According to Furniture Today, in 2020, Vietnam exported 7.4 billion USD of furniture to the United States, up 31% compared to 2019. Meanwhile, China exported 7.33 billion USD to this market in the same period, down 25% compared to 2019. Furniture Today said that although the gap is relatively small, Vietnam's position in the world market shows how the country's furniture industry has developed over the years.
In Vietnam, furniture is an industry with a long-spanning history of manufacturing and distributing. Statistics showed that in 2019, Vietnam is the number one furniture manufacturer in Southeast Asia, second in the Asia-Pacific, and fifth in the world after China, Germany, Italy, and Poland.
Statista reported that the revenue of the furniture industry in Vietnam was estimated at 478 million USD in 2019. It is predicted that from 2019 to 2023, the annual growth rate of furniture industry revenue would be at 13.5%. Accordingly, the furniture and interior products industry in Vietnam is forecasted to be having revenue of about 793 million USD in 2023.
A survey by the Vietnam E-Commerce Association (VECOM) showed that furniture ranked 8 out of the top 10 most traded items on Vietnam’s e-commerce platforms in 2019.
Based on numbers shown above, it can be seen that the potential of the furniture industry in Vietnam is abundant. Hanoi and Ho Chi Minh City are the two markets with an increasingly high demand for furniture, a demand that can be explained knowing that the real estate industry has been booming in recent years.
Experts identified that the Vietnam furniture market can be divided into normal and luxury products. Normal furniture is usually assembled by local carpenters or small companies. Luxury products, meanwhile, are most of the time imported or manufactured by large companies.
In spite of said potential, the domestic furniture market is still somewhat neglected. Most of the domestic furniture market is taken over by imported items originating from China, Malaysia, and Thailand.
Statistics pointed out that the domestic wood furniture industry only accounts for about one-third of the export turnover in Vietnam. Despite being the sixth highest exporter of wood products in the world, the domestic market with a consumption power of 90 million people is not meeting expectations.
Average GDP growth of 6% a year, the developing construction and real estate industries, the increasing income of households will help boost the spending for furniture.
Most Vietnam furniture companies are focusing on export. In the coming time, more foreign investors will step into the domestic market. International brands are planning on installing manufacturing factories in the country, others look for opportunities to expand their business when the tax barriers for furniture and home decors will be removed.
Vietnam has been coping with the new COVID-19 outbreak since late April. The four months of social distancing and lockdown in some provinces have made an impact on the furniture industry.
While Vietnam did surpass China as the largest source of U.S. furniture and wood products, recent pandemic outbreaks resulted in the lockdown of the southern region – the major furniture manufacturing region, which affects Vietnam's furniture industry. This turn of events leads to a renewed interest in China, as some furniture companies started shifting their production lines back to Vietnam’s neighboring country. Companies that remain in Vietnam are facing issues such as the difficulty of housing workers on-site, and a reduced production capability. Theodore Alexander is one of the companies finding it hard to keep up production due to pandemic prevention regulations. Ashley and Kuka are in a similar situation, and Manwah brought its Chinese factory into operation to maintain flow. Many company leaders predict that the market will not be able to recover by the end of 2021
However, experts predict that the COVID-19 may be under control by the end of this year, which will lead to a sharp increase in export turnover of wood and wood products to the EU market. The economic prosperity of EU countries will be one of the factors supporting Vietnam's exports of wood and wood products to this market.
While there exist different opinions on how the furniture market will play out, the outcome will most likely depend on the vaccination rate of Vietnam, which may loosen the strict regulations applying to all companies of different industries, furniture included.
Compiled by VietnamCredit