Timber orders rebound on “few, short and fast” demand

Many wood industry businesses are both happy and worried when the market warms up, orders return but the number of orders is small, signed quarterly and required to deliver quickly, while also having to meet many new standards.

Businesses gradually have orders…

According to industry-wide statistics, foreign-invested enterprises (FDI) have seen a stronger recovery in orders than domestic enterprises. In fact, for a long time, the profit pie of the Vietnamese wood industry has been largely in the hands of this group of enterprises.

With a furniture factory located in Dong Nai with 50 years of experience in the furniture industry specializing in exporting to the US and EU, Mr. Chao Chung Lee, Chairman of Shingmark Group, shared that orders have recovered and increased by 30% compared to the time of the Covid-19 pandemic.

“The 2024 order is full until the end of October. Before the Covid-19 pandemic, the factory had more than 11,000 workers and now has more than 7,000 workers and continues to recruit,” said Mr. Lee.

Inventory decreases, global demand increases, orders for wood and furniture industries gradually recover. Photo: Gia Han

As for domestic enterprises, Mr. Nguyen Hoai Bao, Vice President of the Ho Chi Minh City Handicraft and Wood Processing Association, said that compared to 2023, the order situation of the Ho Chi Minh City wood industry in the first months of 2024 was more positive, but compared to 2021-2022, it was only back on track.

“The main markets, the US and EU, have run out of inventory and are buying back orders. However, the growth is still stable but not as strong as after the pandemic. The industry still has to closely monitor market developments,” said Mr. Bao.

Recent, The US Federal Reserve (FED) has sent out messages to stop raising interest rates and consider reducing interest rates in 2024. Meanwhile, the problem of high inventories is gradually being overcome. These are favorable conditions for Vietnamese goods to be exported to this market. Inflation in the US is cooling down, employment is increasing, construction and real estate sales are showing positive signs... These are encouraging signs for the recovery of wood orders because the US currently accounts for about 53% of Vietnam's total export turnover of wood and wood products.

Mr. Nguyen Van Sang, CEO of Furnist Viet Profducts Interior and Exterior Company, shared that orders in 2024 have recovered and grown better than last year, but orders are no longer large, requiring a lot of raw materials, high standards, and rapid delivery times.

“Even though the orders are few, short, and fast, we still have to ensure that we keep our customers because this is the way to maintain relationships and retain them in the face of many difficulties so that when the market improves again, we will be the first choice of our partners. Moreover, this is also a way for businesses to hold on, retain employees, and continue the company's production activities,” said Mr. Sang.

From the Association's perspective, Mr. Cao Xuan Thanh, Chief of Office of the Vietnam Timber and Forest Products Association (Viforest), said that in reality, the wood industry must recognize that the market has only "warmed up" compared to the time of the pandemic, but has not yet fully recovered. Because the number of orders, although there are, is still not as much as before.

However, according to Mr. Thanh, when large markets such as the US and EU reduce imports, businesses also flexibly shift to Asian and Southeast Asian markets, which has helped increase the number of orders in recent months.

… many challenges from export markets

The wood industry is constantly facing challenges from trade defense tariffs, most recently from the US and South Korea.

Specifically, Korea has investigated 6 companies and applied a general rate of 10.54% for the entire industry. In the latest review period, Korea has issued a draft to increase the tax rate from 9.78% to 31.28% for 7 businesses (latest update) selected for investigation and apply a general rate of 13.94% for all businesses.

Or 37 enterprises were listed by the United States as uncooperative (not declaring, declaring multiple times with inconsistent results) during the anti-dumping investigation due to origin issues, leading to anti-dumping and subsidy taxes of up to more than 200%.

In addition, the EU has introduced new standards such as the Carbon Border Adjustment Mechanism (CBAM), the EU Deforestation Regulation (EUDR) or the requirement to declare data before goods arrive in the Import Control System (ICS2) ...

Citing the IKEA Group as an example, Ms. Nguyen Hoang Thuy, Vietnam Trade Counselor in Sweden, said that buyers in Northern Europe tend to choose suppliers who can share positive values ​​with the community. For example, in the field of wooden furniture, IKEA Group (Sweden, the world's largest furniture retailer) has built a very new set of standards called IWAY standards, which are considered a set of rules for responsible purchasing and supply, a core premise in business operations for their suppliers.

Thus, forcing businesses to invest and change to meet this requirement in order to have strong order growth. In many cases, businesses have little capital and are unable to change everything, so investing in partial changes is the best choice.

Source: https://baodautu.vn/don-hang-go-hoi-phuc-theo-yeu-cau-it-ngan-va-nhanh-d215091.html