Over the past decade, Vietnam has made a spectacular leap in the global furniture supply chain, becoming the world's sixth-largest producer in 2023.
This information was released by CSIL (Center for Industrial Studies), a research and consulting organization specializing in the furniture market and industry, based in Milan, Italy, at the "Furniture and Interior Design Forum" within the framework of Hawa Expo 2024 in Ho Chi Minh City.
Accordingly, Vietnam has achieved "impressive growth" in its ranking in the global furniture manufacturing industry, rising from 13th place in 2014 to 6th place last year, based on value. Currently, the top 5 largest furniture manufacturers are China, the US, Italy, Germany, and India. Of these, China and the US have maintained their top 12 positions for the past decade.
Top 10 largest furniture manufacturers in the world. Source: CSIL
Giovana Castellina, Director of Multi-Consumer Research for Furniture at CSIL, assessed the Vietnamese furniture industry as quite flexible and growing faster than other countries over the past 10 years. "Initially, it mainly supplied outdoor furniture, but now it has developed strongly in the furniture sector. For example, 25% of products are upholstered furniture, accounting for 10% of the upholstered furniture production in the Asia- Pacific region," she pointed out.
According to CSIL, Vietnam's furniture production is growing by an average of 10% annually, and its furniture exports by 11%, ranking second in Asia. "Exports are the driving force behind growth, accounting for 93% of total production," she said.
According to data from the General Department of Forestry, furniture accounted for 82.9% of the total export value of wood and wood products last year, reaching nearly $8.4 billion. Mr. Tran Quang Bao, Director of the Forestry Department, assessed that Vietnamese products are gaining the trust of international customers.
Mr. Tran Duc Hieu, Vice Chairman of Tran Duc Group, said that productivity is currently reaching 200 export containers per month. Tran Duc Homes, a member unit of this group, recently sold prefabricated wooden houses to the US. Owning two factories totaling 120,000 m2 in Binh Duong , they have just invested in the first CLT component production line in Southeast Asia, a structural floor solution that replaces traditional reinforced concrete.
A booth constructed from prefabricated wooden components displays furniture manufactured by the same company at HawaExpo 2024. Photo: Tran Duc Corp.
According to Dr. Nguyen Tuan Hung, an expert from the Forestry Department, the potential of the furniture industry is a $405 billion international market. Meanwhile, Vietnam has at least 20 years of experience and over 30 million cubic meters of raw materials harvested annually, meeting 75% of the demand. "Wood is an environmentally friendly material, renewable, and reduces emissions if harvested legally. We are promoting forest certification and planting area codes," said Dr. Hung.
In the first two months of the year, exports of wood and wood products reached US$2.4 billion, an increase of nearly 44%. The Ho Chi Minh City Handicraft and Wood Processing Association (Hawa) reported that businesses have orders booked until April and May. The situation looks brighter than in 2023, but experts believe caution is still necessary.
Mr. Nguyen Liem, Chairman of the Binh Duong Wood Processing Association (Bifa), said that the current characteristic of buyers is placing short-term orders. "Now, with inflation and high interest rates, they don't place orders for a year or six months, but for a few months, or even a month at a time. Export sales this year matching last year's are good. If conflicts decrease, we'll be fortunate to see even greater growth," Mr. Liem said. Currently, Binh Duong's wood industry accounts for over 40% of the country's annual exports.
Giovana Castellina believes it is difficult to predict global furniture purchasing power in 2024 in an uncertain and unpredictable world. "I think the market will be flat this year and grow again in 2025," she assessed.
A booth showcasing products from a Vietnamese business. Photo: HawaExpo 2024
In the long term, the Vietnamese furniture industry also faces challenges, ranging from partner structure and design capabilities to combating trade fraud.
CSIL believes that Vietnam's furniture exports are "very risky" due to their excessive focus on the US, which accounts for over 50% of annual export value. "Their consumption weakened last year due to high inflation and rising mortgage rates, for example. This year, with the presidential election, people are also holding back," Castellina assessed.
Therefore, she believes it's necessary to diversify the customer base by reaching out to Europe and expanding the trade network. Additionally, they should develop their own brand and designs to increase their price range and reach higher-end customers.
According to Dr. Nguyen Tuan Hung, the furniture industry has grown for many years, but it relies on cheap raw materials and labor, so the added value is not high. "These strengths are gradually fading," he said.
Meanwhile, the market is becoming increasingly stringent with a series of policies such as the EU's anti-deforestation law, the EU Timber Regulation (EURT), and the US Law on Illicit Timber Trade (LACY). The Carbon Border Adjustment Mechanism (CBAM) has not yet been implemented for the industry but will be in effect by 2027.
Mr. Nguyen Liem said that many Bifa businesses have actively improved their product design capabilities but are also concerned about trade fraud. The furniture industry must find ways to prove to the world that it "conducts business honestly".
"We are currently facing the challenge of trade fraud related to origin of goods. Recently, we have been working with local leaders, customs, tax authorities, and economic security agencies to combat trade fraud through origin of goods," he said.
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