Wood companies link to overcome difficulties

Visitors at the HAWA EXPO in HCMC. (Photo: SGGP)

Modest growth

The global real estate market is decreasing, which in turn is causing the wood industry to suffer a drop in the number of orders domestically and internationally. According to Mr. Nguyen Liem, Chairman of the Binh Duong Woodworking Association, to survive, many enterprises have had to struggle to operate without making a profit, hoping to overcome this difficult period.

However, the challenges have not stopped because the world tends to switch to using many other materials for construction works, interior decoration, and household appliances, such as bamboo, rattan, plastic, and stone. Therefore, even if the real estate market recovers, it will be difficult for the wood industry to develop further.

Meanwhile, the trade promotion of Vietnam's wood industry is weaker than other countries in the region. For many years, customers have usually visited and learned about wood products at trade fairs in China, Malaysia, Indonesia, and Singapore before coming to Vietnam.

Therefore, large orders are often taken away by companies in these countries, leaving only low-value ones. Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Product Association (VIFOREST), said that in 2022, the value of Vietnam's wood and forest product exports reached US$16.928 billion. However, it is forecasted that wood exports in 2023 will not be as high as in previous years.

Not only facing difficulties due to reduced orders, but many wood industry companies also face difficulties in obtaining capital for production investment. The majority of companies have not been able to access the government's 2-percent interest rate support package. Even those who have been able to access it still face difficulties because the support is in Vietnamese dong, while most export orders are conducted in US dollars.

In recent times, there have been many fluctuations in the exchange rate between the Vietnamese dong and the US dollar, which has had a negative impact on the business operations of companies in general and the wood industry in particular.

Engaging in both production and trading

According to Mr. Do Xuan Lap, the Vietnamese wood industry ranks fifth in the world in terms of scale, which is a great advantage for accessing many markets. However, the scale of each company remains small, with unsustainable development strategies.

Currently, many Vietnamese wood companies only focus on processing and accepting orders through many intermediaries, resulting in low profits; and market research and development are not paid attention to. "In the future, the Vietnamese wood industry cannot rely solely on production but must also engage in trading to increase value and meet market trends," Mr. Do Xuan Lap stated.

Similarly, Mr. Nguyen Chanh Phuong, Vice Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said that, from March, many countries would hold exhibitions on wood products. This is an opportunity for Vietnamese wood companies to seek orders from European countries, the US, and some other countries.

Furniture production at Thuan An Company. (Photo: SGGP)

According to HAWA, the Vietnamese wood processing industry aims to achieve an export value of $20 billion by 2025. To achieve this goal, starting this year, HAWA will launch a series of trade promotion activities in the wood industry. Along with HAWA, VIFOREST, and the wood furniture associations of HCMC, Binh Duong, Dong Nai, and Binh Dinh will also collaborate to organize an exhibition on exported wood products and furniture in HCMC.

"From now on, the trade promotion activities of the five associations will no longer be separate but will be unified to bring collective strength. Vietnam is expected to organize another exhibition in October this year to obtain export orders for the beginning of next year," said Mr. Do Xuan Lap.

According to HAWA representatives, through the trade fair organized by the associations at the end of February, some Vietnamese companies have reached agreements with many direct buyers from the US. This could be the first step in building the Vietnamese brand. These companies are currently being supported by associations to get agreements from orders.

Not standing outside the collective effort, Mr. Le Hoang Tai, Deputy Director of the Trade Promotion Agency under the Ministry of Industry and Trade, said that in the coming time, the department would regularly coordinate with Vietnamese agencies abroad to organize trade promotion activities, as well as monthly trade promotion meetings, to timely support businesses in grasping market information, trade policies of countries to prepare export plans and market access strategies.

From the reality of trade, the Head of the Department of Trade Promotion also recognized that niche markets, specifically Middle Eastern markets, are developing strongly because young people in these countries want to switch to modern styles instead of traditional ones. Therefore, businesses should focus on exploiting these markets. However, they should not neglect the domestic market, which is also developing in the coming time.