Vietnam wood industry rallies on strong export orders

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The furniture and wood products industry is experiencing a rebound with many producers receiving more orders at higher prices this year.

Nguyen Liem, director of the Lam Viet Company in the southern province of Binh Duong, said revenues until July will exceed $6 million, equal to its total sales in 2009. "There were big orders this year and prices also rose 5-7 percent," he said.

The company's factory, which employs more than 600 workers, is running at full capacity to meet delivery deadlines for orders from Europe, the US and New Zealand, Liem said.

Tran Quoc Manh, general director of Ho Chi Minh City-based Sadaco, said his company has received enough orders for the year and is signing contracts for 2011.

Many foreign customers have come to Vietnam looking for suppliers and the demand has allowed local exporters to boost shipments, he said.

The demand for medium to hi-end furniture has increased sharply after the economic crisis, said Huynh Quang Thanh, general director of Hiep Long Fine Furniture Company. He said in less than six months his company already posted revenues of around $5 million.

The conditions are in sharp contrast to the previous two years, when local producers had to struggle with falling global demand for wood products.

Vietnam's wood products industry in 2008 missed its target for the first time in eight years as exports totaled $2.8 billion versus a target of $3.2 billion. Exports continued to fall, registering a 9.9 percent drop last year to $2.55 billion.

Orders began to recover at the end of last year. According to the HCMC Handicraft and Wood Industry Association, Vietnam's wood product exports rose nearly 50 percent in the first five months this year to $1.4 billion.

Nguyen Ton Quyen, secretary general of the Vietnam Association of Timber and Forestry Products, said the industry's target of $3 billion for the whole year will be achieved.

But Quyen cautioned that with the cost of materials rising, local producers should make plans to stockpile what they need so as to maintain production and meet rising demand.

The association has also requested the Ministry of Industry and Trade to take measures and prevent excessive wood exports to China. Vietnam's wood industry imports 70 percent of the materials needed.

Quyen also said Vietnamese exporters should pay attention to the US Lacey Act, a law that bans any wood products containing illegally harvested timber.

No shipments from Vietnam have been returned so far but exporters need to prepare all documents carefully to avoid trouble, he said.

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