Wood products: Large export markets, but ...

Signs of optimism

Statistics from the Directorate of Forestry (Ministry of Agriculture and Rural Development) show that the export value of NTFPs, wood and wood products in Vietnam in 2016 reached US $ 7.3 billion, of which only Wood products reached $ 5.12 billion, up 7.1% over the previous year. This is the first time the export turnover of this group has increased only one digit, but in the context of the world timber industry is facing many difficulties, the European region reduced imports plus the reduction in wood chips Vietnam in China (only 61% compared to 2015), the results are relatively good. According to Huynh Van Hanh, vice chair of the Ho Chi Minh City Handicraft and Wood Industry Association (HAWA), wood export market for Vietnam is likely to be expanded this year due to the huge impact of trade agreements. due (FTA) has been signed and is in the process of being implemented. On the other hand, major export markets of Vietnam such as USA, Japan ... all increase.

According to Hanh, export turnover of wood products in Vietnam also accounts for a small proportion compared with the value of wood consumption worldwide about 467.7 billion dollars per year. It is noteworthy that the consumption of the US market for Vietnamese goods is increasing every year and is expected to continue to rise.

According to the timber trade, the United States is a very important market both in terms of raw material supply and consumption market. The trade balance between timber and wood products between the two countries is tilted toward Vietnam, with the value of Vietnam's exports to the US reaching over US $ 2 billion a year, about 10 times higher than the import value. export. The export of this item to the United States has grown strongly since the entry into force of the Vietnam-US Bilateral Trade Agreement, which has helped cut tariffs from around 50% about 0%.

Besides, this item of China was subject to US investigation and anti-dumping tax, resulting in China's exports to the market value of about 30 billion US dollars fell sharply, especially furniture.

Another advantage is that most of Vietnam's wood exports to the United States are made from legal woods, thus maintaining high levels of sustainability.

According to HAWA, Vietnam can completely become the world's production point of furniture when Vietnam wood products are present in more than 120 countries and territories and increasingly popular.

According to Cao Duy Tam, Director and Chairman of the Board of Directors of Vi Dai Trading Co., Ltd - a supplier of wood processing machinery for 25 years, from last year to now, many wood processing factories in the area. South East has expanded its production line. The enterprises also installed the modern equipment with high automation technology that previously few domestic enterprises dare to invest. Last year, Dai's sales increased by more than 50% compared to 2015 and Tam predicted that this year would continue to grow.

According to Huynh Van Hanh, wood processing is a high export industry, stable growth, less dependence and value-added of over 40%. In the context of competition now, businesses can not expect to develop by cheap labor but must be modern technology and gray matter to create value added. "The demand for furniture in the world is forecast to continue to increase. If the investment seriously, enterprises have the ability to breakthrough in revenue, "Hanh said, and predicted export turnover of wood and wood products in Vietnam in 2017 will reach about $ 8 billion.

Foreign investment increased, raw materials shortage

Recognizing the potential of the Chinese market, timber suppliers in Europe are moving into Vietnam through joint ventures with local firms. It is quicker for Chinese enterprises to move their production lines to Vietnam to take advantage of Vietnam's export tax incentives to the European and American markets from only 0 to 4 per cent and because of the product Vietnamese furniture is highly valued. In addition, foreign investors invest in production in Vietnam also to make use of skilled labor but low cost ...

According to the Vietnam Association of Timber and Forest Products (VIFores), about 500 foreign-invested wood processing enterprises in Vietnam nowadays account for about one-third of Chinese and Taiwanese enterprises. This number has not stopped. Binh Duong is one of the localities noted for the massive investment of Chinese enterprises in this sector. According to analysts, China exports $ 12 billion worth of wood products annually to the United States, a market they can not ignore and they will turn to invest in Vietnam. Some Chinese businesses have invested through the acquisition of Vietnamese businesses at a loss or have gone bankrupt, even investing under Vietnamese companies and bringing goods from China to the market. This situation not only leads to the threat of domestic enterprises (small scale majority) losing their orders to Chinese enterprises. The imposition of antidumping tariffs is the same as for China due to the surge in wood and timber products.

Another worrying issue is that from the end of 2016 until now, the purchase of materials for export wood furniture is difficult. According to Vifores, Vietnam consumes 24-25 million cubic meters of timber every year, of which 6 million cubic meters is imported. Recently, many countries in the region (including Vietnam) have issued a policy of closing natural forests and restricting the export of raw materials leading to processing enterprises not accepting orders because of lack of sufficient raw materials. "Standard", enough valid papers required production of exports.