Orders and turnover in the wood sector have fallen in the last few months, but experts believe that the industry has tremendous opportunities for growth over the coming years.
The export turnover of the wood sector in the first six months of 2023 reached nearly $6.06 billion, down 28.3% year-on-year, according to Vietnam Customs.
"The current global situation continues to be complicated and unpredictable, which is having a profound impact on the world economy. Key markets for the Vietnamese wood industry, such as the U.S., China, the EU, Korea, and Japan, have been affected, leading to a decrease in export orders," said Le Hoang Tai, deputy director of the Ministry of Industry and Trade's Vietnam trade promotion agency.
Tai was speaking at the recent Vietnamese Wood and Furniture Technology forum held by the Handicraft and Wood Industry Association of HCMC (HAWA) in Ho Chi Minh City.
But speakers at the event said there are enormous opportunities for sector development. Economic expert Pham Phu Ngoc Trai noted that the current drop in orders is only temporary, and the sector has ample room for growth in the next 5 to 10 years.
"Vietnam's wood sector, with an average annual growth rate of 15.4%, proves its position and great potential in comparison to the average global GDP growth of 3% and the global wood industry's growth of 4.5%," Trai said.
Nguyen Quoc Khanh, chairman of HAWA, also told the forum that Vietnam's wood sector has a lot of possibilities for growth.
Firstly, during and after the Covid-19 pandemic, people began looking at their houses, particularly home decor, which presents an opportunity for the sector.
Secondly, China accounted for 70% of the global export market in the sector five years ago, but that percentage has subsequently plummeted to 40%, creating room for renewed expansion. Thirdly, Vietnam is still a low-cost market, creating competitively priced products.
Many Vietnamese enterprises have made attempts to locate new markets and adapt to the latest conditions in order to operate in this tough climate, he added.
Economic expert Tran Si Chuong argued that declines across the industry in particular and the global economy in general are the result of many negative factors, but growth opportunities remain.
Businesses change to adapt
Tran Lam Son, deputy general director of Thien Minh Import-Export Co., Ltd., stated on the sidelines of the event that the company's exports had progressively recovered since early July.
Orders from the U.S. market were up 60-80% from the previous year, but bamboo and rattan items were in decline. Faced with the situation, the company has shifted to plantation wood products, enhancing farmers' incomes while also matching user preferences for processed wood products.
Nguyen Phuong, director of Minh Thanh Company and vice president of the Dong Nai Wood Association, said his business is looking for a niche market in Dubai, which focuses on construction and interior design.
Regarding the adaptation narrative, chairman of HAWA Khanh remarked that in order to deal with the current situation, the sector has undergone a shift. The leading furniture makers in Vietnam are expanding their presence in export markets, including Saudi Arabia and Dubai.
Chad Ovel, general director of Mekong Capital, stated that the Vietnamese furniture business is highly impressive in the eyes of investors. They have a chance to benefit from investment and post-inflation growth waves. The issue is how to adapt to the present obstacles and implement the industry's sustainable development strategy.
Khanh told The Investor that this year's industry export turnover is unlikely to decrease much compared to last year, but the exact number was unclear at present.
The industry's export turnover reached $15.6 billion in 2022.