Wood industry expected to regain growth

Worthwhile efforts

The seminar “Strategy to restore the supply chain of furniture industry in Vietnam” has been coordinatedly held by the Department of Trade Promotion (under the Ministry of Industry and Trade), the Vietnam Administration of Forestry (under the Ministry of Agriculture and Rural Development, MARD), the Department of Industry and Trade of Ho Chi Minh City, the Vietnam Association of Wood and Forest Products (Viforest), and the Handicraft and Wood Industry Association of Ho Chi Minh City (Hawa).

Sharing opinions at the seminar, Mr. Le Minh Hoan - Minister of MARD said, in the first eight months this year, the export turnover of wood and wood products reached USD 10.4 billion, up 41.4% over the same period last year. The export turnover of wood products in particular reached USD 7.98 billion, up 45.6% in comparison to the same period in 2020.

"Although the export data in September has not yet improved, compared with the difficulties caused by the pandemic, the achievements and efforts of Vietnam's wood processing industry are remarkable. This is the result of the careful preparation and initiative and determination of businesses in the industry, not yielding or being constrained under hard circumstances,” said Minister Le Minh Hoan.

According to Ms. Bui Thi Thanh An, Deputy Director of the Department of Trade Promotion, the data recorded from the Ministry of Industry and Trade shows that including the group of interior and exterior products and fine art decoration, Vietnam has exported USD 10 billion of wood products in the first half of 2021, an increase of 70% over the same period in 2020. In fact, in the past two years, since the pandemic began, Vietnamese furniture enterprises have had substantial endurance. Support and orientation activities of industrial organizations are also very active.

Markets still wide open

“About 60% of wood processing factories that have contracts in Vietnam are partners of American enterprises,” said Ms. Marry Tarnowka - Executive Director of the American Chamber of Commerce in Vietnam (AmCham).

There are many contracts being affected by the pandemic between the two parties in the third quarter. Furniture retailers in the US have been significantly affected by social distancing in Vietnam and Vietnamese furniture manufacturers have not been able to restore full capacity right away.

However, the US market's demand for Vietnamese furniture will continue to grow. Furniture retailers in the US still believe in the supply ability of Vietnam's wood industry, which has skilled and hard-working workers with competitive prices, etc.

Mr. Alain Cany - Chairman of the European Chamber of Commerce in Vietnam (EuroCham), shared that Vietnam applied social distancing to prevent the pandemic at the right time the demand of the European market increased. Fortunately, the orders are still there, because in general, European businesses are less aggressive in changing supply from Vietnam to China or other markets.

According to Mr. Benjamin Petlock, Senior Attaché for Agriculture (US Embassy in Vietnam), the US market has received Vietnamese furniture products very positively. The trade relationship between Vietnam and the US, one side supplying legal wood materials and the other supplying high-quality furniture products, has been growing in recent years. On both sides, the export and import markets are both large and likely to expand in the near future.

Some experts and entrepreneurs in the wood industry (domestic enterprises and FDI enterprises) share the same opinion that there are only a few countries producing wood furniture on a large scale in the world. Therefore, if retailers, especially retailers in the US, want to move orders out of Vietnam, it will be difficult to find other suppliers with similar capacities.

That is because China - the largest supplier of wood products - is being obliged to very high taxes when exporting to the US, and manufacturing industries in China are facing serious energy shortages. Large furniture producing countries also have problems, in which, there are countries that are also being severely affected by the pandemic like Vietnam.

“Vietnamese wood industry still faces many challenges and competition in the coming time,’ said Mr. Ernie Koh - Executive Director of Koda. According to Mr. Koh, there will be more foreign investments in Vietnam's wood industry, and Koda is going to invest to upgrade, enlarge their factories in Vietnam.

Restoring production

Chances for export growth are wide open for Vietnam's wood industry. Therefore, according to Mr. Do Xuan Lap, Chairman of Viforest, wood enterprises are doing their best to restore production soon.

According to some wood industry entrepreneurs, two major problems that wood businesses are facing in the recovery period are the lack of raw materials and labor. Therefore, the as-soon-as-possible "opening" will help the wood industry partially solve the shortage of raw materials and retain workers, enticing workers to return to factories.

But in order to facilitate the recovery of wood businesses, a unified approach to restoring production across the region is needed, as the wood industry supply chain has no administrative boundaries.

Mr. Do Xuan Lap affirmed: “Despite difficulties due to the pandemic, opportunities for Vietnam's furniture industry are still wide open. Enterprises themselves are also aware of these great opportunities, so they have been constantly looking for ways to adapt to new conditions, from retaining employees, finding a stable source of raw materials to even applying modern machinery and equipment not only to reduce dependence on human resources but also improve product quality, etc.

In addition to open policies, supports from agencies and departments, the companionship of wood associations nationwide, I believe Vietnam's wood processing industry will quickly recover and regain its strength, continue to become the spearhead of the country's economic development”.

“By the end of September, the export of wood and wood products has reached US$ 11.9 billion. In the last 3 months of the year, if each month maintains export turnover at US$ 800 million to US$ 1 billion, the whole forestry industry can still achieve the set target of US$ 14.5 billion,” said Mr. Bui Chinh Nghia, Deputy Director of the Vietnam Administration of Forestry.