Foreign demand grows for Vietnamese furniture

Vietnam’s indoor and outdoor furniture industry should remain strong until the year-end on the back of demand from traditional markets, which bounced back after being affected by the global recession, said a report.

Exports of indoor and outdoor furniture this year expanded roughly 20 per cent, compared to previous years when exports dropped due to the recession, according to the Vietnam Sourcing Report: Indoor and Outdoor Furniture, published by the US non-profit Kearny Alliance organisation.

Vietnam ‘s furniture output is categorised under two segments, depending on the materials used.

The larger line is wooden products, which recorded overseas shipments of $1.4 billion in the first five months of this year, an increase of nearly 17 per cent compared to the same period last year.

The other line comprises rattan, bamboo, rush and carpet products.

From February to May this year, overseas revenue from this line amounted to $83 million, a decline of more than 7 per cent compared with the same period last year.

The drop was due to tighter governmental controls over the harvest and use of raw rattan and bamboo, the report said.

According to the Vietnam Timber and Forest Product Association, exports of wooden items, which include furniture, are expected to reach $4.1 billion by the end of this year, an increase of 24 per cent over last year.

Since Vietnam ‘s accession to WTO in 2007, the sector has been one of the 10 leading export-revenue generators of the country, according to the report.

Wooden items were sold to nearly 120 nations and territories, with North America , the EU and the Asia-Pacific region as the key foreign markets, the report said.

According to figures from the customs, the US is the largest destination for Vietnam’s wooden items, spending nearly $1.4 billion on the products in 2010.

Japan is next at about $455 million. Completing the top five are mainland China , the Republic of Korea and the UK .

For bamboo and rattan pieces, the US and Japan are also the two biggest importers, accounting for $34 million and $29 million, respectively.

Germany , Taiwan and the UK round out the five most important markets, according to the report.

The industry has strong OEM (Original Equipment Manufacturer) capability, allowing suppliers to readily meet buyers’ design requirements.

An estimated 90 per cent of output is manufactured according to customised specifications.

Another major strength of the industry is the widespread availability of certain raw materials, allowing suppliers to source components easily.

In addition, Vietnam is the world’s sixth largest producer of bamboo products.

According to the Ministry of Agriculture and Rural Development, at least 14 million hectares of forests and farms are used to cultivate the plant, which result in an annual yield of 2.1-3.5 million tonnes, depending on the species.

The country also has vast plantations devoted to rattan. The material is harvested from 380,000 hectares, turning out 20,000 to 50,000 tonnes every year.

Moreover, Vietnam is home to more than 2,000 craft villages specialising in handmade goods, including furniture.

Suppliers typically subcontract a number of procedures to artisans residing in these communities, which have gained years of experience in production techniques.

These competitive advantages have helped Vietnam secure a niche not just as a major sourcing centre for furniture, but as an attractive option for offshore manufacturing for companies based in other countries.

According to the report, Vietnam’s exporters of indoor and outdoor furniture are expecting export sales to climb this year.

About 75 per cent of suppliers featured in the report expect to increase sales by 10 per cent by the end of this year.

The report’s survey also showed that 45 per cent of featured suppliers would target the Asia-Pacific market and 35 per cent, the US .

“Vietnam ‘s wooden and bamboo furniture suppliers enjoy notable advantages because of the eco-friendly materials they use, such as wood, bamboo, fern and water hyacinth, obtained from their forests and plantations. This helps increase competitiveness against China-based manufacturers,” said Khiem Vu, manager of the Export Assistance Programme in Asia .

One of the significant challenges of the indoor and outdoor furniture sector is the cost and availability of manpower.

In recent years, many businesses have suffered increasing labour expenditures as a result of government regulations and surging inflation rates, the report said.

The rising cost of raw materials is another challenge facing the industry.

Although Vietnam has an abundance of forest-based components, environmental restrictions imposed by the government have limited makers’ access to these components.

As a result, expenses for unprocessed bamboo and rattan have surged 10 – 15 per cent over the past 12 months. – VIR

Tags: Vietnam furniture exports