Vietnamese wooden furniture manufacturers are "losing at home"

Ranked 6th in the world with over 120 countries and territories in exporting wood and wood products, but in the domestic market, Vietnam's wood industry is being overwhelmed by imported wood products or wood products with imported designs from foreign countries.

Production of decorative wooden products. Photo: VNA

It is the weaknesses in linking, promoting trade, and building a domestic product distribution system that have caused Vietnamese wooden furniture manufacturing enterprises and craft villages to not pay proper attention to the domestic market and are "losing at home."

According to Mr. Nguyen Ton Quyen, General Secretary of the Vietnam Timber and Forest Products Association, the country currently has about 1,000 wood processing villages, along with tens of thousands of households working in wood processing, mostly concentrated in Hanoi, Bac Ninh, Ha Nam, Nam Dinh, Nghe An, Quang Nam...

The demand for domestic wooden furniture consumption has increased sharply and has great potential, in which the demand for wooden furniture of households is relatively large, on average each household needs to buy about 6 million VND for wooden furniture. In addition, the demand for wooden furniture for hotels, offices for rent and new urban areas also tends to increase rapidly.

Mr. Nguyen Ton Quyen said that the average domestic consumption of wooden products in the last 5 years accounts for about 40% of the total commercial value of Vietnamese wooden products, with a value of about 2.25 billion USD. The structure of wooden products participating in the domestic market is 40% for construction projects, 30% for rural consumption and 30% for urban consumption.

However, the number of medium and large-scale wood processing units investing in exploiting the domestic market is low, with almost only small and micro-sized enterprises, as well as processing households in craft villages.

As a locality with about 20 craft villages and 300 wood processing enterprises concentrated in districts such as Y Yen, Nam Truc, Hai Hau, Xuan Truong... but most of Nam Dinh's wood processing facilities have simple machinery and equipment, serving the preliminary processing and production of products for domestic consumption or processing and preliminary processing of raw materials for large-scale enterprises.

Mr. Nguyen The Truong, Head of the Department of Rural Development of Nam Dinh province, said that due to lack of production capital and limited ability to mobilize capital, craft villages still use outdated technology and equipment, low production efficiency, and are unable to meet large orders. Domestic consumption products of Nam Dinh wood craft villages still only focus on a few old-style products.

According to Mr. Ngo Sy Hoai, Vice President of the Vietnam Timber and Forest Products Association, domestic wooden furniture consumption is often combined with other materials or wooden furniture made from artificial boards with light, modern, and cheap designs.

These products are being “offered” very well by countries that are ahead of Vietnam in the field of artificial board processing industry. Domestic enterprises also see the potential of this market, but currently Vietnam produces at a higher price so it is difficult to compete.

“Many businesses really want to dominate the domestic market but the difficulty is that production is low and distribution seems to be non-existent, while exporting in large volumes, according to orders.

Perhaps that is why the domestic wood market has not yet attracted many domestic businesses," Mr. Hoai commented.

In addition, one of the biggest difficulties for businesses when targeting the domestic market is not being able to create a product brand that consumers know about, not being able to create products with designs that suit market tastes, not having a distribution system and reasonable prices.

Besides, in craft villages, marketing, product promotion and application of e-commerce technology in wood craft villages are still very weak.

Looking straight at this reality, Mr. Vo Thanh Do, Deputy Director of the Department of Processing, Trade of Agricultural, Forestry, Fisheries and Salt, assessed that currently the domestic wooden furniture market in Vietnam only has a few small-scale distribution systems, which makes it difficult for Vietnamese wooden products, especially wooden products from craft villages, to reach "at home."

The production and consumption of wooden furniture is mostly independent and closed in the form of small wholesale or "self-production, self-consumption", without forming a reasonable product distribution system and orienting domestic consumption.

Faced with the development trend of the domestic market, some craft villages have linked and specialized in production, with production facilities specializing in producing only one or several product details.

This specialization has been and is having a great effect in improving product quality as well as meeting large orders.

Typically, Dong Ky wood craft village (Bac Ninh) has linked with neighboring villages such as Huong Mac, Phu Khe, Tam Son (Tu Son, Bac Ninh), Van Mon, Dong Tho (Yen Phong, Bac Ninh) to form a production chain system.

Although there has been association and specialization in production, according to Mr. Vu Quoc Vuong, Chairman of Dong Ky Wood Craft Village Association, in the consumption of domestic wooden products, craft village enterprises compete spontaneously or unfairly, and there is little association between enterprises and households producing wood craft villages in the consumption of products.

Mr. Trinh Quoc Dat, Vice President of the Vietnam Craft Villages Association, said that wood craft villages and enterprises producing the same type of products need to have close links with each other to share market information, choose a wood craft village or a wood craft village enterprise with enough capacity to lead the organization, cooperate in production to create large batches of goods with guaranteed quality, and find suitable markets.

In addition, the State needs to have policies to encourage linkages between wood craft villages and wood enterprises in product consumption by reducing taxes, providing credit loans, etc.; trade agencies should support organizations, create favorable conditions, and introduce markets for organizations that link to consume products of wood craft villages and wood craft village enterprises.

In the process of restructuring the agricultural sector towards increasing added value and sustainable development, the Ministry of Agriculture and Rural Development has also oriented and built solutions to develop the domestic market for processed wood products with the target of reaching 4 billion USD by 2020.

Accordingly, craft villages and wood processing enterprises must promote innovation of raw materials for production, innovate models and designs so that products are increasingly suitable to consumer tastes; improve trade promotion methods and especially join hands to contribute to building a strong enough product distribution system nationwide.

According to Vietnam+