Vietnam Wood Industry More Likely to Increase Exports

2013 ended up with the stabilisation of the macro-economy and curbed inflation, which raised people's confidence in the economy in general and the furniture market in particular. The export value of wood and wood products of Vietnam in 2013 reached US$5.56 billion, up 19.2 percent compared with 2012. This impressive figure is the highlight of the industry and opens new prospects for exports of wood and wood products in Vietnam in 2014.

 

Vietnam Business Forum interviewed Mr Huynh Van Hanh, Vice Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) regarding the forecast of furniture export this year. Anh Dao reports.

 

Due to the economic downturn affecting the European market, the increasing price of the wood products of some well-known furniture manufacturers from Italy, Germany, and US, have caused their businesses to downsize. Particularly, the anti-dumpling imposed on some furniture exports from some countries to the US market has made the exporters of these countries lose their competitive advantage. This is really a golden opportunity to expand market share and market for Vietnam's wood industry. In addition, the quality of the Vietnamese wood products compared with other products are more recognised and preferred by consumers because the Vietnamese wood companies have actively invested technology chain, recruiting skilled workers, constantly developing new products, creating more high-quality and innovative products, innovative with a combination of old material with new designs.

 

In the scope of the domestic market, in recent years the wood furniture market has had a strong transformation. The businesses have taken advantages of the local fairs for faster access to consumers and construction works. Give the transaction outcomes from two wood furniture fairs organised by the HAWA, the demands for furniture are increasing dramatically. Specifically, at the Vietnam's International Furniture Fair (VIFA) held in March, 2013, total transactions right on the spot account for US$4.25 million, up 63.4 percent compared to November 2013 of the previous year. An total spot transactions is US$16 billion, an increase of 30.3 percent over the previous year.

 

Vietnam's market size with a population of 90 million and the average consumption of furniture in the last 4 years of about US$1.98 billion. It is obvious that the Vietnam's market size is now small so businesses looking to gain market share need to evaluate the strengths, weaknesses, opportunities and challenges to determine the right markets and learn about the specific demands to plan their own strategies.

 

Based on the positive news about the domestic and foreign furniture markets, we can expect the price of wood products this year to see an average increase of 5-7 percent.

 

Facing global recession and domestic macroeconomic instability, Vietnamese businesses always strive to maintain the current market shares as well as look for new markets. It can be seen that the potentials of many businesses are promising and the abilities to increase the share of exports are not hard because the shares of the Vietnam's furniture exports only account for 1.5 percent market share of the world of furniture.

 

Currently, the wood products of Vietnam had been sold in over 100 foreign markets. The largest import markets of Vietnam (accounting for over 70 percent of total furniture exports), which are known as the world's biggest consumers, are the U.S., EU, China and Japan. In 2013, Vietnam became the largest furniture exporter of ASEAN, ranked second in Asia and 6th in the world.

 

However, compared with the 10 largest furniture exporters, Vietnam is a country with advantages in production and higher opportunities to expand its industry. If there are incentives in policy making for the wood industry, Vietnam furniture industry could raise the annual export market share from 1.5 percent to 5 percent, equivalent to US$15 billion within 5-7 years. Particularly in 2014, the furniture export turnover may rise 20 percent, equivalent to over US$6.5 billion, and the domestic consumption may reach over US$2 billion.

 

Regarding the consumer markets, the business prospects of the wood industry in 2014 are very promising in new markets such as the Middle East, Australia and some countries in ASEAN, such as Singapore, Malaysia and Indonesia.

 

In addition to the internal issues such as technical workers, manufacturing technology, internal transport and management of the input costs each business needs to focus on, the businesses have to face with the external challenges such as increase of effectiveness rate of wood, reduction of the cost of timber transport through the intermediary production processes (the artificial boards and laminated wood) in the plantation areas, legalization of the wood products and accountability to declare the origins of the wood products, handling and supervision of the temporary imports and exports after the TPP is signed. These are not only the business challenges but also the challenges of the government to follow up and implement when the TPP is signed and after the ASEAN Economic Community (AEC) shall be the regional economic integration by 2015.