Binh Dinh wood industry firmly overcomes difficulties and challenges in the export market

Overcoming difficulties spectacularly

According to Mr. Le Minh Thien, Chairman of the Forest Products Association of Binh Dinh, the export turnover of Binh Dinh’s wood industry in 2023 reached USD 925.8 million, down 2.3% compared to 2022. Meanwhile, Vietnam's export turnover of wood and forest products in 2023 was estimated at over USD 14.3 billion, a decrease of 16.8% compared to 2022.

In particular, only Binh Dinh's interior, exterior, and garden wood had a decrease in export turnover, reaching nearly USD 388 million and down 18.6%, while other types of wood products such as chips, pellets, etc. increased 21.2%, reaching USD 373.4 million, and plastic rattan products increased 0.7%, reaching USD 164.44 million.

“In 2023, many challenges and difficulties came to the wood processing industry, causing the export turnover of the country's wood industry to decrease by 16.8%; however, the export turnover of wood and wooden products in Binh Dinh only decreased by 2.3%. This is a great success, demonstrating the strong determination of the Forest Products Association of Binh Dinh (FPA Binh Dinh). In addition to the efforts of wood enterprises, there is the active companionship of provincial leaders and related industries. Thanks to that, in 2023, FPA Binh Dinh was awarded Certificates of Merit by the Minister of Agriculture and Rural Development and the Vietnam Timber and Forest Products Association (VIFOREST)," said Mr. Ngo Si Hoai, Vice Chairman of VIFOREST.

According to Chairman of FPA Binh Dinh Le Minh Thien, to achieve the above-mentioned results, it is thanks to many wood enterprises in the province that have shaped and developed the furniture and forest products processing industry in depth, applying advanced technology applications and increasing labor productivity. These enterprises include Phu Tai, Tien Dat, Dai Thanh, Hoang Hung, Duc Hai, Duc Toan, Nghia Tin, Phu Tai Bioenergy, Gia Han, Hoang Giang, and more than 130 other member businesses. Thereby, Binh Dinh has attracted many leading corporations and distribution chains of furniture and wooden products, such as Ashley, Masterbrand Cabinet, Walmart, Target, HomeDepot, Kingfisher, Chenming, Itochu, Enviva, etc., from the US, EU, UK, Australia, Japan, and China markets.

“Binh Dinh's export turnover of exterior and interior furniture decreased sharply in the first two quarters of 2023. And then, purchasing power gradually increased, but it was not until the 4^th quarter that the export turnover recovered, leading to this product group’s export turnover for the whole year decreasing by more than 18% compared to 2022. While the group of plastic rattan products decreased sharply in the first three quarters of the year but recovered quickly in the 4^th quarter, helping to maintain the export turnover level approximately as in 2022. Wood chip and wood pellet products increased strongly in two main markets: China and Japan. Thanks to that, the wood industry in 2023 still remains at an export turnover level approximately as in 2022," Mr. Le Minh Thien illustrated the ups and downs of Binh Dinh’s wood industry in 2023.

In the face of unstable world developments and sharply declining furniture consumption and export demand in most major export markets, FPA Binh Dinh continues to closely monitor the actual situation of domestic and international markets in order to provide analysis, comments, forecasts, and development orientation for Binh Dinh's wood enterprises to feel secure in production.

Expectations for the new year

According to Mr. Nguyen Tuan Thanh, Standing Vice Chairman of Binh Dinh Provincial People's Committee, in order for the provincial wood industry to be stable and sustainable, Binh Dinh will prioritize attracting deep wood processing factories in the coming years.

“Binh Dinh is one of the localities with strong development in the wood processing industry across the country. However, the province lacks the field of deep processing to improve product quality and value, so in the coming time, Binh Dinh will pay attention to attracting investment in this field," shared Mr. Nguyen Tuan Thanh, Standing Vice Chairman of Binh Dinh Provincial People's Committee.

Regarding the forestry sector related to the wood industry, Binh Dinh is focusing on developing large-timber forests associated with FSC certification and carbon certification. In the 2016–2020 period, Binh Dinh set a target of 10,000 ha of large-timber forests, and as of now, 9,800 ha have been achieved. Recently, some wood enterprises in Binh Dinh pioneered linkages with forest growers in the province to transform many areas of large-timber forests.

Mr. Thanh is very concerned that 80% of the raw materials for Binh Dinh's wood processing industry currently depend on imported wood sources. This is one of the disadvantages of wood enterprises because buying imported wood raw materials has a very high cost, is passive, and poses many potential risks that affect the production and income of enterprises.

“Binh Dinh has strengths in planted forests, so it is hoped that enterprises will cooperate with the province in the guidelines for developing large-timber forests to gradually be proactive in raw materials. The province will remove mechanisms to create conditions for wood enterprises to participate in developing large-timber forests, especially credit support. FPA Binh Dinh needs to do well with the task of connecting member businesses to create strength for the province's wood processing industry to grow stronger," said Mr. Nguyen Tuan Thanh.

According to the Chairman of FPA Binh Dinh, one of the issues is that, in the context that most businesses have a serious shortage of orders, goods are in stock, and many businesses' orders have been postponed or canceled, leading to production stagnation, wood enterprises are still fined by the electricity industry when they do not use enough capacity and electricity output. Therefore, FPA Binh Dinh suggests that the provincial electricity industry consider waiving or reducing fines in order to share part of the cost burden of customers and partners.

In 2024, Binh Dinh’s wood processing industry is determined to still face many difficulties in orders and export markets. Recently, the Israel-Hamas conflict has caused instability in the Red Sea area, so shipping lines chose the bypass route to the Cape of Good Hope, leading to a high increase in sea freight fees on the Asia-Europe route. The shortage of cargo ships and containers prolonged the delivery time. In addition, major export markets such as the US, EU, and UK are still greatly affected by inflation, persistently high interest rates, and tightening monetary policies, especially the wave of corporate bankruptcy in these markets, causing furniture consumption power to decrease sharply.

“However, we see signs that the furniture export market will prosper and potentially recover quickly in the first quarter of 2024. Therefore, the Forest Products Association of Binh Dinh sets an export turnover target of over USD 1 billion in 2024. Binh Dinh’s wood industry also identifies solution groups to realize this goal based on the strategy of diversifying markets and customers according to the motto "self-reliance, savings"; increasing investment in activities to improve and innovate production technology; and creativity in searching for and selecting customers and orders suitable to the capacity and production conditions of each enterprise," said Mr. Le Minh Thien, Chairman of the Forest Products Association of Binh Dinh.