Vietnam has traditionally been an agrarian society, but since the turn of the century, it has been steady in its commitment to economic liberalization and industrialization. A major beneficiary of this policy is the furniture industry.
Vietnam has succeeded in leveraging its USPs, such as highly skilled labor, cultural heritage of craftsmanship, low wage structures, political stability, and advantageous geographical location to develop a strong competence in furniture making.
Over the last 20 years, Vietnam has become a world class location to set up furniture factories, and a major base for furniture exports. Furniture from Vietnam is now exported to over 120 countries. 70% of the exports are to United States, European Union States and Japan. Vietnamese furniture even makes its way to China, which is traditionally regarded as the bastion of low cost furniture.
Overview of the furniture industry in Vietnam
Vietnam is renowned for wooden furniture, which caters to both interior and outdoor needs for home and office, as well as handicrafts and wooden artifacts.
The Vietnamese furniture industry is comprised of about 2000 furniture manufacturers, and more than 2500 wood processing operations. Together, they process more than 2 million cubic meters of wood per year, and employ more than 200,000 workers. Logs and timber are actually imported into Vietnam from New Zealand, Sweden, USA, Canada and other countries, as the domestic produce is insufficient to meet the demand of the manufacturing units. Furniture in Vietnam is dependent on external supply of specific materials (types of wood) or components (hardware for assembly) in order to meet the huge demand by its furniture producers.
The units are a mix of State Owned Enterprises, Private, private enterprises, and foreign businesses, and range across small scale family owned units, local owned medium scale units, and large factories, mostly foreign owned. About 15% of all produce are exported.
Large international furniture companies that operate out of Vietnam include Metro, Ikea, Scancom, and Li & Fung. By 2005, about 60 foreign furniture manufacturing companies invested more than USD 185 million to set up operations in Vietnam.
Each region has developed its own niche:
The region around HCMC, or South Vietnam, is noted for its furniture manufacturers. About 70% of Vietnam’s 600+ large furniture manufacturers are located in this region.
North Vietnam, or the region around Ha Noi has developed a niche in hardwood furniture and handicrafts. The high quality of craftsmanship and mastery in traditional carvings make Ha Noi made art objects and handicrafts stand out.
Central Vietnam, comprising of the areas around Da Nang, Binh Dinh and the Highlands specialize in less formal hardwood furniture and art objects.
Vietnamese Furniture Industry Level Co-Ordination
The Handicraft and Wood Industry Assn. of HCMC (HAWA) brings together and coordinates the various stakeholders involved in the wood and furniture industry in Vietnam.
HAWA’s Vietnam International Furniture and Home Accessories Fair, first organized in 2008, and since then an annual event, showcases Vietnamese furniture to the global market and also offers a convenient B2B business platform.
The annual HCMC International Furniture and Handicrafts Fair, the largest international furniture and handicrafts trade exhibition in Vietnam also offers a sourcing and B2B interaction platform.
The establishment of TUVRheinland LGA furniture testing laboratory in 2007 removed a serious handicap in that the country now has the facility to test furniture for international standards and approvals.
The furniture industry in Vietnam is going strong, and contributes significantly to the country's GDP.