Vietnam furniture makers utilize sustainable timber resources

Wooden furniture suppliers use timber from plantations with Forest Stewardship Council certifications, especially for exports to the US and the EU.

February 27, 2017

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Wooden furniture suppliers use timber from plantations with Forest Stewardship Council certifications, especially for exports to the US and the EU.

Vietnam wooden furniture

Vietnam makers of bedroom, kitchen, dining, living room and outdoor furniture use different types of wood. (L-R: Nesting table set from Truong Thanh Furniture Corp., bed from Anh Quoc Co. Ltd, garden furniture from Nguyen Hoang Co. Ltd and dining furniture from Bao Hung Co. Ltd)

Wooden furniture suppliers in Vietnam are enhancing their capability to provide competitively priced models made from sustainable timber resources. Prompting this action is that, apart from rising environmental awareness among consumers, several markets have regulations restricting the sale of illegal wood products.

Many suppliers are using timber that comes from plantations or suppliers with the Forest Stewardship Council (FSC) Forest Management (FM) or Chain of Custody (CoC) certifications. Additionally, several companies have obtained CoC certifications for their products to show that they support responsible forest management.

Vietnam has more than 200,000 hectares of FSC-certified area, according to information posted on the FSC website. Among those with combined Forest Management and Chain of Custody certification (FM/CoC) is the Quang Tri Smallholder Forest Certification Group in central Vietnam, which includes 517 smallholders and covers about 1,393 hectares of acacia plantations.

Domestic supply, however, falls short of demand. Consequently, for most furniture manufacturers, adopting timber from FSC-certified forests means importing wood from Malaysia, the US, New Zealand and South America because domestic supply is limited. Using certified wood, whether this is domestically sourced or imported, also means an additional expense since the FSC-certified wood costs more than non-certified versions.

FOREXCO, which is located in Quang Nam province, is among the wooden furniture suppliers with FSC CoC certification. Another is Dai Thanh Furniture JSC, which is located in Binh Dinh province.

Furniture manufacturers targeting the US and the EU are using FSC-certified lumber as part of efforts to meet the requirements of the revised Lacey Act and the EU Timber Regulation (EUTR). Both regulations prohibit the trade of illegally harvested plant and wood, as well as products derived from such materials.

In November 2016, Vietnam and the EU reached an agreement in principle on the contents of the Forest Law Enforcement Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA). Under the terms of the VPA, which is expected to be ratified in 2017, Vietnam will develop a timber legality assurance system and other reforms, including issuing specific legislation to ensurethe legality of timber it imports for further processing. The agreement is expected to boost confidence in the legality of timber products exported by Vietnam and promote trade, according to a news release.

Timber products included in the scope of the VPA encompasses all major products exported to the EU, particularly the five compulsory timber products as defined in the FLEGT Regulation of 2005, namely logs, sawn timber, railway sleepers, plywood and veneer. Covered products also include wood in chips or particles, parquet flooring, particle board and wooden furniture.

Competitive advantages

Vietnam’s wooden furniture makers benefit from having access to a large labor force. In 2015, about 70 percent of the country’s total population of more than 90 million were of working age, or between 15 and 64 years old, according to data on the World Bank’s website.

The country also has lower wages compared with China and several other countries in Asia. Starting January, minimum wages in Vietnam ranged from approximately $116 to $165 per month, depending on the area. These are only about 50 percent of the monthly rate in Shanghai.

In terms of skills, the country has more than 300 wooden craft villages from which furniture makers can hire carpenters, carvers, painters and other artisans. Many of these villages are located in the Red River Delta region.

Furniture makers also ensure that regular employees have the necessary skills by providing training in woodworking and other skills. Some suppliers are conducting trainings FSC principles and requirements.

Vietnam’s furniture industry is also gaining strength from the various free trade agreements (FTAs) that will facilitate the importing of raw materials and exporting of wooden products overseas. One that recently came into force is the Viet Nam-Eurasian Economic Union FTA, which took effect in 2016. The Vietnam-EU FTA, negotiations for which have concluded, is expected to enter into force in 2018.

Organizations such as the Handicraft and Wood Industry Association (HAWA) and the Vietnam Chamber of Commerce and Industry (VCCI) also have several initiatives that support the wooden furniture industry.

HAWA organizes training sessions to improve suppliers’ design capability and knowledge. It also holds competitions on furniture design to discover young designers and connect them with furniture manufacturers.

VCCI also conducts seminars and workshops on various topics, including business opportunities and financial tools and techniques.

NEPCon, a Danish-registered nonprofit organization, and the Research Institute for Sustainable Forest Management and Forest Certification (SFMI), a Vietnam-based nongovernment organization, has an ongoing project that aims to equip SMEs in Vietnam with the know-how for satisfying FLEGT requirements and EUTR-related buyer demands. The project is funded by the European Commission.

This article and its contents are provided by the Hinrich Foundation, a partner of Global Sources in promoting trade across Asia. The products and the suppliers featured in this article are export assistance program beneficiaries of the Hinrich Foundation.

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