Vietnam's exports of wood and wood products reached $2.4 billion in Jan-Feb 2024, up 43.8% year-on-year. But the growth in orders is not enough for many businesses to run at full capacity as happened in 2019-2021; and whether the two-month surge can be sustained through the year remains uncertain, said Nguyen Chanh Phuong, vice chairman of the Handicraft and Wood Industry Association of HCMC (HAWA).
The value of wood and wood products exported in January 2024 was $1.47 billion, up 83.1% year-on-year. With $820 million, the U.S. market made up 56% of the total, marking an increase of 124%. Can you comment on this?
Vietnam's top export destination for wood and wood products is the U.S. This market has expanded favorably this year. Despite the enormous demand for housing in the U.S., many people are reluctant to purchase homes due to high mortgage rates. The furniture market will grow when mortgage rates remain constant and real estate demand increases.
The first two months of the year saw a 44% growth in exports. Is this sustainable?
It is very difficult now to discuss stable growth because of the many variables that affect it, including geopolitics. For instance, Europe is in an unstable state as a result of the Russia-Ukraine conflict.
Where are the markets that Vietnamese enterprises can expand into, then?
Actually, Vietnamese businesses are finding new markets. The Indian market grew by 250% in 2023, although the absolute value is small. However, it is a market that Vietnamese firms may capitalize on. Malaysia’s expansion in India indicates the potential. They have discovered different ways to market their products, including offering low-cost items.
China and Muslim-majority countries are both good growth markets. Vietnam has a few significant enterprises engaged in the Muslim market. Many Muslim businesses are also very interested in the Vietnamese market. The number of Muslim businesses registered for the Hawa Expo, which took place from March 6-9, demonstrates this.
How are Vietnamese firms responding to the surge in orders?
We talk about the surge in orders, but it isn't a wave like previous years. Many businesses have orders, but not enough to operate at full capacity, as they did in 2019-2021.
What should businesses with increasing orders do in the current situation?
First, businesses must rebalance their staff. There were many people who left their jobs at the end of last year.
After a year of dealing with financial issues, interest rates have fallen. Price is always a major issue for Vietnamese businesses entering the U.S. market, since they must compete with many from other countries and FDI enterprises in the U.S.
Getting more orders is good news, but the question is how to turn a profit. There are various ways to do this, including using diverse marketing tactics. For instance, many firms were able to use participation in promotion events like fairs to their advantage last year. Those who were able to create distinctive designs for their products also did well.