Vietnam becomes hand-made hub

China, Turkey and Sweden are looking to Vietnam for cheap, well-made handicrafts

Vietnamese pottery products on display at an exhibition in Ho Chi Minh City. Local suppliers of hand-made products are highly competitive on the global market, experts say.

International manufacturers are looking to Vietnam to make their hand-made products thanks to the country’s cheap labor and competitive pricing.

In the meantime, growing Chinese wealth has translated to skyrocketing imports of high-end Vietnamese furniture.

IKEA, the world’s largest furniture retailer plans to double its orders from Vietnam in the next three years. At the moment, the conglomerate is the largest buyer of Vietnamese hand-made products.

Mikael Demitz-Helin, manager of IKEA Trading in Southeast Asia, says Vietnamese suppliers of products like textiles, furniture, handicrafts and ceramics were highly competitive on the global market.

IKEA, which has been doing business in Vietnam for 14 years, shipped out 25,000 containers of hand-made Vietnamese products last year to its stores worldwide. Its Southeast Asian headquarters are based in Ho Chi Minh City and the firm currently does business with 42 Vietnamese companies producing textile, wood and metal products. IKEA has 1,047 suppliers, worldwide.

Demitz-Helin told Thanh Nien Weekly that Vietnam is a choice manufacturing destination due to its competitive advantages of cheap, skilled labor and abundant raw materials.

He said many Vietnamese firms hoping to break into the global market have been hindered by a shortage of investment. Without proper funding, many hand-made product manufacturers find themselves unable to increase their production to meet soaring international demand.

“Local businesses have utilized the nation’s low labor costs and need to invest in technology [to meet] bigger orders from international buyers,” said Demitz-Helin.

He said IKEA has extended technical support to small manufacturing firms seeking to become IKEA’s long-term suppliers.

Talking Turkey

Selman Aycan, a representative from Turkish Businessmen and Industrialists in Vietnam (TUSKON) said buyers in the European-Asian country have discovered Vietnam as a new source of home products like furniture, rattan and bamboo handicrafts in addition to products like building materials and plastics.

Aycan said that two-way trade between Turkey and Vietnam doubled last year nearing US$500 million.

An unofficial source said the exchanges amounted to $390 million during the first eight months of this year.

Turkish buyers had been previously unaware of Vietnam due to the geographical distance between the two countries, said Aycan, who led a delegation of Turkish businesses to join an export exhibition of furniture in HCMC last week.

He said the association will invite a delegation of Vietnamese craft sellers to visit the Turkish market next summer.

Fine China

China has emerged as a major buyer of Vietnamese handmade products, according to an official from the Handicraft and Wood Industry Association of HCMC or HAWA.

Dang Quoc Hung, deputy chairman of the association, said furniture factories have reached their capacity to fill orders from international importers, especially Chinese buyers.

“It is strange that local firms have received many orders for high-quality products from China, the world’s biggest wooden product exporter,” said Hung.

Hung told Thanh Nien Weekly that Vietnam’s export of high-quality furniture to China soared from $100 million to $230 million in the first eight months of this year. Vietnam exported $890 million and $270 million worth of furniture to the US (the world’s largest importer) and Japan respectively in the same period, according to HAWA.

China’s manufacturers have focused on low-priced products and left a big hole for high-quality furniture in the domestic market, said Hung, adding that demand for the product has grown as China’s high-income demographic continues to flourish.

Expanding Chinese wealth could bring opportunities for other producers as well, he said.

Meanwhile, Vietnam’s rattan and bamboo furniture exports have been valued at $2.41 billion and $153 million respectively. The figures represent a 34.5 and 18 percent year-on-year increase in the first nine months of 2010, according to the General Statistics Office.

The office also said the country shipped $8 billion worth of textiles and garments – a 20 percent increase from January to September.

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Vietnam becomes hand-made hub

China, Turkey and Sweden are looking to Vietnam for cheap, well-made handicrafts

Vietnamese pottery products on display at an exhibition in Ho Chi Minh City. Local suppliers of hand-made products are highly competitive on the global market, experts say.

International manufacturers are looking to Vietnam to make their hand-made products thanks to the country’s cheap labor and competitive pricing.

In the meantime, growing Chinese wealth has translated to skyrocketing imports of high-end Vietnamese furniture.

IKEA, the world’s largest furniture retailer plans to double its orders from Vietnam in the next three years. At the moment, the conglomerate is the largest buyer of Vietnamese hand-made products.

Mikael Demitz-Helin, manager of IKEA Trading in Southeast Asia, says Vietnamese suppliers of products like textiles, furniture, handicrafts and ceramics were highly competitive on the global market.

IKEA, which has been doing business in Vietnam for 14 years, shipped out 25,000 containers of hand-made Vietnamese products last year to its stores worldwide. Its Southeast Asian headquarters are based in Ho Chi Minh City and the firm currently does business with 42 Vietnamese companies producing textile, wood and metal products. IKEA has 1,047 suppliers, worldwide.

Demitz-Helin told Thanh Nien Weekly that Vietnam is a choice manufacturing destination due to its competitive advantages of cheap, skilled labor and abundant raw materials.

He said many Vietnamese firms hoping to break into the global market have been hindered by a shortage of investment. Without proper funding, many hand-made product manufacturers find themselves unable to increase their production to meet soaring international demand.

“Local businesses have utilized the nation’s low labor costs and need to invest in technology [to meet] bigger orders from international buyers,” said Demitz-Helin.

He said IKEA has extended technical support to small manufacturing firms seeking to become IKEA’s long-term suppliers.

Talking Turkey

Selman Aycan, a representative from Turkish Businessmen and Industrialists in Vietnam (TUSKON) said buyers in the European-Asian country have discovered Vietnam as a new source of home products like furniture, rattan and bamboo handicrafts in addition to products like building materials and plastics.

Aycan said that two-way trade between Turkey and Vietnam doubled last year nearing US$500 million.

An unofficial source said the exchanges amounted to $390 million during the first eight months of this year.

Turkish buyers had been previously unaware of Vietnam due to the geographical distance between the two countries, said Aycan, who led a delegation of Turkish businesses to join an export exhibition of furniture in HCMC last week.

He said the association will invite a delegation of Vietnamese craft sellers to visit the Turkish market next summer.

Fine China

China has emerged as a major buyer of Vietnamese handmade products, according to an official from the Handicraft and Wood Industry Association of HCMC or HAWA.

Dang Quoc Hung, deputy chairman of the association, said furniture factories have reached their capacity to fill orders from international importers, especially Chinese buyers.

“It is strange that local firms have received many orders for high-quality products from China, the world’s biggest wooden product exporter,” said Hung.

Hung told Thanh Nien Weekly that Vietnam’s export of high-quality furniture to China soared from $100 million to $230 million in the first eight months of this year. Vietnam exported $890 million and $270 million worth of furniture to the US (the world’s largest importer) and Japan respectively in the same period, according to HAWA.

China’s manufacturers have focused on low-priced products and left a big hole for high-quality furniture in the domestic market, said Hung, adding that demand for the product has grown as China’s high-income demographic continues to flourish.

Expanding Chinese wealth could bring opportunities for other producers as well, he said.

Meanwhile, Vietnam’s rattan and bamboo furniture exports have been valued at $2.41 billion and $153 million respectively. The figures represent a 34.5 and 18 percent year-on-year increase in the first nine months of 2010, according to the General Statistics Office.

The office also said the country shipped $8 billion worth of textiles and garments – a 20 percent increase from January to September.

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Furniture exports to China rise sharply

HCMC - Vietnam’s high quality furniture shipments to China have increased rapidly since early this year, said a source from the Handicraft and Wood Industry Association of HCMC (HAWA).  

“China is exporting mass-produced furniture made of artificial materials but importing quality furniture from Vietnam, especially products made of precious timber such as redwood,” said Dang Quoc Hung, vice chairman of HAWA.

According to the  Vietnam Industry and Information Center under the Ministry of Industry and Trade, in the first eight months of this year, Vietnam’s wooden product exports to China grew 130% year-on-year to US$230 million.  

Thus China is becoming a big importer of Vietnam’s furniture, after the U.S., the EU and Japan which respectively imported US$889 million, US$387 million and US$271 million in January-August, Hung told reporters at the ongoing International Furniture and Handicraft Fair and Exhibition in HCMC, or Expo 2010.

Hung explained that while China is known as the world’s factory, it is also a huge market with increasing demand due to rising incomes and an emerging middle class.  

“If China keeps growing well, it will be the potential market for Vietnam’s wooden product makers. Vietnamese businesses should explore the tastes of Chinese consumers,” the vice chairman said, adding the rising yuan is expected to benefit Vietnamese exporters.  

According to Hung, the volume of furniture orders this year is increasing a little bit over last year, with the total export value expected to beat US$3 billion. However, the handicrafts industry is facing a gloomy picture due to fierce competition from China’s cheap mass-produced items.  

Preliminary statistics from the Vietnam Industry and Information Center shows a 38.4% year-on-year increase in Vietnam’s wooden product exports in January-September to US$2.45 billion. Exports to major markets namely the U.S., the EU and Japan have risen by 34.2%, 13.8% and 20.8% respectively.

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Traders upbeat on new deals at Expo 2010

Turkey seeks after Vietnam’s wooden products

Deputy Minister of Industry and Trade Nguyen Thanh Bien (3rd, R) and the city’s officials cut the inauguration ribbon for Expo 2010 on WEdnesday - Photo: Thai Hang

HCMC – Many traders attending the HCMC International Furniture and Handicraft Fair and Exhibition, or Expo 2010, which kicked off here in the city on Wednesday morning, said they were optimistic about the number of contracts they would strike at the five-day event.

Dang Van Long, director of Dang Long Furniture Co. specializing in indoor and outdoor furniture, said he met several guests from the U.S., Canada and Japan on the first day of Expo 2010.

“Especially, there is one American retailer who asked for price quotations for big contracts amounting to hundreds of containers. I have participated in the Expo for years but have never seen such positive results right on the first day,” Long said.

Long and other exporters said they had faced difficulties in business due to weak purchasing power of key markets although signs of recovery had emerged since the first months of the year. The situation has forced them to delay plans to expand factories or develop new products.

Traders hence expect the fair will help them bolster business.

On day one Expo 2010 attracted not only international buyers but also local traders who came to get updated on the latest trends in the woodworking and handicraft sectors.

Tran Viet Tien, director of Gia Long Fine Art Co., specializing in home décor from poly resin, composite and foam, said he had many local visitors to his booth on Wednesday. They included contractors for restaurants and resorts.

In opening remarks Deputy Minister of Industry and Trade Nguyen Thanh Bien praised efforts by wood and handicraft enterprises to ride out tough times, saying this had helped push up the country’s overall export.

According to Vietnam’s customs, in the January-September period, wood exports increased by up to 37% from last year’s same period to around US$2.2 billion.

After the opening ceremony, which was also attended by diplomatic offices of France, Korea, Cuba, and the Netherlands, Deputy Minister Bien and representatives of the HCMC government awarded certificates of merit to the city’s 20 leading wood and handicraft exporters.

Expo 2010 will wrap up on October 10. On Thursday and Friday, there will be seminars on new challenges and solutions for the furniture and handicraft sectors, and introduction of a credit program by Viet A Bank to support enterprises.

Ten Turkish businesses are in talks with Vietnamese partners over the supply of wooden products to the country - Photo: Thu Nguyet

* Turkey was among several countries sending trade missions to the HCMC International Furniture and Handicraft Fair and Exhibition 2010 on Wednesday, and had business meetings with local furniture and handicraft makers at the event.

Selman Aycan, a representative of the Turkish Confederation of Businessmen and Industrialists (TUSKON) in Vietnam, said Turkey had a big demand for furniture, thus promising a new market for Vietnamese businesses.

He added that TUSKON is due to organize a trade mission for Vietnamese enterprises to Turkey next June. The market imports furniture, farm products, rubber, construction materials and garments from Vietnam while exporting steel.

However, furniture exports to Turkey are still modest. Statistics of the Ministry of Industry and Trade show Vietnam shipped a mere US$4.97 million worth of furniture to Turkey in the first eight months of this year, up 20% year-on-year.

Vietnamese furniture and wooden products imported by Japan and Turkey gained more than US$271 million and US$4.97 million, up 20.8% and 20% respectively.

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Traders upbeat on new deals at Expo 2010

Turkey seeks after Vietnam’s wooden products

Deputy Minister of Industry and Trade Nguyen Thanh Bien (3rd, R) and the city’s officials cut the inauguration ribbon for Expo 2010 on WEdnesday - Photo: Thai Hang

HCMC – Many traders attending the HCMC International Furniture and Handicraft Fair and Exhibition, or Expo 2010, which kicked off here in the city on Wednesday morning, said they were optimistic about the number of contracts they would strike at the five-day event.

Dang Van Long, director of Dang Long Furniture Co. specializing in indoor and outdoor furniture, said he met several guests from the U.S., Canada and Japan on the first day of Expo 2010.

“Especially, there is one American retailer who asked for price quotations for big contracts amounting to hundreds of containers. I have participated in the Expo for years but have never seen such positive results right on the first day,” Long said.

Long and other exporters said they had faced difficulties in business due to weak purchasing power of key markets although signs of recovery had emerged since the first months of the year. The situation has forced them to delay plans to expand factories or develop new products.

Traders hence expect the fair will help them bolster business.

On day one Expo 2010 attracted not only international buyers but also local traders who came to get updated on the latest trends in the woodworking and handicraft sectors.

Tran Viet Tien, director of Gia Long Fine Art Co., specializing in home décor from poly resin, composite and foam, said he had many local visitors to his booth on Wednesday. They included contractors for restaurants and resorts.

In opening remarks Deputy Minister of Industry and Trade Nguyen Thanh Bien praised efforts by wood and handicraft enterprises to ride out tough times, saying this had helped push up the country’s overall export.

According to Vietnam’s customs, in the January-September period, wood exports increased by up to 37% from last year’s same period to around US$2.2 billion.

After the opening ceremony, which was also attended by diplomatic offices of France, Korea, Cuba, and the Netherlands, Deputy Minister Bien and representatives of the HCMC government awarded certificates of merit to the city’s 20 leading wood and handicraft exporters.

Expo 2010 will wrap up on October 10. On Thursday and Friday, there will be seminars on new challenges and solutions for the furniture and handicraft sectors, and introduction of a credit program by Viet A Bank to support enterprises.

Ten Turkish businesses are in talks with Vietnamese partners over the supply of wooden products to the country - Photo: Thu Nguyet

* Turkey was among several countries sending trade missions to the HCMC International Furniture and Handicraft Fair and Exhibition 2010 on Wednesday, and had business meetings with local furniture and handicraft makers at the event.

Selman Aycan, a representative of the Turkish Confederation of Businessmen and Industrialists (TUSKON) in Vietnam, said Turkey had a big demand for furniture, thus promising a new market for Vietnamese businesses.

He added that TUSKON is due to organize a trade mission for Vietnamese enterprises to Turkey next June. The market imports furniture, farm products, rubber, construction materials and garments from Vietnam while exporting steel.

However, furniture exports to Turkey are still modest. Statistics of the Ministry of Industry and Trade show Vietnam shipped a mere US$4.97 million worth of furniture to Turkey in the first eight months of this year, up 20% year-on-year.

Vietnamese furniture and wooden products imported by Japan and Turkey gained more than US$271 million and US$4.97 million, up 20.8% and 20% respectively.

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Wood imports eat up furniture makers’ profits

Vietnamese wooden furniture makers’ profits are less than 5 percent since 80 percent of the raw materials have to be imported, according to the Vietnam Timber and Forest Product Association.

The dependence on imports is pinching them especially after the prices of timber in main supply markets like China, the US, and New Zealand have spiraled by 15-30 percent this year.

Pine and oak have seen the greatest rise, Tran Duc Sinh, the chairman of Viforest, as the association is known, said.

Exports of wooden furniture were worth $1.82 billion in the first eight months, up 20 percent year on year.

The industry hopes to increase that to $3.1 billion for the year and has enough export orders on hand to hit the target.

However, more than 6.4 million cubic meters of wood is required for that while domestic supply is only around 1.6 million cubic meters.

Besides, since the local supply is sourced mostly from young forests, the wood quality is low and only really suitable for the paper industry.

The Vietnamese government limits commercial logging to 300,000 cubic meters a year to prevent over-exploitation.

But in 2012 it will be calculated differently, ensuring domestic supply will partially replace imports, Thoi Bao Kinh Te Sai Gon Online (The Saigon Economic Times Online) quoted Pham Minh Thoa of the General Forestry Department as saying.

Local supply will also be augmented under a pilot project on sustainable forestry exploitation and management, following the international Forest Stewardship Council (FSC) model, she said.

FSC certification is required by major furniture importers like the US and European countries as a measure against illegal logging but, a condition most Vietnamese timber suppliers have yet to meet.

Vietnam ranks second in Southeast Asia in terms of wood products export, shipping its goods to 120 countries.

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Furniture makers ‘neglecting' local market

Vietnamese wood furniture firms are focused mostly on export markets, leaving the local market to imports, especially from China.

Huynh Van Hanh, deputy chairman of the Handicraft and Wood Industry Association of HCM City (HAWA), said with its population of 86 million and increasing incomes, Vietnam is a promising market for furniture and other wooden products.

Demand for wooden indoor furniture has grown at an annual rate of 15-20 per cent in recent years, he said.

But Vietnamese firms, among the world's largest exporters of wood products, continue to ignore the local market, which, at 3 billion USD, is equal to the export market, Hanh said.

They accound for just 20 percent of the Vietnamese market, with imports from mainland China, Malaysia, Taiwan, Hong Kong and Thailand accounting for the rest.

Dien Quang Hiep, director of Binh Duong-based Minh Phat Furniture Company, said companies prefer exports to domestic sales because orders are usually big. The domestic market not only places small orders but also requires various designs.

And then there is the cost of setting up distribution systems, he pointed out.

Furniture shops on Ngo Gia Tu and To Hien Thanh streets in District 10, Nguyen Thi Minh Khai in district 3, and other places in HCM City, display a lot of imported furniture products.

Tran Hoang Trung, owner of a shop on Ngo Gia Tu street, said most of his products are from China and they come in a range of designs and materials.

As for local products, he sold the odd table made of natural wood, he said.

Many foreign companies, mostly Chinese, import large quantities of timber from Vietnam at cheap prices and export finished products at high prices to Vietnam.

Many distributors import 30-40 containers of furniture every month from China, according to insiders.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Product Association, said the low import tariffs on wooden products, of 0-3 percent, encourage furniture distributors to import them, creating pressure on domestic producers.

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Furniture makers ‘neglecting' local market

Vietnamese wood furniture firms are focused mostly on export markets, leaving the local market to imports, especially from China.

Huynh Van Hanh, deputy chairman of the Handicraft and Wood Industry Association of HCM City (HAWA), said with its population of 86 million and increasing incomes, Vietnam is a promising market for furniture and other wooden products.

Demand for wooden indoor furniture has grown at an annual rate of 15-20 per cent in recent years, he said.

But Vietnamese firms, among the world's largest exporters of wood products, continue to ignore the local market, which, at 3 billion USD, is equal to the export market, Hanh said.

They accound for just 20 percent of the Vietnamese market, with imports from mainland China, Malaysia, Taiwan, Hong Kong and Thailand accounting for the rest.

Dien Quang Hiep, director of Binh Duong-based Minh Phat Furniture Company, said companies prefer exports to domestic sales because orders are usually big. The domestic market not only places small orders but also requires various designs.

And then there is the cost of setting up distribution systems, he pointed out.

Furniture shops on Ngo Gia Tu and To Hien Thanh streets in District 10, Nguyen Thi Minh Khai in district 3, and other places in HCM City, display a lot of imported furniture products.

Tran Hoang Trung, owner of a shop on Ngo Gia Tu street, said most of his products are from China and they come in a range of designs and materials.

As for local products, he sold the odd table made of natural wood, he said.

Many foreign companies, mostly Chinese, import large quantities of timber from Vietnam at cheap prices and export finished products at high prices to Vietnam.

Many distributors import 30-40 containers of furniture every month from China, according to insiders.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Product Association, said the low import tariffs on wooden products, of 0-3 percent, encourage furniture distributors to import them, creating pressure on domestic producers.

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Furniture makers ‘neglecting' local market

Vietnamese wood furniture firms are focused mostly on export markets,
leaving the local market to imports, especially from China.

Huynh Van Hanh, deputy chairman of the Handicraft and Wood Industry
Association of HCM City (HAWA), said with its population of 86 million
and increasing incomes, Vietnam is a promising market for furniture and
other wooden products.

Demand for wooden indoor furniture has grown at an annual rate of 15-20 per cent in recent years, he said.

But Vietnamese firms, among the world's largest exporters of wood
products, continue to ignore the local market, which, at 3 billion USD,
is equal to the export market, Hanh said.

They
accound for just 20 percent of the Vietnamese market, with imports from
mainland China, Malaysia, Taiwan, Hong Kong and Thailand accounting for
the rest.

Dien Quang Hiep, director of Binh
Duong-based Minh Phat Furniture Company, said companies prefer exports
to domestic sales because orders are usually big. The domestic market
not only places small orders but also requires various designs.

And then there is the cost of setting up distribution systems, he pointed out.

Furniture shops on Ngo Gia Tu and To Hien Thanh streets in District
10, Nguyen Thi Minh Khai in district 3, and other places in HCM City,
display a lot of imported furniture products.

Tran
Hoang Trung, owner of a shop on Ngo Gia Tu street, said most of his
products are from China and they come in a range of designs and
materials.

As for local products, he sold the odd table made of natural wood, he said.

Many foreign companies, mostly Chinese, import large quantities of
timber from Vietnam at cheap prices and export finished products at high
prices to Vietnam.

Many distributors import 30-40 containers of furniture every month from China, according to insiders.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest
Product Association, said the low import tariffs on wooden products, of
0-3 percent, encourage furniture distributors to import them, creating
pressure on domestic producers./.

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