Wood Companies Overcome Hardships

It is quite easy to see that the Vietnamese wood processing industry has made remarkable growth in capacity, production value and export market in the past few years. The Ministry of Industry and Trade said Vietnam’s woodwork export markets are gradually being restored in the wake of global economic turmoil. Vietnamese enterprises have also managed to approach and penetrate new fertile markets like Russia, India and the Middle East. Vietnamese wooden products boast a presence in 163 countries and territories in the world. The key markets of the United States, the European Union and Japan are staging recoveries at the back of economic recession. The American Hardwood Export Council (AHEC) said Vietnam took the lead in ASEAN countries in prestige and volume of woodwork export.

 

According to the Vietnam Timber and Forestry Products Association (Viforest), world demand for processed woodworks is higher in 2012. Many Vietnamese companies have signed enough export contracts for full operation through the second quarter of 2012. Following the success in 2012 and anticipating prospects for 2012, Vietnam sets the target of earning US$4.3 billion from woodwork export in 2012, an increase of US$400 million from 2011. This objective is not easy to reach, especially when the Vietnamese wood industry is facing plenty of challenges as other ASEAN rivals have united to strengthen competition against Vietnam.

 

Vietnam has taken a number of solutions for the wood industry to achieve its goals in 2012, of which conquering the domestic market is considered the most efficient and flexible direction in the current context. For years, Vietnamese companies focused on exporting while passing up the domestic market and giving it to Chinese and Taiwanese firms. According to Mr Nguyen Chien Thang, Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), the Vietnamese woodwork market has massive potential because living standards are getting higher and purchases of wooden interior and decoration items are increasing. Especially, producers easily know consumer tastes and lifestyles. Nonetheless, this potential market has been left untapped, especially in the countryside. A Viforest representative said: “Imported wooden furniture stores are abundant in major cities. This means that the domestic market has been relatively developed. But, most large Vietnamese enterprises have not seen all potentials or lacked proper attention to the countryside market.”

 

Mr Thang said current domestic demand for high-grade wooden furniture is actually increasing rapidly. Like other economic sectors, domestic revenues of the wood industry are almost equal to export earnings. This proves the considerable potential and consumption of this market. If the domestic market is effectively exploited, Vietnamese enterprises will not only increase sales but also sustain growth and development. They will not be as seriously hurt if global markets are not favourable as now. With superior quality, competitive prices and low transport costs, Vietnamese furniture brands are completely capable of dislodging foreign rivers from the home market.

 

Mr Nguyen Ton Quyen, Viforest Vice President, said as many wood companies are absorbed in exports while disregarding the domestic market, they are very vulnerable to global economic changes. The home market is the driving force for their survival and sustainable development. He said: “We always appeal to enterprises to pay notice to the domestic market.” In reality, woodwork export revenues slowed in recent years when global economies fell into recession. Many HAWA member companies understand the importance of the domestic market, as only exporting is like standing on one leg. They easily lose equilibrium when world markets fluctuate. Boosting local sales will help woodwork companies to withstand export shrinkage. Mr Huynh Van Hanh, HAWA Vice Chairman, said: In 2011, most firms had positive growth and better performers had good domestic sales. Thus, HAWA recommends that wood companies expand product advertisement and distribution in the domestic market to reduce reliance on foreign markets, thus mitigating risks.

 

Sharing Mr Hanh’s standpoint, Mr Vo Truong Thanh, President and General Director of Truong Thanh Furniture Group Joint Stock Company (TTF), asserted that Vietnamese woodworks and handicrafts have successfully conquered global markets and they will not thus face much difficulty in dominating the domestic market. Decisive factors are the determination and vision of enterprises. Importantly, they need to change technologies, reorganise production, improve product quality and create designs to suit local consumer tastes. Perseverance, determination and suitable strategy will clear the way for enterprises to return to the home market.