Chinese market remains vital for Vietnamese wood

The Vietnam Timber and Forest Products Association (VIFOREST) reports local businesses shipped over US$14 billion worth of wood and wood products abroad throughout 2021, with US$1.49 billion of this figure going to China.

Meanwhile, wood imports were valued at more than US$2.5 billion, including US$1.1 billion coming from the northern neighbour. 

Typically, Vietnam mainly focused on exporting raw wood coded HS44 to China, with more than 20 products making up approximately 80% of its total wood exports to China. Among them, wood chips represented a large proportion of the country’s total annual wood export turnover to this market.

In the other direction, the northern neighbour is the largest supplier of wood and wood products to Vietnam, accounting for between 25% and 37% of the country’s total annual wood imports. Local wood processors import more than 20 wood products from China, with the majority of them belonging to the HS44 group.

“Vietnam maintains a timber trade surplus with China, mostly coming from the export of wood chips, but its imports are growing faster than its exports,” says Nguyen Vinh Quang, a policy analyst at Forest Trends.

The Forest Trends report shows that Chinese investment in the Vietnamese wood industry remains relatively high, accounting for 17% to 35% of the total investment capital injected into the industry as a whole. In addition, the merge and acquisition (M&A) capital of Chinese enterprises makes up between 6% and 35% of the total M&A capital of FDI enterprises specialising in this industry locally.

Speaking at a workshop held on June 10, Cao Chi Cong, vice chairman of VIFOREST, affirmed that China represents a major trading partner for Vietnam in terms of both imports and exports of wood and forest products.

Cong anticipated that wood processors of the two countries would put forward recommendations to the Government and management agencies as a means of providing business support towards sustainable and effective production.

Hai Ling, from the Chinese Academy of Forestry, agreed that Vietnam is widely viewed as an important market for Chinese timber. Along with fully complying with legal regulations, introducing preventive measures to combat risks and better improving the supply chain, she said China also looks forward to having close co-operation ties with Vietnamese wood enterprises to fully optimise co-operation opportunities.

To Xuan Phuc, another policy analyst at Forest Trends, pointed out that Vietnamese wood enterprises usually lack knowledge of market regulations. On the other hand, Chinese enterprises do not have a great understanding about the timber supply flow in Vietnam.

“We do hope that the wood processor associations of the two countries will have more exchanges to share information and experiences so as to contribute to the sustainability of the wood industry of the two countries,” said Phuc.