Optimistic prospects for exporting wooden furniture to the EU

Vietnam Industry and Trade Information Center, Ministry of Industry and Trade said that after the first 2 months of 2024, bedroom furniture export turnover reached US$ 296 million, an increase of 61.2% compared to 2023. This is a very positive sign in an unpredictable world economic situation, with demand for goods in many major markets decreasing.

Forecasted for the whole year 2024, bedroom furniture exports have many opportunities to grow because the problem of high inventory in many countries is gradually being overcome. Additionally, domestic businesses continue to take advantage of free trade agreements.

One of them is EVFTA. According to data from the General Department of Vietnam Customs, the export turnover of wood and wood products to the EU market in the first 2 months of 2024 reached US$ 106 million, an increase of 36.1% over the same period in 2023.

Exports of wood and wood products to this market decreased significantly in 2023 as the EU's demand is affected by inflation, tightened monetary policy and many objective factors that have inhibited growth across the EU.

The European Statistics (Eurostat) summarizes that in 2023, EU imports of wooden furniture reached EUR 22.3 billion (equivalent to US$ 24.3 billion), down 9.6% compared to 2022. Vietnam is affected when the import proportion only accounts for less than 2% of the EU's total wooden furniture import value.

However, this market tends to recover quickly, especially the wooden furniture segment. Even in January 2024, this group of products accounted for 73.5% of the total export turnover of wood and wood products to the EU, reaching US$ 52.8 million, an increase of 66.9% compared to January 2023.

In addition, the number of wood and other wood products exported to the EU market increased significantly in January 2024, such as wood pellets and wood, boards, and flooring.

Mr. Trinh Huu Kien, General Director of KES Group, an enterprise specializing in manufacturing industrial wood panels in Binh Phuoc, admitted that Europe is a bright spot in the early stages of 2024. For example, his company's exports to the Netherlands in January were nearly doubled.

The EU market's space is very large, but the EU's requirements are also stringent, according to Mr. Kien. In addition to investing a lot of money to improve equipment and technology, businesses also have to face the fact that the EU is promoting diversifying sources and supply chains.

The EU also introduces many new regulations and high standards for goods quality, environmental protection, and sustainable development... collectively known as EU green standards. Within the framework of the Green Deal, in June 2023, the EU issued the Regulation on Deforestation-free Products (EUDR) effective at the end of 2024 to prevent the import of goods that cause forest loss and degradation.

To maintain trade, companies trading in wood in the EU must prove that their goods are unrelated to deforestation or contribute to forest degradation.

Since October 2023, European countries have sent requests for the Carbon Border Adjustment Mechanism (CBAM) to partners. Goods imported into the EU market must incur additional costs and convert to a production model with less emissions to get carbon credits.

The EU also introduced regulations on new limits on formaldehyde in consumer products. For wooden products and furniture, the relevant limit in the future will be 0.062 mg/m3. A series of new regulations made Mr. Kien express: "Maintaining exports to the EU is not a simple matter."

According to Statista's assessment, by 2024, the furniture market in Europe will have a revenue of about US$ 236.8 billion, with a compound growth rate of 3.28%. Of which, the living room furniture segment is estimated to reach US$ 62.73 billion by 2024, dominating this market.

As the only sector in the agriculture, forestry and fishery group to achieve a "billion dollar" export value in January 2024, the wood industry will soon complete the export target of US$ 15.2 billion for the year.

However, like many other product groups, wood and non-wood forest products also have challenges because of logistics problems. Many businesses belonging to the Vietnam Timber and Forest Products Association (Viforest) complained that shipping containers that cost just over US$ 1,000 previously have now increased to more than US$ 6,800. The price advantage of Vietnamese products is significantly reduced.

To solve the problem, Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri has asked wood processing enterprises to promote links with forest growers and forest owners to develop large timber forests. "Not only will forest growers benefit from this, but businesses can also proactively source raw materials that are legal, certified, and sourced," he said.

Currently, wood processing enterprises are not obliged to measure carbon emissions, but in the near future, they may be required to do so at the request of the EU and other countries. Therefore, reducing emissions and avoiding risks are prerequisites at this time.