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Wood industry finds ways to overcome challenges

 (News Portal - Dong Nai) - Faced with general fluctuations of the global economy, Vietnam's wood production is one of the key export industries that has been strongly affected.  

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Enterprises visit the international wood materials and machinery fair recently held in Binh Duong 

In the first 7 months of 2023, the wood industry exported nearly 7.8 billion USD. Thus, the goal of 18 billion USD in wood export is almost impossible to achieve.

To overcome the limitations of the wood industry, finding solutions to stay in the target market, and at the same time exploiting more niche, smaller markets is an extremely difficult task for the wood production industry.

Still facing difficulties
Recently, at the wood processing industry, wood and forest product export in 2023 conference held in Binh Duong province, Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri commented that in the first 7 months of 2023, due to being influenced on by world conflicts, rising global inflation, and Vietnam's main export markets for wood and wood products continued to shrink. In particular, Vietnam's wood export turnover in the first 7 months of 2023 was nearly 7.8 billion USD, down 25.5% compared to the same period last year and reaching 46% of the year plan. Therefore, local associations and enterprises in the wood industry had planned and coordinated to build stores in exporting countries, carefully considered each small order, each available item... in an effort to overcome difficulties and follow what had been planned.

Similarly, Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, added that in addition to difficulties in reduced market demand, the wood industry has continuously faced more and more trade defense cases. From 2015 to 2019, the wood industry faced two cases of using trade defense measures by Turkey and Korea, but from 2020 until now, the wood industry has faced 5 cases, of which 4 from the US market and 1 from the Canadian market. In addition, importing countries are setting stricter standards, for example, Japan has required that all Vietnamese wood products exported to this market must have a sustainable forest certificate, or other countries must have sustainable forest certification. Germany applies the Law on Enterprise Appraisal Obligation in the supply chain. These problems continue to indirectly impact Vietnamese exporters, especially during the time when there are a shortage of new orders.

Finding ways through the challenges
According to wood industry manufacturers, recently there has been signs of positive changes, as some units continue to place orders, inquire and announce the quantity they plan to order in the future. However, the general situation has not yet returned to the way it was. Sales have declined due to the economy in general, so consumers have tightened their spending. If the economic situation stabilizes, demand will be huge and a recovery phase is expected by the business community.

Meanwhile, experts said that to regain export growth for the wood industry, businesses needed to receive more support from the Ministry of Industry and Trade and Vietnam's wood product marketing business to find markets, while conveying the message that Vietnam strongly commit to providing legal wood products, preparing to strictly implement regulations from importers... In addition, businesses need to redefine their domestic production and business strategies, identify markets and products, and learn about regulations and barriers. Exporting to large markets, improving product quality as well as production technology are factors for sustainable development.
Another factor is that in addition to finding large distribution channels, businesses also need to find niche markets, because the problem with large distributors is that when they reduce demand, they will be out of contact, causing export activities of the company to decrease. In particular, when promoting trade, it is advisable to seek out local businesses and people, sign consulting contracts to find niche markets, handle inventory and retail goods. 

This is a supplementary solution in the short term when major markets have problems.
According to Mr. Nguyen Phuong, Director of Minh Thanh Co., Ltd (Vinh Cuu district), wood export orders are returning, but the number of orders is not as much as before, delivery time is also asked to be shortened by partners. This requires businesses to change, invest in lean production and cost-saving machines to have profitable prices to meet the requirements of order quality as well as time from partners​

Author: Vi Quan

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