Binh Duong is the leading locality in the country in exporting wood and wood products, accounting for more than 55% of the country's export turnover. However, to make good use of these advantages and improve competitiveness when exporting to difficult markets, it requires firmsto make efforts to renovate and restructure the management system towards the application of 4.0 technologies, upgrading the global value chain.

Plywood production activities of Hoang Thong Wood Company Limited (Binh Duong).
Photo: T.D

Export growth is impressive

According to the Binh Duong Wood Processing Association (BIFA), the wood product processing and manufacturing industry of Binh Duong accounts for the largest export turnover value of Vietnam’s wood industry. The province currently has 1,600 enterprises operating in the wood industry (40% of the country's timber enterprises). Since the beginning of the year, the Covid-19 pandemic has significantly affected the production and export of timber, but businesses have still made great efforts to maintain growth. Export turnover of wood products of the province in ninemonths of 2020 is estimated at nearly 3.7 billion USD, up 12.5% ​​over the same period, accounting for 19% of provincial export turnover. The main export markets are the US, accounting for 45.4% of the total, up 24.2% over the same period; while the Hong Kong market accounted for 10.6%, up 14.7%; Taiwan accounted for 10.5%, up 16.5%; Japan accounted for 5.7%, up 14%; and Macau accounted for 2.2%, up 5%.

The wood industry in the province is promoting the restructuring of production, the management system to welcome opportunities from the market. DienQuangHiep, Chairman of BIFA said the wood processing and manufacturing industry in Vietnam in general and Binh Duong province in particular have many opportunities. In particular, from August 1, 2020, the EVFTA officially came into effect; the Vietnamese wood industry expects that the EVFTA will help the industry expand the market for wood products in the EU.

The EVFTA for the wood industry will be a long-term problem such as accessing modern EU machinery and technology, simplifying customs procedures, trade defence, institutional reform, and strengthening the grassroots enforcement of intellectual property, products with clear origin, transparent and environmentally friendly information, towards sustainable development. Anoteworthy point in the wood and wood products industry is that on September 1, the Prime Minister issued Decree No. 102/2020/ND-CP on ensuring the legal timber system in Vietnam. This is the basis to increase the assurance of the legality of timber and timber products in Vietnam. This regulation will make Vietnamese wooden products more competitive when exporting to difficult markets.

Try to conquer the world market

In addition to achievements, the wood processing and wood product manufacturing industry in Binh Duong still faces many difficulties in raw materials, supporting industries serving the wood processing industry and manufacturing have not yet developed. Most firms are small and medium-sized; the technology level of most enterprises is medium. The number of technology transfer contracts from domestic and foreign suppliers to enterprises is very low. In particular, compliance with strict commitments from EVFTA is a huge "burden" on trade, technical barriers, rules of origin, environment and labour.

To take advantage of opportunities for development and improve competitiveness, timber enterprises need to link together, together upgrade the value chain of the industry, and improve competitiveness to join the supply chain. Besides, along with efforts to restore production, restructure the system in the direction of promoting the application of 4.0 technologies in production and management, Binh Duong’s wood industry is planning sustainable strategies to develop the market.

DienQuangHiep, Chairman of BIFA said that, with the trend of e-commerce, the business community of Binh Duong wood industry is being delayed 1-2 years later than other countries. Reducing the number of direct stores, increasing the number of online stores, participating in e-commerce networks will be an inevitable trend for businesses. This currently accounts for more than half of the orders of wood enterprises in the province.

PhanTheHai, Director of TrieuPhuLoc Company, said that Europe is a potential market, with economic stability, bringing high value to product lines but having very strict standards. To prepare for this market, in early 2020, TrieuPhuLoc Company built a factory with 60% of goods exported to Europe. The company's goal by 2021 will meet 80% of capacity to serve the EU market.

According to PhanThanhVung, Director of Viet Au Company, the good signal is that when the pandemic has relieved stress, some traditional customers have returned with some new customers from Europe. Currently, businesses have proactively sourced raw materials and labour to take advantage of cooperation opportunities when the EVFTA takes effect.