At the seminar “Opportunities and challenges for Vietnamese export wood processing industry after WTO entry” in late February 2008, representatives of the Vietnam Chamber of Commerce and Industry (VCCI) said WTO entry has helped Vietnamese enterprises expand export markets, but also posed challenges in meeting big orders, creating more product categories, renovating technologies and reducing currently high production costs due to reliance on imported materials.
Vietnam now has more than 300 export wood processors, but most are small and medium enterprises. They also lack cooperation. They usually use prices as a tool to win export contacts. They cannot meet big export orders because of their current individual capacities.
Small production size, backward processing technology, weak governance, low skills and reliance on imported materials cause great difficulties for the Vietnamese export wood processing industry. Vietnam has to import 80 per cent of wood material for local production and import value accounts for 60 per cent of product cost. As a result, many companies have become sub-contractors for foreign rivals.
To develop stable material sources for the wood processing industry, Vietnam should issue forestry licences. It must encourage forestation to provide timber for the local wood processing industry, reducing reliance on imported materials and increasing actual export value.
Regarding the product development strategy, according to the Ministry of Industry and Trade, wood exporters should develop their strong points and advantages. In the near future, they need to continue exploiting the outdoor wood market because this is already a strong point of Vietnam. In the long term, Vietnam should focus on indoor products and increase high-end indoor products for export. Apart from pure wood products, Vietnamese enterprises should seek alternative materials to produce indoor decorations. Product diversification will enable easier access to foreign markets and limit antidumping threats.
Labour training, technological renovation and design are very important in wood processing, because they help meet the diversified demand of domestic and international customers.
Export market expansion should focus on key markets such as the US, the EU and Japan. At the same time, potential markets such as Canada, Russia and Eastern European countries should also be targeted. Penetrating distribution channels in importing markets is the most effective measure to increase market share and save marketing costs.
Besides, Vietnamese enterprises need to pay attention to their rivals. Since the US levied high antidumping tax on Chinese products, Chinese investors moved production units to Vietnam to avoid taxes imposed by the US. As a result, Vietnamese enterprises have to compete with foreign investors even on their home market.
Trung Kien
Vietnamese
