Wood processing businesses in Bac Kan face great difficulties

Thanh Binh Industrial Park located in Cho Moi district is where the majority of Bac Kan province's wood processing businesses are located. There are 5 functional wood processing factories in this Industrial Park. Their key products include plywood boards, wooden flooring and disposable household products made from wood.

These products are primarily exported to international markets around the world such as the US, Korea, Malaysia, Japan. However, export activities have encountered considerable obstacles in the last 6 months.

Lechenwood Vietnam Co., Ltd specializes in manufacturing plywood products; this is one of two factories whose products are mainly exported to the US market. The company's revenue was estimated at 600 billion VND in 2021; this figure has dropped to 477 billion VND in 2022.

This decline in revenue was caused by the fact that the US Department of Commerce added Lechenwood Vietnam Co., Ltd. to the list of businesses subject to anti-dumping investigation. The investigation focuses on plywood products manufactured in Vietnam due to suspicion of originating from China.

As a result, several export orders to the US market have been suspended, and other delivered orders have been rejected by customers. According to the director of Lechenwood Vietnam Co., Ltd., the company is suffering heavy losses because 70% of its products are exported to the US market.

The company is expanding its range of target markets in order to maintain operations. However, the company is forced to cut working hours and reduce workforce for the time being.

Similarly, Govina Investment Joint Stock Company in Thanh Binh Industrial Park must also reduce its production capacity due to restrictions on exports to the US market.

Mr. Vu Khanh Cuong, General Director of Govina Investment Joint Stock Company, shared: The company has provided legal documents to verify that its input materials originate from wood collected from planted forests in Bac Kan province. However, the US authorities have not responded to the company's claim over an year later.

Govina Investment Joint Stock Corporation turned to domestic sales when it was unable to export to the American market. In comparison, the price is 30% lower, the amount of orders is modest, and inventory is considerable. The company had to reduce production capacity due to capital difficulties, high inventory and limited storage.

The Management Board of Industrial Parks in Bac Kan province reported that wood processing businesses in Thanh Binh Industrial Park generated over 29,000m3 of products during the first quarter of 2022, with an export value of 7.5 million USD. However, the production of these factories had only reached 11,000m3 by the beginning of 2023 with an export value estimated at only 3 million USD. Consequently, the output and value have decreased by more than half compared to the same period in 2022.

On the other hand, these challenges are not exclusive to the 2 businesses who export wood to the US market. Other wood processing companies in Thanh Binh Industrial Park are also facing difficulties due to reduced orders from export markets, limited domestic consumption, and low selling prices.

Normally, five wood processing factories in Thanh Binh Industrial Park would employ around 1,200 workers. This numer has now been cut down to roughly 800 employees due to difficult circumstances.

Mr. Hoang Van Khoi, Deputy Head of the Management Board of Industrial Parks in Bac Kan province, said that Vietnamese wood-based products have had great difficulties exporting to other international markets outside of the US due to global situation. Multiple wood processing enterprises in industrial parks have had to restructure their workforce and reduce working hours. The Management Board is actively supporting workers to find jobs in other sectors of the industrial park.

Many business leaders and managers believe that June 2023 would be the earliest time frame for the wood export market to begin its recovery.

According to wood industry experts, although export of wood products is facing difficulties, export of wood pellets and chips is growing steadily. However, because wood products account for a large proportion of the total export turnover for wood and wood products, the outstanding growth of wood pellets and chips cannot compensate for the heavy losses in the remaining sector.