The booming furniture industry may be stymied by its over-reliance on imported wood, lack of coordination among various players, and the weakening of the dollar, businesses have told Thanh Nien.
Foreign experts added that businesses were neglecting niche product lines which could actually be their biggest strength.
Wooden furniture production has grown since the 1990s while the government has taken steps to conserve forests, industry executives said on the sidelines of the International Furniture Fair Singapore held earlier this month.
Furniture production, therefore, relied mostly on imported timber, they said.
Truong Thanh Company Director Vo Truong Thanh said the industry imported 80 percent of its timber.
His company imported 90 percent, mostly from Africa and South America.
This meant low profits and unsustainable growth, he explained.
The government launched in 1998 a program to plant 5 million hectares of forest to supply raw materials to industry.
“It should have been able to supply enough wood to the furniture industry. However, no one thought of this when they planned it.”
Vietnam interior
The Vietnam Handicraft Exporters Association (Vietcraft) and the Vietnam Trade Promotion Agency (Vietrade), cordially invite you to participate in one of the largest home decor and gifts fairs in Southeast Asia, “LifeStyle Vietnam 2011”, which will be held during 18-21 April 2011 in Hochiminh City, Vietnam.
Vietnam ceramic products
Vietnam ceramic products: Each step in the labor - intensive process - design, clay mixing, molding, curing, glazing and firing is performed using traditional techniques handed down by generations of potters.
THE MINISTRY OF INDUSTRY AND TRADE SET:
■ Exports of furniture to reach US$5.5 billion by 2010 and Vietnam to overtake China in shipments to the US
THE FURNITURE INDUSTRY FIGURES SHOW:
■ Exports jumped by more than 49 percent to $1.9 billion in 2007, pushing Vietnam to the top of the heap in Asia
■ 2006’s key exporting market shares:
- 39 percent to the US - 14 percent to Japan - 7 percent to Britain - 4 percent each to France and Germany
Thanh said while some of the wood could be used for making furniture, it was generally of low quality.
Furniture exports totaled US$2.4 billion last year, a tenfold increase since 2000, ranking fifth among Vietnam’s exports behind crude oil, textiles, footwear and seafood.
Too small
Many foreign business people at the fair complained that Vietnamese businesses were unable to handle large orders.
As a result, they could not take on China and Indonesia, the world’s top exporters, even though their workers were skillful, they said.
Vietnamese executives admitted this was a fair criticism, saying they often had to turn down large orders.
Nevertheless, they rejected the possibility of cooperating with other businesses to execute large orders, saying they lacked confidence in others’ quality.
Thanh said he knew about a business that tried to pull off a large order by itself.
Only when it realized it had taken on too much did it look for partners, he said - but it was already too late.
Professional associations could play a vital role in coordinating the industry’s growth, but their influence was vague, Thanh said.
His opinion was echoed by Dragan Mladenovik, the Italian chief executive officer of Rare Dragan Limited based in Tay Ninh Province.
Mladenovik said he had attended an event held by the Handicraft and Wood Processing Association of Ho Chi Minh City and found it to be “nonsense.”
The association should have acted to forge links between businesses, he said.
Le Duy Linh, an association official, however, told Thanh Nien that the association could provide business intelligence for members.
He accused members of disrespecting the association.
Industry executives agreed that the dong’s appreciation against the dollar and the hike in timber prices were major problems.
Director of the Binh Duong-based Thinh Viet Company, Le Xuan Hao, said his firm was losing VND200-300 million ($12,828-19,242) every month.
Linh, also the director of My Tai Company in Binh Dinh, complained that the recent hike in bank interest rates could “kill” exporters who could not add the extra costs to existing orders.
The industry asked the government to adopt measures like cutting taxes.
Strength neglected
Foreign executives working in the furniture industry said Vietnamese workers were skillful and could make high-end products for niche markets.
But, instead, they were neglecting this strength to run after mass orders which brought marginal profits and left them unable to compete with “global workshop” China.
Mladenovik, a frequent participant in the Singapore fair, said his company had many customers thanks to its strategy of manually making high-value, rare products.
He said small Vietnamese enterprises should develop family-sized production and focus on upscale product lines.
