Wood furniture export industry expands its business margin in difficult times

The frequency of the wood industry facing trade defence cases is increasing. Photo: NT

Difficulties pile up difficulties

The country's forest product export value in the first 7 months of 2023 was estimated to reach 7.78 billion USD, down 25.5% over the same period in 2022. Wood and wood products reached 7.21 billion USD, down 26.2%. 2% (wood products 4.81 billion USD, down 30%; wood materials 2.39 billion USD, down 14.2%; non-wood forest products 580 million USD, down 15.4%). The main markets for Vietnamese wood exports are the United States, Japan, China, Europe and Korea. The total export value to these 5 markets in the first 7 months was estimated at 5.44 billion USD, accounting for 89% of the country's total export value. According to Dr To Xuan Phuc, CEO of Forest Trends Organization, in the first 8 months of 2023, the export turnover of wooden products of Vietnamese businesses and foreign-invested enterprises (FDI) decreased year on year. Of which, FDI enterprises decreased by 32.5% and domestic ones by 22.4%.

Deeply studying current difficulties, Mr Trieu Van Luc, Deputy Director of the Forestry Department (Ministry of Agriculture and Rural Development), said the export value decline of forest product exports in the first 7 months of 2023 was mainly due to high inflation in some main forest product importing countries such as the United States, EU, etc. As a result, many countries are implementing many tightening monetary policies; consumers are limit ing their spending and reducing purchases of non-essential items, including products from forest products. Meanwhile, the price of wood chips has decreased from 195 USD/ton in 2022 to 135 USD/ton; Pellet prices dropped sharply from 180 USD/ton to 100 USD/ton. This also contributes to the decline in forest product export value.

Expansion of presence in potential export markets

Mr. Trieu Van Luc gave another reason why Vietnam's wood exports in the first 8 months of the year were strongly affected: the impact of geopolitical conflicts that continued to develop complicatedly, affecting the logistics issues and the price of raw materials and inputs. Besides, protectionist policies and trade remedies of many countries to protect their domestically produced goods and products partly affect our country's wood trade.

Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association (VIFOREST), said that the frequency of trade remedies cases the wood industry faces is increasing. From 2015 to 2019, there were two cases in Turkey and Korea. From 2020, the wood industry has faced 5 cases: 4 cases originating from the US market (case 301, hardwood plywood, wooden cabinets, products using stone surfaces imported from China) and 1 case originating from the Canadian market. The Japanese government also requires that all Vietnamese wood products must have a sustainable forest certificate when exported to this market. The German market applies the Law on Enterprise Appraisal Obligation in the supply chain, indirectly affecting Vietnamese exporters.

Besides being affected by external influences, many internal difficulties in the wood industry have directly impacted wood export turnover in recent years. Specifically, some craft villages have difficulty finding markets to consume products and converting to using wood from planted forests to replace wood imported from natural forests and timber imported from dangerous, risky sources.

According to Mr. Nguyen Quoc Khanh, Chairman of Ho Chi Minh City Handicraft and Processing Association (HAWA), recently, in solutions to cope with the decline in orders from main markets, the wood processing industry has witnessed a new shift which can be considered as business margin expansion. Accordingly, major Vietnamese furniture brands are expanding their presence in potential export markets. In particular, we must mention the markets of super-rich countries in the Middle East, such as Saudi Arabia and Dubai, to access supply opportunities for new super real estate projects. With the wood processing industry's internal strength, the export target of 2023 can be completely achieved because orders have begun to return recently.

Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri said that the wood industry has only reached the target of 46% of exports by 2023 while many obstacles are heading up. To achieve the set target of 17 billion USD, in the coming time, the Ministry will coordinate with associations to continue implementing business support programs, especially in trade promotion and trademark advertisement and planning large timber plantations, high-tech forestry zones, and green transformation for the wood processing industry.