RIGA - "There are millions of chairs in the world, so you have to create a special one to be noticed." So says Indra Krizus, director of Baltic Furniture Design Factory, a Latvian furniture maker, and this is indeed the challenge now facing the Baltic industry.
Furniture is both one of the oldest and one of the most competitive industries in the world. In the words of Enn Veskimagi, president of Standard Furniture, "Our main competition is from everywhere: the whole of Central and Eastern Europe, the West, Scandinavia, China..."
And with China rapidly becoming the producer of choice in the world's labor-intensive industries, tiny operators such as those in the Baltics are in danger of extinction.
"Estonia produces 0.3 percent of the European furniture market," says August Kull, chairman of the Estonian Woodworking Federation. "Compared with China, what does it matter what we do?"
Remarkably, however, Baltic furniture production has boomed in recent years. Since 2001, both Latvia and Estonia have seen a 50 percent increase in the value of furniture exports, while Lithuania's exports have more than doubled (see sidebar). The profits are fueling further growth: according to Renata Martinkute, industry specialist at the Lithuanian Development Agency, "Furniture is now overtaking textiles as Lithuania's biggest industry. A lot of Lithuanian companies are investing their own money and structural funds in production."
With this kind of long-term commitment, there is a real chance for Baltic furniture to succeed on the world's markets.
Create the brand
The key to that success will be branding: since it is now possible to buy a mass-produced Chinese chair for a handful of euros, Baltic furniture producers have to convince consumers that they want to buy something more expensive. As Krizus explains, "You shouldn't go for mass production 's because that's what they do in China."
"The challenge will be to produce more value-added products," says Martinkute in Lithuania.
With the lucrative Nordic markets so close, it is Scandinavian quality that has become the benchmark for Baltic producers. "Finland is our [Estonia's] main export market, followed by Sweden and Denmark," comments Kull. "The Nordic market is better for us because consumers there appreciate quality furniture, so it's possible to sell branded furniture rather than just sub-contracting."
Indeed, his ultimate goal is full market integration. "We hope that more foreigners will invest in production here. That will help us to be part of the Scandinavian furniture market," Kull says.
In fact, Baltic furniture producers have already created a Scandinavian brand for themselves, and there are logical reasons for this. "Scandinavian design is well-known and popular everywhere, whereas Latvia is still an unknown country," Krizus explains.
"We cooperate with five Scandinavian design studios, then send the production to the Saga factory, which is 100-percent Latvian owned," she explains. "The Latvians chose that name to aim at the Scandinavian market."
And while her company's name makes its Baltic-origin specific, only its acronym is stamped on its products. "The word 'Latvia' isn't a selling point, but it does arouse interest, so it's not negative," she says.
The trick for Baltic furniture is not to hide its origins so much as to avoid drawing attention to them.
The same balance is evident in Lithuanian-British company Link Interiors, which supplies U.K. chains such as Laura Ashley. In 2004, the company launched its own brand of solid-wood furniture and named it Christian Harold, after the company's Danish owner Christian Harald Petersen. While admitting that many of the new ideas are from U.K. and Danish designers, managing director Liudmila Briand Petersen insists: "We always highlight that we sell Lithuanian furniture."
However, neither the brand name nor the names of individual collections (Ardennes, Lyon, Breton) have an evident Lithuanian link. "The French were the trend-setter in oak furniture, so we wanted it to come true for us too," Christian says.
"Made in Lithuania" may be a selling-point to industry insiders, but when appealing to customers, it is clearly other labels that matter.
This is not to belittle the company's achievements. According to Liudmila, Link is already one of the biggest exporters of furniture in the Baltics after IKEA. It was recently recognized by Prime Minister Algirdas Brazauskas for its contribution to the furniture industry. In the same way, Baltic Furniture Design Factory recently won the prize for Latvia's best new export product of 2004 for its chair/coat hanger, the Python. Estonia's Standard Furniture 's which specializes in modular veneer furniture for the hotel market 's has seen double-digit export sales growth every year since 2000. These are not the kind of successes that come from simple re-branding.
"The international name gives us better market access, but it's quality that counts, and the quality of Lithuanian products is so high that even I was pleasantly surprised," Christian says.
However, they may well be a sign of things to come. Baltic furniture companies are currently using Scandinavian designs and working under Scandinavian-sounding brands, in the same way that two Japanese entrepreneurs decided to call their company Canon in the 1930s. This is a pragmatic response to world market conditions.
"Before EU accession, we had to tell people about Latvia before we could even talk about our products, but after a couple of years people began to recognize us," Krizus comments.
And the Baltics' recognition is improving. "At our first international trade fair in 2000, everyone asked 'Where's Lithuania?' Now they all know Baltic oak," Liudmila says.
Martinkute confirms this trend toward more branding: "Some Lithuanian companies are now branding their own products, both in the EU and in Russia, where the Lithuanian brand is still remembered."
But with the global industry beginning to recognize Baltic quality, local producers are looking to their own designers. Veskimagi points out that Standard Furniture has its own in-house designers, while Krizus says, "So far we've only used Scandinavian designers, because otherwise it would take much longer to open doors. However, we're monitoring Latvian designers, we participate in workshops and educational programs so we expect to start using Latvian designs in the next couple of years."
Christian agrees. "We're in contact with Lithuanian designers, and we'd absolutely like to use their designs in the future. What they need is the chance to get out into the wider market and see what's going on there," he says. As foreign recognition leads to more orders and higher income, it seems only a matter of time before Baltic furniture takes on an image of its own.
How far it will go remains to be seen. The Baltics' traditional strengths 's flexible production, highly developed logistics and proximity to Russia 's are as compelling an advantage in furniture as any other industry. Local production skills are slowly winning converts, and the next step may well be the creation of a high-quality, stylish Baltic brand. But for the furniture industry's leading players, that is not the main point. They have already found their niche, combining Nordic design with Baltic production. Even if they go no further along the road to "brandhood," they appear to have found a recipe for success.