Analysis on the Dynamic Relationship between the Research and Development Capacity, Net Exports, and Profits of China's Furniture Industry

China's furniture industry has grown rapidly over the past 10 years, which makes China an important furniture exporter in the world. This article focuses on the evolution of research and development (R&D) capacity, net exports of China's furniture industry, and their relationship; analyzes the impact of changes in external factors on R&D capacity, net exports, and profits; and makes predictions for R&D capacity, net exports, and profits. A dynamic model of R&D capacity, net exports, and profits for China's furniture industry is established based on the data from 1993 to 2008; ordinary least squares methods are used for model estimation. The positive correlation between R&D capacity and net exports in regression results illustrates that R&D capacity is conducive to enhancing the competitiveness of Chinese furniture enterprises and likely contributes to export growth as well. If the world economic environment changed radically, exports would decline under the influence of external factors, and then profits would also fall. At present, however, companies are often interested in expanding their exports by increasing R&D investment and, in turn, enhancing their competitiveness. If the world economy grows in a stable manner, China's furniture industry development of R&D capacity and net exports should conform with Virasa and Tang's model (J. High Technol. Manag. Res. 9(2):195-205, 1998). If a sharp fluctuation in the international market occurs, however, the development of China's furniture industry most likely will be unstable.