Furniture Sector in Kenya: Office Furniture, Kitchens and Bedroom Wardrobes by Newline

Interview with Onder Yildiz, Director of Newline

What is your assessment of the furniture sector in Kenya? What are the latest trends? Is the market competitive?

The competition in the furniture market is quite high, especially since we have cheap imports from Asia. The competition is on the price. So, it kills our profit expectation and profit ratio.

Being that the imports are always cheaper, does that affect the entire market? Is it worth it to produce here in Kenya?

In Kisumu and Mombasa, we do need some dealers. Outside of Kenya, we are also looking for dealers in Rwanda, Uganda, and Tanzania.

Kenya is quite far away from most developed countries. For manufacturing we need raw materials. We have to import our raw materials from places like Malaysia, Korea, Turkey, Europe, etc. The cost of transport is almost equal to the cost of the actual items. Also, we have high custom taxes, up to 35%. Our lenders cost for raw materials are almost more than twice that in Europe.

How do you distinguish yourself from the competition? What makes you different in what you do, produce, and supply?

Since we are a furniture manufacturer, we have some advantages. Our lead time is a day or week basis which is quite a big advantage. Our manufacturing quality does not depend on labor. All our machinery and equipment are imported from Europe so our finishing quality is very high. We use materials with high standards similar to those used in Europe. They are not harmful to people. Our workers might be touching these materials for 8 hours and they must not have poisons or harmful chemicals in them. Our products include office furniture, kitchens and bedroom wardrobes.

How do you distribute your products?

We have a sales and marketing team. We do our own marketing and we have a huge client list. Most of them are corporates. We sell, distribute, and transport. We do everything by ourselves. In Nairobi, we do have a couple of dealers, too.

Do the dealers go directly to the client or do they have a showroom?

They have a showroom and they also have marketing teams. They have their own customer segment which is slightly different from ours. They do not have to carry stock. When they have an order, they can order from us and we can supply to their warehouses.

Are you looking to expand this network of dealerships?

Not in Nairobi, but in Kisumu and Mombasa we do need some dealers. Outside of Kenya, we are also looking for dealers in Rwanda, Uganda, and Tanzania.

How are these markets supplied? Are things manufactured locally or mostly imports?

It is mostly imports. There is not much manufacturing. Local manufacturing is based on very special products made out of real wood. However, our products are fabricated. We use cheap boards or laminated MDFs.

Are you looking for technological partnerships or improvements?

We are open to any kind of development and innovation. Anyone with smart ideas in the furniture sector is welcome to come talk with us.

Who are your clients?

Our customer base is mostly corporate companies, mostly in the private sector, such as banks, insurance companies, embassies, universities, schools, to which we provide office furniture, desks, etc. We also have some clients from the government sector.

What is it like to manufacture here in Kenya?

Manufacturing is not easy in Kenya because you need raw materials and you need skilled staff like technicians and workers. Both are very difficult to find locally. We import almost all our raw material from Europe and Asia-Pacific. For our manpower, we try to employ all local people. We have a training program for sales and marketing, technical, and factory areas to train them. We like to keep them in the system for as long as possible.

What are your CSR activities?

Whatever CSR we can do for the public in Kenya is very useful. There are many schools that need new student desks, new desks for teachers’ staff rooms, the roof may need to be repaired, etc. In the last three months, we have given that kind of support to schools, especially in the Kibera area.

What is one of your success stories?

Since we are a manufacturer, we have the capability to customize the items we make according to companies’ corporate policy, colors, and designs. We have some big insurance companies where no one could do what they required. But we had the potential and we won their business and we still maintain a relationship with them. When they have a development process, they always come to us to get those new items.

What are some companies that are your clients?

For example, UAP Old Mutual insurance company and KRA (Kenya Revenue Authority), are some of our clients. Kenya Airways is also one of our clients. They have very corporate colors and designs that we can do.

What projects are you working on currently?

Now, we are trying to develop our social media and digital marketing. I have just made some agreements for all marketing activities with a company. From catalogs, diaries, printed or digital, whatever we have, even whatever we do not have, we are improving. Also, in the near future, we will need corporate software like ERP because we have a factory and we are in physically different places. We need to create integration between the factory and the head office.

Project yourself to the medium term, three years’ time. What would you like to have achieved?

Our first target is to expand our business to neighboring countries. Secondly, we want to manufacture some offtake items for the big global companies like IKEA, etc. We have the capacity and capability. The only challenge is that we are far from the main markets.

Will this be to sell all over the world or just in Kenya?

It will be to export and sell directly to those outside countries.

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