Domestic wood exporters are still struggling to find and expand markets

DNHN - What solutions will aid in the stabilization and growth of businesses when domestic wood exporters are confronted with difficulties and challenges while expanding the market?

Exports encounter numerous obstacles

Gia Khang Trading-Manufacturing Co., Ltd., which manufactures furniture in the province of Gia Lai, is experiencing unprecedented difficulties. Mr. Nguyen Van Khanh, the company's director, stated that the company's annual revenue ranges from 50 to 100 billion dongs when the market is stable. In contrast, revenue decreased by 70% a year ago. From 200 workers, the factory now only employs forty individuals.

Similar to many other export industries, wood exports face numerous challenges due to a lack of demand. Mr. Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association (Viforest), stated that orders for the upcoming months will be low due to weak market demand, in addition to the fact that Vietnamese wood exports to the United States continue to face obstacles. Cabinet and plywood investigations.

The export volume of wood and wood products is anticipated to decrease by 28-32% in the first half of 2023 compared to the same period in 2022. The market has not shown any signs of improvement, and it is difficult to be optimistic about the export of many commodities, even though the goal is to increase. An export expansion of 6% for the entire year remains a formidable obstacle.

The Ministry of Agriculture and Rural Development estimates that the export of wood and wood products in the first five months of 2023 totaled only $5,1 billion, a decrease of 27.3% compared to the same period in the previous year.

Exports of timber face numerous obstacles in key markets. In April 2023, for instance, the export value of wood and wood products to the U.S. market reached 633.5 million USD, down 32.2% from April 2022. In the first four months of 2023, the export value of wood and wood products to the United States market reached 2 billion USD, a decrease of 39.5% from the same period in 2022.

In the first three months of 2023, the majority of Vietnam's wood products and wood products exported to the United States market experienced a sharp decline. In this case, wooden furniture is the primary export product with a high proportion, reaching USD 1.2 billion, down 41.9% compared to the same period in 2022; followed by wood, planks, and flooring with USD 97.7 million, down 53.8%; wooden doors reached USD 4.1 million, down 42.9%...

Depending on the type of wood products and furniture, export orders to the US market currently decrease by 50-50%. Particularly for plywood products, there are currently only a handful of businesses with export orders to this market. Similarly, orders for kitchen cabinets and bathroom cabinets have been drastically reduced, and the majority of businesses do not receive any orders. new merchandise.

As for other product categories receiving orders shortly, many businesses reported that no orders would be placed until after the month of July. Similarly, for the EU market, which has decreased by up to 60 percent, there are currently very few new orders, even though it is the EU's season. The United States is the primary market for Vietnamese wood, so when this market experiences difficulties, the export of wooden furniture will be negatively impacted.

Mr. Nguyen Liem, chairman of the Binh Duong Wood Processing Association, stated that enterprises are currently slashing capacity by 60-70 percent due to the challenging export market. "The current global economic situation is difficult to predict, inflation in the United States continues to rise, and the Federal Reserve continues to raise interest rates; all market signals are negative." Mr. Nguyen Liem said.

In conjunction with the Federal Reserve's decision to raise interest rates to a range of 0.5 to 5.25%, experts predict that US consumer spending on common goods will continue to increase. Difficulties for Vietnam's key export industries, which include wood and wood products. Due to inflation, economic recession, and low consumer confidence, the US import market may continue to decline.

Solutions that assist businesses in expanding their markets

With inflation in the United States continuing to rise and the Federal Reserve of the United States (FED) continuing to raise interest rates, the current state of the global economy is highly unpredictable, and all market indicators are deteriorating. In response to the current market difficulties, businesses are searching for investment opportunities to expand their wood products' competitiveness. Focus shortly on major markets such as North America, the United Kingdom, Europe, and Northeast Asia.

In addition, the Wood and Forest Products Association suggested that ministries, sectors, and localities prioritize assisting businesses in the wood and forest product processing industries to promote trade and expand markets through negotiations and signing. conclude trade agreements. Support the establishment of clusters and concentrated industrial zones for the wood and forest product processing industry in regions and areas with potential, such as the Northern Mountains, the South Central Coast, and the Southeast. Support the establishment of a large-scale international trade center for organizing events and fairs to introduce, promote, and trade wood processing products and export forest products. Assist businesses in enhancing their capacity to proactively resolve commercial competition cases. Supporting the growth of the wood industry's supporting industries, such as paint, glue, screws, packaging, and logistics.

Supporting investment and development of concentrated plantation material areas in the country, large timber forests, and timber with certificates of sustainable forest management to meet the needs and preferences of consumers; having supportive tax, insurance, and credit policies to create favorable conditions for businesses in the current challenging economic climate.

Priority is also placed on reorganizing production lines and investing in labor-saving machinery at furniture factories. In addition to adapting to new consumer trends, businesses diversify their product lines, using wood as the primary raw material but coordinating it with other materials such as metal, stone, glass, and fabric to increase aesthetics and application according to customer needs.

In actuality, not only is the wood and forest products industry experiencing difficulties in the current era, but many other agricultural products are in the same predicament as well, as a result of the global economic situation being highly volatile and influenced by inflation. Consequently, this is a difficult time for the production and operations of many businesses.

Therefore, in the current context, experts assert that businesses in the wood industry must exert significant effort to continue seeking and expanding new markets, as well as to absorb information from other markets. Likewise, promote the market-dominant product segments to increase orders and revenue.

In addition to actively promoting trade by organizing and participating in exhibitions and trade fairs, introducing products to business partners and consumers to establish more relationships, and promoting product consumption, the company should actively promote trade.

In 2023, the wood and forest products industry aims for an export value of 17.5 billion USD, a modest increase from the 17.1 billion USD achieved in 2022. However, in the context of 2023's increasingly challenging conditions, achieving the aforementioned number is not simple.

P.V (T/h)