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Thursday, January 27, 2022

Many woodworking businesses hesitant about digital transformation

By Le Hoang

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Despite its relatively high position in the world marketplace, Vietnam’s wood processing industry hesitates to place emphasis on and commit investment in digital transformation because they think the contribution of hi-tech to their business success remains insignificant.

The above conclusion was reached at a workshop entitled “Digital Transformation in Woodworking Businesses: Reality, Preparedness and Solutions” held on December 15 by the Board of Private Economic Development Studies under the Prime Minister’s Advisory Council for Administrative Procedure Reform in cooperation with woodworking enterprise associations.

At the workshop, the report on Vietnamese woodworking businesses’ preparedness for digital transformation was released.

According to Amit Sharma, head of the research team of the report, the five key markets—encompassing the United States, Japan, China, South Korea and the European Union—will continue to be the most important importers of Vietnamese wood products. This group of nations accounted for nearly 90% of Vietnam’s wood product export sales in 2021. Forestry exports are among the few commodities which still retain their growth rates in both quantities and value despite the catastrophic consequences caused by Covid-19. However, in the long run, local woodworking businesses have to seek new ways to spur their development rate.

“The rapid spread of Covid-19 has substantially changed consumer behaviors and exerted heavier pressure on and more challenging tasks for enterprises in the field, forcing them to innovate and improve all the production phases, from design and manufacturing to marketing,” said Mr. Sharma. “Of this process, digitalization plays the pivotal role.”

Do Xuan Lap, chairman of the Vietnam Timber and Forest Product Association (Viforest), contended that the competitiveness of woodworking businesses in general remains relatively lower than that of counterparts in other industries and foreign-invested enterprises.

Mr. Lap therefore put emphasis on the managerial skills and levels of Vietnamese wood firms which he said are limited, especially when it comes to information technology application and IT in management systems.

The Viforest chairman therefore hoped that businesses in the industry will accelerate the pace of digital transformation to raise their management capacity to improve production and gain higher added value.

Nguyen Chanh Phuong, vice chairman and secretary general of the Handicraft and Wood Industry Association of HCMC (HAWA), also agreed that the digital transformation process in the wood industry has remained slow so far. It seems the majority of the businesses in the circle have just taken tentative steps, he said.

According to Mr. Phuong, Vietnam’s wood industry has secured a rather high position on the world map. However, the contribution of digital transformation and hi-tech to the results of the industry is still modest and businesses should do more to turn the table.

Some have opined that the ambiguity in the concept of digital transformation is one of the key reasons behind the slow pace of the digital transformation process. Remarkably, many woodworking businesses are hesitant about the process because of various reasons, including high costs, unclear start, and undecided short-, medium- and long-term solutions.

To begin with, a woodworking business should therefore grasp the concept of digital transformation so as to come up with appropriate options during the entire process.

In addition, participating enterprises should not expect a universal solution to that process. As one business varies from another, it needs different solutions to the problems.

As regards costs, there have been examples in which small investments resulted in great efficiency. Vice versa, big investments may not necessarily expect outcomes always fulfilling their targets.

Industry experts argued that businesses taking part in the process should identify their exact locations so as to make the right decisions on agendas and investment.

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