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Why Vietnam’s furniture industry is looking towards traceable timber
As global demand for furniture picks up, Vietnamese furniture producers have been urged to take advantage of new market trends, especially increasing calls for traceable timber.
Nguyen Quoc Khanh, chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), urged businesses to re-evaluate their product lines. In key markets such as the US and EU, sales of new homes have started to rise after a consumer lull – signaling new demand for both interior and garden furniture.
Vietnam is currently the world’s number one furniture exporter to the US – having continually battled with China for the spot since 2021. It hopes to be one of the prime beneficiaries of the upsurge in demand.
Over the first six months of 2023, low consumer confidence in export markets saw orders at Vietnam’s timber processing companies fall by an average of 30%. The country’s extensive forests and lower timber prices compared to China have been one of the key factors behind its growth as a major furniture producer.
Tran Lam Son, VP of furniture exporter Thien Minh Trade Co, told the Vietnam Investment Review (VIR), “In the US, our associates have depleted their stocks as consumers are resuming their shopping habits.” Son added that canceled orders and lack of new orders had seen delivery times drop to 45–60 from 70–90 days. He said that US buyers typically purchase goods costing between $300 and $750.
Consumers are increasingly seeking entirely traceable timber. Last year, the Vietnamese government said it was providing subsidies to foreign owners to increase the coverage of forests certified by traceability NGOs like the Forest Stewardship Council.
Vietnam is also looking to develop a data system to ensure better timber traceability throughout the supply chain.
It is also looking to increase domestic timber supplies for the industry — which currently accounts for around 77% of total timber used in Vietnamese furniture production.
Vietnamese forests tend to have a timber productivity of around half the worldwide average, leading the government to call for more investments in forest plantations to increase output.
Margins and product choices become key for Asia’s garment manufacturers
Asia has become the go-to destination for the world’s apparel buyers. Yet, the region’s garment factories have been warned they need to consider new fashions and modernize operations or risk decline.
The region’s apparel factories are seeing their margins squeezed between two global economic trends, according to a recent McKinsey report. One is the decline in orders as Western buyers face a downturn in consumer spending. Another is high volatility in costs of raw materials and other supply chain inputs. Cotton prices increased 30 percent between January and May 2022, with the commodity accounting for around 40 to 50 percent of a manufacturer’s raw material cost. They later started to drop in the second half of 2022.
The report says brands should diversify their product ranges to reflect “gender-fluid fashion, formal wear, and occasion wear,” which “are probably going to take on new definitions.”
“In addition to the above interventions, manufacturers need to make strategic shifts toward higher margin products to be less vulnerable to being replaced by fashion brands when volumes open up,” the report said.
It also warns the region’s apparel factories – mainly in countries like India, Vietnam, and Bangladesh – to embrace new management strategies and technologies to optimize operations wherever possible.
“The time is ripe to prioritize needle-moving initiatives that leverage digital, analytics, and process excellence to drive productivity and strategic benefits with core customers,” said the report.
Consultants said that as the apparel industry accounts for 10 percent of global greenhouse gas emissions and less than 1 percent of clothing is recycled currently, increasing sustainability within the industry is an urgent priority. Reduced volumes from Europe and the US led to significant manufacturing units across Bangladesh, India, and Sri Lanka running at 60 to 70 percent utilization and accepting orders at near-zero margins to keep production lines running.
World’s largest trade fair makes post-pandemic return
SMBs can expect to rub shoulders with buyers from major corporations as Shanghai gears up for the full return of the world’s largest trade fair. Organizers are anticipating record turnout from big corporations and a record floor space for the China International Import Expo (CIIE), South China Morning Post reported. The CIIE is due to make its full post-pandemic return between November 5 and 10 after the strict travel restrictions that have affected the event during and immediately after the Covid-19 pandemic were lifted.
“It will be a free and open CIIE, different from the previous three events,” Chen Xiao, chief executive of Shanghai Yacheng Culture, a marketing and branding company, was quoted as saying in the SCMP.
“Domestic consumption appears to be weak, but high-quality food and clothing products are still going to draw many middle-class consumers.”
Twenty new Fortune 500 companies are expected to attend – with the total number of major companies already exceeding last year’s record of 284 and still growing. Booths are set to cover over 360,000 square meters, encompassing six exhibition zones, including food and agricultural produce, automobiles, consumer goods, and services trade. China’s Global Times said 15 global automakers, three mining giants, ten large industrial electric appliances firms, ten renowned medical equipment enterprises, and the big four accounting and auditing firms had confirmed attendance.
According to organizers, the CIIE has seen transaction volumes of nearly $350 billion during the past five years.
Organizers have held several “matchmaking” events in the run-up to the event to bring buyers and exhibitors together.
A pre-expo matchmaking session was held for CIIE participants in the intelligent industry, information technology, and the automobile sector. A recent event for exhibitors and buyers in the technical equipment and automotive showcased areas such as digital industrial automation, energy efficiency, low-carbon and environmental technologies, integrated circuits, and metal processing.
Kaohsiung opens an efficiency-boosting automated terminal
Buyers importing from Taiwan can expect improved efficiency in handling ocean freight after the island state opened its first fully automated container terminal, SeaTrade Maritime News reported.
The terminal has been officially inaugurated at Kaohsiung – Taiwan’s largest port. The terminal has a depth of 18 meters and a combined length of 2,415 meters, five deep-water container berths, and can accommodate up to four 24,000 TEU super-large containerships and two feeder vessels at once.
It is equipped with state-of-the-art port technology, including Ship-to-Shore (STS) gantry cranes, Automated Rail-Mounted Gantry Cranes (ARMGC), reachstackers, and side loaders.
Nineteen of the 24 STS gantry cranes are remote-controlled to facilitate handling mega containerships. Berth S5, S4, and S3B have just commenced operations, while Berth S1, S2, and S3A are due to launch operations in July 2024. The terminal’s 149-hectare yard can hold 89,238 TEU of laden containers and 43,656 TEU of empty containers.
The port hit the headlines a month ago when more than 600 containers fell into the sea after the Palau-flagged Angel capsized and sank in its waters.
The captain of the Angel had earlier alerted port authorities that his vessel was suffering water and listing to port. It finally capsized, leading to the evacuation of the 19-strong crew via lifeboats. The large number of containers in the water temporarily hindered port operations.
In the 1980s, Kaohsiung was ranked as the world’s third busiest container port but fell to 17th place in 2016 before recovering to 15th by 2022.
Why the Philippines is turning to bamboo for an export boost
Many Asian countries such as China and Vietnam have built sizeable export industries out of handcrafts and furniture made from abundant local materials like bamboo – and now the Philippines is looking to follow suit.
The country’s Department of Science and Technology’s Forest Products Research and Development Institute (DOST-FPRDI) is helping furniture manufacturers develop new and highly marketable products from widely available materials, the Philippine News Agency (PNA) reported.
Margie Dizon, officer-in-charge of FPRDI’s Training and Manpower Development Services Section, told the publication that FRDI is hosting workshops to teach entrepreneurs how to turn hardwood and other forest-sourced materials into high-value finished goods that can potentially be exported.
“We want to utilize what others think as merely agricultural or production wastes which can still be made useful and have an increased value,” she told PNA.
“We expect our participants, especially those from the (forest products) industry to produce it at home for livelihood or try it in their own products,” she added. Dizon believes wood manufacturers will be able to expand product lines and boost exports.
Among the free workshops are training on bamboo-craft-making, lumber kiln-drying techniques, dyeing, and bleaching of non-wood forest products. “We also have many clients, especially in technology like kiln drying, who want their materials to be export quality. We have standards that must be complied with; hence, they request training from our office,” said Dizon.
Rene Madarang, executive director of the Philippine Bamboo Industry Development Council (PBIDC), added: “There is a market for bamboo during any point during its lifecycle, from propagules to the time it is made into engineered bamboo products.”
The Philippines has an ideal climate for bamboo farming due to its abundant rainfall and rich soil. But it lags behind the world’s major bamboo exporters, China and Vietnam.
Fast-growing bamboo has also been dubbed a weapon in the fight against climate change as it produces more oxygen than most trees.
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