Furniture makers pins high hope on US market

Despite the downbeat global outlook, and despite the possible double-dip recession stateside, Vietnamese furniture makers still increasingly rely on the US market to buoy up their sales. And efforts to further penetrate the US are paying off.

Demand for bedroom, dinning room and living room furniture from the market with a population of over 300 million is still rising, at least for Vietnamese woodworking enterprises. They are hoping for a brighter year in 2010, although the US market has for years been among major importers of Vietnamese wood products, the others being Japan and European countries. The US is the biggest market for Vietnam’s wood processing industry with 2009 woodwork exports totalling $2.7 billion.

Ngo Thi Hong Thu, deputy director of Truong Thanh Corporation, a furniture supplier for the famous Wal-mart retail stores and many other retailers and distributors, told the Daily weeks ago that her company’s total furniture export to the US in the first six months of the year has doubled from last year.

A more favourable factor is that, according to Thu, the low labour cost still makes furniture items made in Vietnam more competitive than those from China, where the labour input is becoming costlier.

“Demand also increases from other markets, but the US is the leader,” Thu said.

Apart from higher demand stateside, prices are also picking up. Thu revealed that as demand still ran high, her company was now more careful on deciding whom to sign contracts with, usually those who offered better prices.

According to the Ministry of Industry and Trade, the local woodworking industry has fetched an export earning of nearly $1.8 billion in the year to date, up 33 percent compared to last year, and the US is still the leading importer. Bed room, dining room and living room furniture accounts for over half of total wooden products bound for the US, while prices for the items also pick up considerably from last year, at about 5 percent to 10 percent.

Huge demand from the US also attracted manufacturers to shift to the market.

Vu Duy Tien, deputy general director for exports of Savimex Corporation, who has been producing wood products for the Japanese market for nearly 20 years, said the company was making efforts to boost wood exports to the US from the current proportion of 30 percent to between 50 percent and 70 percent in the next five years.

“Japanese customers are very demanding with regards to products. They ask for perfection from everything while the US is a big market and never has enough for furniture, plus the demand for products is not as strict as in Japan. That’s why we are planning to boost furniture export to the US,” he said.

Nevertheless, for those who are not familiar with this market, they will find it much difficult. The taste for furniture in the US has also changed after the recession, from the expensive, sophisticated items to the cheaper, simpler ones that can be made from wood tapped at replanted forests.

“Before, customers from the US and European countries usually favour Vietnamese sophisticated furniture made from imported hardwood such as cherry, maple, mahogany, pine, and oak that can be very expensive and required high skills of producers. After the economic downturn, customers in developed countries tightened their budget for furniture, hence a more reasonable price on the product had become a priority,” a manufacturer said.

Those furniture makers who tap the US market also find it an ample source of materials for their production.

According to the American Hardwood Export Council, Vietnam has emerged as the top Southeast Asian importer of American hardwood.

John Chan Jick Chun, regional director of the Council for Southeast Asia and China, said during his visit to HCM City earlier this year that Vietnam was also the second largest Asian importer of US hardwood after China. US hardwood shipments to Vietnam are forecast to amount to $100 million this year, up from $90 million last year.

However, there are concerns over trade restrictions when shipping furniture products to the US, given the fact that American authorities announced in late April to carry out Lacey Act, which strictly bans illegally originated wood. Those exporters using materials of illegal sources from countries and regions and can’t obtain the certificate of Forest Stewardship Council, which also prevent their products from entering the US market.

Under the Lacey Act issued by the US Department of Agriculture’s Animal and Plant Health Inspection Service, companies exporting products stateside will have to provide specific documentation to prove that the materials were harvested legally. The Lacey Act will require an import declaration containing the plant’s scientific name and quantity, importation value and its country of origin.

Fortunately, so far there’s been no record on any considerable trouble with the US import authorities on the origin of imported wood products, according to local wood associations.

Therefore, experts forecast that exports to the US market will continue growing till the end of this year. – Saigon Times

Tags: Vietnam Furniture makers