Vietnamese wood and wooden furniture enterprises have been facing many difficulties as export orders have dropped 50-60% since the beginning of this year, pushing firms to cut off at least half of their production capacities.
Data from Vietnam’s General Department of Customs showed that the export turnover of wood and wooden products reached US$3.9bn in the first four months, down 30.6% year-on-year. The export of wooden goods saw a yearly decline of 38% to $2.6bn.
At the same time, the import value of wood and wooden products also decreased significantly to $634m, down 33.6% over the same period last year.
During the first four months of 2023, Vietnamese exports of these goods to major markets all decreased sharply such as the US ($2.02bn, 38%); Japan ($556m, 1.5%); South Korea ($274m, 22%) and China ($481m, 13%).
Analysts and businesses have said that the decrease in wood and wooden goods exports was foreseeable. They attribute the decline to inflation surges in some countries, which were also major importers of Vietnam’s wood and wooden goods, resulting in sluggish demand for these products.
For example, the US imported $1.24bn worth of timber and wooden products from Vietnam in the first three months, a year-on-year drop of 42%.
In the context of inflation and the banking crisis, US banks have tightened credit, making importers unable to finance import goods in large quantities. The demand for US wooden furniture imports has plummeted, analysts said.
According to wood exporters, their export orders from the US market have decreased between 50-55% depending on the type of wood products.
Meanwhile, orders from the EU, another key export market, also dropped 60%.
The Chairman of the Woodworking Association Nguyen Liem said “amid the current difficult context the provincial wood enterprises had slashed their production capacities by 60%”.
Liem also predicted that when the market situation improved and the inventory decreased, foreign customers would continue to order but not sooner than early 2024. Around the beginning of 2024, the market would be less difficult, and businesses would have export orders again.
Still, only small ones, he said, forecasting that the market would likely recover at the end of 2024. However, the recovery growth would depend on the world’s economic and political situation.
Despite a sharp slump in orders, trade experts said the US remained a key export outlet for Vietnam’s wood industry. Therefore, businesses needed to maintain the US market by updating information and converting production according to the market’s consumption trends.
In addition, management agencies needed to support businesses to bring Vietnamese wooden goods into large distribution systems such as Walmart, Costco and Amazon.
In the current context, the Ministry of Industry and Trade and the Ministry of Foreign Affairs should continue to help businesses find out information about the market situation of products, consumer demand and tastes, Liem suggested.
They should also support the enterprises in updating the national mechanisms and policies of importing countries on quality, design, legality and sustainability of imported wood products and providing them with information on requirements as well as changes in the trade policy of key markets such as the US, the EU and North-east Asia, he said.
It was recommended that embassies should also provide information and support Vietnamese businesses to participate in international furniture fairs, the chairman of the Vietnam Timber and Forest Products Association (VIFOREST) Do Xuan Lap said.
He also petitioned the embassies to assist wood enterprises in opening companies, representative offices and stores in potential export markets.