Wood and wooden products was the only export item in the agriculture, forestry, and fisheries sector to post export revenue in excess of $1 billion in the opening month of 2024, with $1.5 billion. Export value then reached $2.4 billion in the first two months, for a year-on-year increase of nearly 44 per cent.

This was a positive result compared to 2023, when export turnover stood at $14.3 billion for the year as a whole, down 15.8 per cent against 2022 and short of the annual target of $17.5 billion.

The wood industry reset its target for 2024, with businesses more optimistic about exports, particularly to the US, which accounts for more than 50 per cent of its annual export turnover.

Growth recovery

Southern Dong Nai and Binh Duong provinces and Ho Chi Minh City - localities with the largest wood and wooden product export volumes in Vietnam - co-hosted the Ho Chi Minh City Export Furniture Fair 2024 (HawaExpo 2024) from March 7-9.

There were two international trade fairs on wood processing and furniture held in the southern city within a month of the Lunar New Year (Tet) holiday. Earlier, the 15^th Vietnam International Furniture and Home Accessories Fair (VIFA EXPO 2024) took place from February 26-29.

After six months of overseas promotions, HawaExpo 2024 received extensive media coverage in over 15,000 news items in 20 languages.

“As a result, apart from traditional markets like the US, Europe, Japan, and South Korea, the fair also welcomed participants from new markets of potential such as Australia and the Middle East,” said Mr. Nguyen Vo Nam Viet, Business Manager at An Viet Thinh Furniture.

The majority of furniture companies report orders through April and some even through September. “We have an order to export 600 prefabricated houses to Hawaii,” revealed Mr. Vo Xuan Thuyen, Managing Director of Tran Duc Homes. The company’s factory, in southern Binh Duong province, has received orders through June this year.

“The US and Canada are markets of potential,” he said. “There is huge demand in Canada. We plan to expand the factory by 12 ha to be able to handle more orders.”

Director of the Danh Moc Company, Mr. Nguyen Chanh Phuong, who is also Deputy Chairman of the Ho Chi Minh City Handicraft and Wood Industry Association (Hawa), said that interest rates in the US being on a downwards trend has helped the country’s real estate market.

“This is a good sign for our furniture industry,” he explained. “Exports are forecast to speed up from April-May if there are no major geopolitical changes. There are also positive prospects in other markets. Exports to the Netherlands in January nearly doubled the figure in January last year, while those to India rose 250 per cent year-on-year. The Middle East is also attractive for businesses that can meet demand.”

In order to tap the opportunities for further recovery, businesses need to boost their marketing and improve their design capacity, according to Hawa Chairman Mr. Nguyen Quoc Khanh. Vietnam has been drawing global attention, he added, and many more factories are set to open this year.

E-commerce is also considered a new pathway for local wooden product enterprises. A number of furniture and handicraft businesses have recently posted remarkable growth in revenue through the channel, he said.

Enhancing creativity

Senior Account Manager at Amazon Global Selling Vietnam, Mr. Nguyen Thanh Yen My, said the US’s furniture e-commerce market is forecast to grow strongly in the next four years and may possibly reach $118.6 billion by 2027. Furniture items from Vietnam, such as shoe racks, bed frames, foldable wardrobes, desks, and kitchen and bathroom shelves have sold well on the country’s e-commerce platforms.

However, domestic manufacturers should prioritize products that can be easily disassembled and assembled, have compact sizes, and are easy to pack and transport, he said.

Though 2024 can’t be described as a “golden time” for Vietnam’s wooden product industry due to increases in logistics costs and material costs resulting from international conflicts and with many countries introducing trade barriers, there remain opportunities for the country to expand its market share. The annual global furniture market is worth $450 billion and import demand for wood and wooden products is estimated at $230 billion. Vietnam’s export revenue accounted for just over 6 per cent of this, so ample space remains for wood and wooden product businesses to boost their export activities.

“Vietnamese wooden products are exported to 150 countries and territories, including materials for the processing and construction sectors and completed products,” according to Mr. Vu Ba Phu, Director of the Trade Promotion Department at the Ministry of Industry and Trade.

Free trade agreements Vietnam has ratified will continue to create favorable conditions for the wood industry to develop. Speaking at the recent 2024 Vietnam Furniture Industry Outlook forum, Ms. Giovanna Castellina, Partner and Senior Market Research Expert at CSIL, an independent Italian research and consulting company, said Vietnam has recorded impressive growth in global furniture production rankings, climbing to sixth position last year in value terms from 13th in 2014.

Regionally, Vietnam ranks second in wood exports, after China. It is, however, the largest furniture exporter to the US, which is the world’s biggest furniture market.

In order to mitigate the risks and move towards sustainable development, Ms. Castellina said Vietnam needs to promote creativity. “The production quality and capacity of Vietnamese furniture companies have been tested by the world,” she said. “What the industry needs is greater intangible value, such as design and brands. I recognized these values at HawaExpo 2024. Local businesses have begun to introduce new designs and catch up with global consumption trends while maintaining their domestic cultural characteristics.”

Similarly, Mr. Nguyen Liem, Chairman of the Binh Duong Furniture Association, said Vietnamese businesses are making small steps forward, from designing products themselves or coordinating with foreign designers to catching up with market trends to enhance value.

Addressing a recent forum on carbon finance and the opportunities for Vietnam’s wood industry, Hawa Vice Chairman Phung Quoc Man said that in order to fulfill the export target for 2024, businesses must clearly understand export markets and tap opportunities to increase their competitiveness, including their ability to explore carbon finance and carbon markets.

Director of the Vinacarbon Fund, Mr. Nguyen Ngoc Tung, said that if wood businesses invest in sustainable development and emissions reductions, their revenue will come not only from wood processing and forestry products but also from carbon credits.

Complying with international regulations on sustainable forest management and exploitation will help increase businesses’ competitiveness and access to markets like the EU, bringing in higher value for exports, he added.