Wood exports on track for $10b goal

Wood exports on track for $10b goal

With an optimistic export growth, the target of generating US$10 billion from exports of wood and wooden products by 2020 is on the reach, Nguyen Ton Quyen reported.

The goal was set in an action plan on developing the wood market from now to 2020, approved by the Ministry of Agriculture and Rural Development last month.

Quyen, general secretary of the Viet Nam Timber and Forest Products Association (Vietfores), said that his assessment was based on the fact that exports to major markets such as the US, Japan and EU will continue to increase in the future. In 2014 alone, exports to the three markets will witness growth rates of 10 per cent, 15 per cent and 18 per cent, respectively.

Currently, wood and timber product exports ranked fifth among Viet Nam's top 10 export industries. With effective solutions and support policies, the sector will potentially earn $15 – 20 billion in the next 10 years, Quyen said.

Bilateral and multilateral agreements, including Free Trade Agreement with the EU and the Trans-Pacific Partnership (TPP) Agreement, are expected to be signed this year and will create a good opportunity for Viet Nam, Quyen pointed out.

Viet Nam currently only had access to markets in Germany, France, Britain and Spain. If Viet Nam could export to the 27 EU countries, market potential will grow, he added.

However, he noted that if Viet Nam could become a TPP-member country this year, domestic enterprises should be prepared to adapt to large markets such as the US, Japan, Australia and New Zealand, as well as Canada.

In order to reap the full benefits of these agreements, Quyen petitioned the State to revise policies and mechanisms that will better facilitate domestic businesses.

Local enterprises should be aware of the trends in global market while improving their management capabilities and should foster technological innovation to enhance their competition.

Closer cooperation between the wood producers and exporters is also required, he added.

Year-on-year growth

Currently, wood and timber product exports ranked fifth among Viet Nam's top 10 export industries. With effective solutions and support policies, the sector will potentially earn $15 – 20 billion in the next 10 years, Quyen said.

The latest statistics of The Ministry of Industry and Trade revealed that export of wood and wood products have experienced a year-on-year rise of 17.5 per cent to $2.42 billion over the last five months.

Viet Nam aimed to export a total of $6.3 billion worth of wood and timber products this year, up 10 per cent compared to 2013.

Exporters have signed a significant number of export contracts in many markets, especially in the US and Japan, the Handicraft and Wood Industry Association of HCM City (HAWA) deputy chairman Huynh Van Hanh said.

A representative of a furniture export company said many US and EU customers wanted to place big orders with her company, but her company, which is small in scale, had to turn them down.

Nguyen Quoc Khanh, Hawa's chairman, said that many importers had shifted orders from China to Viet Nam because of rising Chinese labour costs and a desire by buyers to diversify suppliers.

However, the majority of Vietnamese furniture roducts are produced nd exported following foreign buyers' designs which do not have high added value, Khanh said.

Only thre to five per cent of Vietnamese frniture enterprises produce prducts under the ODM business model (Original Design Manufacturer), in which the company designs and manufactures products that are eventually branded by another firm, he said.

Khanh said the association had mapped out plans, including establishing a design centre, to help the local wooden furniture and handicraft design industry raise the ODM rate to 10 per cent in the next five years.

At the seminar, Khanh, who is also chairman of AA Corporation, and Nguyen Chien Thang, former chairman of Hawa and managing director of Scansia Pacific, spoke about their experiences with local wood and wood-product exporters.

AA Corporation focuses on providing interior decor products and services for some of the most acclaimed properties in more than 35 countries.

Scansia Pacific provides many kinds of products for the Swedish company IKEA, the world's top furniture retailer.

Among the factors that can help businesses succeed, Khanh said, are confidence, patience, ability to adapt to change, market research, qualified marketing teams with good English speaking skills, and ability to identify appropriate products.

In addition, Vietnamese companies should participate in trade fairs to seek new customers, he said.

To meet customer demands, Thang said that firms must cut inessential costs and improve productivity.

Chad Ovel, director of Mekong Capital, urged local firms to focus on improving workforce skills and productivity.

The opportunity for Viet Nam to develop the wood and handicraft industry is enormous, said Dominic Price, a financial consultant and founder of the Dominique Saint Paul brand.

Khanh said that HAWA had set a target to earn $10 billion from wood and handicraft exports by 2019.

The Government on Thursday awarded Hawa the Labour Order Third Class for its contribution to economic development in the last 24 years.

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