A well-known furniture making region in Jepara, Indonesia, has a story to tell. Since the 19th century, the region has developed as an industrial district, creating many opportunities for subsidiary activities and other kinds of industries while supporting the livelihood of 4-5 million Indonesians. Jepara, with a total area of 167.8 km2 (64.7 sq. mi.), has nearly 12,000 wood-based furniture workshops, showrooms and warehouses, all of which employ approximately 120,000 workers, process 0.9 million cubic meters of wood per year, and account for 26% of the district’s economy. However, research shows that although Jepara’s furniture export is increasing, continued growth is not sustainable.
This situation could jeopardize an industry that supports millions of people. This paper looks at the wooden furniture industry as a low-technology, resource- and labor-intensive sector in facing globalization. Therefore, it is important to understand how small-scale furniture producers are being affected by globalization. Are they change makers or, the opposite, change takers? Can they benefit from globalization?
The question is asked in response to value chain inequality. Although the value added in Jepara’s furniture production is relatively high, profit distribution is inefficient and inequitable. As an integral part of Jepara’s Furniture Value Chain (FVC) project, this study was designed to gather information on how furniture production value chain actors might react to potential scenarios regarding the ways in which small-scale furniture producers could best thrive in an era of globalization.
Four potential scenarios were considered through a literature analysis:
(1) Fair Trade, (2) Green Furniture, (3) Vertical Integration, and (4) Capacity Building of Small-scale Producers.
The purpose of this research involves determining which of these four scenarios would be the most relevant to improve the performance of small-scale furniture enterprises in Jepara. Recommended strategies include green furniture labels (e.g., eco-labels) and capacity building of small-scale producers.