VietNamNet Bridge – Wooden furniture manufacturers have been warned that the challenges they meet in 2013 would be even tougher than the ones in 2012.

Commenting about the export turnover of $4.67 billion in 2012, Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said this was an “encouraging result.”

Vietnam’s exports now can go directly to the 100 targeted markets, while they don’t have to go through intermediary markets like Taiwan, Singapore and South Korea any more.

Also according to Tuan, Vietnam ranks the sixth in the world, the second in Asia and the first in South East Asia in exporting timber and the products made of timber. The most important markets for Vietnam are the US, China, Europe and Japan.

However, Nguyen Ton Quyen, Deputy Chair of the Vietnam Association of Wood and Forestry Products, is not as optimistic as Tuan.

“The export growth has been brought mainly by the cheap labor force and the raw export products which have the lowest values in the added value chain,” Quyen noted.

Wooden furniture manufacturers have been warned that they would meet bigger barriers when penetrating the export markets due to the protectionist policies applied by importers. Especially, the importers would reinforce anti-dumping measures or require the certificates for wooden furniture products’ origin.

At present, Vietnamese exporters now have to prove that their products use the materials with FSC certificates, or show the documents to prove their legal origin. Since Vietnam still does not have a FSC wood market, it has to import $1 billion worth of wood materials every year.

Since the import prices and the transportation costs are on the rise, Vietnamese wood exporters find it hard to compete with Chinese and Malaysian who can control their material sources.

Since March 2013, European countries, the biggest clients of Vietnam, have been applying a new regulation which aims to tighten the control over the imports and prohibit the import of the wooden products made of illegally sourced timber.

The wood suppliers, including Vietnam, will have to show relevant documents to prove the origin of the wood. For example, they would have to provide the descriptions about the wood materials, show the countries where the wood is exploited, and provide detailed information about the suppliers. Meanwhile, it seems to be impossible for Vietnamese exporters, who buy wood from different sources and through a lot of different parties, to show the origin of wood.

Coming back to the home market

Meeting big barriers in export markets, wooden furniture manufacturers have been trying to seek new markets. However, the results of the searching remain modest, while it is very costly to exploit a new market. The Middle East or North Africa, for example, maintain specific cultural characteristics which makes it difficult to approach for trade exchange.

Vo Dai Hai, Deputy Head of the General Forestry Directorate, has noted that domestic wooden furniture manufacturers have missed the domestic market which also has very high demand.

Coming back to the home market is really a good idea, but it is not easy to be done. Domestic firms have been focusing on making products for export, while they don’t have much information about the domestic market.

If enterprises focus on the domestic market now, they would have to spend money to start their business from scratch, i.e. they would have to spend money and time to learn about the market demand, make designs and establish the distribution network.

DNSGCT