Many big furniture brands move orders to Vietnam

The Vietnam Furniture Matching Week - VFMW 2022 has just taken place in Ho Chi Minh City. The event was jointly organized by the Ho Chi Minh City Fine Arts and Woodworking Association (HAWA), the Department of Trade Promotion (under the Ministry of Industry and Trade) and the Ho Chi Minh City’s Department of Industry and Trade.

VFMW 2022 attracted the participation of hundreds of representatives of international buyer who came to learn about and find Vietnamese furniture manufacturers and suppliers.

It is worth noting that the international purchasing team (sourcing) comes from many big brands in the world such as Mitchell Gold + Bob Williams, Lidl & Kaufland Asia, Target Corporation, Home Depot, Williams Sonoma Vietnam LLC, OBI Group sourcing Hong Kong Limited in Vietnam, El Corte Ingles, HK, Delta-Sport Vietnam, TJX Vietnam, Four Hands, etc.

Nguyen Chanh Phuong, Vice President of HAWA, says that VFMW 2022 takes place at the right time to order for the year-end furniture sales season worldwide, so it attracts a lot of attention from both domestic and international businesses.

“From 300 participants in the first organization last year, Vietnam Furniture Matching Week 2022 is gathering more than 800 representatives from more than 450 businesses in the processing industry of wood and handicrafts. This is a positive signal, showing the recovery and exciting activity of the wood industry,” says Nguyen Quoc Khanh, President of HAWA.

Information from Vietnam Furniture Matching Week 2022 shows that international buyers are paying more and more attention to Vietnamese furniture.

In particular, many large buyers in the world have moved orders for processing and manufacturing wooden furniture from other countries, including China, to Vietnam.

Therefore, up to this time, many businesses in the wood industry have received orders fully for the third quarter. Some businesses even have orders to produce until the end of this year.

By the time orders for processing and manufacturing wooden furniture are not big issue, logistical difficulties become obstacles for Vietnamese furniture manufacturers.

According to Mrs. Vo Thi Phuong Lan, Head of Transportation and Forwarding Unit of the Vietnam Logistics Business Association (VLA), the international freight rates in 2022 have shown signs of cooling down but are still high. Once American buyers had to spend more than US$ 20,000 to transport 1 container of furniture from Vietnam to the US. By now, the average freight rate for a container going from Vietnam to the East and West coasts of the US in the first quarter is US$16,333 and US$13,667, respectively.

The US is the largest market and accounts for about 60% of export turnover of wood and wood products of Vietnam. That is reason when sea freight rates from Vietnam to the US are still very high, it is a big concern for Vietnam's wood industry.

Besides, Vietnamese wood processing enterprises also have to face the situation of high price of raw materials and other input costs. According to HAWA, the price of wood materials is increasing sharply in the first months of this year. For example, the price of (sawn) oak increased by 28%, the price of (round) oak increased by 40%, the price of (sawn) poplar increased by 40%, etc. The price of gasoline increased by 52% in the first quarter also significantly increased costs of transporting exported wooden furniture from the factory to the seaport.

However, with more and more orders for furniture putting on the table of Vietnam’s enterprises, Vietnamese wood traders still believe that this year will continue to be a successful year of exporting wood and wooden products, and completely can reach the target of US$ 16.5 billion in exporting turnover.

Statistics of the General Department of Customs show that, in the first quarter of 2022, Vietnam's exports of wood and wooden products reached US$ 4 billion, up 4% over the same period last year. The US is still the largest market of Vietnam's wood industry with an export turnover of US$ 2.4 billion in the first quarter of this year.

With an export turnover of more than US$ 1.5 billion, wood and wooden products have been among 7 groups of export goods of the country with a turnover of more than US$ 1 billion in the first month of 2022 and in the "top 3" of the commodity groups with the double-digit growth (ranked second in growth after textiles and garments). This shows that the export of wood and wooden products is making a larger contribution to the overall export of the country.

With positive signals from the market, many wood industry experts believe that this year's export of wood and wooden products will achieve the target of US$ 16.5 billion as the Government has assigned. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association (Viforest), once said that the export of wood and wooden products can reach US$ 17.5 - 18 billion this year.