Vietnam's wood products manufacturers should focus on domestic market rather than exports, take advantage of growing home decor market that reached US$3B in 2013, says Vietnam Wood and Forest Products Assn. executive

Aimee Bellah

May 4, 2014 (Thai News Service) – Section: Business News - Firms which manufacture wood products for export should focus on the domestic market, which is being dominated by foreign products or those made by small-and medium-sized firms and trade villages.

This was stated by Nguyen Ton Quyen, General Secretary of the Vietnam Wood and Forest Product Association (Vifores). He added that Vietnam is placed sixth in the world market in terms of the value of its wood and wood product exports, second in Asia and the first in Southeast Asia, reported the Thoi bao Kinh te Vietnam (Vietnam Economic Times) newspaper.

Last year, Vietnam earned an export value of US$5.7 billion for its wood and wood products, according to the wood processing industry. In the first four months of this year, the industry also reported a year-on-year increase of 21 per cent in the total export value to reach $479 million.

Meanwhile, the value of the domestic consumption of wood products for home and outdoor decorations reached $2.7 billion in 2012 and surged to $3 billion in 2013, Quyen said.

However, few of the 2,500 local companies which process wood products for export have invested in developing the business for the home market, according to Quyen. Therefore, it could be said that these enterprises have ignored the domestic market for wood products.

The domestic market is dominated by imported wood products. Small and medium-sized companies and trade villages have provided their fine art, interior and wood products for the domestic market, but these are of non-uniform quality and poor design.

At present, a few Thai manufacturers and distribution companies of wood products were planning to buy the facilities of small wood product manufacturers in Vietnam to expand their business here, he said.

The local wood product exporters could meet international quality standards and had many quality designs, but the domestic customers did not have access to such products.

Quyen said these exporters had the ability to produce on a large scale but did not have the ability to trade.

Almost all of them focused on exporting products and shipping them to their partners abroad under large export orders. They had not paid attention to distributing their products in foreign markets.

In recent years, the exporters had returned to the domestic market, together with an increase in exports, Quyen said. However, they had faced many challenges in developing their business in the domestic market.

The state did not have any policies to encourage the development of wood products for the domestic market. For example, the state exempted wood product exports from tax, but imposed value-added tax on wood products sold in the domestic market.

The companies must build a distribution system and a production system while developing the domestic business.

Additionally, the domestic customers were not familiar with the trademarks of domestic wood product manufacturers, he said.

To enter the domestic market, these companies should set up design, marketing, market research and consulting teams and then build a distribution system in the home market, he said.

The enterprises should also have strategies to increase the volume and quality of wood products for the local market as well as to advertise their trademarks, he said. - VNS

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