Potential material shortages: Vietnam Wooden furniture manufacturers

Exports in Vietnam have been growing well, but there is still concerns that the wooden furniture industry is in need of materials.

A report from the General Department of Customs (GDC) showed that export of all woodwork items in the first four months of 2018 had a substantial increase.

Vietnam exports of wood products saw an increase of 9 per cent this year vis-a-vis the same period last year– US$286,000 in the first four months of 2018.

Wooden furniture manufacturers expect another good year in 2018 as demand is expected to continue growing globally.

Most large manufacturers have enough orders to process till mid-year, while some of them even have orders scheduled for the entire year, especially from Europe and the US.

A director of a wooden furniture company confirmed that manufacturers are receiving more orders from the Europe and the U.S. markets as they are ordering more from Vietnamese enterprises rather than Chinese firms.

Moreover, exports to South Korea have seen a sharp rise as Vietnam’s products are growing more favourable. Exports have also been facilitated by the bilateral FTA (free trade agreement) between Vietnam and South Korea.

According to Nguyen Ton Quyen, deputy chair of the Vietnam Timber and Forest Product Association (VIFORES), the target of US$390,000 turnover this year is attainable. However, to obtain such high export turnover, Vietnam would need a large volume of materials.

The agriculture ministry reported that by the end of April 2018, Vietnam had imported US$31,000 worth of timber materials, up by 2.5 per cent compared with the same period last year.

It is estimated that for every US$440,000 worth of increased export turnover, the material needed would be 3.5 million cubic meters. Meanwhile, domestic sources (planted forests) can only satisfy 10-15 per cent of demand.

Every year, Vietnam collects 18-19 million cubic meters of timber, but only 2-3 million cubic meters are used to make wooden furniture, while the rest are chips for artificial boards.

To ease the material shortage, VIFORES suggested that the state restrict material exports, especially chips. It also proposed making full use of domestic materials such as rubber wood and fruit tree wood.

“To do so, the support of the State will be very important,” Quyen said. “The state should not make too much intervention into businesses’ transport and examination over timber origin.”

According to Nguyen Quoc Tri, general director of the Forestry Department, Vietnam needs to develop domestic material sources over the long term, in order to cut down production costs and trace the origin of timber.

 

Source: VietNamNet Bridge