Vietnamese wooden furniture exporters now focus on high end products

Vietnamese low-class and medium-class wooden furniture products have become less competitive, because Vietnamese producers do not have the advantage of a cheap labor force any more. Therefore, making high class products has become the new strategy for them.

The number of orders tends to decrease
It is now the high wooden furniture export season. However, Dien Quang Hiep, Director of the Minh Phat 2 Company in Binh Duong province, said the number of orders tends to decrease.

“In 2010 and the first months of 2011, when the global economies recovered strongly, and the demand for wooden furniture products increased to offset the sharp decreases in stocks; a lot of orders came. Now, as the stocks have increased and the market does not recover as strongly as expected, the number of orders has been decreasing,” Hiep said.

In economic difficulties, high end products still have opportunities

According to Hiep, it is now a difficult period for wooden furniture manufacturers, because it is very difficult to boost sales in the context of big difficulties, when people have to fasten their belt. However, Hiep said he still can see opportunities in the difficulties, especially the opportunities to develop medium class and high class products.

“All types of products will be influenced in a difficult market. However, medium and high class products will not suffer much,” Hiep said. “There are not too many factories that make high end products, therefore, though the demand decreases, high end product market segment has not been affected seriously.”

In 2010, Hiep’s company began expanding his workshops, installed more painting lines, and sent staffs to training courses in the master plan to shift to make medium and high class wooden furniture products. The company’s capacity has increased by three times, which allows making the products worth nearly 1.5 million dollars a month.

Sharing the same view, Nguyen Ton Quyen, Secretary General of the Vietnam Wood and Forest Products Association (Viforest), said that high class product market segment has also been influenced by the current difficulties, but the influences are not as serious as the ones on medium class and low cost products. It is because there are not many enterprises specializing in making high end products.

“There are many enterprises which mainly make low end products and only make high end products when they receive orders. Therefore, the competition in the market segment is not too stiff, and it is easy to negotiate about the prices when the input costs increase.

Meanwhile, according to Nguyen Quoc Khanh, General Director of AA Corp, which specializes in providing solutions in interiors to domestic and foreign projects, Vietnam’s production capacity makes nothing if compared with the world’s demand for medium class and high end products. Therefore, even if the demand for high end products decreases, there are still many opportunities for Vietnamese manufacturers.

It is clear that in the current circumstances, medium class and high end products obviously have bigger advantages than low cost products and have higher profits.

However, Khanh noted that when shifting to make high end products, Vietnamese exporters should not sit and wait for the orders to come, but they need to take initiative in seeking clients.

Khanh, who is also Deputy Chair of the HCM City Fine Arts and Wood Processing Association, said that his association is taking necessary steps (upgrading the quality of products, pushing up advertisement and popularizing images…) in order to better popularize high end Vietnamese products to the world.

“As for low cost products, only the enterprises with big production scale and high financial capability can survive, because only they can reduce the production costs in the context of the increasing input costs,” Khanh said.

He went on to say that it will not require big investments to shift towards making high end products. The most important thing needed is not to have big investment capital, but to have good management skills.

Source: TBKTSG

Tags: Vietnamese wooden furnitures