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Increasing wood exports to Canada, opportunities to expand the North American market

08:31 | 23/06/2022

VCN - The demand for importing wooden furniture and interior decoration from Canada is quite large, but the proportion of Vietnamese goods in this market is still modest. It is forecast that Vietnamese furniture and interior decoration products still have many opportunities to boost exports to Canada, even through this "gateway" to penetrate the North American market.

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The prospect of increasing Vietnam's export of furniture and interior decoration products to the Canadian market is very positive. Photo: ST
The prospect of increasing Vietnam's export of furniture and interior decoration products to the Canadian market is very positive. Photo: ST

Canada imports an average of US$7 billion/year

Canada is one of the top ten furniture manufacturers in the world. The country has a long history of expertise in furniture manufacturing. However, according to the Ministry of Industry and Trade, in recent years due to a rapid increase in imports and decrease in exports, Canada has become a net importer of furniture products.

Ms. Tran Thu Quynh, Head of Vietnam Trade Office in Canada, said that the average consumption demand of this item of a household in Canada is about US$700/year, of which the highest consumption is in the state of Ontario. In the 2014-2021 period, Canada imported on average about $550 million/month, or about $7 billion/year. The peak of imports is usually the last months of the year and the lowest in January, February and July.

Ms. Nguyen Thi Thu Thuy, Deputy Director of the Export Support Center (Trade Promotion Department, Ministry of Industry and Trade), said that in 2021, Vietnam's wooden furniture exports to Canada will reach US$416.4 million, an increase of 27.4%, accounting for 16.7% of Canada's total import value.

This shows that Vietnam's wooden furniture products have met the consumption demand. It’s notable that, at large supermarket chains such as COSTCO, IKEA, LEON'S one can easily see furniture products made in Vietnam.

According to a source from marketingsightsreports.com, Canada's home furniture market is forecast to grow at an average growth rate of 6% in the 2021 - 2025 period.

This figure is achieved thanks to the improvement in operations of construction, especially in the housing sector in many parts of Canada. The majority of furniture purchases are driven by consumers moving into new homes.

According to Ms. Nguyen Thi Thu Thuy, the prospect of increasing Vietnam's export of wooden furniture and interior decoration products to the Canadian market is very positive, thanks to the large consumption demand and the positive impact of the Agreement on Trade and Development Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). "Especially, exploiting the Canadian market well, Vietnam's furniture and interior decoration products also have the opportunity to promote to other markets in North America, because this is considered a "gateway" to enter this area," said Ms. Thuy.

Worrying about lack of raw materials

Although ranked 13th among countries exporting furniture and interior decoration to Canada, according to Ms. Tran Thu Quynh, it is worth noting that Vietnam's market share in Canada is very small compared to other countries.

From the perspective of businesses and industries, Mr. Nguyen Liem, Chairman of Binh Duong Wood Processing Association, said: "Vietnam's wood industry has changed a lot in recent years and has grasped market trends. For Canada alone, Vietnamese wood products are meeting the consumption demand, but the number of exports compared to the market scale is small.”

Promoting the export of furniture and interior decoration to Canada in particular, and to the North American region in general, the problem shared by many wood industry enterprises today is the lack of birch wood used to manufacture cabinets due to import challenges, greatly affected by the Russian-Ukrainian conflict. In fact, although Vietnam is not a country that directly imports a lot of wood materials from Russia, it indirectly imports a large amount through intermediate markets, typically China. After importing from Russia, Chinese wood enterprises will process and export to other markets, including Vietnam. On average, Vietnam annually imports more than 70,000 m3 of lumber and nearly 200,000 m3 of wood planks from China, including birch, yellow maple, oak and pine, originating from Russia.

"Enterprises are looking forward to the support of state management agencies to find alternative sources of imported wood," said Mr. Nguyen Liem.

Sharing experience in trading furniture and interior decoration with the Canadian market, some Canadian importers said there are many ways to sell goods through Canada, of which two main ways are to sell product components through Canada to assembly and sale of finished products.

Specifically, with the sale of product components, enterprises have the advantage of compact packaging and convenient transportation, however, it is necessary to consider the high labor costs in Canada. Meanwhile, with semi-finished products, transportation costs will increase.

Therefore, businesses need to find out information about the distribution of finished products, so they can choose a retail channel or through the help of an agent or sell directly to customers online.

Ms. Tran Thu Quynh added that Canada is home to many high-end furniture brands. Therefore, Vietnamese enterprises can coordinate to cooperate in production and business in the form of OEM (original equipment manufacturer). The reason is that the labor cost in Canada is high, especially wood industry workers are difficult to find, while by manufacturing in Vietnam we can solve these bottlenecks. In addition, domestic wood enterprises can also consider the possibility of buying and selling businesses or starting a business in Canada.

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The head of the Vietnam Trade Office in Canada mentioned that domestic enterprises can also coordinate in training human resources, especially the combination of many types of materials in wood products, gaining experience in wood and water treatment painting, automation in production, taking advantage of the sales system of Canadian partners to bring goods to the US market. "The Canadian government is strongly supporting enterprises to develop supply chains, many ancillary products for the Canadian wood industry are in short supply and domestic enterprises are likely to participate," said Ms. Tran Thu Quynh.

By Thanh Nguyen/ Quynh Lan