The silver lining of the Covid-19 cloud for Vietnam’s furniture exports

The development of the Coronavirus disease (Covid-19) in China and other countries has affected Vietnam’s exports, including the wood industry. Conversely, this also provides an opportunity to expand wood furniture exports.

Nguyen Ton Quyen, former secretary-general of the Vietnam Timber and Forest Product Association, said shipments of woodchips to China have dropped due to the epidemic. To avoid heavy dependence on the Chinese market, Vietnamese wood businesses should shift exports to other countries, Quyen said.

In fact, woodchip exports to China have not yielded high added value and therefore the decline in woodchip exports is an opportunity for local businesses to develop production of artificial boards and medium-density fiberboard (MDF) made of woodchips, which provide higher added value. In recent years, some Vietnamese woodchip manufacturers have bought machines to produce artificial boards. According to Quyen, the state should consider supporting such businesses with low loan interest rates and help them complete production lines to take advantage of the opportunity.

Huynh Van Hanh, permanent deputy chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said the Covid-19 epidemic has resulted in difficulties for many manufacturing sectors due to their dependence on raw materials imported from China. However, the Vietnamese wood industry is less affected by the epidemic as Vietnamese wooden furniture manufacturers rely on more than 70 percent domestic materials, while the remaining is mainly imported from Africa, the US, Canada and New Zealand. Some auxiliary materials for production of wooden furniture, such as handles, screws and sofa fabrics are imported from China in small quantities that do not affect the production process.

According to the Center for Industrial Studies (CSIL), China ranked first globally in exports of wooden furniture with US$54.3 billion in 2019, while Vietnam ranked fifth with US$10.9 billion. However, the Covid-19 epidemic has affected Chinese wooden furniture exporters, leaving a vacuum that Vietnam could take advantage of to create a breakthrough in the export value of such furniture.

Accordingly, Vietnamese wooden furniture manufacturers need to expand export markets and meet customer needs in terms of design and quality. The 2020 Vietnam International Furniture and Home Accessories Fair taking place in Ho Chi Minh City will provide a good opportunity for Vietnamese wooden furniture manufacturers to reach out to international buyers.

Trade tensions between the US and China and the Covid-19 epidemic have made it difficult for US companies to import Chinese-made furniture. Southeast Asian countries, including Vietnam, will be a good alternative supply source for US furniture importers.