Exports of wooden furniture and handicrafts will quickly recover

VCN - That is the prediction of Mr. Tran Quoc Manh, Vice Chairman of the Handicraft Export Association, Chairman of the Board of Directors of Saigon Production and Trade Development Joint Stock Company (Sadaco) in an interview with Customs Magazine about export situation of wooden furniture and handicrafts.
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Mr. Tran Quoc Manh, Vice Chairman of the Handicraft Export Association, Chairman of the Board of Directors of Saigon Production and Trade Development Joint Stock Company (Sadaco).
Mr. Tran Quoc Manh, Vice Chairman of the Handicraft Export Association, Chairman of the Board of Directors of Saigon Production and Trade Development Joint Stock Company (Sadaco).

Sir, under the sharp decline in wooden furniture and handicraft exports from the beginning of the year until now, what do you think about the prospects for the rest of 2023?

The world economic situation and Vietnam's economy in 2023 are still quite difficult in the context of many unpredictable fluctuations in the world market. Therefore, most export industries show signs of decline in 2023, reflected in a decrease in orders. It can be said that the difficult situation of the world economy has impacted on the purchasing power of the market as well as consumer psychology to become increasingly weak in the face of fluctuations such as war and inflation. And the exported wooden furniture and handicraft industry is no exception.

However, the picture is not quite so bleak. Records from goods exporting enterprises show that the rate of decline has slowed down very clearly in the last months of the year. Especially in the furniture and handicraft industry, if at the beginning of the year the decline rate was up to 40%, now it is only around 20%. Thus, the industry's decline rate for the whole year is forecast to be only about 32%. This is a bright spot that gives us the right to hope for the wooden furniture export situation in the future. Currently, many wooden furniture exporters have begun to receive orders again. Although these orders have many differences in price, quality, and design compared to before, the majority of customers, especially traditional customers, have started ordering again.

With customers’ placing orders again, what recommendations do you have for businesses to better grasp this opportunity?

In recent times, the world market situation has had the strongest impact on large enterprises. Of course, small businesses also suffered from a decline but to a lesser extent. In addition, in the two key markets of Vietnam's wooden furniture and handicrafts industry, the US and Europe, the difficult situation has affected on the real estate market, causing demand for wooden furniture to decrease significantly. However, although demand for new purchases has decreased, replacement demand for specific products still exists.

​Therefore, if businesses are interested in products that suit market needs during this period, they can still maintain and develop.

In particular, in the wood processing and handicraft industry, importing countries are currently placing requirements on environmentally friendly products. Accordingly, businesses need to switch to producing green products, wooden products combined with environmentally friendly materials, even recycled wooden products or taking advantage of products from recycled materials combined with wooden furniture... Such products have the advantage of competitive prices and improved quality, so they are suitable for consumers and can still be guaranteed by the ability of Vietnamese businesses.

​With such a trend, I think that in 2024, Vietnamese wooden furniture and handicraft exporters will quickly recover.

As for State agencies, what recommendations do you have to better support businesses to overcome the current difficult period?

Recently, the State has created very good mechanisms and policies for businesses, especially a series of free trade agreements signed with the world's leading markets. This brings huge tariff advantages to businesses. However, to support businesses in exploiting the market more effectively and participating more deeply in the global supply chain, I think the State needs to support businesses in building centralized warehouses in key countries so that businesses can directly supply into the distribution systems of other countries. If this is done, the benefits of businesses will increase and their competitiveness will also increase and businesses can gain more market share and expand the market much easier than before. Specifically, profits from exports are currently at an average of about 5%. But if there is a warehouse system in other countries, profits can increase 3 times.

​We have researched this issue very carefully. But to do that, we need support from the State because building warehouses in other countries will require huge initial costs. Many countries, including China, have been implementing this for a long time. Accordingly, businesses coordinate with industry associations and the State to support part of the funding to build this distribution channel. This will be very meaningful support for businesses in the current difficult conditions. Especially in the context of cross-border e-commerce growing very strongly, having a warehouse not only facilitates wholesale activities but also helps businesses move towards retail in these markets.

By Nguyen Hien/Bui diep

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