Vietnamese wood enterprises forced to branch out overseas

By Dam Tuan   August 8, 2016 | 04:09 pm PT
Vietnam's wood market is dominated by international enterprises.

Vietnamese wood enterprises have lost 80 percent of the domestic market to foreign rivals, despite the huge potential in a sector that earns revenue of about $3 billion per year.

Vietnamese wood products have reached more than 160 overseas markets, including the United States, Europe and Japan, according to the Ministry of Planning and Investment's Economy and Forecast Review.

In the first seven months, the value of Vietnam’s wood exports reached approximately $3.8 billion, an increase of 0.8 percent compared with the same period last year, according to the Ministry of Agriculture and Rural Development. 

On the domestic market, there is rising demand for wood products, but it is easier to find them from Malaysia, China, Taiwan and Thailand rather than local enterprises, according to the Vietnam Timber and Forest Product Association.


Vietnamese wood enterprises make up only 20 percent of the domestic market. Photo from Toan

Vietnamese wood enterprises do not want to focus on the domestic market, Vice President and General Secretary of VIFORES Nguyen Ton Quyen told Vietnam Financial Times.

For years, policies have primarily supported and facilitated exports while the domestic market has been largely ignored. On top of that, the distribution network for wooden products is fragmented.

One reason is that Vietnamese wood enterprises need to spend more on design, marketing, R&D and establishing a distribution network. The burden of work, time and cost has built a barrier that has forced local enterprises to look overseas.

Deputy Chairman of the Handicraft and Wood Industry Association Huynh Van Hanh underlined that 93 percent of Vietnamese wood enterprises are small and micro enterprises, while 5.5 percent are medium-sized and the remainder are large.

“Most small and micro wood firms have weak connections and lack funds and market access, forcing them to sacrifice to domestic market to focus on exports,” Huynh said.

To solve the issue, the Ministry of Agriculture and Rural Development is working on a draft decree that will support Vietnamese by financing 80 percent of the cost of developing the domestic distribution networks along with trade fairs. Domestic enterprises also need to improve their competitiveness, R&D and develop connections with handicraft villages.

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