Two promising opportunities to boost wood export in 2024

Partial return of purchasing orders

Both exporters and businesses in the wood and handicraft industry are currently facing a multitide of difficulties and challenges.

According to affected businesses, the high input fuel costs have significantly affected the overall production costs within the wood industry.

Moreover, high inflation rates, strict monetary policies, stagnated global economic recovery, and the collapse of international banks have contributed to a decline in the import demand for wood and wood products in Vietnam's traditional target markets, such as the United States and Europe, due to the restriction on non-essential product purchases.

On the other hand, the re-opening of the Chinese markets has generated additional competitive pressure for wood and wood product categories, especially for Vietnam’s wooden furniture. Additionally, trade protection measures have introduced complex dynamics into international trading activities.

According to the Agency of Foreign Trade under the Ministry of Industry and Trade, the export value of Vietnamese wood and wood products reached approximately 9.7 billion USD in the first nine months of 2023, which is a decrease of 21.3% compared to the same period in 2022. Accordingly, the export value of Vietnamese wood products is estimated at 6.5 billion USD, which is a decrease of 24.3% compared to the same period in 2022.

Within the structure of exported wood and wood products, wooden furniture is Vietnam's primary export category, achieving an export value of 5 billion USD in the first eight months of 2023. This is a decrease of 29.1% compared to the same period in 2022. The export value of wood chips, timber, wood planks, compressed wood pellets, wooden doors, etc., has also dropped due to weak global demands.

However, Vietnamese wood and handicraft businesses observed a deceleration in the downward trend between the of the third and fourth quarter, hinting at a more positive trajectory. This suggests an optimistic outlook for wood exports in the near future. Moreover, businesses have reported a partial return of purchasing orders to meet end-of-year seasonal demands and those that continue into the initial quarter of 2024.

According to Ms. Duong Thi Thu Trinh, Deputy Director of Duc Thien Co., Ltd in Binh Duong province, with over 30 years of experience in exporting sofas to the U.S. market, her company is able to secure regular export orders despite a decline in trading activities compared to the pre-pandemic period. Namely, the company has secured orders until March 2024.

Duc Thien Co., Ltd exports 10 containers of sofas to the U.S. market on a monthly basis. "In addition to enhancing our internal capacities by investing in technology, machinery, and human resources, we are also moving towards environmentally friendly, sustainable production," emphasized Ms. Trinh.

According to Mr. Tran Quoc Manh, Vice President of the Vietnam Handicraft Exporter Association, customer requirements are growing increasingly strict, with an emphasis on lower prices, diverse designs, and eco-friendliness in wooden products. As a result, businesses must make efforts to address difficulties and meet these demands. It is crucial to reconnect with lost orders, closely collaborate with organizations, associations, and utilize government support from domestic and international trade promotion programs. Consequently, these activities will help businesses explore and secure new customers, new markets, and new orders.

"Throughout 2024 and the following years years, Vietnam's wood industry will have the resilience to overcome challenges and achieve success," affirmed Mr. Manh.

According to Mr. Dang Quoc Hung, Director of Lien Minh Handicrafts Joint Stock Company, the traditional markets for Vietnamese wood and handicraft products are the U.S. and Europe. However, emerging markets such as the Middle East, India, South America, and Africa are expected to compensate for the shortfall in sales. As a result, businesses need to adapt their business strategies accordingly in order to seize these opportunities.

Trade promotion activities

In response to the difficulties faced by the wood and handicraft industry, Mr. Hung reported that Lien Minh Handicrafts Joint Stock Company will collaborate with local governments and agencies to organize the 15th Vietnam International Furniture & Accessories Expo (VIFA EXPO 2024) and the 2nd Vietnam ASEAN International Furniture & Accessories Expo (VIFA ASEAN 2024).

VIFA EXPO 2024 is scheduled to take place at the Sky Expo Vietnam International Exhibition & Convention Center in District 12, Ho Chi Minh City, from February 26 to February 29, 2024. VIFA EXPO 2024 is considered to be one of the largest trade expos in Asia in 2024. The event is expected to attract over 600 businesses with more than 2,000 exhibition booths, featuring a significant number of reputable interior design, handicraft, and decoration suppliers in Vietnam and other countries.

VIFA ASEAN 2024 is scheduled to take place from August 27 to August 30, 2024, at the Saigon Exhibition and Convention Center (SECC), with an expanded scale and double the number of participating businesses. The event is expected to attract over 400 businesses with over 1,200 exhibition booths primarily from countries in the ASEAN bloc.

Mr. Hung noted that during its first edition in August, VIFA ASEAN 2023 attracted 198 businesses, which included 102 businesses from 10 countries around the world, and 96 Vietnamese businesses from 13 provinces and cities. The trade expo welcomed 9,438 visitors, including 3,779 guests from 64 countries and territories.

"The VIFA EXPO 2023 held in March achieved remarkable success, surpassing previous editions. It is evident that Vietnam's furniture and wood processing industry has emerged as a key player on the global stage with an effective, large-scale 'playground' well received by many domestic and international businesses. Furniture importers and buyers from around the world engaged in direct exchanges and established cooperative relationships with quality manufacturers during the event. The event's organizers estimated the value of transactions and signed orders at the expo to amount to nearly 100 million USD.

Following the success of VIFA ASEAN 2023, the Ho Chi Minh City's Department of Industry and Trade and the provinces of Tay Ninh, Binh Phuoc, and Long An have collaborated with the organizing committee to establish a memorandum of understanding in support of trade promotion activities for businesses. This initiative aims to aid in the sustainable development of wood, handicraft, and interior decoration businesses," concluded Mr. Hung.