
the basic demand of community forest user groups of rural
17
 areas. Generally, CFUG members bring the raw material
(wooden logs) to the enterprise and the entrepreneur
manufacture furniture on demand. Mostly, they manufacture
door and window frames, doors, and conventional beds and
the entrepreneurs charge a nominal fee for the service.
Their services rarely reach the urban areas.

- Most of these rural enterprises are not registered with

Department of Cottage and Small Industries (DCSI) or
Cottage and Small industries Development Board (CSIDB)
and therefore mainstreaming them is an urgent need. Their
registration is primarily hindered by the government policy
of not allowing any forest based industries within 3 km of
the forest in the hills and 5 km in the Terai, and secondly by
the lengthy and tedious registration process even for
industries that are located further away from the forest.

ii. Industries that focus their products for village and district
headquarters:
- These entrepreneurs reside at or near the district
headquarters and meet the demand of neighbouring
customers. They either purchase the logs/timber or
manufacture the furniture on demand, or the customer
brings logs or sawn timber from which they produce the
requested furniture and charge for the service. They have a
variety of sources of wood, including saw mills, private
lands, and community forests. They also sell furniture
manufactured in other districts. About 70% of the industries
situated in the municipalities are registered and those
situated outside the municipalities are still unregistered.

iii. Urban Industries:

- These are generally large scale industries, and some of
them have their own saw mills. They are well organized,
18
 have their own sales outlet, and provide permanent
employment to skilled and unskilled manpower. Almost all of
these industries are registered because most of the offices
demand a VAT invoice. Their regular customers are banks,
offices, corporate houses, business complexes, employees,
teachers or small scale businessmen. These industries
manufacture furniture of all types, quality and design. Their
market is expanding due to the increasing purchasing power
of urban dwellers. The price is generally high due to the
quality of timber used and the superior finishes.

iv. Onsite manufacturers:

- The fourth group are those furniture entrepreneurs who
provide their services by visiting the customer’s house and
manufacturing the requested products onsite. They
generally offer low service charges as they do not have to
pay rent and bear other additional costs. None of them are
registered to Department of Cottage and Small Industries
(DCSI), Cottage and Small industries Development Board
(CSIDB) or the Internal Revenue Office (IRO), causing loss
of government revenue. They are also posing a threat to the
existing furniture industries that have sales outlets in the
cities. More than 70% of such manpower comes from India.

4.5 CONSUMERS

 The purchasing capacity of consumers and availability of furniture in

their proximity determines the type of furniture used. E.g.:
- Consumers in rural communities mostly demand door and
window frames, and simple beds;
- Those on the highways and near village and district
headquarters demand frames, cupboards, kitchen cupboards,
beds etc.;

19
 - Urban dwellers demand all types of products offered; and
- Offices and corporate houses mostly demand tables, chairs, and
designer products.

4.6 ENABLERS

 The Ministry of Industry, Commerce and Supplies (MoICS), Ministry

of Information (MoI), DCSI, CSIDB, CFUGs, IRO, Ministry of
Forests and Soil Conservation (MoFSC), Department of Forests
(DoF), and DFO are among the policy level enablers.

 DCSI and CSIDB are both involved in registration of furniture

industries and providing training to individuals on demand. IRO
issues PAN and VAT number, collect revenue and VAT amount and
are responsible for checking and verifying accounting matters and
malpractices like under billing.

 DFO is involved in policy implementation, registration of forest-

based industries, sale of forest-based products and approving the
operational plan of CFUGs. Even private land owners have to
receive permission from the DFO to cut trees in their private lands.
The DFO is guided by the five year district forestry plan which
needs to be approved by DoF.

 MoICS and MoFSC prepare and promulgate the policy, rules,

regulations and circulars. The TCN is a semi-autonomous
government body that has the authority to sell timber throughout
Nepal, in coordination with DFO.

 Commission for the Investigation of Abuse of Authority (CIAA)

regulates the harvesting, sale, and auction of timber by publishing
circulars.

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 The commodity associations facilitate the business by addressing
policy issues. Nepal Furniture & Furnishing Association (NFFA) at
the central level, and its district offices are the commodity
associations. However, the district commodity associations are not
active in raising their voice against trade barriers.

 Federation of Forest Based Industry and Trade Nepal (FENFIT) is

the umbrella organization of forest-based industries.

21
DISTRIBUTION & LOGISTICS

22
5.0 DISTRIBUTION & LOGISTICS

 In general, Nepalese manufacturers use a three-tier selling and

distribution structure, namely area distributors (agent and brokers),
local wholesaler and retailers to service Nepalese consumers who are
scattered in three belts of Nepal i.e. terai, hill and mountain regions.

 Nepalese companies sell furniture through distributors as well as sell

directly to the consumers. The larger companies have their own
commercial offices and showrooms in all large cities in Nepal. In order
to achieve effective sales companies usually appoint several
distributors in the valley and these distributors will be having a strong
network of local wholesalers who deal directly with the retailers in their
respective areas.

 Logistics (marketing) is gradually improving in Nepal. Most distributors

use road transport particularly truck for inbound logistics and small
delivery vans and three wheelers for city level distribution. In rural areas
without roads, animal based transportation such as bullock or buffalo
carts are popular.

 In the export and import trade, the container trucks have replaced the
open trucks which were previously used. The opening of dry port at
Birganj with broad way railway connection with Kolkata port is also
greatly facilitating foreign trade logistics.

 In a latest development, Visakhapatnam (also known as Vizag) Port

has been declared as the second gateway port to Nepal. Although
Visakhapatnam Port is located 1,436km away from the country, the port
in Andhra Pradesh is expected to facilitate Nepal’s third-country trade,
as it is a deepwater port, where bigger cargo vessels can be docked.
Use of bigger container ships for movement of cargoes reduces ocean
freight cost. Goods that arrive at Visakhapatnam Port can be ferried
into Nepal using cargo trucks and railway. These cargoes can enter the
country via Nepal-India border points located in Biratnagar, Birgunj,
Bhairahawa and Nepalgunj.
23
ISSUES AND CONSTRAINTS

24
6.0 ISSUES AND CONSTRAINTS

 A large numbers of stakeholders are involved in the furniture industries

value chain and gaps exist at each level of involvement. Some of the
related issues and constraints as follows:

i. Registration
o Requirement of a consensus of DFO, Land Survey,
DCSI/CSIDB and VDC/municipality for forest based enterprise
registration. Most of the enterprises are operating without
registration, both in villages and municipalities.

ii. Location Restriction

o Forest based enterprises should be located at least 3 km
away from the nearest forest in the hills, and 5 km away in the
Terai region. Hilly regions have fragmented forests and it is
extremely difficult to find a site that is at least 3 km from the
nearest forest. The rule also affects furniture entrepreneurs
near the Terai forests and enterprises are operating without
registration.

iii. Pricing Restriction

o CIAA circular to maintain a uniform price in timber: According
to this circular, districts will not sell timber at a lower price than
in adjoining districts. Eventually increase the price of timber
throughout Nepal

iv. Price of Timber during auction

o As per a survey conducted in 2015, the government rate of
Sal is NRs 853 per cu. ft. but TCN fix the minimum rate of NRs
1397.5 per cu. ft. Supreme Court decided to maintain the
government rate of 853 per cu.ft. but it is still not in practice. It
is the main bottleneck for timber and furniture entrepreneurs.

25
 v. Multiple taxation, hurdles and unseen costs
o Forest based entrepreneurs have to pay multiple taxes (e.g.at
DoF, VDC, DDC, local bodies etc.).

vi. Conservation based approach rather than adopting scientific

forest management
o The new format to prepare district forestry five year plan urges
scientific forest management (use of old, dead and fallen
trees) but its implementation is at the discretion of District
Forest Officers, and the format is not in practice in most of the
districts. This limits the supply of timber, which in recent years
is being compensated by importing sawn timber from Burma,
Indonesia and Malaysia.

vii. Operational Plan of CFUGs

o CF provides timber to its users (limited quantity) but there is
no provision to provide timber for community-based micro
enterprises. Rural furniture entrepreneurs cannot purchase
timber from outside because of its high price. Future of these
rural furniture industries is uncertain.

viii. Lack of timber processing area

o Government should allocate separate zones for timber
processing enterprises in urban areas.

ix. Procurement requirement

o During procurement, contracts have to be awarded to saw
mills or furniture manufacturers that are registered, renewed,
and paying regular tax to the government.

x. Marketing Skills
o Business management and marketing skills of rural
entrepreneurs and competitiveness of Micro, Small and

26
 Medium Scale Enterprises (MSMEs) is still behind as per
International standard.

xi. Technology Constraints

o Inadequate technology to process timber with minimum loss
and inadequate technology to optimize the use of sawn timber
for furniture industries to reduce loss is still been used.

xii. High costs of timber

o Timber becomes very expensive by the time it reaches the
consumer. As per the MSFP study conducted in 2015, the
government rate of sal is NRs 853 (US$ 7.90) per cu. ft. for
logs. TCN sells it at a minimum rate of NRs 1397.5 (US$
12.95) per cu.ft. There are other hidden costs and by the time
the logs reach the saw mill, the price is around 3000 (US$
27.80) per cu. ft. The yield of sawn timber from these logs is
around 65%, and customers have to pay NRs 4500 (US$
41.70) to NRs 5300 (US$ 49.11) per cu. ft. of sawn timber. A
major bottleneck for the growth of enterprises, making the
future of Nepali furniture industry uncertain.

xiii. Lack of Financial Capital

o Most forest based entrepreneurs do not have adequate
financial capital for industry establishment: Hence, there is a
need to link the furniture industries with resourceful CFUGs,
cooperatives, banks etc. and facilitate provision of collateral
free loans.

xiv. Inadequate roadmap for banks and financial institutions to

invest in the forestry sector
o Banks and Financial institutions don’t have a clear roadmap
for the investment which are done in forestry sector. Hence,
there is a need to create a lobby with banks and financial
institutions to ask for such a roadmap.
27
 xv. Geographical Setting
o Nepal is situated between two economic giants of Asia, China
and India. Both countries are engaged in mass production that
results in low production costs. Furthermore, Nepal does not
have a production friendly policy or subsidy policy. Therefore,
it is hard for Nepali furniture industries to remain competitive.

xvi. Access to transportation

o It is almost impossible for forest based entrepreneurs
(furniture industries and saw mills) to introduce sophisticated
equipment in remote areas of Nepal.

xvii. Labour issue

o Unavailability of skilled and unskilled manpower within the
country because of labour migration to Malaysia and Gulf
countries. Skilled labour from Bihar (India) is the major source
of manpower for Nepali furniture industries but the Bihar
government has fixed a minimum daily wage of INR 300 (US$
4.45) for unskilled labourers and INR 500 (US$ 7.42) for
skilled labourers. Consequently, there are very few Indian
skilled labourers working in Nepal. Another issue that is been
faced is lack of registration of skilled labourers who work on
site.

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IMPORTED FURNITURE

MARKET IN NEPAL

29
7.0 IMPORTED FURNITURE IN NEPAL

 The evolving home and living concept along with the development of
modern-style apartment and housing units has led to an increase in the
demand for furniture of foreign brands. Nepalese furniture dealers have
reported an annual business growth of 20% for the market.

 According to Kavindra Joshi, the President of Nepal Furniture and

Furnishing Association, around 60% of the furniture offered in Nepali
market are imported goods. This is due to the fact that foreign brands
offer a wide variety of choices at competitive prices and are promoted
well than domestic products.

 Another reason for the surge in demand for imported furniture was due to
the fact that domestic producers face obstacles like power cuts and high
cost of raw materials which in turn increase the total cost of production
and in turn is been sold to the local consumers at a higher price. Hence,
due to this consumer prefer to opt for a cheaper product which has better
or similar quality as compared to domestic players.

 According to some stakeholders from the industry, increasing conviction

for foreign brands can be attributed to rapidly evolving lifestyle choices
and high demand for ergonomic furniture from foreign manufacturers.

 A prominent Nepalese furniture dealer had mentioned in a news article

published by Kathmandu Post in May 2016 that Nepalese customers are
particularly attracted by quality and design of foreign brands like Ashley,
Alder, BOFA and others. The dealer also claimed that currently, BOFA
contributes the highest sales in the sofa segment/brands and In Home
and ALDER lead the sales in beds and home decor segments. Such
brands are high in demand because they deliver higher comfort and are
easy to assemble and move around. The dealer also claimed that the
imported furniture are fast selling. For an example, some of the beds they
launched for In Homes brand were totally sold out in just three months –
quite a quick response for Nepali market.
30
  One of the Nepalese furniture importer who had visited Malaysia under
MATRADE’s International Sourcing Programme (INSP) has particularly
mentioned that the design and quality of Malaysian furniture are of
exceptional standard. The importer is hoping to become an authorised
furniture dealer for a few reputable Malaysian furniture firm that he had
met during the event. At the moment, he is involved in distributing
imported furniture mainly from Turkey and his import business grows 25%
annually (except for the post-2015-earthquake period).

* Please refer to page 42 onwards of this document for the contact details of some of
the Nepalese furniture importers identified by us.

31
ONLINE FURNITURE

MARKET IN NEPAL

32
8.0 ONLINE FURNITURE MARKET

 The middle class population of Nepal is getting more tech-friendly in

Nepal and these people are now slowly shifting towards online shopping.

 The country is usually associated with often power cut and poor
connectivity. Thus, online shopping has had a rather slow journey in
Nepal.

 However, according to recent studies, it seems over 2 million Nepalese

are surfing the internet each day and businesses have started to
increasingly selling their products and services online. Growth in smart-
phone usage is also gaining momentum in the country which helps the
online shopping to also grow along with it.

 The quickness and convenience of online shopping has also hit the
furniture sector. Consumers in both small towns and metros are choosing
to buy furniture and furnishing online, not only for the discounts but also
for the wider choice easily can be browsed through online.

 Some of the online platform/company selling furniture online in Nepal are

as follows:
 Kamyu: http://www.kaymu.com.np/furniture/
 MeroShopping: https://www.meroshopping.com/furniture

 Sastodeal: https://www.sastodeal.com/category/home-
decor/home-furniture
 Furniture Land: http://www.furnitureland.com.np/

33
 OPPORTUNITIES &

PROMOTIONAL STRATEGIES

34
9.0 OPPORTUNITIES & PROMOTIONAL STRATEGIES FOR
MALAYSIAN FURNITURE MANUFACTURERS

9.1 OPPORTUNITIES

 Nepal has vast untapped opportunities for Malaysian furniture. The

Nepalese tastes and preferences have gradually started to be more
refined to international favourites.

 Demand for furniture of international standards is very high

especially in the Nepalese big city like Kathmandu. Since, Nepalese
are quite familiar with Malaysia as our country is one the major
destinations for Nepalese labourers, this can be reflected as a
promising opportunity for Malaysian exports as these people have
already been exposed and familiar with Malaysian culture and
products.

 Furthermore, the construction industry in Nepal is currently

booming, post the deadly earthquake in April 2015. This is
supported by Nepal’s import of iron & steel which had jumped by
127% in the first 4 months of fiscal year 2016-17 compared to the
same period of the previous year. Construction works, from houses
to big projects, have picked up significantly across the country at
present which has swelled the demand for construction materials
which will technically spurs the orders of interiors, home/office
furniture upon completion.

 Nepal’s tourism industry, which took a major hit following the

earthquake, is also witnessing signs of recovery. This can be
observed by the fact that the number of foreigners visiting Nepal by
air has increased 32% in the first eleven months of 2016 as
compared to the corresponding period of the previous year.
Similarly, the local government is also seem to be increasingly
promoting tourism in Nepal. These development is leading to an
35
 increased number of hotel development in the next few years which
will equally offer good market opportunities for Malaysian
hotel/project furniture companies. One of the latest prominent
project completed in Nepal would be a luxury lodge done by India’s
Taj Safaris at Chitwan National Park in Nepal, a UNESCO World
Heritage site.

9.2 PROMOTIONAL STRATEGIES

 The following promotional strategies for Malaysian manufacturers

and exporters are recommended to penetrate the Nepalese market:

i. Appointing Distributors / Agents

 Appointing distributor or agent is one of the most
important initial strategies to penetrate the Nepalese
market. Distributor/ agents can be appointed at different
levels, namely small town level, city level and National
level.
 However, it is recommended that furniture
manufacturers / exporters appoint distributors at
metropolitan level first. If the product gains market
acceptance then it would be appropriate to appoint
agents / distributors at city level and national level.

 Selection of distributors / agents in Nepal could pose

some problems. At first glance, agents may appear to
have excellent industry and customer contacts. However,
these agents may have little motivation to develop new
markets or new customers.

 The selected distributors / agents should have the

business reputation, business standing, business
capacity, salesmanship, expertise, previous experience in
the line, and creditworthiness to promote the product.

36
 ii. Representative Office / Show Room
 Establishing representative office / show room in Nepal
could also be considered to penetrate and capture the
Nepalese furniture market.

 Furniture manufacturers / exporters can promote the

products through representative office or show rooms. By
way of this strategy, a better assessment of the taste,
preference and demand of the Nepalese consumers can
be made. It also enables implementation of promotional
activities in the Nepalese market more effective.

iii. Advertisements
 Advertisements in Nepal play an important role in creating
awareness, disseminating information and market
promotion. Using celebrities as brand ambassadors will
go a long way in capturing the market. Advertisements in
major national newspapers like The Himalayan Times,
Nepali Times and Kathmandu Post as well as selected
magazines will create the desired awareness and
popularity.

iv. Participation in Trade Fairs

 Nepal is not known to hold a lot of International Trade
Fairs. However, one of the most effective trade promotion
tool in any country is participating in trade fairs. This also
goes a long way for manufacturers and exporters to
understand the consumer’s views, tastes and
preferences.

 The Furniture Fair that is held in Nepal is as below:

37
 Furniture & Furnishing Expo (Furnex Nepal)
Event Organized by: Nepal Furniture & Furnishing
Association (NFFA)
Address: Dillibazar, Kathmandu
Tel: +977-01-4435016
Email: [email protected]
Website: www.furnexnepal.org

v. Invitation to Visit Malaysian Furniture Trade Fairs

 Information on Malaysian furniture trade fairs can be
disseminated through the local print and electronic media.
Dissemination of this information will entice Nepalese
importers to visit the Malaysian Furniture Trade fairs
creating an avenue for the importers to meet and network
with Malaysian furniture exporters and manufacturers

38
TRADE STATISTICS – NEPAL

(FURNITURE)

39
10.0 TRADE STATISTICS – NEPAL (FURNITURE)

10.1 NEPAL’S IMPORTS FROM THE WORLD (TOP 10

IMPORT SOURCES)
Countries 2015 2014 2013
(US$ Mil) (US$ Mil) (US$ Mil)

Total Imports 11.24 13.13 10.09

from the World
1 China 6.74 6.36 6.29
2 India 2.97 4.31 2.24
3 Thailand 0.84 0.89 0.62
4 Turkey 0.25 0.02 0.06
5 Germany 0.09 0.04 0.01
6 United Kingdom 0.06 0.06 0.01
7 Indonesia 0.05 0.06 0.01
8 Malaysia 0.04 0.18 0.13
9 Korea, Republic of 0.03 0.01 0.05
10 Bangladesh 0.02 0.03 0.05

Table 1: Top 10 Nepal’s Furniture Import Sources

(Source: ITC, Trademap)

 In 2015, Malaysia was ranked at 8th position in terms of

Nepalese import sources for furniture.
 Malaysia had only contributed 0.36% in the total imports of
US$11.24 million worth of furniture imported by Nepal last year.
 More than half of the furniture imported by Nepal were being
fulfilled by China alone, followed by India which contributed
around 20-30% annually.
 From the above table, we can notice that our main competitors
in ASEAN would be Thailand, followed by Indonesia.
 Vast opportunities to be explored and potential market
expansion can be expected for this market.

40
10.2 MALAYSIA’S FURNITURE EXPORTS TO NEPAL (BY TYPES)

2013 2014 2015 Jan - Sep 2015 Jan - Sep 2016

HS 9- Description Share Share Change Share Change Share Share Change
DIGIT
US$ % US$ % % US$ % % US$ % US$ % %
TOTAL 51,548 100.0 9,681 100.0 -81.2 104,819 100.0 982.7 104,819 100.0 21,747 100.0 -79.3
Swivel Seats With
940130000 Variable Height
Adjustment 49,241 95.5 7,887 81.5 -84.0 0 0.0 -100.0 0 0.0 6,035 27.8 0.0
Other Seats O/T
940169000 Upholstered, With
Wooden Frames 0 0.0 0 0.0 0.0 0 0.0 0.0 0 0.0 0 0.0 0.0
940320900 Other Metal Furniture 0 0.0 0 0.0 0.0 104,819 100.0 0.0 104,819 100.0 0 0.0 -100.0
940330000 Wooden Furniture Of
A Kind Used In Office 0 0.0 1,794 18.5 0.0 0 0.0 -100.0 0 0.0 13,112 60.3 0.0
Wooden Furniture Of
940350000 A Kind Used In The
Bedroom 2,308 4.5 0 0.0 -100.0 0 0.0 0.0 0 0.0 0 0.0 0.0
940370900 Other Furniture Of
Plastics 0 0.0 0 0.0 0.0 0 0.0 0.0 0 0.0 2,600 12.0 0.0
Table 2: Types of Malaysian Furniture Exported to Nepal
(Source: Department of Statistics, Malaysia)
 In 2015, 100% of Malaysian furniture exports to Nepal was of other metal
Exchange Rate
YEAR/ PERIOD USD 1:RM furniture. While for the recent period of Jan-Sep 2016, the orders changed to
2013 3.1509
other segment i.e. 60.3% was of office wooden furniture, 27.8% of office chairs
2014 3.2729
2015 3.9055 (swivel seats) and 12% of plastics furniture.
2015 (Jan-Sep) 3.7787
 From the above given statistics, we can summarise that Nepalese has been
2016 (Jan-Sep) 4.0895
NOTES: EXCHANGE RATE AVERAGE FOR sourcing for our office furniture (mainly office chairs), wooden home furniture,
PERIOD: BNM
metal furniture and plastics furniture.

41
 LIST OF NEPALESE

FURNITURE IMPORTERS

42
11.0 LIST OF FURNITURE IMPORTERS IN NEPAL

No. Company Details

1 AKHIL TRADING CONCERN PVT LTD
th
7 Floor, JDA Complex, Bagdurbar,
Kathmandu, Nepal
P.O. Box No: - 5029
Contact Name: Mr. Akhil K Chapagain (Chairman)
Telephone: +977-1-4223492 /4230226
Fax : +977-1-4242004
Mobile: +977-9851020987
Email: [email protected]
Products: Home Furniture , Living Furniture

2 BINISHA INTERIORS SEWA

Trade Tower, Thapathali
Kathmandu, Nepal
44600
Contact Name: Mr. Santosh Dhungana (Director)
Telephone: +977-1-5111120
Fax : +977-1-5111110
Mobile: +977-9841512537
Email: [email protected] / [email protected] /
[email protected] / [email protected] Website:
www.binishainteriors.com.np
Products: Home Furniture , Living Furniture , Outdoor Furniture , Office
Furniture

3 ANOJ INTERNATIONAL PVT LTD

P.O.Box: 7114, Old Baneshwar,
Kathmandu, Nepal
Contact Name: Mr. Rabindra Kumar Rijal (Director)
Telephone: +977-1-4261669
Fax : +977-1-4269499

43
 Mobile: +977-9851154190
Email: [email protected]
Products: Home Furniture , Living Furniture

4 ASHA TRADING AND CONTRACTING

Kanti Marg, Kathmandu, Nepal
P.O. Box 24752
Contact Name: Ms. Ambika Sharma Lamichhane (Managing Director)
Telephone: +977-1-4441361/4439911
Mobile: +977-9851023034
Email: [email protected] / [email protected]
Products: Home Furniture , Living Furniture

5 CONSTANT BUSINESS GROUP PVT LTD

P.O. Box 3295, Shah Manjil,
House No. 424/2, Uttar Dhoka,
Lazimpat, Kathmandu, Nepal
Contact Name: Dr. Rajesh Kazi Shrestha (President) / Mr. Rajul Shrestha
(Director)
Telephone: +977-1-4001039/+977-1-4001040
Fax : +977-1-4411745
Mobile: +977-9851104808
Email: [email protected] /[email protected]
/[email protected] /[email protected]
Products: Home Furniture

6 FASHION FURNISHING PVT LTD

Near Welcare Hospital, Ratopul,
Kathmandu, Nepal
44600
Contact Name: Mr. Anil Kumar (Director)
Telephone: +977-1-4420661
Mobile: +977-9801024797
Email: [email protected]
Products: Home Furniture , Living Furniture, Outdoor Furniture
44
7 MARGA DEVI TRADELINK PVT LTD
Kalikasthan 32 Dillibazar, Kathmandu,
Nepal
44501
Contact Name: Mr. Nirmal Rizal (Chairman)
Telephone: +977-1-4417505
Fax: +977-1-4417505
Mobile: +977-9851008515
Email: [email protected] / [email protected]
Website: www.margadevi.com
Products: Home Furniture, Living Furniture

8 PALMOS COLLECTION
Dillibazar, Kathmandu,
Nepal 44501

Contact Name: Ms. Shriya K.C. (Proprietor)

Telephone: +977-1-4424257
Mobile: +977-9851189212
Email: [email protected]
Products: Living Furniture

9 PURPLE ENTERPRISES
rd
Kumari Complex, 3
Floor Old Baneshwor,
Kathmandu, Nepal 44601

Contact Name: Mr. Shree Krishna Shrestha (Managing Director)

Telephone: +977-1-4492285
Fax: +977-1-4470092
Mobile: +977-9851026277
Email: [email protected] /[email protected]
Website: www.purplenepal.com

45
 Products: Home Furniture, Living Furniture
10 ROBIN TRADERS PVT LTD
P.O.Box 5557,
House No. 619/21,
Thirbam Sadak-3,
Naxal
Bhagwati Bahal,
Kathmandu, Nepal
44600
Contact Name: Mr. Khagendra Situala (Managing Director)
Telephone: +977-1-4441571
Fax: +977-1-4441585
Mobile: +977-9851025976
Email: [email protected]/ [email protected]
Products: Outdoor Furniture

11 SB COMPANY PVT LTD

Swayambhu 15,
Kathmandu, Nepal
13875
Contact Name: Mr. Bidur Dhamala (Managing Director)
Telephone: +977-1-4436752 /+977-1-4670027
Fax: +977-1-4670366
Mobile: +977-9851025455
Email: [email protected]
Website: www.sbcompany.com
Products: Home Furniture, Living Furniture

12 LAXMI INTERCONTINENTAL PVT LTD

New Baneshwor,
Kathmandu, Nepal
15109
Contact Name: Mr. Rajendra Kuma Batajoo (Executive Vice Chairman)
Telephone: +977-1- 4785800

46
 Email: [email protected]
Products: Chairs and Sofa, Home Furniture, Motorcars, Office Furniture, Other
Motor Vehicles, Rubber wood Furniture

13 FURNITURE LAND
Tripureshwor, Blue Star Complex,
Kathmandu, Nepal
44600
Contact Name: Mr. Madan Joshi (Managing Director) / Mr. Saurav Joshi
(Managing Director)
Telephone : +977-1-4224797/ 41005
Fax: +977-1-4224797
Email: [email protected]
Website: http://www.furnitureland.com.np/
Products: Home Furniture , Living Furniture , Outdoor Furniture , Office
Furniture

14 HOMEMAKER PVT LTD

Kupondol, Lalitpur
G.P.O. Box: 1059, Kathmandu, Nepal
Contact Name: Mr. Sanchit K. Shrestha (Director)
Telephone : +977 – 1- 5528398 / 5524719 / 5523235
Fax: +977-1- 5536794 / 5010732
Email: [email protected]
Website: www.homemaker.com.np
Products: Home Furniture , Living Furniture , Outdoor Furniture , Office
Furniture

15 METALWOOD NEPAL
Patan Saugal, Nepal
Contact Name: Mr. Nico / Mr. Niraj / Mr. Suraj
Telephone : (+977) 9813 784 250 / (+977) 9808 183 626 / (+977) 9851 065
959 / (+977) 980 838 1010
Fax:

47
 Email: [email protected]
Website: http://www.metalwoodnepal.com/
Products: Home Furniture , Living Furniture , Outdoor Furniture , Office
Furniture

16 PARTH INTERNATIONAL PVT LTD

Central Business Park
4th floor ,Thapathali
Kathmandu ,Nepal
Contact Name: Mr. Mahesh Kr Murarka (Chairman) / Mr. Rajurmar Agarwal (
Vice Chairman)
Telephone: (+977)-1-4245342/4101504
Email: [email protected] / [email protected] /
[email protected]
Website: http://www.parthinternational.org/
Products: Office Furniture

48