Wood industry struggles to reach the target of 18 billion USD

Fairs are an effective channel to connect wood industry enterprises with the market. Photo: N.H

The Import and Export Department (Ministry of Industry and Trade) quoted statistics from the General Department of Customs as saying that, in June 2023, the export of wood and wood products reached 1.1 billion USD, up 3.7% month on month, but down 23.3% compared to June 2022. In which, the export of wood products reached USD 750.7 million, down 1.3% compared to May 2023 and down 21% compared to June 2022.

Generally, in the first 6 months of 2023, the export of wood and wood products reached USD 6.1 billion, down 28.3% over the same period in 2022. In which, the export of wood products reached USD 4.1 billion, down 32.4% over the same period in 2022.

The recent global economic recession leads to a plummet in orders from the wood industry. As a result, Vietnam's exports of wood and wood products to major markets in the first half of 2023 all dropped sharply.

In which, exports to the US market accounted for 54% of the total export value of wood and wood products, reaching $3.3 billion, down 33% compared to the same period in 2022. The sharp decline of orders in this key market makes the target of 18 billion USD in 2023 unable to achieve.

In addition, enterprises exporting wood and wood products also face new regulations and requirements from the European Union (EU) market...

According to the Import-Export Department, the export of wood and wood products in 6 year-end months keeps facing challenges. The recovery of this industry will depend on many factors, including the stability of the global economy, especially the key export markets for wood and wood products such as USA and EU; along with promoting export support measures and exploiting market expansion opportunities.

Speaking at a recent talk, Mr. Ngo Sy Hoai, Vice President and General Secretary of the Vietnam Timber and Forest Products Association, said that the wood industry in recent years has recorded high achievements and made a breakthrough to become one of the world's major export wood processing centers. However, in the first half of 2023, the export of wood products dropped sharply. If the overall export turnover decreased by about 12%, then the export of wood decreased by nearly 30%.

The decline in export turnover of wood and wood products resulted from a steep drop in some main markets such as the US due to poor purchasing power and reduced orders. Besides, the wood industry has faced anti-dumping and anti-subsidy investigations since 2020, up to now, after seven delays, the US Department of Commerce has not yet issued a final decision.

However, according to Mr. Ngo Sy Hoai, the current difficulties are only temporary and affected by the general downtrend. Moreover, the demand for the global wood market still records an increase of 7-8%, which means that there is still a lot of room and opportunities for future development.

To limit  the decline and maintain the growth target, according to Mr. Ngo Sy Hoai, more solutions are needed for Vietnamese wood to have a brand name in the world.

Over the past time, Vietnam has signed many FTAs such as VPA/FLEGT Agreement, also known as the Voluntary Partnership Agreement between the European Union and Vietnam on forest law enforcement, forest governance, and trade in forest products. Moreover, Vietnam entered into a bilateral agreement with the United States to address the complete removal of illegally harvested timber from the supply chain. At the same time, it is effectively implementing recent EU regulations such as non-deforestation and non-degradation regulations.

A representative of the Vietnam Timber and Forest Products Association said that, at the national level, in general, the solutions mainly focus on improving the business environment and enhancing the competitiveness of enterprises, but more solutions are needed for Vietnamese wood to build their brand name in the global market. Especially, the Vietnamese Government, businesses, and the people of Vietnam have shaken hands to promote green growth and green development, contribute to the formation of a responsible wood industry, and contribute to a reduction of global deforestation.

“Given trade promotion, recently, we have established a company to organize fairs of 5 Vietnamese associations such as the Vietnam Timber Association and local Wood Associations in Ho Chi Minh City, Binh Duong, Dong Nai, Binh Dinh. This company specializes in organizing domestic and international fairs to enhance trade promotion for wood products," said Mr. Ngo Sy Hoai.

According to Mr. Ngo Sy Hoai, due to the order shortage, many businesses have to limit  costs, sack workers, reduce working hours, and maintain a certain level of production to wait for the recovery time. return to production. However, in case of positive signals such as in the US market, businesses must be well prepared to welcome the market bounce back. This is also the period when businesses need to look back to restructure after many years of development and hot growth.

Besides, many enterprises are mainly processing and exporting through large wholesalers without paying attention to building the brand name, which means that they now have to make full strength to build their own brand for long-term development.