Timber enterprises invest in market development

VCN - The decline in orders in the last months of 2022 has shown the unbalanced development of Vietnamese wood enterprises when focusing only on the production stage and paying little attention to the market segment. Therefore, a series of trade promotion programs are being implemented to promote market development and create a firm foothold for the wood industry.
Producing wooden furniture for export to EU market at Tuyen Quang WOODSLAND JSC. Photo: VNA
Producing wooden furniture for export to EU market at Tuyen Quang WOODSLAND JSC. Photo: VNA

Light signals

According to the share of wood exporting enterprises, after a very sharp decline in the second half of 2022, Vietnam's wood industry has received positive rival signals.

Similarly, Ms. Le Thi Bich Canh, Director of My Duc Wood Company - an enterprise specializing in supplying raw materials for the furniture industry, said that due to the sharp decline of orders in the last months of 2022, raw wood prices also dropped sharply. However, things are different which shows the bounce back. However, Ms. Lanh also said that orders have only returned to some businesses.

Mr. Do Xuan Lap, Chairman of Vietnam Timber and Forest Products Association (VIFOREST):

Thanks to the support of intermediate products, which are mainly wood pellets and chips, the wood industry still maintains rather smoothly. However, due to the impact of the market, the export activities of deeply processed products, namely furniture, decreased. Although the market is warming up now, it still needs time for the real revival. Accordingly, it is forecast that wood exports in the first quarter of 2022 will only reach 50% year on year, then improve to about 60% in the second quarter and reach about 65-70% in the third and fourth quarters. For the whole year of 2023, the wood industry expects export sales to reach 17.5 billion USD, equivalent to a growth rate of only 2.5% - the lowest level ever.

Mr. Dang Minh Lanh, Director of New GBI Furniture Company shared that there is a shift of customers from the Chinese market to Vietnam. Accordingly, the market has begun to stabilize again with more orders from EU. Meanwhile, the Chinese market is still facing difficulties in terms of prices and unstable supply chains, so buyers are looking for suppliers in Vietnam.

“A lot of customers ask us about Vietnamese suppliers,” Mr. Lanh said

Mr. Nguyen Quoc Khanh, Chairman of Ho Chi Minh City Handicraft and Woodworking Association (HAWA), Chairman of AA Company, also shared that AA Company recently received an order from a large hotel in Israel and another one from Greece – two completely new markets of AA. This is a very good signal showing the opportunities for Vietnam's wood industry in these new markets.

Similarly, Ms. Duong Thi Minh Tue, Sales Director of Minh Duong Wood Company, amid the sharp decline of orders from traditional markets of the US and EU, the company received some new orders from the Middle East market.

Ms. Tue explained that in the past, consumer tastes in the Middle East used to be fond of religious and classic designs. Therefore, manufacturers in Malaysia respond very well to this demand. However, the young generation has shifted to beautiful designs and higher-value materials, and is willing to accept higher prices. Therefore, this is a good opportunity for Vietnamese suppliers.

Focusing on market development investment

Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association (VIFOREST) assessed that, for many years, wood factories have only focused on building infrastructure and production facilities without paying much attention to market development.

However, due to the current scarcity of new markets, businesses need to focus more on trade promotion activities and finding customers. “While industrial parks and FDI factories had to work overtime, Vietnamese enterprises take Tet holidays early and return to work late after Tet. This shows the crucial role of expanding markets for enterprises. Therefore, enterprises need to focus more on this aspect in 2023 and the following years,” Mr. Lap said.

Implementing the market development plan, recently, five associations including VIFOREST, HAWA, BIFA (Binh Duong Province Woodworking Association), DOWA (Dong Nai Wood and Handicraft Association), Binh Dinh FPA (Binh Duong Province) Binh Dinh Timber and Forest Products Association) have successfully cooperated to establish Viforest Fair Company to develop trade promotion activities for the wood industry.

Accordingly, Viforest Fair will kick off with the Ho Chi Minh City Furniture and Furniture Export Fair – HawaExpo 2023 in Ho Chi Minh City at the end of February.

Mr. Do Xuan Lap said Forest Fair will be a bridge for Vietnamese wood enterprises with markets and international organizations, thereby raising the level of trade promotion activities of the wood industry. Through the fair, businesses will be trained to improve their capacity to participate in international fairs and further open stores, offices and companies abroad.

According to Mr. Nguyen Quoc Khanh, in spite of the top ranking in Southeast Asia, the fifth in the world and the second in Asia in terms of wood exports, Vietnam's trade promotion activities through fairs are inferior to other countries. The scale of Vietnam's fair booths only ranked fourth in Southeast Asia, which is not commensurate with Vietnam's wood industry. Meanwhile, the fair is the best channel for wood industry enterprises to directly contact customers and introduce their products in the most economical way. This will greatly support the completion of the wood industry's goal of exporting 20 billion USD by 2030.

Mr. Khanh highly assessed the favorable location of Ho Chi Minh City in organizing fairs for the wood industry. Firstly, the well-equipped tourism infrastructure makes it easy for customers ( 30-40 minutes) to visit large factories in neighboring provinces such as Binh Duong, Dong Nai, Long An.

This is such a dominant advantage of Vietnam against other countries so Vietnam enterprises should grasp it.

Sharing the same view as Mr. Khanh, Mr. Nguyen Liem, Chairman of the Board of Directors of Lam Viet Company, said despite e-commerce development, the peculiarity of the wood industry not only pays attention to utility efficiency but to the texture and aesthetics of the product as well.

Therefore, customers want to directly see and touch products, and at the same time go directly to the factory to evaluate production equipment, productivity, and management system.

Therefore, Mr. Liem is expecting to clear more orders for businesses at this fair.

Similarly, Mr. Nguyen Phuong, Director of Minh Thanh Wood Company, said that the company has arranged many meetings at HawaExpo main office on this occasion. Besides, the company has also built a customer outreach program at international fairs such as the one in Las Vegas next July.

Mr. Lap added that in 2023, the wood industry will organize two fairs, HawaExpo in February and another specializing in machinery, equipment and materials in Binh Duong. Next, in 2024, there will be two more exhibitions on outdoor goods in Binh Dinh and a multi-industry fair in Hanoi. In addition, the wood industry will mobilize members to participate in international fairs in the US and Germany.

Nguyễn Hiền/ Thu Phuong

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