Wood industry remains sustainable growth

	Wood industry "leapfrog" opportunities from CPTPP
	Vietnam’s wood industry faces difficulties in raw materials
	Changing the market, exporting wood is facing big challenge

The prospects of wood exports in key markets remains positive. Photo: N.Hien.

Receiving orders up to 2020

According to the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), the export turnover of Vietnam’s wood and wood products in May 2018 was estimated at US$ 700 million, bringing the total export turnover in the first 5 months of 2018 to US$ 3.3 billion, up 10% over the same period in 2017. The export turnover of wood products was estimated at US$ 2.3 billion, up 4.4% over the same period in 2017. Vietnam’s wood and wooden products remain with optimistic growth prospects in the context of the global economy facing some of the current US trade policies.

The three major export markets of Vietnam’s wood industry are the United States, Japan and the EU. In particular, the US market is still abundant for exports to grow because the US enterprises only produce sawn wood and do not process wood products such as Vietnam does. In addition, due to many years of cooperation with US enterprises, despite many policies of protection, quarantine and explanation requirements, but in general, Vietnam wood enterprises are still able to meet the market.

Meanwhile, in the Japanese market, according to Japan’s Customs data, in the first three months of 2018, the import value and volume of wooden furniture decreased. However, the import value and volume of wooden furniture from Vietnamese market increased. This is a very positive sign for Vietnam wood furniture in this market. In the EU market, Vietnam’s wood products meet the interest of consumers. The evidence is that exports of wooden furniture from Vietnam to the EU has increased continuously from 2015 to now. Demand of this market is very high, but the Vietnam’s market share is still at low level, only about 14.6%, but the potential for development in this market is significant.

According to HAWA, in addition, favourable market conditions, market information, consumer spending and real estate growth in key wood export markets are some of the factors boosting export turnover of Vietnam’s wood and wood products in the coming time.

According to HAWA, through exchanges with member companies, many enterprises said that they have received enough orders in 2018 right from the end of 2017. Even some of them have orders to 2020. Typical is Scansia Pacific Company that has received enough orders until the end of this year. Even though it has risen sharply by 25% in 2017, Scansia Pacific's orders are up 30% compared to 2017. Therefore, the company's management said the company is not worried about the lack of orders. However, the production is not timely to deliver to customers.

Mr. Nguyen Liem, General Director of Lam Viet Company estimated that Lam Viet's orders in 2018 grew by 12-15% over the previous year. As a result, the company's revenue is expected to increase by about 20%.

Not only "bright" in the export market, the domestic market of the timber industry also has quite an optimistic forecast. Consumption of furniture tends to be parallel to real estate. Over the past two years, the real estate situation has improved and by the end of 2017, many projects started to complete, so that 2018 promises to be a vibrant year of wood consumption.

According to HAWA, Vietnamese enterprises sell not only products but also living space, the wisdom to customers. This has been reflected in the 5-star construction works which have been built in recent time such as Park Hayatt, Gem Center. It shows that besides the trade surplus, Vietnam wood industry has been able to control the domestic market. Meanwhile overseas, Vietnamese enterprises are also chosen to execute many large projects, such as the 6-star hotel Rosewood Phnom Penh Hotel in Cambodia, 5-star Park Hyatt hotel in Kitts and Nevis in the Caribbean

Lack of exhibition space

Despite the great growth opportunities, many wood enterprises are worried about exhibition space to promote and introduce their products to customers, as well as the ability to meet international partners. Because the exhibition is the most effective channel with the lowest cost it attracts many enterprises, especially international exhibitions for overseas export. After 11 years of organizing Vietnam Vifa Expo, which has now reached the top position in Southeast Asia, but the exhibition infrastructure in Ho Chi Minh City is currently only available at the Saigon Exhibition & Convention Center (SECC), with narrow area. Moreover, the exhibition schedule is always overloaded and the enterprises always have to register for many years.

According to enterprises, the State should consider the investment to build an exhibition center with at least 60,000 - 80,000 m2 of display area, then open bids for enterprises to exploit the center and pay money to the State in a reasonable period. Thus, the State shall not spend money but collect taxes in a sustainable way from the development of enterprises.

In fact, over the past time, in addition to domestic exhibitions, Vietnam’s wood enterprises have also participated in many international exhibitions in China and the United States. However, the efficiency from international exhibitions is not the same as domestic exhibitions. This is because, domestic exhibitions are less costly, the transport of products from the factories to the exhibition places is shorter, so the transport fee is less. Domestic exhibitors also have the advantage that when foreign enterprises visit the show at the exhibition, they can book appointments and visit the headquarters or factories of enterprises, Accordingly, 95% of orders will be made. While in international exhibitions, enterprises have to spend a lot of money, exhibited products are limited and people are also limited.

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Therefore, the building of a large exhibition center in the country is still an urgent requirement for enterprises. It is known that in the commercial infrastructure planning until 2025, orientation to 2030 of HCM City, besides expanding SECC by 1.2 ha, bringing the area of this center to 11.8 ha, the city will also build two more international exhibitions in Thu Thiem - District 2 (to be 8.3 ha) and in the HiepPhuoc - Nha Be port urban area (30 ha). However, this is just a paper plan and enterprises will probably have to wait a long time to actually have a large exhibition space for meeting the need to introduce products to foreign partners.