The volatility and unpredictability in global markets challenged for many industries including woodworking but offered opportunities to diversify, according to experts.
The Department of Forestry reported that forestry product exports amounted to an estimated US$6.42bn in the first six months of the year, a 29% year-on-year decrease with wood and wood product exports dropping by 29% to $5.96bn.
A preliminary survey by the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) found that export orders fell by around 30% at the start of the year but began to recover in July ahead of the global market year-end furniture shopping season.
Speaking at the Vietnam Wood and Furniture Industry Forum held by HAWA in Ho Chi Minh City, Pham Phu Ngọc Trai, chairman of Global Integration Business Consultants, said the current reduction in export orders is temporary and the furniture industry has considerable growth potential for the next 5-10 years.
Compared to global GDP that forecast growth of 3% this year the world furniture industry’s compounded growth rate is expected to be 4.5%.
According to Statista Market Insights the world furniture market may reach $766bn in 2023 and is estimated to hit approximately $932bn by 2027. Vietnam ranks among the world’s five largest wooden furniture exporters. underlining its solid internal resources.
Nguyen Quoc Khanh, chairman of HAWA shared a similar view stating that woodworking firms showcased their business integration initiative. During market downturns, businesses remained proactive by reorganising production and streamlining operations to reduce costs while also seeking support from trade promotion agencies to explore new markets.
Khanh pointed out a new trend in the woodworking industry, where significant furniture brands from Vietnam are expanding into promising export markets, notably super-rich countries in the Middle East such as Saudi Arabia and Dubai with an eye on supplying products to new up-market real estate projects.
With the industry’s internal strength and the return of orders the industry’s export target for 2023 is considered attainable, said Khanh.
Experts at the forum emphasised the importance of businesses strengthening their internal resources to be prepared for orders to rebound in a recovering market and embrace green transformation to improve competitiveness.
Trai said Vietnamese businesses will face new demands such as the EU’s Carbon Border Adjustment Mechanism (CBAM), effective from October 2023. Goods imported into the European market may incur additional costs if they fail to adopt a lower-emission production model and earn carbon credits.