World’s economic problems hurting Vietnamese woodwork exports

Woodwork exporters are complaining that they cannot sell products as importers have reduced orders in the context of lower purchasing power in the world.

Few orders, lacking capital

Dao Van Trang, Director of Khai Vy Company, one of the biggest woodwork producers and exporters in Vietnam, said that orders have decreased by 30%. As purchasing power has decreased, big distributors in the US and Europe now have bigger stocks than ever before.

Vietnam exported $241mil worth of woodwork in July, while the figure in August is estimated to be lower by several tens of millions of dollars.

According to the Ministry of Industry and Trade, Vietnam exported $1.8bil worth of woodwork in the first eight months of the year, which means that it needs to export another $1.2bil worth of products in the last four months of the year to fulfill the yearly plan of $3bil worth of woodwork exports this year.

According to US customs agencies, the total woodwork imports of the country in August decreased by 4.4%.

Le Hai Lieu, General Director of the Duc Thanh Woodwork Processing and Export Company, said that there are problems in the US, Europe and Japan, the three biggest export markets of Vietnam.

Meanwhile, woodwork producers all complain that they cannot borrow money from banks to maintain production.

Tran Quoc Manh, Deputy Chairman of the HCM City Fine Arts and Woodwork Processing Association, said the measures to fight inflation taken by the government have made capital shortage the ‘chronic disease’ of small- and medium-size woodwork enterprises. Many of these may have to shut down, he said.

Manh related that he knows some owners of woodwork establishments who have had to sell their companies’ stocks cheap to get money to maintain production.

Keeping optimistic

Nevertheless, Manh believes that big enterprises will overcome the difficulties as there are more and more enterprises that have the export turnover of over $50mil a year. Truong Thanh, Sadaco, Khai Vy and Duc Thanh have become well-known names in the world’s market, and are in no way inferior to other regional producers.

Manh said that Vietnam-made woodwork is being sold at a lot of big supermart chains in the world. Big international importers go to the HCM City Woodwork trade fair every year to sign import contracts.

A senior expert in the woodwork processing industry said that there was no need to worry about the industry’s development, though the growth rate of woodwork exports has been slowing down for the last two years. He said that the ‘hot growth period’ is over, which means that now is a good time to reconsider markets and restructure export items.

“It is the right time for enterprises to think of diversifying their products’ designs instead of focusing on increasing the export volume,” he said.

Vietnam’s woodwork exports millions US$:

Source: The Ministry of Industry and Trade:

Exports in the first eight months of the year:

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