Detailed Guide to Importing Wood Products from Vietnam

Wooden furniture is a cornerstone of Vietnam’s export economy, comprising nearly 40% of the total value of wood and wood product exports. Since 2020, Vietnamese wooden furniture has consistently ranked among the fastest-growing in the world, with an annual growth rate of 25% to 30%, particularly in living room and kitchen furniture. This surge has elevated Vietnam from the 14th to the 6th largest furniture exporter globally within 10 years, trailing only China, the US, Italy, Germany, and India.

Vietnam has all the factors and strengths to become a leading wood exporting country in the world such as abundant natural resources, low and increasingly improving labour costs, convenient geographical location for transporting goods, etc. However, to import furniture products from Vietnam reasonably and without risks, a detailed plan for the import process is needed.

With the positive market outlook, importing furniture from Vietnam can be highly profitable, provided there is a detailed import plan. Below are key steps to guide you through the process, ensuring profitability while minimizing risks.

Step 1. Budget Planning for Wood Products Import Projects

Effective budget planning is crucial for controlling costs and ensuring the profitability of your wood import project. Below are the detailed steps:

1. Determine the Overall Budget Target
2. Allocate the Budget by Category
3. Research and Forecast Prices
4. Budget for Risks
5. Calculate Profits and ROI (Return on Investment)
6. Monitor and Adjust the Budget

To help you plan your budget most accurately, VNCommEx has written a detailed article about this activity: Guide to planning a budget for importing Wood from Vietnam

Step 2. Vietnam Wood Selection

Vietnam has a variety of wood types with good quality, suitable for many different uses, this wood source comes from 2 groups of wood: Group one is from 4,655,993 hectares of planted forests for production, providing nearly 80% of the total amount of raw wood in Vietnam. The remaining 20% ​​is provided from partnership contracts with countries from Africa and Laos. Therefore, when choosing wood, it is necessary to have reasonable research to choose the right wood. Each type of wood has different characteristics, based on your needs to find the type of wood that suits your purpose of use or business.

Step 3. Supplier Selection for Wood Products from Vietnam

As of January 2024, Vietnam hosts approximately 6,000 wood manufacturing and processing enterprises. These are divided into two main groups:

• Direct Export Group (20%): Large-scale enterprises, primarily foreign direct investment (FDI) companies, which directly export products.
• Non-Direct Export Group (80%): Enterprises that reprocess wood for export companies or produce for domestic consumption. These suppliers can offer competitive pricing and are worth considering for importing enterprises aiming to manage costs effectively.

Vietnam also boasts a rich tradition in fine art wooden products, with 340 craft villages, many of which have been established for over a century. Additionally, over 1,000 craft villages specialize in bamboo and rattan products, which contribute to the diversity of Vietnam’s wood-related exports.

Therefore, in this step of searching and selecting suppliers, to ensure you choose the right partner to ensure the correct progress and budget.

Step 4. Contract Negotiation for Importing Wood Products from Vietnam

Negotiation and contract signing are crucial steps in ensuring a successful import of wood from Vietnam. Here’s a comprehensive guide to help navigate these processes:

41. Preparation Before Negotiating

Gather information on the supplier’s reputation, production capacity, experience, and financial status. This will help you gain leverage during negotiations.

Certifications to Consider:

• Export License: Ensure the supplier has an export license issued by the Vietnamese government, confirming that the wood is legally sourced and complies with local regulations.
• Certification of Wood Origin: Verify that the wood has a certificate proving its legal origin, confirming it was not harvested illegally and adheres to forest protection laws.
• FSC (Forest Stewardship Council) Certification: FSC certification is increasingly important in international markets as it verifies sustainable forest management practices.

• Intellectual Property Rights: For furniture, ensure that designs, trademarks, and other intellectual properties are legally protected and comply with both Vietnamese and international laws.

Additional Regulations and Considerations:

• Establish Quality Standards: Set clear quality standards and testing procedures to ensure products meet international requirements. Consider using independent inspection agencies.
• Understand Tax Rates: Be aware of Vietnam’s varying export tax rates for different wood types, particularly for rare woods like rosewood and huong wood, which may have higher taxes or export restrictions.
• International Payments: Comply with Vietnam’s regulations on the use of foreign currencies in international transactions, including accepted payment methods like L/C (Letter of Credit) and T/T (Telegraphic Transfer).

4.2. Negotiation Process

Price Discussion: This is the most critical aspect of the negotiation. Aim to secure the best price while ensuring quality. Consider factors like order volume, delivery time, and payment terms to justify a lower price.

Cultural Considerations: Understanding Vietnamese business culture can aid in negotiation:

• Northern Vietnam: Business is often relationship-based, cautious, and detailed, influenced by Chinese business practices.
• Southern Vietnam: Business is more fast-paced and profit-oriented, reflecting American influences from the 20th century.

Other Key Negotiation Points:

• Delivery Terms: Negotiate delivery terms that suit your requirements, such as FOB (Free On Board) or CIF (Cost, Insurance, and Freight). These terms impact the overall cost and risk during transportation.
• Payment Terms: Agree on secure payment methods like L/C, T/T, or payment upon delivery. Ensure the terms protect the interests of both parties.
• Quality and Inspection: Insist on a commitment to deliver products matching the inspected samples. You may also request a third-party inspection before shipment.
• Responsibilities in Case of Issues: Clearly outline the responsibilities of each party in the event of late delivery, subpar quality, or insufficient quantity.

4.3. Drafting the Contract

When drafting a contract for exporting wood from Vietnam, consider these specific elements to ensure compliance with Vietnamese law and international standards:

1. Terms on Origin and Certification of Wood: Specify the required certifications and legal origin of the wood.
2. Terms on Quality and Inspection: Detail the agreed-upon quality standards and inspection processes.
3. Terms on Delivery and Transportation: Clearly define the delivery schedule, shipping terms, and responsibilities during transit.
4. Terms on Payment and Payment Terms: Outline the payment schedule, methods, and any contingencies.
5. Terms on Risk and Insurance: Assign risk responsibilities and specify insurance requirements.
6. Terms on Dispute Resolution: Include mechanisms for resolving disputes, such as arbitration or jurisdictional clauses.
7. Terms on Environment and Sustainability: Ensure compliance with environmental regulations and sustainability practices, particularly regarding FSC certification.

4.4. Signing the Contract

• Review the Final Contract: Before signing, thoroughly review all terms. If necessary, consult a lawyer to ensure that your rights are fully protected.
• Signing the Contract: Once both parties agree on the terms, officially sign the contract. Each party should retain an original copy as a legal reference.

Step 5. Quality Control in Contract Monitoring for Wood Products Import

Ensuring that the terms of a contract are properly implemented is critical to the success of importing wood products from Vietnam. Below is a detailed guide on how to monitor contract performance and maintain quality control throughout the process.

5.1. Create a Monitoring Plan

• Identify Key Milestones: Establish key milestones in the contract, such as delivery schedules, payment deadlines, and points for quality inspections. This timeline will help in tracking the contract’s progress effectively.
• Determine Responsibilities: Assign specific responsibilities to team members for each aspect of the contract, including supplier communication, quality inspections, and issue resolution. Clear delegation helps in maintaining accountability.

5.2. Establish Clear Quality Standards

• Technical Standards: Define the technical specifications that the wood products must meet. This includes dimensions, moisture content, wood grain, colour, and other critical physical characteristics.
• Inspection Standards: Ensure that the contract specifies that products must be inspected according to recognized standards, such as ISO, FSC (Forest Stewardship Council), or relevant national standards.

5.3. Check Production Progress and Delivery

• Inspecting Raw Materials: Before production starts, inspect the raw wood materials to confirm they meet the agreed-upon quality standards. This includes checking moisture levels, wood hardness, and the presence of any pests.
• Monitoring the Production Process: Ensure that the production follows the agreed-upon procedures and standards. This can involve on-site inspections during production or requesting regular progress reports from the supplier.
• Random Sampling Inspections: Conduct random inspections of finished products before they are shipped. This step helps in detecting any defects that may have occurred during production.
• Tracking the Transportation Process: Monitor the shipment of goods from the manufacturing site to the delivery destination. Utilize shipment tracking services to stay updated on the status and location of the goods during transit.

5.4. Check Product Quality

• Hire an Independent Inspection Company: Engage independent inspection firms to carry out quality checks before the goods are shipped. These companies can provide unbiased, detailed reports on product quality, ensuring accuracy and objectivity.
• Request Inspection Reports: Before the goods are shipped, make sure that you receive and review complete and accurate inspection reports. This step helps in verifying that the products meet the specified quality standards.

5.5. Manage and Handle Arising Problems

• Resolve Problems Immediately: If issues arise during production or contract execution—such as shortages of raw materials, substandard products, or delays—contact the supplier immediately to address the problems. Prompt action can mitigate risks and prevent more significant losses.
• Record All Issues and Resolutions: Document all problems and the steps taken to resolve them. This record is vital for handling disputes and can provide valuable insights for improving future contracts.

Quality control is a vital component of contract monitoring in the wood import process. By establishing clear standards, monitoring production, and addressing issues promptly, you can ensure that the terms of the contract are fulfilled and that the quality of the products meets expectations. This proactive approach helps minimize risks and ensures a successful import transaction.

Step 6. Document Preparation for Exporting Wood Products from Vietnam

When exporting wood products from Vietnam, it is essential to prepare a set of specific documents to ensure that the export process complies with both Vietnamese regulations and international standards. Below is a detailed list of the important documents you need to prepare:

1. Commercial Invoice
2. Packing List
3. Bill of Lading
4. Certificate of Origin
5. Phytosanitary Certificate
6. Export License
7. FSC (Forest Stewardship Council) Certification
8. Insurance Certificate
9. Customs Declaration
10. Payment Documents

Step 7. Shipping Guide 

When importing wood and wood-related products from Vietnam, you should use sea transport. This is the most cost-effective and time-saving form of transport for you. You can choose major seaports in Vietnam such as: Saigon Port, Cat Lai Port, Hai Phong Port, Da Nang Port, Cai Mep – Thi Vai Port, Quy Nhon Port, Van Phong Port… 

However, you should use a contract in which the supplier in Vietnam will carry out the transportation for you to ensure safety and convenience for import activities.

Transit times from Ho Chi Minh City ports to different countries may vary depending on shipping method, weather, and other factors. However, here are estimated transit times for major sea routes: