Vietnamese enterprises are optimistic about their exports to the US market recovering in the latter half of 2023. Despite facing challenges, such as inflation in the United States, exports of timber and wood products from Vietnam to the US market are estimated to reach over USD 7.8 billion by the end of November 2022, representing a 3% increase over the same period in 2021. However, the third quarter of 2022 saw a significant decrease in exports to the US market, particularly in the export of wooden furniture. This decrease in demand was attributed to the higher home loan interest rates in the United States, causing a reduction in real estate investment and consumer spending on non-essential goods like wooden furniture.
Mr. Nguyen Liem from the Binh Duong Furniture Association shared that the high living cost has resulted in US consumers focusing their spending on essential goods rather than non-essential items like furniture. Mr. Nguyen Sy Hoe, Deputy General Director of Phu Tai Joint Stock Company, noted that most wood industry enterprises experienced a decline in exports in the latter half of 2022 due to high inventory levels and reduced demand, particularly for outdoor furniture goods. The increase in logistics costs and shipping delays at the beginning of 2021 resulted in many buyers deferring their imports to the end of 2021 and early 2022. However, the conflict between Russia and Ukraine in April 2022 led to a sharp increase in oil prices and inflation, leading to a reduction in consumer spending and a further buildup of inventories.
RECOVERY WILL COME
The question is whether the export of wooden furniture, particularly kitchen cabinets and bathroom vanities, to the US market will return to its pre-Covid-19 golden age. According to Mr. Nguyen Sy Hoe, this is unlikely to happen because the US construction industry experienced a delay in the first year of the pandemic, leading to a surge in demand for construction and furniture in 2021 and early 2022. However, since mid-2022, inflation has caused construction costs to increase, prompting Americans to limit construction due to low profit, high bank interest rates, and loan limitations. Consequently, the demand for furniture has decreased, causing a decline in wood industry exports to the US market.
Nonetheless, Mr. Nguyen Sy Hoe remains hopeful that the export of wooden furniture will improve by the end of 2023. Despite the current economic crisis, the US furniture market remains a potential market, and Vietnamese enterprises can capitalize on this opportunity due to the availability of local raw materials and flexible workers. While the low-priced segment of bathroom vanities and kitchen cabinets may experience a decline in sales, the high-priced segments are still selling relatively well.
Mr. Nguyen Do Anh Tuan, Director of the International Cooperation Department under the Ministry of Agriculture and Rural Development, believes that the wood industry has made significant progress and diversified its products, leading to rapid export growth. Although the US market has experienced a short-term decline in the consumption of wooden furniture, Vietnamese wooden furniture has competitive prices and designs suitable for American consumers. Therefore, the US market remains a promising opportunity for Vietnam’s furniture products in the long term. To prepare for future export market cycles, Mr. Nguyen Do Anh Tuan recommends that enterprises develop a methodical plan with timely solutions and steps.