2024 may be the second year the wood furniture industry cannot reach the export target of 17.5 billion USD because of the unpredictable market and bumpy recovery road.
“Our orders this year are similar or slightly increased compared to 2023, but not as good as 2022,” said Mr. Nguyen Liem, Chairman of Lam Viet’s board of directors.
Also Chairman of the Binh Duong Wood Association (Bifa), Mr. Liem said the general situation of local businesses is similar. The number of orders so far is stable but cannot be compared to 2022, when the export of wood and wood products reached a record of 16.9 billion USD.
To break this peak, the wood furniture industry once set a turnover target of 17.5 billion USD by 2023 but the result was only 14.3 billion USD in exports. In 2024, this goal is set again. However, Mr. Liem believes that the order situation for the whole year 2024 could be about 70-80% of 2022.
Sharing the same forecast, Mr. Nguyen Chanh Phuong, Vice President of Ho Chi Minh City Handicraft and Wood Processing Association (Hawa), said that the whole year’s turnover could be about 14.5-15 billion USD. “Now the wood industry is relatively stable, but its performance is also at the level of 2019,” he assessed. That year, export turnover reached 10.33 billion USD.
In the first 9 months of the year, wood and wood product exports brought in 12.5 billion USD, up 17.2% over the same period in 2023, according to the Ministry of Agriculture and Rural Development. Except for Korea and Japan, which showed signs of slight decline, Vietnam’s main markets such as the US, China, and Europe still maintained good growth momentum.
However, earning 5 billion USD in the last 3 months is difficult to achieve when internal resources are not completely strong and world demand is unpredictable. The Department of Forestry, Ministry of Agriculture and Rural Development predicts that wood industry production activities will face many difficulties in the last quarter of the year. Caused by Typhoon Yagi, 170,000 hectares of planted forests in the Northern provinces were damaged. Many processing factories in this area were also seriously damaged
In the South, Mr. Nguyen Liem said the actual recovery was uneven among businesses. “FDI enterprises are somewhat better, the domestic group has companies operating smoothly and there are also units facing difficulties,” he said.
Visitors visit furniture at VIBE Expo on the morning of October 2 in Ho Chi Minh City. Image organizing committee
Mr. Nguyen Chanh Phuong said that the US market – which accounts for more than half of export turnover – still has unpredictable elements. “The US market is always ‘nervous’, especially having to monitor developments in the US election next month. In addition, strikes emerging in the East Coast region may increase shipping rates, causing buyers to delay payments. Pay more for goods,” he said.
In the past nine months, Americans spent 5.9 billion USD buying wooden furniture “made in Vietnam”, an increase of nearly 25% over the same period in 2023. However, Mr. Liem noted that cheap and average quality products are popular. better consumption. “Americans are now tightening their belts, so essential products are their priority,” he said.
To expand output, some businesses are proactively adapting to new trends. Chairman of Bifa said that some Binh Duong businesses have started designing their own products to offer to customers. Others actively retail through e-commerce channels instead of just wholesale. “Trade has many changes, those who can adapt will grow. But this rate is not much,” he said.
The larger solution advocated by industry experts is to return to meeting domestic demand. Up to now, this market is still largely open, fragmented and dominated by imported goods or only served by small production units.
Mr. Nguyen Quoc Khanh, Chairman of AA Corporation, estimates that the furniture market in Vietnam – including wooden furniture, other furniture and construction materials for indoor spaces – has a scale of no less than 10 billion USD.
“The domestic market still has great potential. With 100 million people and a growing middle class, it has the ability to provide very good support for manufacturers and the rear for exports,” Mr. Khanh said.
An exhibition space at VIBE Expo on the morning of October 2. Image: AK Furniture
Seeing this prospect, for the first time Hawa joined hands with the Construction and Construction Materials Association (SACA) to organize Vietnam Furniture & Construction Exhibition 2024 (VIBE Expo) in Ho Chi Minh City from October 2 to 2024. 5/10 aims to connect the interior & construction ecosystem. There were 150 exhibitors participating, with 500 booths, mainly to find opportunities in the domestic market.
However, the return has only just begun. Also the Head of VIBE Expo Organizing Committee, Mr. Khanh said the journey was “of course not easy”. Because, instead of large-scale production according to orders, even with available designs, domestic service requires understanding needs, tastes, marketing capabilities and especially the distribution system.
According to Associate Professor. Dr. TKS Vu Hong Cuong, Vice President of the Vietnam Furniture Association, the domestic market so far still lacks large domestic designs and brands, leaving their own mark, despite high potential.
The high-end segment is mainly importing European products. The middle and affordable furniture group is still “struggling” with supply and style. “We really want to move forward in building a Vietnamese interior style, but it is still quite lackluster. The preference for imported goods is still strong among consumers,” Mr. Cuong stated the problem that needs to be solved.