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Furniture markers taken to the woodshed; again
Exports of wooden furniture and handicrafts are showing signs of recovery but manufacturers are now facing rising input costs and lower sell prices.
Wood exports generated US$210 million in August this year, up $10 million from July, but the value of exports in the first eight months of 2009 fell 15 percent from the same period last year to US$1.55 billion, Vietnam News Agency reported.
The U.S. continued to be the largest importer of Vietnam’s wooden products, earning $560 million in the first eight months of 2009, up 0.7 percent from the same period last year.
Manufacturers in Ho Chi Minh City and the south in general told The Saigon Times Daily they have received more orders over the past three months but are reluctant to take some of them on due to the small margins on offer.
Huynh Quang Thanh, general director of Hiep Long Fine Furniture Co. in southern Binh Duong Province, said his company had received enough orders to maintain its production.
With the return of business – primarily from the U.S. and Japan - Thanh said many of his competitors are resuming operations after a long export slump.
Truong Thanh Furniture Corporation deputy general director Ngo Thi Hong Thu said she saw the most impressive surge in orders from U.S. clients.
“We have to reject some orders from U.S. customers to maintain a balance with other markets,” she said. “Otherwise, we ask them to contact one of our partners.”
The U.S. market accounted for 15 to 20 percent of Truong Thanh’s export value over the past few years; but that figure has doubled recently.
“The furniture market in the U.S. might have recovered along with the economy,” she said. “Some U.S. major importers are turning to Vietnam after importing products from China for a long time.”
But there have also been complaints about falling sale prices and rising input costs.
“Some factories accept orders just to keep customers and generate jobs for their employees,” Thu said. “In fact, most importers have cut down buying prices, even by five percent.”
Truong Thanh sales came in at VND600 billion ($35 million) in the first half of this year but made about VND8 billion ($448,430) in profit, according to Thu.
Foreign customers are driving a hard bargain and some local manufacturers are left with no choice but to agree to sell their products at lower prices to keep their workers.
The average price of quality imported plywood has surged from $200 per cubic to more than $300. Vietnamese manufacturers must rely on Thai and Malaysian plywood as the locally-made boards can not meet the quality standards of U.S. clients.
Domestic manufacturers are also required to pay higher wages to keep their staff and spend more on their purchase of accessories and materials for furniture products.
“In many cases, after some lengthy negotiations, our company has accepted orders with a projected profit margin of only one to two percent,” Thu said.
Hong Nguyen
vietnews
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