Vietnam government leaving hands off
By Powell Slaughter -- Furniture Today, August 9, 2004
Ho Chi Minh City, Vietnam — Ho Chi Minh City, Vietnam— While the Vietnamese government looks to furniture as an important part of the nation's export-oriented economy, it hopes a hands-off approach to the industry will avoid future trade problems.
"We worry that in the future our furniture industry could share the fate of our catfish industry in the U.S. market," said Mai Van Dau, vice minister of Vietnam's Ministry of Trade.
He referred to a U.S. government ruling last month that imposed preliminary antidumping duties on catfish from Vietnam. That caused concerns that are hampering the willingness to invest in plants, Dau said.
All eyes here are on the antidumping investigation of Chinese wood bedroom furniture. As a non-market economy, Vietnam would face the same set of rules as China in such an investigation should one arise.
So while the government offers incentives for plant expansion and capital investments — just like U.S. states and cities seeking to create jobs — Dau emphasized that Vietnam will not directly subsidize its furniture makers, who will sink or swim on their own.
"The government of Vietnam has no means of financial support or subsidy of the furniture industry," he said. "What we are doing is trying to create an environment for success — forestation and harvesting programs, making it easier to get raw materials, and trade missions to provide market research."
The Ministry of Trade will organize missions to the United States to research not only of the market but also the availability of raw materials for Vietnam's furniture plants. Many manufacturers here are seeking to work with U.S. hardwoods to increase their goods' appeal in North American markets.
Coming again to High Point
The missions will include a presentation by Vietnamese manufacturers at the April 2005 High Point market, with a larger range of product than was shown at the exhibit the Ministry of Trade and its consultant Exsero Group organized at last April's show.
Vietnam exported $560 million in wood furniture last year, $167 million of it to the United States. The export total is expected to reach $800 million this year.
Vietnam's shipments to the United States more than doubled last year from the 2002 amount, but were still less than 3% of the amount shipped to America from China.
"In recent years, Vietnamese companies have invested in technology to better equip plants for wood processing, but their investment so far has been small compared to other countries," Dau said. "We're trying to make it easier for them to invest in the capability to service large orders.
"The furniture manufacturing capacity of Vietnam, compared with Western demands, is still very small," he said.
Several factors work in Vietnam's favor, however.
"Furniture is one of our traditional industries, and we have a tradition of craftsmen skilled in producing wood products," Dau said. "Vietnamese workers are very hardworking and the labor cost is very low."
Such inherent traits should keep the industry growing he said.
"The biggest obstacle we face is wood material," said Dau. "In order to protect our environment, Vietnam has abandoned the exploitation of its natural forests. We have a wood-harvesting quota of 50,000 cubic meters a year. The rest is harvested from planted forests or imported from Asia, Europe and the Americas."
While that can pose a challenge, it does encourage the use of hardwoods popular among American consumers, he said.
Technical expertise in wood processing is another area that needs work.
"In the past few years, we've tried to train more wood-industry technicians, but it hasn't kept up with the demand created by furniture industry expansion," Dau said.
Moving ahead, Vietnam plans to replicate the clustered furniture factory development around Ho Chi Minh City in other parts of the country.
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