Wood industry strives to regain growth momentum

Do Thi Kim Loan, General Director of Sao Nam Trading and Production Co., Ltd, which makes wooden flooring, said the company’s export orders are down 35-40% year-on-year this year as orders from the US market, its major export market, drop sharply.

“With exports to the US plunging, we seek to export to Canada and accept outsourcing orders from Australian customers.

“Australian wood flooring importers ship materials to my company, we carry out the final processing stages, pack and re-export them.

“This is an adaptation to partially offset the decline in our major market.”

Binh Duong-based furniture company Bao Hung has also seen a sharp drop in orders from the US, its key market, this year.

Phung Quoc Cuong, its marketing director, said to cope the company has adjusted prices and developed new products.

“Demand from the US, EU and Japan has reduced. But if businesses come up with new designs and products, it will change customers' perceptions and might spur a recovery in demand."

Nguyen Phuong, merchandise director of Minh Thanh Co., Ltd, said while in general consumers are tightening spending there are still some who have a need, but they have higher requirements in terms of quality and design differentiation. So businesses that invest a lot in design and developing their own products would surely attract international buyers.

Besides developing new products, Vietnamese enterprises are also increasingly setting up sales teams and attending local and foreign fairs to try and find a way into new markets, Phuong added.

Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association (VIFOREST), said exports had been strong in the first half of last year, but orders have dropped sharply thereafter, and companies have gotten just a few orders this year.

“In the past exports would usually go up by 15-20% in January, but there was no growth this year.”

The gloomy housing market due to monetary tightening and interest rate hikes globally to fight inflation has affected demand for furniture, he explained.

Enhance trade promotion

To enable the industry to find new customers in both traditional and new markets, five associations in Vietnam (VIFOREST, HAWA, BIFA, DOWA, and FPA) joined hands to organise the 2023 Ho Chi Minh Export Furniture Fair – HawaExpo 2023 in HCM City from February 22 to 25, he said.

The event attracted 210 exhibitors, of whom 80% were Vietnamese furniture manufacturers while the rest coming from China, the US, Germany, Singapore, Japan, Thailand, Indonesia, the Philippines, and Denmark.

Nguyen Hoai Bao, an executive board member of the Handicraft and Wood Industry Association of HCM City (HAWA), said: “The fair was successful, attracting 16,062 visitors, including 2,653 visitors from 100 countries and territories.

“Sixty four contracts and MoUs were signed at HawaExpo 2023 and the estimated value of transactions at the fair is US$3.6 million.”

Dang Rang, manager of A&M Industry Vietnam Co., Ltd, said HawaExpo was an effective forum for his company to advertise products and seek new partners.

“Through the fair, besides getting new orders from foreign customers, it was quite surprising that we received an order for wooden sofas from the domestic market.”

To add more value to furniture products, local manufacturers need to make further investment in design to produce their own products instead of manufacturing furniture to designs provided by buyers, he said.

Nguyen Liem, Chairman of the Binh Duong Furniture Association and founder of Lam Viet Furniture, said HawaExpo took place at a unique time when the wood industry lacked export orders, and so participating in the fair gave businesses a good opportunity to access new customers.

Bao said the organisers have also created a virtual exhibition on Hopefairs.com that showcases 28,000sq.m of the fair. It will remain there for three months.

“Buyers and visitors who missed the physical fair will be able to see every single booth and product and continue to make B2B connections through the virtual exhibition.”

This year the industry has set an export target of US$17.5 billion, a year-on-year increase of 2.5%.