The wood industry’s $16 billion objective is jeopardized by a steep drop in export orders. This decline reflects the industry’s current state and demonstrates the passivity of its companies.
Finding the growth trajectory
In the first eight months of the year, Vietnam’s wood and wood product exports reached $11 billion, marking a 6.2% increase from the same period in 2021. However, a Forest Trend survey indicates that 90% of companies are still reducing orders by an average of 30 to 60%.
Most factories are operating at only 40 to 50% capacity.
The Industry’s Response to External Factors
Workers find it hard to accept the furniture industry’s deviation from its growth trajectory. Minister of Agriculture and Rural Development Le Minh Hoan has determined that the production capacity and strengths of the wood industry still exist. This decline is primarily attributable to objective factors such as political tension, a sharp rise in consumer prices, inflation, logistics costs, and raw materials, among others.
The industry’s current state, heavily reliant on the US and European markets, reflects its companies’ passivity.
Vietnam’s Position in the Global Market
The minister notes that Vietnam’s furniture industry is second globally, thanks to its superior production capacity, management, human resources, and local materials. This is a well-deserved position
At a third-quarter 2022 wood industry briefing, the minister stated that proactive trade promotion, market development, and customer acquisition are key to rescuing businesses and adding value.
To be able to participate in higher segments of the supply chain, businesses in the industry must not only find markets but also equip themselves with intangible values such as design, brand, and distribution, etc. Currently, in terms of profit margin, Vietnamese enterprises receive a relatively low surplus value compared to other furniture-exporting nations in lower positions.
Varying the Depth: Strategies for Future Growth
“We are coordinating with agencies and departments, implementing business support programs to welcome the beginning of the order season in 2023. After that, we need to change our business strategy to match new needs in the world market”
Mr. Nguyen Quoc Khanh, HAWA Chairman.
Investing in Creativity and Branding
According to Mr. Khanh, in order to participate in the high-value framework, Vietnamese businesses need to invest in a creative team as well as promotion, build a brand, and most importantly, proactively approach potential customers. Moreover, there must be a space to display capacity. Therefore, trade promotion and industry marketing in the coming time will be synchronously organized in a general message.
Collaborative Efforts and Industry Events
In the near future, HAWA will collaborate with the Ho Chi Minh City’s Department of Industry and Trade and the Department of Tourism to implement the 2023 Exhibition Week initiative for the furniture industry, creative industry, and tourism services. The highlight of this trade promotion week is HawaExpo, a fair that will take place at the end of February 2023 and will bring together all the links in the handicraft and woodworking ecosystem.
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Marketing and communication efforts to attract international partners to Vietnam are particularly concentrated on this occasion. Numerous seasoned businesspeople with expertise in approaching partners and constructing images at international expos have volunteered to serve as advisors for this initiative.
Do Thi Kim Loan, Director of Sao Nam Flooring Company, stated that a care program and a comfortable environment are required to attract international partners.
Tens of thousands of international visitors attending HawaExpo in Vietnam will require accommodation, catering, utility services, factory tours, showroom visits, and visits to craft villages, etc. The wood industry must collaborate with the tourism industry to develop exhibition tour.
This is an important branch of MICE, a service that generates six times the revenue of regular tourism but has not been emphasized in Vietnam. Cooperation with the Ho Chi Minh City’s Department of Tourism is the solution for the wood industry to attract partners and create conditions for tourism services to earn more foreign currency and recover from the pandemic.
“The wood industry must demonstrate the diversity of Vietnamese businesses and the ability to meet customer needs outside of production, based on his experience working with European companies.”
Mr. Tran Lam Son, Director of Thien Minh Furniture
HawaExpo therefore not only solicits business participation, but also allocates space to support small businesses, start-ups, and design space for young creatives.
“Domestic businesses must always have activities to share information, assist other businesses in meeting new inspection standards, and connect further along the supply chain to gain a competitive advantage.”
A series of HawaExpo side events will assist businesses with this need.
On the macro level, statistical research activities will also need to be conducted during this time so that the Association can promptly advise management agencies on strategies and plans for the industry’s overall growth.
“The combination of creative industries and tourism services will give Vietnam’s wood processing industry more opportunities to accelerate in the near future.”
Mr. Khanh stated.