Endeavors of the Wood Industry
Mr. Nguyễn Quốc Khanh, Chairperson of the Ho Chi Minh City Fine Arts and Woodworking Association (HAWA), revealed that the wood processing and furniture sectors experienced setbacks in the initial months of 2023. The dearth of orders resulted in factories scaling down their operations and downsizing the workforce. In response, numerous enterprises within the wood industry restructured their production mechanisms and adopted leaner models to cut costs. Simultaneously, they leveraged support from trade promotion agencies to scout new markets. Amidst these adaptive measures, a novel trend emerged within the wood industry – an expansion of the business horizon.
For the first time, prominent Vietnamese furniture brands such as Trần Đức, AA, Minh Thành, etc., have secured contracts to acquire substantial booth space at furniture exhibitions catering to the Dubai market. The Middle East, deemed the investment epicenter of the decade, is witnessing an impressive influx of large-scale projects. Noteworthy projects encompass the Saudi Arabian Neom super project featuring Sindalah, The Line, Trojena, and Oxagon complexes; the USD 800 billion The Mukaab (New Murabba) super project; and the USD 1.000 billion Mirror Line super project. All these undertakings necessitate high-end furniture, Mr. Khanh noted.
Market Exploration: A Necessity
Discussing the quest for new markets, Mr. Nguyễn Phương, General Director of Minh Thanh Company, underscored the necessity of venturing beyond local confines. Businesses can no longer remain idle and await customers; instead, they must venture out, participate in fairs and exhibitions, and grasp market nuances, discerning customers' needs and preferences. Mr. Phương added that while the Middle East constitutes a niche market, if managed adeptly, it could burgeon into a pivotal market for Vietnam's wood industry.
Insights from the UAE's Vietnam trade depiction spotlight heightened furniture demand within Gulf Cooperation Council (GCC) countries, witnessing over 45% annual growth in furniture imports. The furniture sales forecast for this market anticipates reaching $4 billion by 2023, with an expected annual growth rate of 4.12% (2023-2027). The largest segment within this market is projected to be living room furniture, estimated at USD 1.08 billion by 2023. Presently ranked 15th among furniture exporters to this region, Vietnam holds immense market potential if a well-structured penetration strategy is implemented.
During a forum in late July in Ho Chi Minh City, Ms. Phạm Thị Ngọc Thủy, Director of the Office of Research and Development of the Private Economy (Board IV), recounted a meeting with 30 Vietnamese ambassadors stationed abroad in late 2022. Reflecting on the textile industry, Ms. Thủy mentioned how Vietnamese textile enterprises faced a New Year order deficit while Bangladesh experienced a surplus. The Vietnamese Ambassador to the US highlighted Bangladesh's rapid textile and garment market share expansion in the US within a few months. Similarly, the Vietnamese Ambassador to Canada shared insights from an international textile and garment industry fair held a few weeks prior. The fair showcased several hundred participating Bangladeshi companies, all flaunting green and sustainable certificates issued by the US. In contrast, Vietnam merely had one participating enterprise.
A wood industry representative recounted their fair participation, discovering untapped products due to inadequate promotion. Consequently, customers sourced supplies from other countries. This proactive approach isn't limited to the wood industry – other sectors are also reaping rewards. In May, 33 Vietnamese enterprises participated in the Thaifex Anuga Asia 2023 (Thaifex 2023) International Fair held in Bangkok, Thailand, yielding positive outcomes. For instance, Sokfarm Coconut Nectar garnered approval from about ten potential customers impressed by product quality and commercial viability.
Likewise, Lai Phu Joint Stock Company's General Director, Mr. Trần Phan Tế, found success in the foreign market after attending fairs post-pandemic. While their initial aim was market expansion insights, they were met with unexpected customer interest, particularly from the Asian market. Phuc Sinh Group also stands as a testament to fair and exhibition success, maintaining over 30% growth in the first half of the year despite prevailing market challenges.
Participation in domestic fairs and exhibitions further solidified international buyer connections. During an export fair and forum in Ho Chi Minh City, 500 trade interactions transpired between Vietnamese enterprises and foreign purchasing delegations. Notably, Binh Tay Food Company secured a contract for distributing consumer products in Korea, while Vina T&T Import-Export Company inked a deal for product distribution to Taiwanese and US businesses. The culmination of B2B connections yielded estimated orders worth $66,000. B2C connections (direct sales at the fair) exceeded VND 2 billion.
