Binh Duong wood industry needs to adapt quickly to the market

In 2018, domestic wood industry targets to achieve $9 billion export. Binh Duong is considered as the "capital" of the whole country’s wood industry. This year, Binh Duong Furniture Association (BIFA) set a wood export goal of $4.5 billion.

To make good use of advantages

According to Huynh Van Hanh, Vice President of Handicraft and Wood Industry Association of Ho Chi Minh City, Vietnam had signed many Free Trade Agreements (FTAs) in recent time; this helped domestic wood enterprises have good opportunities to diversify the market; sources of materials also have more advantages, so that businesses will not be passive when raw material prices surge. What domestic wood enterprises need to do now is taking advantage of modern production lines of the world's developed wood industry.

Wood production at Kim Thanh A Company. 

This year, the goal of national timber industry is to reach $9 billion export of wood and wood products. Experts asserted that in order to achieve this goal, wood enterprises needed to modernize production lines, improve labor productivity, stabilize product quality and make competitive prices... The country's timber industry has many advantages to develop their market, expand production scale. In Binh Duong, there are more than 600 enterprises operating in the wood industry; average annual export turnover increase is 15%. In 2017, export value of provincial wood industry accounted for 50% of total wood export turnover of the country.

Huynh Quang Thanh, Chairman of BIFA, said that recently, many small enterprises, who are members of the association, invested in and procured modern equipment for production to meet increasing requirements for product quality of partners. The tendency of timber industry today is to focus on large enterprises, small businesses only take part in the production chain and supply wood products for export markets.

Mr Thanh added that BIFA's export target in 2018 would be $4.5 billion, $5.65 billion by 2020 and $9.95 billion by 2030.

To diversify the market

After Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP) take effect, the country's timber industry will have more opportunities to increase its export market share. In recent years, the Government, Ministry of Agriculture and Rural Development, Binh Duong Provincial People's Committee and relevant departments, agencies have regularly supported and organized trade promotion activities and programs in international markets to help businessess to approach new markets. BIFA also very active in linking its members, exchanging market information, disseminating and updating policies and legislation, providing training to improve skills, improving production processes.

In addition, BIFA has implemented support projects of international organizations such as the ILO with Score Project, Food and Agriculture Organization (FAO) with FLEGT Project, SIPPO Program to improve marketing skills for wood enterprises... thereby contributing to improving the operation efficiency of wood enterprises in Binh Duong.

Nguyen Liem, Director of Lam Viet Wood Joint Stock Company, said that the export market of domestic wood industry focused on some key markets, which also pose risks to domestic wood enterprises, when these markets are saturate. Therefore, wood industry of the country in general and Binh Duong wood industry in particular need to expand their consumption market, so that enterprises actively produce and reduce risks when the traditional market suddenly reduced orders. In addition, timber enterprises also need to be aware that now export markets require fast delivery time, competitive prices, so domestic wood enterprises need to adapt timely.

According to General Department of Customs, in the first quarter of 2018, export turnover of the country’s wood industry was estimated at $1.87 billion, up 5.8% over the same period in 2017. The United States, Japan and South Korea accounted for 77.6% of total export value of timber and timber products in the first quarter. Particularly, wood enterprises in Binh Duong accounted for over $1 billion worth of export value of the whole industry.

Reported by Phung Hieu – Translated by Ngoc Huynh