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VIETNAM FURNITURE INDUSTRY COMPREHENSIVE STRATEGY NEEDED One of the development orientations of the timber sector is to shift from the production of furniture only to the market-based diversification of products including furniture combined with products made from metal, plastic, textiles, leather and bamboo. Sadaco is one company which has had initial success in introducing products made from wood and metal which are priced three times higher than 100%-wood equivalents. Diversifying product variety Khai Vy is a rapidly growing timber company with three wood processing plants located in Quy Nhon, Binh Dinh and Ho Chi Minh City and total investment capital of more than $10m. The company’s production area covers 25 hectares and its products have been exported to European countries and the US. In 2003, Khai Vy’s processed wood export volume stood at $23m. Mr Doan Van Trang, Khai Vy’s Director, says the wood processing sector is now facing a pressing problem, namely the poor development of supporting industries. Despite impressive growth over the past few years, Vietnam’s wood processing sector is not harmoniously coordinated with related industries which produce auxiliary materials and components for wood products. These spare parts account for 5-10% of the total product value. According to Mr Trang, the development of furniture and wood processing plants in Taiwan is closely paralleled by vigorous investment in industries producing associated materials and auxiliary components for wood products. The investment rate in these support industries in Taiwan is quite high, with $500m invested in associated industries for every $1bn invested in furniture and wood processing. Auxiliary materials supply problems Beside spare parts, the timber sector also needs other auxiliary materials such as chemicals, the supply of which is currently at a standstill. There is no sizeable chemical producer with high-quality products at reasonable prices. In China, the cost of chemicals as a component of timber products accounts for only 3% of the total as compared with 10-25% in Vietnam. Auxiliary materials for the timber sector are not only highly priced but also of low quality and rarely delivered on time. The supply of textiles in particular poses difficulties for wood processing and export enterprises. For example, a textile enterprise agreed to produce cloth of a certain colour and pattern as required by Khai Vy. Based on these, Khai Vy received orders from its customers. But the cloth eventually delivered was not of the colour and pattern agreed to, thus severely undermining the relationship between Khai Vy and its customers and even leading to the cancellation of orders and claims for compensation. Many wood processing and export enterprises in Vietnam also share deep concerns about marketing. According to Mr Nguyen Thanh Son, President of the Binh Dinh Timber Production and Export-Import Association, most enterprises with annual export turnover of more than $1m participate in at least one international woodwork exhibition a year. A large number of companies have opened their own websites to facilitate their e-trade activities. Marketing strategy needed That said, Vietnam is still lacking a national policy on, say, the protection of trademarks and models in the world market. Many enterprises complain that no sooner have they launched new products than imitations made in other countries flood the markets, rendering their accomplishments in design and creation null and void and undermining the competitive advantages of Vietnam’s enterprises. The registration of product models in Vietnam is undergoing difficulties. The maximum time-limit for the appraisal and recognition of a product model in Belgium and Switzerland is one month while this process in Vietnam requires from four to six months. Mr Tran Duc Sinh, General Director of Vietnam Forestry Corporation, holds that as the capacity of enterprises in the industry remains deficient, they should attach great importance to large-scale marketing campaigns appropriate to each specific market. Also according to Mr Sinh, Vietnam should be proactive in organizing exhibitions to introduce Vietnam’s wood exports in markets of great potential. The Ministry of Trade has recognized this pressing problem. The Trade Promotion Bureau has recently put forth a trade promotion strategy for processed wood and furniture. It nominates the industry’s key export markets as the EU, the US and Japan because these countries presently want to diversify their wood supply sources. Vietnam’s wood products also have competitive advantages in terms of low-to-average quality products. This year, the Ministry of Trade will strive to develop an export promotion strategy for woodwork; enhance the production and business capacity of wood processing and furniture enterprises; organize woodwork seminars and exhibitions in Hanoi and Binh Dinh; and facilitate the participation of interested enterprises in three major international furniture fairs. List of Vietnamese mission International home furnishings market, High Point 1. Ministry of Trade of Vietnam: Mr. Nguyen Van Binh, Deputy Director General, America Trade Policy Department. Ms. Phan Thi Thanh Minh, Official, Import Ð Export Management Department Mr. Tran Minh Thang, Official, Vietnam Trade Promotion Agency. 2. Minh Duong Co., Ltd: Mr. Duong Minh Chinh, Chairman Mr. Tran Trinh, Technical Deputy Director Ms. Phan Thi Ngoc Thuy 3. Hiep Long Co., Ltd: Mr. Huynh Quang Thanh, Director General 4. Tien Trien VN Furniture Co., Ltd: Mr. Tran Phi Tien, Managing Director Ms. Do Thi Luong, Director Mr. Ton That Manh, Vice Director 5. Kim Hung Fine Arts and Woodwork Private Company
Mr. Nguyen Kim Hung,
Director
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