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Furniture firms eye up Mexico, Canada

Update: December, 18/2018 - 15:50
At a wood processing factory in Bình Dương. Vietnamese furniture firms have a great opportunity to boost exports to Canada and Mexico when the CPTPP comes into effect next year. — VNA/VNS Photo
Viet Nam News

Xuân Hương

HCM CITY — Mexico and Canada will be promising markets for Việt Nam’s wood and furniture products when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) takes effect in early 2019, according to the Ministry of Industry and Trade.

Deputy Minister Trần Quốc Khánh said exports to Canada were worth over US$129 million last year and are expected to top $140 million this year.

“The CPTPP will open opportunities for products such as wood flooring and bars to Canada because the market will immediately scrap the import tariff of 3.5 per cent when the agreement comes into effect.

“Products such as plywood, picture frames, door frames and especially furniture will also have an opportunity because import tariffs of between 6 per cent and 9.5 per cent will be eliminated as soon as the agreement comes into effect.

“Wooden handicrafts will also benefit when Canada agrees to abolish the 7 per cent import tariff.”

According to customs figures, Vietnamese firms earned around $9.1 million from exports of wood and furniture products to Mexico last year.

According to the Handicraft and Wood Industry Association of HCM City (HAWA), Mexico is still a new market for Vietnamese furniture, with some 90 enterprises shipping their products there, 65 of them just a few containers each to test the market.

According to Vietnamese agencies and Mexican enterprises, Vietnamese furniture has met quality requirements in fastidious markets like the EU, US and Japan, and so could penetrate Latin American markets without much difficulty.

Huỳnh Văn Hạnh, deputy chairman of HAWA, said Mexico wants to expand trade with APEC economies, including Việt Nam.

“Therefore, Vietnamese firms should start studying the market so that they can capitalise on opportunities brought by the CPTPP.”

Khánh said, “Mexico currently is not a big market for Vietnamese wood and furniture products because the country has high import tariffs of 10-15 per cent.

“However, enterprises should pay great attention to the market and prepare to enter it because under the CPTPP Mexico has agreed to eliminate import tariffs on all wooden products, including plywood, particle boards, wood bars, wood flooring, furniture, and exteriors within a maximum of 10 years.”

By checking the prices of some products sold at Walmart Mexico, Vietnamese furniture firms believe their products are capable of competing with products available in the market.

But Hạnh said businesses should also keep an eye on the prices of Chinese products exported to this market. Amid the US-China trade tensions, Chinese firms will promote exports of their products to other markets.

“If there is good preparation, Vietnamese firms will surely get positive results in … this attractive market.”

High export potential

Global furniture demand was worth around $428 billion last year and is expected to rise by 3.5 per cent this year. Furniture exports by 100 countries amounted to $141 billion last year, with China being the largest exporter, accounting for 39 per cent, followed by Germany, Italy, Poland, and Việt Nam.

Đặng Lưu Phương Anh of the International Financial Group said “Việt Nam accounts for only 6 per cent of the global wood and wood products market, meaning there is ample growth potential.

“Exports of Vietnamese furniture have increased 13 per cent year-on-year since 2010 and is expected to continue with its growth trajectory as the industry becomes more sustainable and integrated.”

Bụt to add value, Vietnamese firms need to focus on improving design, adopting automation and building brands, according to experts.

National brand

Nguyễn Quốc Khanh, chairman of AA Corporation and HAWA, said building a national brand for the furniture industry is a strategic investment that would enable it to make great strides in future. 

Khanh said Vietnamese wood companies have gone beyond mere processing and have signed direct contracts with the world’s leading furniture companies.

Wood products made in Việt Nam now also adorn major projects such as the Park Hyatt St. Kitts and Nevis (the Caribbean), the six-star hotel Rosewood Phnom Pen­­­­­­h (Cambodia) and Gem Centre and Park Hyatt in HCM City, he said.

“The world is increasingly receptive to Vietnamese furniture thanks to their high quality, refinement, production from legal timber and other factors.

“Việt Nam can export not only individual furniture products but also ‘interior spaces’, adding more value.”

Khanh quoted leading branding experts as saying Việt Nam is eminently capable of building a national brand for its wood industry since the industry possesses advantages in terms of timber sources, a young and skilled workforce and improving technologies.

Currently all Vietnamese furniture exporting firms use legally sourced timber for their products mainly from plantations and the rest imported from countries with sustainable forest certification, he said.

Experts including Khanh said it is imperative to build a national brand for Vietnamese wood products to gain access to the international market. Having a brand would increase the value of the country’s wood products, they said. — VNS

 

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