MR NGUYEN QUOC KHANH SHARED ABOUT “NEW CHALLENGES FOR VIETNAMESE WOOD INDUSTRY”
Mr Nguyen Quoc Khanh, Chairman of AA Corporation and HAWA Corporation shared a few thoughts about the Vietnam wood industry facing new challenges as well as new opportunities.
The Vietnam wood and furniture industry is targeting to achieve turnover of 20 billion USD by 2025. Considering the global business difficulties because of Covid-19 pandemic, the China – United States trade war, the Vietnam wood and furniture have gained a lot of advantages. This is one of the few industries that has been growing steadily over the last 18 years, unaffected by any economic crisis and even experienced strong growth in 2019 and 2020.
Vietnam is a rising star in wood exports, emerging rapidly as a major player in the international wood market, fourth worldwide and second in Asia. However, in order to reach 20 billion USD turnover by 2025 is not an easy target. First of all, we need to increase the amount of high quality products that meets international standards. Second of all, European consumers and businesses have a growing demand for products with transparent production and origins, using sustainable materials. Third of all is the next generation, the question is whether the wood and furniture industry is attractive enough for the younger generation of businesses to invest and continue. The majority of young startups are investing in IT, F&B, services, meanwhile not many companies invest in manufacturing. The next difficulty is the increase of labor salary and the slow transition of high-end technology, it is difficult to maintain a low cost. Investing in technology will not only improve production, but also increase revenue and quality.
Lastly, we need to change the way we export wood products. Currently, Vietnam mainly exports raw materials, harvesting young forests. We need to grow timber for at least 7-8 years in order to have good materials for the furniture industry, thus increases export values.
Vietnam is entirely capable of creating high quality, high valued furniture products. Even though we do not have any mega manufacturer, but we have enough mid-size and small manufacturers who are highly flexible, highly creative. Vietnam manufacturers can produce ODM products successfully. The important factor here is that businesses need to do more research, expand their product range, quickly adapt to new trends globally. Many companies such as Minh Tue, Tan Thanh, Truong Thanh, AA Corporation…. have their own ODM research team. AA Corporation recently launched George Bensley Collection, a new brand that represents the exquisite Vietnamese handcrafts and phenomenal designs.
Talking about the balance between imported furniture and made-in-vietnam products, Mr Khanh mentioned that the domestic supply is currently low. The demand is so great, people pay more attention in decorating their homes, spending more on higher quality furniture and accessories. Our challenge is that we do not have a strong distributor. Because only a strong distributor can place big orders, which means the manufacturer can lower production costs, which leads to better retail prices.
On the other hands, our society sees grade A wood as a symbol of luxury lifestyle, meanwhile the world is against using these type of timbers. We need to change our mindset toward the use of wood materials, protecting old forest and only use sustainable timber. Fortunately, the younger generation pays a lot of attention to protecting the environment, they demand the use of sustainable materials and safe chemicals.
How to preserve and propagate the Vietnam traditional carpentry into architecture and interior? According to Mr Khanh, the Vietnam architecture is a great mixture of many cultures. We have 54 ethnic groups with unique motifs, unique designs and traditions. The designer can mix a little bit of H’Mong or Champa details into the design, or the Indochine style which is a French design with a tropical touch. All of those can be called Vietnamese resources, so Vietnamese designers can use to create their own products.
Annually, HAWA hosts the Hoa Mai competition for all university students as well as designers to submit their furniture creativities. We also offer Hoa Sen competition for sustainable timber and craft products. The great new is, nowadays, more and more money is being invested into the furniture industry, we see more and more talented designers.
One of the most important factors of furniture is comfort and convenience. A set of dining table and chairs must be at the right height, a sofa must be comfy, and nice. Beauty is in the eye of the beholder. The furniture designer and manufacturer must know how to balance beauty and comfort, meanwhile creating trends and knowing exactly what their customers want.
The increasing urban population means the increasing demands for apartment designs, furniture designs. Customers have different demands for furniture, but the majority would like their furniture to be more simple, multi-functional but also pretty. AA Corporation will soon launched a new brand of kitchen and storage, expecting to lead the industry by offering more than just a standard kitchen.
Talking about the Covid-19 pandemic, Mr Khanh shared AA Corporation’s experience dealing with the challenges. AA decided to move all factories to Tay Ninh, planning more ODM productions, getting new customers who are big furniture brands in the world. Our strategy is to use 40% of production capability for projects, 60% for OEM and OSM, also turning Nha Xinh into one of Vietnam’s largest furniture brands. On the other hands, AA Corporation restructure the company, rethink strategy and make greater plans for the future.