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Wooden exports show signs of recovery
Due to shrinking orders, falling prices and other difficulties on the domestic market in April and May, the US market has become a potential market for many businesses. Russia and the Middle East have also drawn a lot of attention from businesses although they have only imported a small amount of wooden products in the first few months of this year.
Not easy to sustain the domestic market
When facing problems in the export market, foodstuff and customer goods often find opportunities in the domestic market and consider it a good way of overcoming difficulties. However, wood businesses have said that it has not been easy to increase their sales on the domestic market.
According to wood businesses, since early this year, domestic purchasing power has decreased due to the economic difficulties and customers have cut down on unnecessary products, including wooden products. Another important reason causing the fall in turnover from the domestic market is that the real estate market is frozen, leading to a decrease in the purchasing power.
Vice chairman and general secretary of the Vietnam Wood and Forestry Products Association (Vietfores), Nguyen Ton Quyen, said that currently the customer taste for wood products has not changed. They like products made from natural wood, instead of made-made composites.
General Director of the Truong Thanh Wood Processing Joint Stock Company, Vo Truong Thanh added that wood businesses must change their production and forward planning from marketing to designing and distribution if they want to successfully return to the domestic market. However, to fulfill this task will take at least 3 or 4 years while obstacles will always appear. Currently, wood enterprises are focusing on two potential fields: producing chairs, tables and learning facilities for schools in remote and mountainous areas and markets that are urbanizing rapidly and use a lot of wooden products.
Hoping for the best
Wooden exports in the first half of this year are estimated to have reached US$1.3 billion, down by 30 percent compared to the same period last year, according to Vietfores.
A survey that Vietfores conducted in the central province of Binh Dinh and southern province of Dong Nai showed that many businesses are in difficulty because of the shortage of orders. In addition, export prices have fallen by around 10-15 percent compared to before while the prices of input materials, transport and electricity have increased, making more than 70 percent of enterprises face bankruptcy.
Nguyen Ton Quyen said that to cope with these problems, in addition to maintaining the traditional markets such as Japan, the EU and the US, wood businesses should pay more attention to new markets, like Russia and the Middle East. Since March 2009, businesses began to seek opportunities in new markets, including Russia. However, it is difficult to convert from the Rouble to US$ and the Euro. Therefore, businesses have proposed that the Government deal with the issue to access this market more easily.
Recently, the Truong Thanh Company has begun to penetrate the Russian and Middle Eastern markets. However, it has only earned a small amount from these markets. Therefore, to penetrate these markets more effectively, the State and businesses must develop a long-term strategy.
Vo Truong Thanh said that in April and May the US market showed signs of recovery when exports increased by 12 percent and some US importers were reported as buying Vietnamese products instead of Chinese ones. As this current pace, many businesses hope that the US market will fully recover sooner than the EU.
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