Sustainable Wood Demand Growth
In 2024, Vietnam’s wood export market is increasingly focused on sustainability, with 70% of its wood and wood product exports directed towards the U.S. market. The need for sustainable, certified wood has become critical, not only for businesses but also as a national priority. To support this, Vietnam’s Forestry Department has launched the “Large Timber Plantation Development Plan for 2024-2030,” aiming to expand sustainable wood production and ensure continued export growth over the next decade.
Key Goals by 2030:
- Expansion of Sustainable Timber Plantations: By 2030, Vietnam plans to achieve 1 million hectares of large timber plantations, maintaining the existing 500,000 hectares and adding an additional 450,000-550,000 hectares by 2030.
- Enhanced Plantation Productivity: The productivity of key species such as acacia and eucalyptus is targeted to reach an average of 22 m³/ha/year by 2030. This increase in productivity is expected to boost income from timber plantations by 1.5 to 2 times compared to 2020.
In the first half of 2024, Vietnam harvested 9.9 million cubic meters of certified sustainable plantation wood, marking a 6.6% increase compared to the same period last year. The total harvest for 2024 is projected to reach approximately 24 million cubic meters. Moving forward, the Ministry of Agriculture and Rural Development will continue to consolidate forest land for commercial wood production, fostering a value chain that encompasses planting, care, harvesting, processing, and distribution of forest products. Thanh Hoa province, which has the largest forest area in Vietnam, aims to increase its timber plantation area to 125,000 hectares by 2025, with 25,000 hectares of timber plantations and 10 hectares of bamboo forests certified by the Forest Stewardship Council (FSC).
Shift to Value-Added Products
Since 2021, Vietnam has been strategically shifting towards high-value wood products, driven by government resolutions. After three years, this transformation is becoming more evident. A key milestone was the issuance of Decision No. 523 on April 1, 2021, which outlines various tasks and solutions for the rapid and sustainable development of the wood processing industry for export.
Specific Goals:
- Achieve $20 billion in wood and forest product exports by 2025, with wood and wood products accounting for $18.5 billion.
- By 2030, the export value is expected to reach $25 billion, with wood and wood products surpassing $20.4 billion.
- Over 80% of processing and storage facilities will achieve advanced production technology.
- 100% of wood and wood products for export and domestic consumption will be sourced from legal wood with sustainable forest management certifications.
To realize these objectives, the government is also committed to supporting infrastructure Establishing five high-tech forestry zones to attract investment from wood processing and auxiliary material production enterprises.
- Building a national wood furniture exhibition centre of international standards.
- Investing in the development of the supporting industry, prioritizing eco-friendly adhesives, coatings, and surface decoration materials, along with logistics services.
Vietnam’s policy emphasizes the development of the following main product groups:
- Indoor Wood Furniture: Products such as tables, chairs, beds, wardrobes, kitchen cabinets, dressing tables, bookshelves, and various flooring types.
- Outdoor Wood Products: Items like swings, slides, benches, tables, chairs, and sun umbrellas.
- Engineered Wood Products: Laminated boards, plywood, particleboard, MDF boards.
- Composite Wood Products: Products that combine wood with other materials, enhancing aesthetics, durability, and wood conservation—such as rattan, bamboo, plastic, metal, fabric, and leather.
- Wooden Handicrafts: Including furniture, lacquer paintings, wooden sculptures, and souvenirs.
The meticulous and precise execution of government policies by both the state and Vietnamese enterprises demonstrates a clear commitment to achieving the set goals. The year 2025 will be a pivotal point to review the actions and policies stemming from Decision No. 523. Moving forward, the forestry sector will focus on supporting the development of sustainable, certified raw materials that comply with international standards while minimizing the impact of climate change.
Vietnam’s Wooden Furniture Export Growth
Wooden furniture is a cornerstone of Vietnam’s export economy, accounting for nearly 40% of the total export value of wood and wood products. Prior to 2019, the country’s wooden furniture exports predominantly included office tables, chairs, and cabinets. However, starting in 2020, there has been a notable surge in wooden furniture exports, with growth rates of 25% to 30% per year, particularly in living room and kitchen furniture. Exports of wooden kitchen furniture rose dramatically from $800 million in 2019-2020 to $1.2 billion in 2023.
In 2023, research by furniture market consultancy CSIL revealed that Vietnam advanced seven ranks to become the sixth largest furniture manufacturer in the world. This remarkable increase within less than a decade reflects the commitment of both Vietnamese enterprises and the government to innovate and boost furniture production.
Here are The Top 6 Wood Products Driving Vietnam’s Export Market
Additionally, forecasts from the Mortgage Bankers Association (MBA) in the United States indicate a robust recovery in housing and real estate supply, with expectations of more than 3 million new homes. This surge is projected to drive increased demand for home furniture, prompting businesses to invest more in wooden furniture products to meet market needs.
Growth in Acacia and Rubber Wood Exports
Acacia and rubber wood have emerged as the two most popular types of wood in Vietnam, valued for their durability and aesthetic appeal in interior products.
Acacia Auriculiformis
Acacia is the most widely used tree species for planted forests in Vietnam. According to the General Department of Forestry, trees with a 5-7 years exploitation cycle, including acacia and eucalyptus, account for 70% of the planted forest area designated for production, covering approximately 1,715,280 hectares. Acacia auriculiformis is particularly well-distributed across the country. The wood is known for its hardness, durability, and attractive colours with distinct grain patterns, making it ideal for crafting tables, chairs, cabinets, beds, and various handicraft products.
Rubber Wood
As for rubber, the estimated area of rubber plantations in Vietnam reached around 1 million hectares in 2024. Vietnam is among the countries with the largest rubber forests globally, second only to Thailand. These plantations are predominantly located in southern provinces such as Binh Duong, Dong Nai, Tay Ninh, and Ba Ria-Vung Tau. Rubber wood is light yellow, lightweight, and easy to process, and it is considered environmentally friendly. This wood is harvested after a latex economic cycle of approximately 25 to 30 years and has become a vital source of raw material for the wood industry, serving both export markets and domestic consumption.
See more about the Top 7 types of wood favoured for import from Vietnam
Industry Landscape
Currently, Vietnam has 5,580 enterprises involved in the production, trading, and processing of wood and forestry products, employing around 500,000 workers. Among these, 2,600 enterprises are engaged in direct exports. In the past, many businesses imported wood from Africa due to lower costs and guaranteed supply. However, with the implementation of agreements regarding origin and sustainable development by the end of 2024, companies will need to exercise caution in selecting raw wood sources. To mitigate risks, many are opting to utilize domestic supplies of acacia and rubber wood.
Each business with an annual revenue of $100 million requires about 3 million m³ of wood, creating a significant demand. If we assume that 20% of the 2,600 exporting businesses need this volume, building raw material growing areas and collaborating with farmers in districts and communes becomes increasingly urgent. For instance, Woodland Joint Stock Company has partnered with farmers in Yen Son district, Tuyen Quang province, to cultivate 1,500 hectares of FSC-certified forest.
Sustainable Sourcing
Regarding rubber wood, approximately 90% of the current supply comes from large-scale rubber plantations, ensuring a clear origin and compliance with sustainable wood certifications. This makes rubberwood highly sought after by wood processing enterprises, which often secure advance contracts with rubber production companies.
Additionally, the Vietnamese government has launched a strategy to establish new production forests from 2021 to 2030, targeting a total of 3 million hectares, primarily focused on acacia and eucalyptus. The breakdown of this initiative is as follows:
- Raw Wood Forests (85% of the area, or 2,550,000 hectares):
- New Planting: 550,000 hectares
- Replanting: 2,000,000 hectares
- Large Wood Forests (15% of the area, or 450,000 hectares)
This campaign ensures that Vietnam maintains a sufficient wood supply to support the growth of its wood industry and meet the demands of its export markets.
Focus on the Asian Market
International conflicts and energy crises are having a severe impact on global logistics costs, causing a significant increase in transportation prices. This is putting great pressure on supply chains and product prices, negatively affecting international trade activities. For example, the ongoing Russia-Ukraine conflict, the energy crisis, and the Hamas-Israel conflict have led to unpredictable consequences, particularly impacting logistics costs. Since the end of 2023, logistics costs have surged by approximately 130%. In the European market, shipping costs have soared from $1,230 to $4,450 per container.
As a response, many Vietnamese wood processing enterprises are boosting exports to Asian countries to mitigate costs, enhance cash flow, and reduce risks. Key Asian markets for Vietnamese exports include China, Japan, India, and Australia.
Market Highlights
- China: In the first half of 2024, Vietnam’s wood and wood product exports to China exceeded $1 billion, representing a remarkable increase of over 46.6% compared to the same period last year. Notably, Vietnamese office furniture accounted for 24.7% of the imported office furniture market in China.
- Japan: Japan is Vietnam’s third-largest market for wood products, following the U.S. and China. In the first half of 2024, exports to Japan reached $796 million, reflecting a slight decline of 2.2% due to domestic economic slowdowns and reduced consumer spending. The continuous loss of growth momentum and scandals among large corporations have contributed to Japan experiencing its fourth consecutive quarter of declining personal consumption—the most significant drop in 15 years. Despite these challenges, the 2.2% decline can be viewed as a relatively positive outcome in the current context.
- Korea: Vietnam is the largest supplier of wood pellets to South Korea, holding 29% of the volume and 22.7% of the value of Vietnam’s total plywood export turnover. Exports of wood and wood products to Korea reached $389 million in the first half of 2024, down 1.4% year-on-year. The decrease in pellet exports is attributed to Korean enterprises sourcing cheaper pellets from Russia. However, the increase in exports of wood chip products, wooden frame chairs, and wooden doors offers growth potential, compensating for the losses in the pellet segment.
- India: India is emerging as one of Vietnam’s key markets. In the first half of 2024, exports of wood and wood products to India reached $63 million, marking a significant growth of 94% compared to the same period in 2023. In 2023, wood turnover from this market increased by an impressive 287.7%, reaching nearly $60 million. With home sales in India growing by 30-40% annually and the hotel industry anticipating the addition of 12,000 new rooms, this market presents substantial opportunities for furniture and bamboo handicraft products.
Overall, as logistics costs rise and global challenges persist, Vietnamese wood processing enterprises are strategically pivoting towards the Asian market to sustain growth and capitalize on emerging opportunities.
Using Technology and Automation in Vietnam’s Wood Industry
Vietnam’s wood industry has made significant strides in recent years, with many enterprises adopting advanced equipment and technology to reduce labour costs while enhancing productivity and product quality. This transformation has emerged as a bright spot for the sector, with automated production lines increasingly replacing manual labour processes, resulting in higher efficiency and improved outcomes.
Advances in Wood Processing Technology
The adoption of modern wood processing technologies has advanced significantly, with some companies exploring heat-modification technology to enhance weather resistance and wood durability. This innovative approach not only prolongs the lifespan of wood products but also meets the growing demand for high-quality, durable materials in various markets.
Strengthening Internal Capabilities
Currently, the internal capabilities of wood processing and forestry export enterprises have greatly improved. Companies are shifting their management and business practices towards a more professional model, focusing on high-tech investments and advanced manufacturing technologies. This shift aims to improve labor productivity, enhance product quality, reduce costs, lower prices, and adopt environmentally friendly technologies in alignment with the 4.0 technology revolution.
Additionally, thanks to the productivity forecasting and optimization features of these systems, Vietnamese enterprises are becoming more proactive in avoiding late deliveries. This capability enhances their reputation among customers and partners, leading to larger orders from leading corporations.
The integration of technology and automation in Vietnam’s wood industry not only boosts efficiency and productivity but also positions enterprises to meet the demands of a competitive global market. By continually investing in advanced technologies and automated solutions, the industry is setting a foundation for sustainable growth and long-term success.
Understand more about the strengthening of Vietnam in the Timber industry via this article: Top Reasons to Import High-Quality Wood from Vietnam
Developing Environmentally Friendly Products
Wood industry enterprises in Vietnam are increasingly embracing environmentally friendly practices in response to market demands and global trends. Transitioning to sustainable products is not only a strategic move to secure the industry’s future but also an essential step towards addressing global environmental concerns.
Addressing Plastic Pollution
Plastic pollution has become a significant issue, particularly in the EU and the US. In response, there is a growing demand for everyday products made from safe, sustainable materials to replace plastic. Bamboo products such as straws, chopsticks, and spoons are gaining popularity due to their environmental benefits. Bamboo flooring is another eco-friendly alternative that balances the ecology with natural wood flooring products. Bamboo’s rapid growth cycle, taking only six years to harvest, makes it a sustainable resource. The production of bamboo flooring utilizes advanced fibre pressing and heat treatment technology, enhancing durability and providing excellent sound insulation compared to other materials. High-pressure production processes make bamboo flooring products nearly waterproof and crack-proof, with new technologies creating vivid patterns that mimic natural wood.
Embracing Recycled Wood
Recycled wood is another environmentally friendly material frequently used in interior decoration and construction. This material can be sourced from old houses or wood scraps left over from manufacturing finished products, where typically 18-21% of wood is discarded during processing. Recycled wood is ideal for making wooden doors, decorative items, and flooring. Brazil has pioneered many projects that effectively utilize recycled materials, significantly reducing environmental waste. One notable example is the Hanging House in Sao Paulo, constructed with 80% recycled materials, emphasizing harmony with the local ecosystem and sustainability.
Community and Industry Engagement
The use of recycled wood and bamboo materials is increasingly capturing the community’s interest. The global spread of environmental protection concepts is influencing Vietnamese businesses and architects, driving initiatives that integrate sustainability into design and production. These eco-friendly practices not only reduce waste but also resonate with consumers who are increasingly conscious of their environmental impact.
Vietnam’s wood industry is making significant strides in developing environmentally friendly products. By leveraging sustainable materials like bamboo and recycled wood, the industry is not only meeting global market demands but also contributing to environmental conservation. This shift towards green products positions Vietnamese enterprises to lead in the sustainable wood product market, ensuring long-term growth and ecological balance.
Conclusion
In the current years, Vietnam’s wood export market is set to experience significant growth, driven by strategic adaptation to global trends, robust government support, and increasing collaboration within the industry. The focus on high-value products, sustainable practices, and expansion into new markets positions Vietnam as a key player in the global wood industry.
As trade agreements and policies continue to support this sector, Vietnam is well-prepared to meet and exceed its export targets, solidifying its role as a leading wood exporter on the world stage.
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