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Wood sector confronts hard situation

Update: September, 22/2014 - 07:52

A worker controls machines at the Hao Quang wood processing company in the central province of Ha Tinh. Consumers say domestic wood products are uncompetitively priced and the styles are all the same. — VNA/VNS Photo Tran Viet

HCM CITY (VNS) — Although Viet Nam ranks second worldwide in wood exports, local consumers say they lack access to Vietnamese-made furniture that is both stylish and reasonably priced, Tin tuc (News) newspaper reported late last week.

A customer from HCM City's District 3, for example, said that many products sold in stores from China, Korea and Malaysia were affordable.

"Foreign wood products are diversified, have eye-catching designs, and are updated to follow global trends, but local products are uncompetitively priced, and the styles are all the same," the woman said.

Viet Nam has 4,000 businesses operating in the wood product sector, of which 95 per cent are privately owned. Enterprises fully invested in the domestic market are usually of a small or very small scale, typically located in individual households or craft-village households.

Larger enterprises, which have better technology and more capital, focus on exports and the requirements of international buyers such as US and Japan.

Viet Nam has more than 1,000 wood-processing craft villages nationwide, but due to a lack of a distribution system, the locally-made products, especially those in craft villages, have not been favoured by consumers.

Phan Chi Dung, head of the Ministry of Industry and Trade's Light Industrial Department, said multinationals and foreign-invested enterprises had grabbed 80 per cent of market share of wood and furniture products.

Many of the local companies are not competitive because of the lack of capital and small-scale production. Moreover, it is difficult for them to quickly adapt to changing consumer tastes.

In addition, the production of raw materials is heavily dependent on foreign imports, leading to higher selling prices. And promotional activities and designs are still limited.

Nguyen Huu Toan, director of Toan Thien An Interior Ltd Co, said businesses should have professional design teams and distribution channels, and recognisable trademarks.

"Exploiting the domestic market has many advantages, such as stable demand and stable production plans. Companies can adjust samples and designs according to market demand," he added.

At the seminar "Viet Nam Economy 2014 and business prospects in the furniture sector" held recently in HCM City, many participants said the local wood market had great potential in a country of 90 million people.

According to Nguyen Quoc Khanh, chairman of the HCM City Handicraft and Wood Industry Association, a Vietnamese household spends about VND6 million (US$285.7) for furniture products per year.

With a growing economic recovery, domestic consumption this year is expected to reach more than $2 billion and will increase in coming years.

According to economists, the State needs to issue support policies for local businesses soon, such as preferential tax policies to encourage investment and preferential credit policies. It also should create wood-processing industrial clusters, they said.

Creating linkages between local and foreign businesses would help them learn from more experienced manufacturers. — VNS



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