The widespread coronavirus pandemic has resulted in a serious disruption of the supply chains. Besides difficulties in the source of raw materials and export, Vietnam’s wood industry also faces double trouble – the possibility of being imposed anti-dumping tariffs on wood products exported to the US and South Korea.
According to Mr. Ngo Sy Hoai, Vice Chairman cum General Secretary of the Vietnam Timber and Forest Product Association (VIFOREST), the export target of Vietnam’s wood industry set at the beginning of this year was US$12 billion. However, the export growth of the industry this year might be zero while wood processing enterprises have been facing several difficulties.
A survey conducted by the wood associations on 124 enterprises in the industry in late March showed that 100 percent of enterprises were affected by the Covid-19 pandemic. Specifically, in terms of financial impact, 75 percent of enterprises responded that the initial damage was over VND3 trillion. 51 percent of enterprises participating in the survey said that they had to reduce their production scale. About 35 percent of enterprises, though operating normally, will have to suspend production shortly; 7 percent of enterprises have ceased operations and only 7 percent of enterprises still operate normally.
The Covid-19 pandemic also affected the import of wood materials, wood processing, and domestic consumption. The import of wood materials from Africa – Vietnam’s largest source of tropical wood materials – has stopped. Imports of temperate timber decreased by 70 percent.
The prices of raw wood materials and freight increased. The business and production of households in craft villages decreased by 80 percent. About 50-60 percent of sawmills using raw materials from domestic forest plantations in the country ceased operations.
Vietnam’s wood industry also faces double trouble, which is the possibility of being levied anti-dumping duty on wooden boards exported to the US and South Korea, and some other items such as kitchen cabinets. Recently, India has launched an investigation on medium density fiberboard products imported from Vietnam.
According to Mr. To Xuan Phuc, a senior expert of Forest Trends, the operation mode of the industry requires strategic changes to reduce risks and create breakthroughs for the development. First of all, it is necessary to make radical changes in determining the product lines and strategic markets.
The Covid-19 pandemic also showed that the industry needs to shift its sales approach. The traditional channel needs to be changed, to reduce risks amid economic integration and to be in line with the global trend. Digital transformation needs to be stronger and more synchronized.
To do this, according to Mr. Nguyen Chanh Phuong, Vice Chairman cum General Secretary of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), there should be a synchronic change in both the Government’s mechanism and policies and enterprises themselves, thereby, promoting change in thinking, creating a wave of digital transformation.
Dr. Vo Tri Thanh, former Deputy Director of the Central Institute for Economic Management of Vietnam, said that in the context of uncertainty due to the pandemic, climate change, as well as many other risks, this is the time for enterprises to rethink, design again activities, and learn how to manage risks. Enterprises should neither be too pessimistic nor too optimistic, they need to be flexible, calm and follow the trend.
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