Back to home market
04-09-2012
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A majority of local wood products in the domestic market are supplied by small woodworking mills while the remainder are imported.
According to the Asian Development Bank (ADB), with the current economic growth of 6-8%, local demands for wood mark up from 6% to 11% per year. Meanwhile, many experts said the domestic woodworking market grows by 10-15% annually.
Conceding home market to foreign products
In a preliminary evaluation of the Vietnam Timber and Forest Products Association (Vifores), the local woodworking market has total value of less than US$1 billion but it is being dominated by imported products. The association noticed the overwhelming presence of wooden products imported from China, Malaysia and Taiwan.
A number of surveys conducted by the association since early this year show that only about 20% of sales of the local woodworking market belongs to Vietnamese products. Obviously, the remaining 80% goes to Malaysian, Chinese, Taiwanese and Thai items.
Dang Quoc Hung, vice chairman of the HCMC Handicraft and Wood Industry Association (Hawa), said there is an influx of Chinese interior furnishing items into the Vietnamese market. On the other hand, Vietnam also exports wooden goods worth hundreds of millions of U.S. dollars to China every year, Hung noted.
For the time being, China has emerged as a big importer of Vietnamese wood products. Notably, most of Vietnamese interior furnishing exports to China are high-class products for well-to-do people because they are made from high-value materials in a sophisticated way.
Chinese exporters, in the meantime, mainly target Vietnamese middle- and low-income customers with products made from cheap material. That’s why such low-value Chinese products have won the hearts of many local consumers, Hung reasoned.
However, Hung attributed the dominance of Chinese products to the passive attitude of Vietnamese producers towards local demands.
Large numbers of domestic firms have long got accustomed to carrying out orders placed by foreign buyers. As customers from other developed nations prefer middle- and high-class products made from good materials, local producers find it difficult to study and meet local demands.
Tough comeback
Two prestigious local fairs organized annually to promote the woodwork market are Hawa’s Vifa and the HCMC Department of Industry and Trade’s Expo with endorsement of the Industry and Trade Ministry. Before 2010 when the woodworking sector experienced heated growth, the fairs had only focused on promoting exports but in the last two years, they have paid more attention to the home market.
Hawa in Vifa 2010 concentrated on boosting exports and promoting domestic sales as well. A survey of Hawa at 96 member businesses indicates local sales of the firms surveyed amounted to a combined US$101.6 million last year, showing their ability in winning back local consumers besides developing export markets in a sustainable way.
Despite this success, regaining local woodworking market share is really challenging to local producers.
Nguyen Ton Quyen, vice chairman and general secretary of Vifores, said local woodwork makers are involved in all processes of business activities, from production to marketing. Therefore, there are neither retail sales nor wholesaler systems for locally-made wood products available in the country, he noted.
Furthermore, wood products are subject to an import tariff of 0% while local products are subject to many taxes. On top of that, those companies wanting to come back home, mostly small and medium ones, cannot build up distribution systems given capital shortages.
Over the years, Hawa members have come up with the idea of capital contribution to establish a firm specializing in marketing, distributing and developing sales networks for the local market but they have not been able to get the job done. Companies in the industry will continue struggling in the local market.
