City of HCM (VNS/VNA) – Unlike the complete orders at the beginning of the year, the woods and wooden furniture companies are currently facing a lot of difficulties due to the cancellation of orders by customers due to inflation in countries like the US and EU and the high increase in inputs cost of materials.
In fact, the Vietnamese timber industry is experiencing a decline in overseas sales.
The value of exports in July was estimated at USD 1.41 billion, down 5.5% from June and down 1.6% year on year, according to a report by the General Department of Forestry under the Ministry of Agriculture and Rural Development(TUESDAY).
This is the second month of slowing exports of wood and wood products.
Earlier, figures from the General Department of Customs showed that timber and wood products export turnover in June was down nearly 11 percent year-on-year. In the first seven months of the year, exports of wood and wood products totaled $10.4 billion, up just 1.3% year-on-year.
According to market insiders, the timber industry will face a big challenge due to a drop in export orders in the second half of this year.
A rapid survey of 52 forestry companies conducted by the Vietnam Timber and Forest Products Association (Vifores) in collaboration with Forest Trends showed that most of the companies saw a drop in revenue in the US, European and UK markets.
Thirty-three of the 45 companies exporting to the United States said their revenues were down nearly 40% from the first months of this year. A similar trend is seen in the EU and the UK, with two-thirds of companies surveyed reporting revenue declines of more than 41%.
Additionally, around 71% of companies said orders would continue to decline towards the end of the year. In the current market situation, 44% of companies expect their revenues to fall by around 44% for the full year.
Phung Quoc Man, general manager of Bao Hung Wooden Furniture Export Company, said the number of canceled orders in July was over 30%. In response to declining purchasing power in EU and US markets, the company is looking to boost furniture exports to Japan and the Republic of Korea, where inflation has had less of a hit. impact than in other countries.
There are also a few companies looking to the domestic market in order to maintain production, Man said.
According to Vifores Chairman Do Xuan Lap, Vietnam’s timber industry is deeply integrating into international markets, so high inflation and tightening credit policies in response to rising inflation in major markets lead to lower demand for non-essential products, including wood and wood products.
“High inflation in major markets such as the US, EU and UK is having a direct negative impact on the production and business activities of wood processing companies. They are currently facing many difficulties in terms of capital, labor costs and raw materials,” Lap said.
Changing or finding new markets isn’t easy, but it helps wood and wood furniture manufacturers minimize losses when a series of orders are stretched, reduced or even canceled by international partners, Man said.
In addition, in order to reduce the import price of raw materials to increase competitiveness, experts said that timber companies should diversify their timber supply, reducing the proportion of imports from tropical countries and increasing the proportion of low-risk sources.
Vietnam has become the sixth largest exporter of wood and wood products with more than 4% of the world market, the second in Asia and the largest in Southeast Asia, which puts it under the watch of major trading partners. .
Besides local supply, Vietnam also imports raw wood, including from tropical countries. The volume of tropical timber imported annually is approximately 1.5 million cubic meters, or 30% of total imports, mainly from Africa.
According to statistics from the General Directorate of Customs, despite the impact of the COVID-19 pandemic, exports of wood and wood products increased by 17.6% last year to reach USD 14.12 billion.
Vietnamese wood and wood products are present in more than 163 countries.
Vietnam is targeting $20 billion in total timber exports by 2025, an increase of more than $9 billion from today.
The value of wood and wood products for domestic consumption will reach $5 billion in 2025 and over $6 billion in 2030.
The industry aims to have more than 80% of wood processing and preservation establishments equipped with state-of-the-art technology, and all wood and wood products for export and domestic consumption will be made from the legal raw material of wood.
By 2030, the domestic wood processing industry will become an important economic sector and develop a reputable brand for Vietnamese wood products in domestic and export markets.
Vietnam is striving to become one of the leading countries in the production, processing and export of wood and wood products in the world.
Another task of the industry is to develop the infrastructure and expand the scale of production. Specifically, the industry will form five forest areas with high-tech applications to attract investment from wood processing enterprises and enterprises producing auxiliary materials.
Vietnam will build an international furniture exhibition center and promote the development of research centers to design wooden products according to consumer needs./.