Wood processors weak in capital and market access

A seller and a buyer are seen meeting at VIFA EXPO 2016 – PHOTO: BAN CAO

HAWA said up to 93% of local wood processing enterprises are small and ultra-small. Medium enterprises account for 5.5% of the total and big firms make up the remainder.

Speaking to the Daily at the opening of the Vietnam International Furniture and Home Accessories Fair 2016 (VIFA EXPO 2016) on March 8, HAWA vice chairman Huynh Van Hanh said financial capability and market access are among the weaknesses of Vietnamese wood processing firms.

The wood processing industry is expected to ship abroad US$7.6 billion worth of products this year. According to Hanh, to achieve the target, enterprises will need assistance to sell products to major markets and upgrade production technologies.

Phung Quoc Man, director of Bao Hung Co Ltd, said designs and creativity of Vietnamese enterprises remain weak. Currently 70% of wood processors in Vietnam rely on outsourcing contracts from foreign partners and just do what their customers order. A few businesses are able to develop their own designs and items.

“This makes enterprises unable to compete with foreign companies. If domestic enterprises can focus more on designs, more value could be added to their products,” Man said.

Regarding the difficulties faced by enterprises in the industry, Man pointed out the slow refunding of value-added tax (VAT) had cut into their working capital.

However, Hanh is optimistic that the wood processing industry will grow strongly this year as there have been more orders because of the country’s signing of new free trade agreements and its cheap labor.

Wood processing enterprises have prepared themselves well to meet strict requirements of the U.S. and EU markets for product origin, he added.

Vietnam earned US$6.9 billion from exporting wooden products last year, up 10.7% against the previous year. Vietnam is currently one of the world’s six biggest wooden goods exporters.

Lasting until this Friday, VIFA EXPO 2016 at the Saigon Exhibition andConvention Center features 1,234 booths (a 36% rise against 2014) manned by 253 exhibitors. Of the total number, Vietnamese and foreign-invested enterprises make up 77% and 58 firms from 12 countries and territories account for the rest.

At the opening ceremony, HAWA gave prizes to top eight entries in a designcontest for indoor and outdoor furniture entitled Hoa Mai (apricot). Huynh Tan Anh Tuan brought home first prize for Workspace Desk.

The 13th contest drew 191 contestants with 238 entries. Member enterprises of HAWA supported contestants to create 20 works and those outstanding designs are on show at VIFA EXPO 2016.

The prize-winning designs of last year’s contest will be displayed at the International Furniture Fair Singapore taking place in the island state from March 10 to 13.

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