Timber exporters face sharp decline in orders
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Vietnamese wood and wooden furniture enterprises have been facing many difficulties as export orders have dropped 50-60% since the beginning of this year, pushing firms to cut off at least half of their production capacities.
Data from the General Department of Customs showed that the export turnover of wood and wooden products reached $3.9 billion in the first four months, down 30.6% year-on-year.
At the same time, the import value of wood and wooden products also decreased significantly to $634 million, down 33.6% over the same period last year.
During the four months, Vietnamese exports of these goods to major markets all decreased sharply such as the U.S. ($2.02 billion, 38%); Japan ($556 million, 1.5%); South Korea ($274 million, 22%) and China ($481 million, 13%).
Analysts and businesses have said that the decrease in wood and wooden goods exports was foreseeable. They attributable the decline to inflation surges in some countries, which were also major importers of Vietnam’s wood and wooden goods, resulting in sluggish demand for these products.
For example, the U.S. imported $1.24 billion worth of timber and wooden products from Vietnam in the first three months, a year-on-year drop of 42%.
In the context of inflation and the banking crisis, U.S. banks have tightened credit, making importers unable to finance import goods in large quantities. The demand for U.S. wooden furniture imports has plummeted, analysts said.
“The current global economic situation is very unpredictable,”
According to wood exporters, their export orders from the U.S. market have decreased between 50% and 55% depending on the type of wood products. Meanwhile, orders from the E.U. – another key export market, also dropped 60%.
Chairman of the Binh Duong Woodworking Association Nguyen Liem said amid the current difficult context, the provincial wood enterprises had slashed their production capacities by 60%.
“The current global economic situation is very unpredictable,” Liem said. “All market signals are not bright, and it is hard for wood enterprises to draw up their business plans.”
Liem also predicted that when the market situation improved, and the inventory decreased, foreign customers would continue to order but not sooner than early 2024.
Around the beginning of 2024, the market would be less difficult, and businesses would have export orders again. Still, only small ones, he said, forecasting that the market would likely recover at the end of 2024. However, the recovery growth would depend on the world’s economic and political situation.
Despite a sharp slump in orders, trade experts said the U.S. remained a key export outlet for Vietnam’s wood industry. Therefore, businesses need to maintain the U.S. market by updating information and converting production according to the market’s consumption trends.
In addition, management agencies should support businesses to bring Vietnamese wooden goods into large distribution systems such as Walmart, Costco and Amazon. This was an effective way for the firms to develop their brands, avoiding relying too much on intermediaries, trade experts said.
Questions & Answers
Q.What is the overall decline in export turnover for wood and wooden products for Vietnam?
What is the overall decline in export turnover for wood and wooden products for Vietnam?
Export turnover of wood and wooden products reached $3.9 billion in the first four months, representing a 30.6% year-on-year decrease. The import value of these products also fell by 33.6% over the same period.
Q.Which of Vietnam's major export markets has seen the biggest percentage drop in wooden goods imports?
Which of Vietnam's major export markets has seen the biggest percentage drop in wooden goods imports?
The U.S. Market has seen the sharpest decline, with exports to the U.S. Falling by 38% to $2.02 billion in the first four months. Exports to Japan dropped by 1.5%, South Korea by 22%, and China by 13%.
Q.What is the primary reason given for the significant decrease in demand for Vietnamese wood and wooden products?
What is the primary reason given for the significant decrease in demand for Vietnamese wood and wooden products?
Analysts and businesses attribute the decline to inflation surges in major importing countries, leading to sluggish demand. Also, a banking crisis in the U.S. Has tightened credit, hindering importers.
Q.When do experts predict a potential recovery for the Vietnamese wood export market?
When do experts predict a potential recovery for the Vietnamese wood export market?
Chairman Nguyen Liem predicts foreign customers may place small orders around early 2024 when inventory decreases. A more substantial market recovery is forecasted for the end of 2024, dependent on global economic conditions.
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