Low demand takes a toll on timber businesses

By Thi Ha   May 24, 2023 | 03:59 am PT
Low demand takes a toll on timber businesses
Workers at a wood products factory in Binh Duong. Photo courtesy of Binh Duong Furniture Association
Timber businesses are struggling to find export orders, and are willing to grab even small ones to keep their head above water.

Data from the General Department of Customs shows that exports of wood and wood products were worth only US$4 billion in the first four months of the year, a 28.5% year-on-year decline.

The value of wood products alone fell by 36.7% to $2.6 billion.

The slump has been blamed on inflation, tight monetary policies, slow economic recovery, and the collapse of some banks around the world, which have caused consumers to cut spending on non-essential goods.

Demand has therefore plummeted in large markets like the U.S. and the EU.

The reopening of the world’s biggest exporter, China, has also put pressure on Vietnamese exports, especially wooden furniture.

The industry faces a slew of other problems too.

"We are struggling on many sides," Nguyen Thanh Tuan, CEO of Viet Au My Wood JSC, told VnExpress.

He said his company has cash flow problems and its production has been affected by banks’ credit tightening limits, slow disbursement and rising interest rates.

"Suppliers are running out of resources and so prioritize debt collection, while buyers ask for debt extension due to the low overall demand."

According to the Association of Vietnam Timber and Forest Products (Vifores), many businesses are forced to operate at low capacity, barely break even and accept whatever orders they get to keep their staff and cover fixed costs.

Tran Ngoc Liem, chairman of the Vietnam Chamber of Commerce and Industry in HCMC, said wood products and fine arts producers are among those having the hardest time now.

To cope, many businesses have cut costs and focus on niche markets and small orders to sustain operations and retain workers while waiting for the market to recover.

They have stepped up promotional activities to reach more customers, he added.

Cao Van Dong, CEO of Kettle Interiors Asia Co. Ltd, said in March his company sold 24 containers of wood products after attending the Vietnam International Furniture & Home Accessories (VIFA) EXPO in HCMC and getting over 40 new customers.

He expected the upcoming VIFA ASEAN fair to similarly benefit his and other companies.

The VIFA ASEAN fair will be attended by 350 wooden and fine arts products businesses and have over 1,400 booths.

go to top