Vietnam’s timber industry encouraged to go digital amid COVID-19 concerns

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According to data by Vietnam’s Ministry of Agriculture and Rural Development, export of wood and wood products reached US$13.2 billion in the past 11 months, a 20% increase over the same period last year, in which wood products represented $9.9bn. However, despite seeing a growth in forestry products exports amid the COVID-19 pandemic, the Vietnamese timber industry decided that they have to find a new direction to sustain this growth, as the negative impacts of the pandemic are unavoidable in the long term.

Amit Sharma, lead of researcher team in the report on Digitalisation Maturity Assessment of the Wood Processing Industry in Vietnam, expressed this sentiment: “The rapid spread of COVID-19 has changed consumer behaviour, creating pressure and challenges forcing businesses to innovate and improve at all stages, from design and production to trade, in which digitalisation is the key.”

The report was conducted by the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) and the Private Sector Development Research Board (IV Board) under the support of Asia Foundation in Vietnam. It studied the readiness of Vietnam’s wood industry to digital transformation.

The report found 58% of its respondents confirming that their companies have formed some sort of digital strategy, while 80% confirmed that digital transformation is core for their future strategic business development. 70% found their management team ready to handle digital transformations, while 48% their company plans its digital strategy for up to two years and 46% have a plan from three to five years.

The core reasons for digitalisation, besides rising revenue, reducing costs and finding new markets, are to increase productivity and transform their companies, according to the companies.

In order to achieve $20bn exports in 2025, the industry has determined that new directions, multi-channel sales, and increasing of value of products are necessary. The report said that on top of e-commerce as the immediate solution, complete digitalisation should be the mid-to-long-term focus of all wood processing Vietnamese enterprises.

Pham Thi Ngoc Thuy, director of the office of the IV Board, commented in a conference on the digital transformation in the wood processing industry that business leaders have innovated to interact with domestic and foreign market customers amid lockdown measures. “However, those endeavours are still spontaneous and have yet to create spillovers to the whole industry, so the effect has not been as expected,” she said.

Even so, some Vietnamese wood enterprises are still hesitant about shifting to digitalisation, making them lag behind counterparts in other countries like China, Germany and Poland. According to Nguyen Chanh Phuong, vice chairman and general secretary of HAWA, “Vietnam’s wood industry has a relatively high position in the world’s export map but the contribution of digital transformation and high technology to this result is not much and has not changed the face of the Vietnamese wood industry.”

Businesses are sceptical of digitalisation due to high cost pressure, the lack of knowledge of where to start, what to do in the short, medium and long terms. The lack of budget and management also impede the development and implementation of digital strategies.

Experts have said that there is no one way to digitalisation, and each business have their own quality, thus having own unique strategies. Many companies started out by examining the factors that create value for their customers and developing operating models to deliver said value.

According to Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, timber associations will help Vietnamese wood enterprises put a digital transformation programme into place, to make them as competitive as other enterprises, especially foreign-invested ones.

Source: Vietnam Plus