Vietnam is the sixth largest wood and wooden product exporter in theworld and the second largest in Asia, yet the domestic wood processingsector is injured by low- priced, skillfully crafted imports, saidradio The Voice of Vietnam (VOV) on July 20.
Nguyen Ton Quyen,General Secretary of the Vietnam Timber and Forest Products Association(Vietfores), says the country now has over 1,000 craft villages andthousands of households specialising in processing wood products, mostlyin Hanoi, Bac Ninh, Ha Nam, Nam Dinh, Nghe An and Quang Nam.
Rapidurbanisation has fueled a huge demand for wood products at hotels,restaurants, offices and new urban areas. Over the past five years,domestic consumption has accounted for 40 percent of the country’s totalwood production, amounting to 2.25 billion USD in value.
However,the wood processing sector faces many obstacles, principally related tothe fact that there are too few large businesses and it is saddled withan excessive number of small-scale businesses, Quyen says.
Thesesmaller businesses are characteristically most often equipped withobsolete machinery and equipment that are highly inefficient that add alot of cost to the final product, making it difficult to compete withlower priced imports.
Many of these smaller businesses arerelegated small outsourcing contracts for the larger businesses, or inother words, relatively low value and low profitability production.
Vietfores vice president Ngo Sy Hoai said consumers have preferedimported products due to their eye-catching designs and reasonableprices. These imported products have won favour from local consumers.
Domesticprocessors want to cash in on this segment of the market, but they findit difficult to compete with foreign rivals that offer the items at alower price.
A number of businesses want to get the lion’s shareto capitalize on this opportunity; however, they have failed due tospontaneous production and lack of a complete distribution network. Ifthey sign export contracts, they do not have adequate financial capacityto expand production for huge orders.
This is why the domestic wood market has yet to attract local processors, says Vietfores Vice President Hoai.
Oneof the greatest challenges for local businesses is that businesses haveyet to develop their brand name and market products with good design tocater to consumer tastes. In addition, marketing activities ande-commerce application in wood craft villages remains poor, furthercompounding the problem.
To anticipate the development trend,some craft villages have cooperated to create specialty niches in themarket producing parts of wood products, a model that has provedeffective in improving the product quality and meeting big orders forexport.
A case in point, Bac Ninh province’s Dong Ky woodcarving village has teamed up with craft villages namely Huong Mac, PhuKhe, and Tam Son to establish a production chain.
Trinh Quoc Dat,Vice President of Vietnam Association of Craft Villages, says thatcraft villages and businesses should work closely together to sharemarket information and select a wood craft village or a business capableof meeting big orders and seeking suitable markets.
He suggeststhat the State encourage linkages between craft villages and processorsby offering them credits and reducing taxes. Trade agencies should playan important role in seeking outlets for their products.
TheMinistry of Agriculture and Rural Development has drawn up a domesticwood market development strategy, aiming to fetch 4 billion USD inrevenue by 2020.
Accordingly, craft villages and wood businessesare required to develop materials supplies, diversify patterns, boosttrade promotion, and build a complete distribution network.-VNA
Nguyen Ton Quyen,General Secretary of the Vietnam Timber and Forest Products Association(Vietfores), says the country now has over 1,000 craft villages andthousands of households specialising in processing wood products, mostlyin Hanoi, Bac Ninh, Ha Nam, Nam Dinh, Nghe An and Quang Nam.
Rapidurbanisation has fueled a huge demand for wood products at hotels,restaurants, offices and new urban areas. Over the past five years,domestic consumption has accounted for 40 percent of the country’s totalwood production, amounting to 2.25 billion USD in value.
However,the wood processing sector faces many obstacles, principally related tothe fact that there are too few large businesses and it is saddled withan excessive number of small-scale businesses, Quyen says.
Thesesmaller businesses are characteristically most often equipped withobsolete machinery and equipment that are highly inefficient that add alot of cost to the final product, making it difficult to compete withlower priced imports.
Many of these smaller businesses arerelegated small outsourcing contracts for the larger businesses, or inother words, relatively low value and low profitability production.
Vietfores vice president Ngo Sy Hoai said consumers have preferedimported products due to their eye-catching designs and reasonableprices. These imported products have won favour from local consumers.
Domesticprocessors want to cash in on this segment of the market, but they findit difficult to compete with foreign rivals that offer the items at alower price.
A number of businesses want to get the lion’s shareto capitalize on this opportunity; however, they have failed due tospontaneous production and lack of a complete distribution network. Ifthey sign export contracts, they do not have adequate financial capacityto expand production for huge orders.
This is why the domestic wood market has yet to attract local processors, says Vietfores Vice President Hoai.
Oneof the greatest challenges for local businesses is that businesses haveyet to develop their brand name and market products with good design tocater to consumer tastes. In addition, marketing activities ande-commerce application in wood craft villages remains poor, furthercompounding the problem.
To anticipate the development trend,some craft villages have cooperated to create specialty niches in themarket producing parts of wood products, a model that has provedeffective in improving the product quality and meeting big orders forexport.
A case in point, Bac Ninh province’s Dong Ky woodcarving village has teamed up with craft villages namely Huong Mac, PhuKhe, and Tam Son to establish a production chain.
Trinh Quoc Dat,Vice President of Vietnam Association of Craft Villages, says thatcraft villages and businesses should work closely together to sharemarket information and select a wood craft village or a business capableof meeting big orders and seeking suitable markets.
He suggeststhat the State encourage linkages between craft villages and processorsby offering them credits and reducing taxes. Trade agencies should playan important role in seeking outlets for their products.
TheMinistry of Agriculture and Rural Development has drawn up a domesticwood market development strategy, aiming to fetch 4 billion USD inrevenue by 2020.
Accordingly, craft villages and wood businessesare required to develop materials supplies, diversify patterns, boosttrade promotion, and build a complete distribution network.-VNA
