Outlook for wood products exports to UK remains optimistic

04/10/2023    26

Wood and wood product exports to the UK, as well as other major export markets, are expected to recover this year after a significant drop, industry experts have predicted.

Ngô Sỹ Hoài, vice chairman of the Vietnam Timber and Forest Products Association, said exports to the UK were worth US$124 million in the first eight months, a year-on-year decrease of 26.5 per cent.

Việt Nam also earned $28 million from the export of non-timber forest products (rattan, bamboo, rush, carpet, etc.) to the UK in the first eight months, a 3.6 per cent year-on-year decrease.

Exports of wood and non-timber forest products to the UK were worth a total of $152 million, he said.

The UK is among the crucial export markets for Vietnamese wood products and serves as their gateway to Europe. Vietnamese woodworking firms have shown great interest in this market.

The export of wood and wood products to the UK is relatively stable and substantial, usually accounting for a third of the total exports to the EU, Hoài said.

“Currently, there are challenges in the global market, with exports to many markets decreasing.

“However, firms should steadfastly continue promoting exports to the UK. Hopefully, these challenges are temporary.

“In the long run, the UK remains a key market for interior and exterior furniture, especially those with high added value.”

The UK-Việt Nam Free Trade Agreement signed in May 2021 is an important continuation of trade facilitation between the two countries after the UK exited the EU.

Tariffs for bilateral trade are replicated from the EU-Vietnam Free Trade Agreement.

The agreement has enhanced opportunities to export Vietnamese products through the increased access to the UK market.

Therefore, there are no policy difficulties when exporting to the UK.

Currently, Vietnamese firms can only export outdoor furniture and handicrafts to the EU, mainly Germany, the Netherlands and Belgium, but can sell a lot of interior furniture to the UK, said Nguyễn Chánh Phương, deputy chairman of the Handicrafts and Wood Industry Association of HCM City (HAWA).

“British and American tastes are similar and they do not have too many requirements in terms of quality or style unlike Europeans,” he added.

But Hoài and Phương shared the opinion that the UK has introduced new initiatives and regulations related to green production and sustainable development to minimise the impacts of climate change, reduce greenhouse gas emissions, curb deforestation, and preserve biodiversity.

This presents challenges for Vietnamese exporters, but businesses must strive to comply with its regulations, they said.

Hoài said: “This is a market with quite strict regulations. However, firms that successfully enter the market can demonstrate their ability to expand their products to other demanding markets since they satisfy strict requirements in terms of the environment, ensuring a legal timber source and sustainable forest management.

“Despite current difficulties, firms should strive to maintain trade ties in the wood sector with the UK market; exports to the market will definitely grow again,” he added.

Eight-month exports

HAWA Deputy Chairman Phương said total wood and wood product exports declined by nearly 26 per cent in the first eight months of the year to $8.3 billion, with exports to key markets such as the US, EU, and UK experiencing significant drops.

The decrease was primarily driven by high inventories and weak demand due to high inflation, prompting consumers to reduce consumption of non-essential goods, including wood and wood products.

However, since May there have been signs of recovery, with exports averaging over $1.2 billion per month, he said.

“From May until now Vietnamese businesses have also imported large volumes of timber, with the average imports increasing by 5-10 per cent a month.

“This indicates that woodworking firms are actively preparing for year-end orders."

Huỳnh Quang Thanh, CEO of Hiệp Long Fine Furniture Company, said buyers in many markets had "over-ordered" products last year in response to supply-chain issues and shortages, leading to the high inventories.

Statistics from international organisations show global inventories have significantly reduced, and buyers in many markets have resumed ordering since July, he said.

“The number of orders is expected to surge from October to pre-pandemic levels.”

His company has secured enough orders to retain all of its workers until the end of the year, he said.

He added that his company’s key markets include the US, EU, northern Europe, and the Middle East.

Lê Xuân Tân, managing director of Happy Furniture, which exports indoor and outdoor furniture to major markets such as the US, EU, and Australia (with exports to the UK accounting for 15 per cent of its total exports), said demand for furniture typically picks up in the fourth quarter every year as people prepare for the year-end holiday season.

Buyers now tend to order smaller volumes than before, and delivery times are shorter, and so firms need to prepare raw materials, personnel and production facilities well to meet buyers’ demands, he said.

Source: Việt Nam News