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Wood industry aims products at domestic buyers
The global economic depression has reduced demand for wood products, according to an official from the Viet Nam Timber and Forest Product Association.
Association statistics show the wood processing industry had a total export turnover of about US$500 million during the first three months of this year, down 22.9 per cent on a year-on-year basis because many main partners had reduced their imports.
Last year, firms received $2.8 billion for wood products, which was 13.4 per cent higher than in 2007, but in the first two months of this year, the value fell 60 per cent to $330 million compared with the same period last year, said VFA deputy chairman, Nguyen Ton Quyen.
The downturn was taking its toll on demand in key export markets, Quyen said. With demand for furniture and outdoor chairs and tables in the US and European markets set to fall 30 to 35 per cent this year, it was likely several contracts would be cancelled.
The US market, especially for wood and furniture imports from Viet Nam, seemed trigger, said Cao Vinh Hai, a VFA official."
At the same time, the domestic wood industry faces a lot of difficulties," he said.
Deputy chairman of the HCM City Handicraft and Wood Industry Association (Hawa) Tran Quoc Manh said most export wood producers, processors and traders had not signed new contracts.
With consumption at a standstill, enterprises will face difficulties getting capital to penetrate new markets as commercial banks enforce strict credit terms.
Chairman of Bac Ninh Timber Association Nguyen Van Khanh said 80 per cent, equivalent to 240 provincial wood enterprises, had stopped producing and the rest were operating at restricted levels.
Khanh said the value of export contracts was much lower than earlier. They were usually worth from hundreds of thousands to millions of US dollars.
Wood product processors faced shortages of raw materials and had to import 80 per cent of their material, as well as a great quantity of inventory products, Quyen said.
To get the material, domestic processors were competing with enterprises from China, Indonesia and Malaysia.
Sturdier quality
In an effort to promote domestic consumption of wood products, Deputy Minister of Agriculture and Rural Development Hua Duc Nhi suggested advertising and diversification were the best choices to combat difficult times.
Nhi added firms should diversify their products and designs and boost quality so they could compete with goods produced in countries like China.
Hung Long Development Ltd is among a few wood product processors focusing on the domestic market.
Company director Tran Duc Thuan said wooden products were essential for daily life and local demand had increased.
He said many growth prospects remained, considering the financial decline would only last for a limited time.
Hung Long expects to hold 80 per cent of the domestic market this year, 30 per cent higher than during 2008.
Manh said domestic furniture exporters trying to develop local markets needed close co-operation between producers and exporters and the establishment of distribution centres in the large regions.
Reforms and changes to expenditure, labour and quality and a focus on developing local markets were important.
Less-rigid financing
To help enterprises overcome difficulties, Quyen said commercial banks could more easily accept unsecured loans through a VFA guarantee and that people's committees could take over mortgages.
Besides traditional export markets in the US, the EU and Japan, processors should expand to Russia, Eastern European and African countries and develop product strategies to help themselves.
Tavico Timber Co general director Vo Quang Ha said the Government needed to find solutions to stimulate demand for investment and domestic consumption, stop collecting export tax on wood products and reschedule payments for firms with inventory products.
VietNamNet, Viet Nam News
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