Woodwork industry: $10 billion within reach, but VN could earn even more

VietNamNet Bridge – Vietnamese woodwork enterprises aim to increase their competitiveness in the global value chain, but they face a number of challenges.

Reports all show significant growth in Vietnam’s woodwork exports in recent years. In 2015, Vietnam exported $6.7 billion worth of wood and wooden products, while the figures rose to $7 billion in 2016 and $7.7 billion in 2017.

Vietnam’s abilities in the wood processing industry have been recognized internationally. Made-in-Vietnam wooden products are sold all over the world under famous brandnames.

Vietnamese enterprises are part of the high-end market segment. AA Corporation in 2017 provided furnishings to Park Hyatt St Kitts and Nevis project, from which it earned $16 million, equal to the annual turnover of a workshop with 700 workers.

When doing outsourcing for foreign partners, Vietnamese enterprises can earn about $3 for one desk. Meanwhile, foreign enterprises, which have workshops in Vietnam, can sell a similar product at a price 10 times as much.

Thanks to large-scale production and cheap labor costs, Vietnamese woodwork enterprises are prospering but the profit is still lower compared with their capability.

When doing outsourcing for foreign partners, Vietnamese enterprises can earn about $3 for one desk. Meanwhile, foreign enterprises, which have workshops in Vietnam, can sell a similar product at a price 10 times as much. 

According to experts, the problem lies in the fact that Vietnamese products still don’t have good brands and designs.

Over the last 20 years, Vietnam’s woodwork industry has been doing outsourcing to satisfy international orders. Enterprises are not thinking about making products from A to Z, under their brands. Only several interior designers have been honoured in the world market.

Experts believe that if Vietnam can have creative business strategies by establishing an institute of interior design, this will give a push to the development of the wood processing industry.

Vietnam ranks fifth in the world in terms of woodwork exports. However, It still doesn’t have an exhibition center that matches the scale of the industry.

“If you come to High Point in the US, a city specializing in providing furnishings in the US and other regional markets, you can easily find showrooms with diverse products,” director of a wood processing company in Bac Ninh province said.

The businessman went on to say that Vietnam is capable of earning more than $10 billion as targeted by the Ministry of Agriculture and Rural Development (MARD), if it can have reasonable trade strategy. In the 4.0 era, eBay, Amazon and Alibaba will help Vietnam’s products reach out to more markets .

To become a global furnishing production hub, Vietnam also needs to develop supporting industries.

[Source: english.vietnamnet.vn 14th February 2019]