Timber industry makes the most of advantages and limits challenges

In 2019, the export of wood and furniture of the whole country reached the target of 11 billion USD. In 2020, the domestic timber industry is assessed to face competitive pressures on the export market, requiring businesses to make more efforts.

Wooden furniture production at Minh Phat 2 Company (Binh Chuan Ward, Thuan An Town).

 To yield a successful year

Điền Quang Hiệp, Chairman of Binh Duong Furniture Association (BIFA), General Director of Minh Phat 2 Company, said in 2019 the export of wood and furniture of the whole country reached the target of USD 11 billion, because The Prime Minister had placed orders. In the coming time, the industry still has rooms for development, with estimated export turnover in 2020 could reach 12 - 13 billion USD, in 2025 could reach 20 billion USD.

According to Mr. Hiệp, the timber industry is receiving great attention of the Government, when foreign currencies earning from wood export still stay in the country. This is the biggest advantage of the wood industry, because many other industries have a large export turnover but are also proportional to the large amount of foreign currencies flowing back to foreign countries due to heavy reliance on imported raw materials.

This is a time with many opportunities for Vietnamese wood enterprises to reach the world market. The reason is that the domestic wood industry is having a competitive advantage from free trade agreements (FTAs), for example EVFTA. Notably, the current source of imported materials for domestic production only accounts for 20%. Being proactive in supply helps increase export value of the wood industry. It is important that timber enterprises need to increase the proportion of export of Vietnamese brands and the added value in the total turnover.

Trần Anh Vũ, General Secretary of BIFA, said that there were many large-scale and specializing timber exporters in the country. In Binh Duong, which is a locality with the largest number of wood enterprises in the country, currently, domestic timber enterprises account for 50% of total wood export turnover, previously was only 10-20%. This proves that domestic timber enterprises are developing strongly, focusing on investing in design, production lines, branding... so that products have high added values in total export turnover.

Mr. Hiệp also predicts that the export of wooden furniture into the US market in 2020 would grow strongly, about 30%. Vietnam's furniture export to other key markets would also increase significantly.

To soon solve internal problems

Although the dependence on imported raw materials has been reduced, Vietnamese furniture has initially made a unique impression. However, domestic timber enterprises are facing productions shifting from some countries. Other firms enter Vietnam, creating sudden growth in this industry, leading to labor shortages, increasing product prices, and reducing the quality of exports.

According to Mr. Vũ, because of the China-US trade war, many foreign furniture enterprises have shifted to production bases in Vietnam. The large inflows of foreign capital into Vietnamese timber industry have both advantages and disadvantages. In the immediate future, it can be seen that the foreign inflow of investment in the wood industry would make it difficult to control the quality of projects and the risk of receiving small-scale projects, outdated technologies, not ensure environmental requirements. In addition, the competitive pressure of domestic wood industry increases, making it difficult for small businesses to develop.

Mr. Vũ said that apart from the shifting production from some other countries to Vietnam, the sudden growth of each enterprise in this industry also created many challenges. For example, when market opportunities expand, wood enterprises would expand the scale of production, leading to more labor attraction. When a series of enterprises increase their size in a short time, the labor shortage problem is a big worry, causing enterprises in the industry to compete with each other to attract labor resources...

In order to increase competitive advantages, it is important for domestic wood enterprises to soon solve internal problems, from increasing productivity, rethinking production to investing in new technologies, attracting labor sources. ... to be able to receive more new orders.

Reported by Tieu My - Translated by Ngoc Huynh