The export target of 17.5 billion USD this year of the wooden furniture industry is almost impossible to complete and is likely to reach only 13.5 billion USD.
After a sharp drop in orders of about 40% in the first half of the year, the wooden furniture industry has shown signs of improvement since July, with each month growing by 2-5% compared to the previous month. By October, export turnover reached 1.2 billion USD, up 5.7% compared to September, according to the General Department of Customs.
However, in the first 10 months, the export turnover of wood and wood products is estimated at 10.8 billion USD, down 19.9% compared to the same period in 2022. The reason is that purchasing power in major markets such as the US and Europe is still weak due to economic disadvantages, and real estate is tense due to high interest rates.
With less than two months left until the end of the year, the wooden furniture industry's export target of 17.5 billion USD is almost impossible to achieve. "It is expected that by the end of this year, the turnover can reach 13.5 billion USD if the situation continues to be favorable (gradually improving) as it is now," said Mr. Nguyen Quoc Khanh, Chairman of the Handicraft and Wood Processing Association of Ho Chi Minh City (Hawa) at the event on November 17.
Even if the target is not reached, if the whole year's export reaches 13.5 billion USD, it will still be a better result than the pre-pandemic period, that is, from 2020 onwards, and only worse than 2021 and 2022. This is the period when Covid-19 affects many people to stay at home, have the need to renovate their living space or change their place of residence.
Despite the difficulties, the wood industry is still a key export industry in the agriculture, forestry and fishery sector, according to Mr. Khanh. To date, Vietnam has more than 5,000 enterprises operating in the wood and furniture industry. About half of the export turnover comes from the US market.
An interior event in Ho Chi Minh City in April 2022. Photo: Vien Thong
Therefore, when forecasting the situation in 2024, Mr. Nguyen Chanh Phuong, Director of Danh Moc Company, Vice President of Hawa said that we can look at the US market prospects to see positive signals.
One is Colliers' recent "Fall 2023 Retail Report" which found that nearly 49% of U.S. retail chains plan to expand over the next five years. And as of September, U.S. retail sales continued to rise even as consumers faced economic pressures, according to the National Retail Federation. These are hopeful signs for home retail.
Second, with the US Federal Reserve (Fed) likely to gradually reduce its base interest rate from early 2024, mortgage interest rates are likely to fall from the current level of around 8% to 6% by the end of next year, helping the real estate market to flourish.
"In the US, real estate is a sign of the warming of the furniture market," said Mr. Phuong. According to him, there are forecasts that from the end of the second quarter of 2024, the business situation will improve thanks to lower interest rates.
Third, Vietnamese wood furniture enterprises themselves are proactively seizing opportunities from now until the beginning of next year. In March 2024, this community will focus on Hawa Expo 2024 - the official representative of the Vietnamese wood industry in the Asian Furniture Export Fair series held every March.
This is the largest-scale organization ever, taking place simultaneously at 3 locations (2 in Ho Chi Minh City and one in Binh Duong), gathering more than 80% of the total 700 Vietnamese exhibitors.
If trade promotion activities go smoothly, Vietnamese businesses will have the opportunity to close many orders in April-May 2024, at the same time the US real estate market is likely to be less stressed due to lower interest rates, according to Mr. Phuong.
In addition, according to Mr. Khanh's observation, there is a trend that businesses are gradually shifting from processing to making ODM products (manufacturers design and manufacture products according to orders, instead of making according to available samples). This method will also help create more added value for domestic and exported wood products in the coming time.
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