Wood businesses struggle to find orders

Many wood industry businesses said they are running around looking for orders but are stuck, with only small, individual contracts being the luckiest.

The above information was stated by Mr. Cao Ba Dang Khoa, Acting Secretary General of the Vietnam Coconut Association at the seminar: "Vietnam ASEAN International Furniture and Handicraft Export Fair 2023" in Ho Chi Minh City, on May 23.

According to Mr. Khoa, the wood industry has never been as difficult as it is now. Businesses are "running around" but only get a few small orders. "The goods that businesses are producing are mainly old orders," he said.

In addition to struggling to find new orders, according to wood businesses, they are also facing difficulties in accessing capital, high interest rates and input costs.

Sharing with VnExpress earlier, Mr. Nguyen Thanh Tuan - General Director of Viet Au My Wood Joint Stock Company - said that business cash flow is congested. Banks are tightening credit limits, disbursement is slow, interest rates are high, so production activities are affected in a chain reaction.

"We are facing difficulties on many fronts. In particular, businesses supplying raw materials to the company are running out of capital, so they are prioritizing debt collection. Meanwhile, purchasing partners are asking for debt extensions because of weak purchasing power," said Mr. Tuan.

Faced with the above shortcomings, according to the Vietnam Timber and Forest Products Association (Vifores), many businesses are operating at a low level. They are producing and doing business with the goal of not making a profit, but only needing orders to keep workers and cover the costs of factory operations.

Workers in a wood production workshop of a company in Binh Duong. Photo: Binh Duong Wood Association. — Workers in a wood production workshop of a company in Binh Duong. *Photo: Binh Duong Wood Association.*

Mr. Tran Ngoc Liem, representative of the Federation of Trade and Enterprises - VCCI HCM, said that wood processing and handicraft enterprises are among the most difficult groups at present. Citing data from the General Department of Customs, in the first 4 months of the year, the export turnover of wood and wood products is estimated at 4 billion USD, down 28.5% compared to the same period in 2022. Of which, the export turnover of wood products is estimated at 2.6 billion USD, down 36.7% compared to the same period last year.

The reason why the wood industry is facing difficulties is due to the high global input fuel and energy prices, which have affected the production costs of enterprises. Escalating inflation, monetary policy has not been loosened, the world economy is slow to recover and the collapse of some banks in the world has also affected the trend of tightening spending on non-essential products such as wood and wood products. Currently, shopping demand in some major markets such as the US and EU has decreased dramatically.

Besides, China's reopening also creates a lot of competitive pressure on wood and wood products, especially Vietnamese wooden furniture.

To reduce difficulties, according to Vifores, many companies have proactively reviewed costs to cut costs as much as possible; at the same time, they have found niche markets and small orders to maintain operations and retain workers while waiting for the market to recover.

In addition, businesses are also increasing trade promotion activities to reach customers. Mr. Cao Van Dong - General Director of Kettle Interiors Asia Co., Ltd., said that in March, the company participated in VIFA EXPO 2023 in Ho Chi Minh City and sold 24 containers of goods. The company also reached 40 new customers who visited and contacted the business. He hopes that with VIFA ASEAN 2023, his company and other businesses will achieve more success.

VIFA ASEAN 2023 attracts about 350 domestic and international manufacturers and processors of wooden furniture and handicrafts for export, with 1,400 booths. There will be common booth areas of Southeast Asian countries such as Malaysia, Indonesia, Singapore, and the Philippines.

Thi Ha

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