Handicrafts are identified as one of the product groups with great export potential and high-profit margin that Vietnam needs to boost in the future.

Bamboo products are sold at a trade fair in Hanoi.

According to the Vietnam Handicraft Exporters Association (VHEA), demand for handicrafts in the world is huge with a market value of up to US$100 billion but Vietnam has yet to tap into this opportunity to develop this industry and boost exports.

Data from the Ministry of Industry and Trade revealed export turnover of Vietnam’s handicraft products grew by an average of around 10% per year in the past five years, from US$1.62 billion in 2015 to US$2.23 billion last year.

Vietnam’s handicraft products include five groups such as bags, purses, suitcases, hats and umbrellas; toys, sports equipment and parts; ceramics; rattan, bamboo, sedge products; and art wood products. In addition, many fashion items and gifts have been on-spot exporting through sales to foreign visitors in Vietnam which currently account for about 15% of their spending (US$15/person).

Many products are highly valued by foreign markets including ceramic, rattan and bamboo products, handmade embroidery and textile products. These are also items with the highest export turnover of several hundred million of US dollar each year.

The handicraft industry has a higher profit margin of between five and 10 times compared to several industries such as mining, creating thousands of jobs and helping restructure rural labour from low-income agricultural jobs to higher-income workers.

Despite the COVID-19 pandemic, Vietnam’s export of handmade products maintained positive growth. Shipments of rattan, bamboo, sedge products rose 25% year-on-year to reach US$542 million in the last 11 months. Export of ceramics also increased by 7% to US$517 million.

The US is still the largest consumption market for Vietnamese handicraft products with sales accounting for 35% of annual export turnover. Japan, the European Union, Australia and the Republic of Korea are also among the country’s key exporting markets.

Need for a national exporting strategy

Vietnam’s handicraft export is forecast to grow more than 12% per year with turnover reaching US$5 billion by 2025.

Greater opportunities are also opening up from the important free trade deals that the country has joined or signed recently such as CPTPP and EU-Vietnam Free Trade Agreement (EVFTA). In addition, Vietnam is emerging as a safe destination after the Government has successfully controlled the disease.

However, despite huge potential, the domestic handicraft industry still faces many problems, including fragmented production, a weak link between actors in the value chain, limited technology and poor innovative design idea and new product development.

According to Filip Graovac, deputy chief representative of Asia Fund in Vietnam, Vietnam has great potential to export handicrafts and agricultural products but the key issue is how Vietnamese handicraft manufacturers present their good products and prove they are responsible manufacturers to foreign customers.

Consumers are increasingly concerned about environmental and social issues, especially issues related to the origin and legality of raw materials used, labour practices, clean and green production and fair trade market.

Graovac said Vietnamese enterprises had not applied well the traceability of their goods.

Le Ba Ngoc, Vice Chairman of the Vietnam Handicraft Exporters Association, admitted traceability was one challenge to the growth of the industry. He recommended local businesses learn more about the basic business and market requirements, including traceability.

To reach the world further, Ngoc said the handicraft industry needed to build the export strategy for the next five years.

The Ministry of Industry and Trade said in the future, it would focus on improving the value chain of Vietnam's handicrafts, prioritising the products with high competitive advantages, increasing product value and standards to meet different market segments, especially middle and high-end market segments.