HCM City Handicraft and Wood Industry Association vice chairman Tran Quoc Manh spoke to Viet Nam News about prospects this year for wood products exports.
How did the Vietnamese wood products industry do last year?
Last year was the most difficult so far for firms in the woodworking industry.
The 2011 global economic downturn caused a fall in demand from key import markets for Vietnamese wood products such as the US and the EU and hardly any increase in export prices.
In the domestic market, high inflation, high interest rates, as well as higher prices of raw materials, worker salaries, electricity and water sharply pushed up costs.
This brought great pressure on wood processing firms.
But the industry made great efforts to overcome the difficulties and achieve US$3.9 billion in exports.
What do you see as the main challenges facing the industry this year?
Last year's difficulties, including high loan interest rates, will continue this year. In addition, with the continuing tight monetary policy this year, businesses will find it hard to get credit from banks.
Input costs have shown no sign of falling, while export orders are not as plentiful as last year.
In the wake of the economic downturn, exports will be more difficult since importing countries will raise barriers to protect their domestic industry.
Firms must be prepared to face difficulties. However, there are some advantages this year, including the Government's efforts to reduce bank interest rates. The high interest rates last year cut into profits, with some companies even incurring losses.
The Government has also pledged to stabilise the economy and taken measures [for this].
I think these advantages can help businesses in some ways.
In addition, management and production methods are much better than earlier. Businesses are able to make products that are highly competitive.
I hope firms will continue to weather the difficulties and achieve high export revenues like they did last year.
What is your advice for the industry about the export market?
This year the woodwork industry should continue to consider the US as a key export market. Exports to this country have increased sharply in recent years. Last year the US accounted for nearly half of Viet Nam's total wood product exports.
As for the EU market, despite its public debt problems and other difficulties, it remains a good market for Vietnamese wood products.
Besides, enterprises should take advantage of the Viet Nam-Japan Economic Partnership Agreement to expand exports to that country.
They should focus more on emerging markets such as ASEAN members, China, South America, India and the Middle East, especially ASEAN countries due to the preferential tariffs there.
What is your expectation about the domestic market?
The domestic market is very attractive amid the current economic gloom since it provides higher margins than export sales. It is very good for local firms if they can widen their market share in the home market.
However, many things need to be considered in the domestic market, including the establishment of distribution systems and close links between producers and distributors.
Businesses should also make products exclusively for the domestic market since local and foreign customers' tastes vary. Firms need to have good design and customer consulting teams.
Hawa has, in recent years, organised an annual fair with a focus on attracting more domestic consumers, and furniture and handicraft design contests to discover young Vietnamese talents who can generate new ideas and boost the domestic furniture industry.
In the current situation, I believe that local businesses will gradually dominate the domestic market. — VNS