China Outbound Investments Vol. 40 – Q4, 2018

China Outbound Investments Vol. 39 – Q3, 2018

China Outbound Investments Vol. 38 – Q2, 2018

China Outbound Investments Vol. 37 – Q1, 2018



China Outbound Investments Vol. 36 – Q4, 2017

China Outbound Investments Vol. 32 – Q4, 2016



China Outbound Investments Vol. 28 – Q4, 2015

China Outbound Investments Vol. 25 – Q1 2015



China Outbound Investments Vol. 24 – Q4, 2014

China Outbound Investments Vol. 23 – Q3, 2014

China Outbound Investments Vol. 22 – Q2, 2014

China Outbound Investments Vol. 21 – Q1, 2014

View M&A / Equity Transactions Q1 – Q4, 2014

View Government Related Loan Agreements Q1 – Q4, 2014

View Government Agreements Q1 – Q4, 2014

Compare China Outbound Investments Q1 – Q4, 2014


Compare China Outbound Investments Vol. 17 – 20, 2013


Q4 Quarterly Feature –
Tariffs and Asian Furniture Manufacturing

This quarter we chose to highlight a small China outbound transaction which is a minnow in size relative to the largest proposed China outbound acquisition of 2018 – Three Gorges $27.5 billion (enterprise value) acquisition of EDP (based in Portugal) – but involves Asian furniture manufacturing.

In 2016, there were 9 Taiwanese companies among the top 10 Asian furniture manufacturers. In addition to domestic Taiwanese demands, more than half of the top 20 US leading furniture brands outsourced their furniture manufacturing to Taiwanese manufacturers, most of which own and operate major Vietnamese factories.

A major Asian manufacturer in the top 10 but not Taiwan based is China based Markor Home. Founded in 1990, Markor Home has 10 furniture production facilities in China, most of which are in Tianjin (near the port) as well as in Urumqi, where it is based. Markor Home also owns American home decor brand Rowe Furniture and high-end wood furniture brand Jonathan Charles, which has its own factory in Vietnam.

Apart from significant increases in domestic sales (for obvious reasons), China’s furniture exports have also demonstrated sustained growth. According to the 13th Five-Year Plan for the Development of China’s Furniture Industry, the value of China’s furniture exports increased at an average annual rate of 8.8%, from
US$38.9 billion in 2011 to US$54.3 billion in 2015. Such exports are expected to show an average annual growth rate of 3-5% during the 13th Five-Year Plan period (2016-2020).

During 2018, the US Government imposed tariffs on more than $200 billion of Chinese-made consumer products, including furniture. A 10% tariff took effect 24th September and was scheduled to be increased to 25% on 1st January 2019 unless an agreement with China was reached before that date.

In October, Markor Home agreed to become a major shareholder in Vietnam based furniture manufacturer Starwood Furniture Manufacturing, which it had known and collaborated with for years. Starwood, founded in 2004, has 1.7 million square feet of production space and employs 3,000 workers in Vietnam. It produces a wide range of bedroom, dining room and occasional furniture as well as upholstery, home entertainment and home office furniture.

As a part of this transaction, both Marko Home and Starwood agreed to fully integrate their product development, manufacturing, warehousing and container transportation functions into the Vietnam based firm. Such consolidation is standard in a merger, especially among companies and managements which already know each other. Separate from the corporate benefits of this Q4 merger, is there a tariff angle via Vietnam?

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