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Wood furniture enterprises have many orders but great pressure

Orders are closed until the third quarter, even the end of the year, but wood furniture businesses are under great pressure on production and transportation costs.

The above information was said by Mr. Nguyen Chanh Phuong, Vice Chairman of the Ho Chi Minh City Handicraft and Woodworking Association (HAWA) on the morning of March 29.

Ms. Duong Thi Minh Tue, Sales Director of Minh Duong Wood Company, also said that the company’s orders to the US and Europe were closed until the end of the third quarter. “We are taking orders for the fourth quarter,” she said.

Similarly, the order of Furnis Company has also been placed until August. “Our orders are currently exported to the US accounting for 60%, the rest is supplied to the European and domestic markets”, said Mr. Nguyen Van Sang. – Information Furnis Joint Stock Company CEO.

Ms. Tracy Tran, representative of Mitchell Gold + Bob Williams, a buyer for furniture retail chains in the US also said that from 2019, her unit gradually shifted purchases from China, India, and Indonesia to Vietnam. Male.

Initially, this buyer had 4 factories supplying from Vietnam, now the number has increased to 16. “Purchase of purchases from Vietnam accounts for about 70% of our total world purchasing volume”, Ms. Tracy said.

The above positive situation helped the export of the wood industry in the first quarter to reach a turnover of 3.94 billion USD, up 3% over the same period in 2021. “If exports maintain the rate of 1.5 billion USD per month, the next The whole year plan of 16.5 billion USD can be achieved,” said Mr. Phuong.

Exhibition at International Trade Week Woodworking & Handicraft Industry on April 14, 2021, in Ho Chi Minh City.Photo: HAWA

Exhibition at the International Trade Week of Woodworking & Handicraft Industry on April 14, 2021, in Ho Chi Minh City. Photo: HAWA

However, HAWA assesses that this industry is still facing many challenges due to complicated Covid-19 and world geopolitical fluctuations. The price of input materials is high even though 70% of the materials of Vietnam’s wood furniture industry are domestic. “The rest of the supply still has to be imported from Europe, the US and South America, so the pressure on input prices is great,” said Mr. Phuong.

Two other costs, labor and logistics costs, have also increased. In particular, logistics prices have not shown any signs of cooling down, even escalating due to the Ukraine crisis. Normally, the value of a container of furniture sold for FOB (delivery on board) of Vietnam is about 10,000-15,000 USD.

However, the shipping price was close to or sometimes higher than the item price. A container going to Europe currently ranges from 6,000-8,000 USD, going to the US ranges from 10,000-12,000 USD. Compared to a year ago, shipping prices have increased by about 30%.

Businesses believe that this affects the costs of importers, making them more hesitant to import goods, limiting purchasing power. With the orders placed, some buyers postpone the import, waiting for a cheaper container.

“Logistics costs are increasing rapidly, so product prices are very high. Some manufacturers are therefore slow to ship goods,” said Ms. Duong Thi Minh Tue, sales director of Minh Duong Wood Company, member of Hawa’s Executive Committee. , said.

Particularly in Minh Duong Wood, there are buyers who have to spend up to 25,000 USD to transport a container from Cat Lai port to the East coast of the US. “Actually, each chair costs an additional 40 USD, so consumers cannot accept it,” said Ms. Tue.

Ms. Hong Quang, Director of Viet S Company, confirmed that the cost problem is very difficult, from input materials to labor. “Since the beginning of this year, we have had to increase wages by 10-20% for employees. The cost of raw materials has increased by 10-30%,” she said.

To remove it, HAWA will first join the Trade Promotion Department and Ho Chi Minh City Department of Industry and Trade to organize the Vietnam Furniture Trade Week from April 13 to 20. The organizers expect to have 1,000 online and direct B2B trade connections with major markets such as the US, EU, UK, Korea, Australia, and ASEAN.

In the long term, Ms. Tracy Tran encourages Vietnamese businesses to be more proactive in the design stage, releasing their own collections to invite brands and buyers because currently they mainly do OEM processing. If the collection is available, the order process will be faster, it only takes about 2-3 months after refining to suit the needs of the customer. Meanwhile, for brands to design and deliver OEM samples, it takes 4-5 months, even years.

In addition, according to this buyer, the high-end furniture processing segment in Vietnam does not have many manufacturing units, compared to the low-mid segment. “Some of our customers have a great need to find outsourcing suppliers in the high-end segment. Suppliers need to better understand customers, invest in more models to give customers more choices,” said Ms. Tracy Tran. recommended.


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