Speaking at the seminar “Solutions to Consolidate and Develop the Domestic Market” hosted by the Foreign Investment Business Association (VAFIE) on April 25, Ngo Sy Hoai, Vice President and General Secretary of the Vietnam Timber and Forest Product Association, shared that during the COVID-19 pandemic and amid current trade tensions, many timber businesses considered the domestic market as a “lifeline,” compensating for profits from exports to the US market.
However, the Vietnam Timber and Forest Product Association representative assessed that while it is a necessary solution to support businesses, the domestic market is still small in scale and does not have enough profit potential to make up for the entire Vietnamese timber industry’s exports.
According to the timber industry’s estimates, the domestic market currently has a scale of 5 billion USD. In the next five years, the market could potentially double to 10 billion USD. In contrast, in 2024, the export turnover of timber and timber products reached 16.25 billion USD, with the US market accounting for 56%.
“We are not neglecting the domestic market, but it is because this market is small in scale. Additionally, unlike American customers who use products uniformly, Vietnamese people prefer ‘tailor-made’ products and are not fond of buying ready-made items,” said Mr. Hoai, describing the reality.
Nevertheless, out of 340 timber craft villages in rural areas, many have started bidding to supply wooden furniture for apartment projects in cities.
Mr. Hoai assessed that businesses that both export and tap into the domestic market could survive through such earthquakes. However, most timber businesses export modules to the US in large containers.
Therefore, Mr. Hoai hopes for accelerated trade negotiations with the US to reach a suitable trade agreement, helping timber businesses operate with peace of mind.
“Currently, timber businesses are looking forward to the trade negotiations between Vietnam and the US and also hoping for leniency from the US administration. We see ourselves as a mountain-climbing team that sometimes needs to stop and look back to reposition and find the way forward,” he said at the seminar.
Not only Vietnamese timber businesses depend on the US market, but conversely, nearly 40% of furniture that the US imports from global sources comes from Vietnam. Most of the furniture in American real estate properties valued at $200,000–500,000 comes from Vietnam.
Also, at the seminar, Le Duc Khanh, Director of Analysis at VPS Securities Joint Stock Company, said that domestic enterprises need to pay more attention to meeting the ambitions of expanding production and business, thinking about the story of equitization and listing, strengthening investor relations, and focusing on enhancing their brand image.
“In the process of e-commerce, it is necessary to attract strong brands of Vietnam to attract consumers’ attention, enhance consumption potential. Enterprises also need to focus on customers and enhance their experience, then consumption of enterprise products will be better, helping enterprises have a place in the domestic market,” Mr. Khanh proposed.
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