HCMC – Inflation is leading to a significant fall in demand in major importing markets, including the United States, Europe and the United Kingdom, hindering the operations of wood processing businesses in Vietnam.
Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association, voiced the difficulties plaguing the wood industry during the briefing session of Q3 yesterday, July 28.
“Enterprises are facing difficulties in terms of capital, labor costs and input materials,” said Lap.
The survey by timber associations in collaboration with Forest Trends showed that 33 out of 45 enterprises exporting wood products to the United States reported their revenue dipping by nearly 40% compared to the first months of 2022.
Only ten companies saw their monthly revenues increase, but the growth rates were low, at 11%.
The trends in the European Union (EU) and the United Kingdom (UK) are on the same line.
Accordingly, 24 out of 38 businesses selling products to the EU market witnessed a 41% decrease in revenue compared to the last months, while 17 out of 25 firms participating in the survey reported a decline in their monthly revenues when trading in the UK, at more than 41%.
Nearly three fourth of enterprises agreed that purchases are likely to drop in H2. Given the slow business of the wood industry, many firms anticipated the total revenue in 2022 would decrease by about 44%.
Lap said that companies have carried out measures to deal with the ongoing challenges, including reducing the production scale, switching products and diversifying markets.
Vo Quang Ha, standing vice chairman of the Dong Nai Wood and Handicrafts Association, expected that purchases could rise when international retailers release their excess inventories.
Ha recommended banks offer favorable conditions for rescheduling debts, reducing interest rates, extending loans and providing business support packages.
The export of wood and forest products is estimated at US$10.42 billion in the first seven months, up 1.3% over the same period last year.
The United States, Japan, China, the EU, and South Korea are the top markets, accounting for US$9.38 billion, or 90% of the total export value.