The price of high-end mahogany raw materials falls, and the investment in Hongmu needs rationality.
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In recent months, the prices of high-end mahogany raw materials, such as Siamese rosewood and Burmese rosewood, have seen a significant decline. According to Mr. Liu, a manager at a well-known redwood furniture store in Zhengzhou, some rosewood materials have dropped by over 20%, with certain types falling by as much as 30% to 40%. This has led to pressure on profit margins for furniture retailers, who are now struggling to maintain sales. In an effort to boost demand, some stores have introduced “zero-profit†promotions during the Spring Festival, but the results have been underwhelming. Many consumers are waiting for further price drops, expecting that the market will continue to soften.
The most dramatic drop has been seen in Siamese rosewood from Laos and Cambodia, where top-grade material has fallen from over 400,000 yuan per ton to around 250,000–280,000 yuan per ton. Similarly, lobular rosewood has also experienced a 30% to 40% decrease, returning to levels similar to those seen in early 2013. According to Mr. Liu, this sharp decline is largely due to excessive speculation in previous years, with many investors looking to cash out. He added that current domestic stockpiles of raw materials are sufficient, and manufacturers have significant inventory, meaning that only a small portion of these materials is actually used in finished products. As a result, he believes that the price of premium redwood is unlikely to rebound in the short term.
A rosewood supplier revealed that in recent years, the price of red rosewood soared to as high as 1,000 yuan per kilogram, leading many manufacturers to hoard raw materials rather than use them for production. However, with tighter financial conditions, supply has exceeded demand, prompting many suppliers to start selling at lower prices. This trend has created challenges for the industry, forcing companies to reconsider their pricing strategies.
The redwood market has entered a phase of adjustment. According to a report on China's redwood import situation in the first half of 2014, imports of rosewood saw a sharp increase, indicating strong domestic demand. Industry experts suggest that the rapid growth of the mahogany market has attracted a large influx of capital, while soaring raw material prices have fueled increased imports. However, the impact of these price changes is only beginning to be felt at the retail level, with profit margins shrinking by 5 to 8 percentage points.
Mr. Liu noted that this year’s market is experiencing a downturn, and reducing product prices is a necessary step to stimulate demand among middle- and high-income consumers. While the final price of mahogany furniture is typically at least double the cost of the raw material, many stores are still selling pre-price-drop materials, so significant price reductions are unlikely. However, for less expensive wood species, lowering prices to match market expectations is becoming a common strategy to regain consumer interest.
As anti-corruption efforts intensify, luxury consumption in China has declined, affecting the high-end mahogany furniture sector. Meanwhile, more affordable options like Burmese rosewood have gained popularity among mass consumers. In the future, low-cost or budget-friendly mahogany products are expected to dominate the market, with mid-range items becoming the preferred choice for many buyers.
With rising purchasing power among ordinary consumers, more families are spending over 100,000 yuan on furniture, creating new opportunities for mid-to-low-end mahogany dealers. Some are now focusing on smaller, more affordable pieces, such as sofas priced at 20,000 yuan or dining chairs costing nearly 10,000 yuan. In many solid wood furniture stores, sales staff often label cheaper furniture as “redwood,†even though it is far less valuable than high-grade varieties like Huanghua rosewood.
Mr. Liu pointed out that compared to leather sofas priced at 20,000 yuan or more, certain mahogany furniture sets can be purchased for 30,000 to 40,000 yuan, with room for negotiation. Many consumers are choosing these options for their durability and value retention. With a wider range of redwood species available, consumers now have more choices and stronger bargaining power. In the past, prices were set and fixed, but today, negotiations are common.
Looking ahead, the investment potential of Burmese rosewood remains uncertain. While some industry insiders believe the price decline will continue, others argue that the scarcity of redwood resources is overstated. Although some countries have imposed export restrictions on logs, processed timber and semi-finished products can still be exported. This suggests that the supply of mahogany furniture may not disappear entirely in the near future.
Both consumers and businesses should approach the investment value of redwood with a rational perspective. The domestic market currently faces challenges such as limited distribution channels and high brand premiums. While some companies rely heavily on resource sales, the long-term outlook for the industry depends on sustainable practices and realistic expectations. Relying solely on the idea of a “resource shortage†carries significant risks, especially given the ongoing policies in origin countries that allow for controlled exports.