The more difficult it is, the more we have to find ways to adapt.

Hopeful based on positive signs at the beginning of the year.

By the end of January 2024, nationwide wood exports reached US$1.5 billion – according to statistics from the Ministry of Industry and Trade , a 72.5% increase compared to the same period last year. For wood exporting businesses, this is a positive sign – indicating that the market is recovering.

Speaking to the Industry and Trade Newspaper, Mr. Tran Quoc Manh, Vice Chairman of the Handicraft Association and Chairman of the Board of Directors of Saigon Production and Trade Development Joint Stock Company (SADACO), assessed: "This is a positive result under extremely difficult conditions due to war and tensions in the Red Sea, which disrupted the supply chain. The fact that wood exports still increased in value under these difficult circumstances is very encouraging, and we hope that wood exports will be even better this year, " Mr. Manh said.

The timber industry is seeking ways to adapt to market challenges.

Explaining the reasons, Mr. Manh said that recently, signs of inflation in the US – the largest import market for Vietnamese wood – have become less severe. In addition, the inventory accumulated in the US before the pandemic has been almost completely sold off, and they will rotate orders again in 2024, especially in the third quarter of this year. These signals create hope and strengthen confidence for businesses that orders will return.

Sharing the same view, Mr. Dien Quang Hiep, General Director of Minh Phat 2 Co., Ltd., also stated that compared to last year, the company's orders for the first quarter of 2024 are "reasonably stable". According to Mr. Hiep, although the overall market is difficult, Vietnam has very good foreign relations advantages, so partners still choose us to purchase goods.

Regarding Duc Thien Co., Ltd., Mr. Le Ha Trong Chau, the company's Business Manager, informed that the company currently has orders booked until June 2024. With current developments, the company expects to achieve export growth of approximately 20% in 2024.

The more difficult the situation, the more we must find ways to adapt.

Besides the positive signs, according to Mr. Dien Quang Hiep, this year's wood exports still face the lingering challenges of 2023, such as political conflicts, wars, and tensions in the Red Sea. More concerning, the disruption of transportation related to the Red Sea region is driving up shipping costs to Europe. "The market for wood products, which was already difficult, is now even more challenging, and it's crucial for businesses to be cautious and calm in order to develop effective business strategies," Mr. Hiep said.

In fact, Mr. Hiep's concerns are also shared by many wood businesses today. Specifically, according to Mr. Tran Quoc Manh, not only have shipping costs to Europe increased, but even the US market has seen a more than 200% increase (from $1,000/container to $4,000/40ft container) – while both of these markets are key markets for Vietnam's wood industry. Another challenge is that delivery times are longer than before, and the number of returning containers is scarce. All of this is putting immense pressure on businesses.

However, for wood businesses, 2024 marks the third year of a difficult period. At this point, businesses can no longer say they are "facing difficulties" but must "adapt" to them. Therefore, according to wood export businesses, their current challenge is how to ensure the continued survival and development of their factories.

Mr. Dien Quang Hiep stated that the company has been streamlining its operations and seeking ways to reduce production costs. Accordingly, despite the difficulties, a certain budget is allocated for investing in machinery to reduce labor costs, while simultaneously communicating with employees to foster unity and determination in the company's efforts to reduce production expenses.

Meanwhile, regarding SADACO Company, Mr. Tran Quoc Manh stated that the company is no longer focusing heavily on long-term orders as before, but instead is handling short-term orders and producing samples according to customer requirements. "Orders are very different now; we no longer export in bulk, dozens or hundreds of containers. Instead, we are focusing on producing samples to meet market demands," Mr. Manh shared.

Focus on opening new markets and increasing trade promotion.

In its 2024 plan, the wood industry aims for an export turnover of US$17.5 billion, a rather high target, especially given the escalating and unpredictable political conflict and the difficulties in both export inputs and outputs. In this context, businesses share the view that one of the most urgent tasks is to expand into new markets and diversify sales channels, both traditional and non-traditional. Therefore, trade promotion for the wood industry through participation in domestic and international trade fairs and exhibitions is essential. "Participating in trade fairs is a niche for finding customers, so even though costs may increase, businesses still participate," Mr. Hiep affirmed.

Similar to Minh Phat 2, Mr. Tran Quoc Manh advised that the export market trends for wood have changed significantly. Therefore, participating in trade promotion activities will help businesses update new trends, understand customer preferences, and develop appropriate business strategies. “Participating in trade fairs is the best way to promote a brand, especially in the current market conditions. Through these fairs, we have found customers and subsequently signed contracts,” Mr. Manh added.

Source: https://congthuong.vn/xuat-khau-go-cang-kho-cang-phai-tim-cach-thich-nghi-304614.html