The US is 'hungry' for Vietnamese wooden products

Big market for wooden product exports

According to Mr. Do Xuan Lap, Chairman of the Vietnam Wood and Forestry Products Association, there are currently 5,580 businesses producing, trading and processing wood and forest products in the country, including: 4,760 wood processing businesses, 820 artificial boards producing businesses, 55 pallets businesses and 188 wood chips producing businesses.

Among 5,580 businesses producing, trading, processing wood and forest products in Vietnam, there are 4,813 businesses with domestic investment capital and 767 businesses with foreign direct investment  (FDI); There are 2,600 businesses that directly export wooden products to international markets.

Wood processing businesses in Vietnam are concentrated mainly in the Southeast region, including: Ho Chi Minh City and the provinces of Dong Nai, Binh Duong, Binh Phuoc, the number of businesses operating in the wood processing industry in this region accounts for over 42% of the total number of businesses in the country.

In the South Central region, wood processing businesses are mainly concentrated in Binh Dinh, Phu Yen as well as some provinces in the Northern region, in areas with traditional craft villages such as Hanoi, Bac Ninh, and Nam Dinh. 

“The wood and forest product processing industry in our country is increasingly profitable, attracting over 500,000 workers; 55-60% of which are trained laborers with stable jobs. The average labor productivity is estimated at 25,000 USD/person/year, up by 25% compared to that in 2015 and by 47% compared to that in 2010”, said Mr. Do Xuan Lap, illustrating the promising outlook of the wood processing industry in Vietnam presently.

According to Mr. Lap, Vietnamese wooden products are currently present on the market in 120 countries, territories around the world, with 5 main markets being the United States, Japan, China, the EU and South Korea.

Although the Covid-19 pandemic affected the production and export of wood products in 2021, the export turnover of Vietnamese wood and forestry products still reached 15.96 billion USD, an increase of 20.7% compared to 2020.

Specifically, export of wood materials and various boards reached 3.74 billion USD, up by 31.7%; wooden product exports reached 11.1 billion USD, up by 16.1%; non-timber forest product exports reached 1.15 billion USD, up by 34.7%.

“The five major markets for Vietnam's wooden products consumption in 2021, namely the United States, Japan, China, the EU and South Korea, have a total export value of 14.27 billion USD, accounting for 90.4% of the national export value. The US market has always accounted for over 60% of Vietnam's wooden product exports in the last 3 years.

The most popular items on the US market are wooden cabinets and sofas.The orders that Vietnam's wood processing businesses receive from US customers in 2022 account for 68% of the total volume of goods our country's wood processing businesses received from the international market", said Mr. Lap.

Binh Dinh province, "capital" of the export wood processing industry in the South Central region, has over 183 businesses engaged in wood production and business, nearly 150 of which are wood processing businesses. Binh Dinh has the potentials in the outdoor wooden product line, which is accelerating the product line restructuring towards increasing the proportion of indoor exports to the US market.

Large-scale wood processing businesses in Binh Dinh such as Tien Dat Wood Industry Joint Stock Company, Dai Thanh Wood Technology Joint Stock Company, Phu Tai Corporation, Thien Phat Co., Ltd. have installed modern production lines to produce kitchen cabinets for export to the United States. The production factories are well-invested, complete with modern technology to reduce dependency on labor, reduce production costs and increase productivity”, said Mr. Le Minh Thien, Chairman of Binh Dinh Association of Wood and Forestry Products.

"Playing by the rules" is a must

According to Mr. Do Xuan Lap, the US-China trade war was prolonged, leading to the US market's high demand for wooden products from countries around the world, including Vietnam.

Vietnam's wooden products exported to the US market are mainly wooden products with high added value, so our national wood processing industry has the opportunity to restructure export products towards increasing the proportion of value-added products, reducing the export proportion of wood materials.

“However, Vietnam's wood processing industry must sustainably develop legal timber businesses, and avoid accepting high-risk raw materials in order to stabilize the US market. It is necessary to avoid issues of origin evasion and boycott tax-imposed products from other countries. The US market is closely inspecting Vietnamese wooden products for such problems", said Mr. Do Xuan Lap.

According to Mr. Lap, Vietnam was once accused by the Office of the United States Trade Representative (USTR) at the end of 2020 that the wood processing industry had imported illegal wood harvested from Cambodia's protected areas; as well illegal wood imports from Cameroon and the Democratic Republic of the Congo.

Vietnam is also accused of not enforcing the law on wood import and processing strictly, especially regulations on legal wood origin, using illegal wood to process goods for domestic consumption. These are trade barriers that hinder Vietnamese wood industry's progress in the roadmap to greatly develop wooden product exports, especially those to the US market.

“In face of such situation, the Vietnam Wood and Forestry Products Association has requested the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade to work with the Cameroonian Ministry of Forestry and Wildlife and strengthen coordination in wood import, export control, ensuring legal wood trade between the two countries. Additionally, stakeholders need to contact relevant Cambodian authorities to find measures in preveningt illegal wood trade across the border, the most important of which are transparent procedures for licensing export of wood logs and sawn wood from Cambodia, Mr. Do Xuan Lap emphasized.

Moreover, the US-China trade conflict makes it impossible for China's plywood made from hardwoods, kitchen cabinets, bathroom cabinets and other wooden products to be directly exported to the US market. Therefore, Vietnam has become a middleman in transporting wooden products from China, so there is a high risk of facing commercial fraud accusations.

The US has initiated an investigation into Chinese plywood exporting from Vietnam to evade anti-dumping duties and production subsidies since the beginning of 2020. As a result, the US Department of Industry and Trade requested 60 Vietnamese plywood manufacturers to answer various questions related to plywood exports to the country.

In such context, the Vietnam Wood and Forestry Products Association has requested the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, the General Department of Customs and local Customs to strengthen control of wood imports by FDI businesses to prevent commercial fraud or businesses taking advantage of Vietnam's origin to export to the United States; review FDI investment in the wood processing industry; avoid licensing new investment businesses to produce plywood, kitchen cabinets, bathroom cabinets or products that are under the risk of being heavily taxed in the US market.