Vietnam’s timber and wood products overview
On April 24, 1989, Vietnam’s Minister of Forestry, Phan Xuan Tới, issued a decision to eliminate round wood from the export list, shifting the focus to processed wood products such as furniture, wooden furniture combined with rattan, flooring, refined flooring, veneer, plywood, particle board, pressed fiberboard, and sawn wood. With more than 30 years of development, Vietnamese wooden furniture is now present in 140 countries and territories, generating over $10 billion annually. This makes Vietnam the world’s 5th largest exporter of wood and wood products, the 2nd largest in Asia, and the top exporter in Southeast Asia.
The wood industry has become a crucial part of Vietnam’s export economy. Vietnam’s finished wood products are highly regarded globally, not just as raw materials for industrial use. Since 2020, Vietnam has been the leading supplier of wooden furniture to the US market, holding a 35%-40% market share.
In 2023, research by the furniture market and industry consulting organization CSIL showed that Vietnam became the world’s 6th largest furniture manufacturer, behind China, the USA, Italy, Germany, and India, those countries maintaining a strong global standing over the past decade. The increase to 7 ranks in less than 10 years proves the determination of all businesses and the Vietnamese government to innovate, apply technology, and comply with global policies to improve the quality of Vietnamese wood products.
Top 10 countries of funiture production
According to the Ministry of Agriculture and Rural Development, in the first half of 2024, Vietnam’s wood and forestry product exports reached $7.95 billion, a 21.2% increase over the same period in 2023, achieving 52.3% of the annual target. Key markets saw significant growth: exports to the United States reached $4.38 billion (up 27.6%), and exports to China hit $1.059 billion (up 46.6%).
In 2023, Vietnam’s total export turnover of wood and wood products was $13.18 billion. The top five export items—wooden furniture, chairs, wood chips, plywood, and pellets – accounted for $11.91 billion, or 90.4% of the industry’s total export turnover. Notable HS codes include:
- Furniture parts (HS 940390): $1.04 billion, down 28.6% from 2022
- Wooden bedroom furniture (HS 940350): $1.18 billion, down 18.7% from 2022
- Wooden kitchen furniture (HS 940340): $970.26 million, down 8.2% from 2022
- Office furniture (HS 940330): $254.27 million, down 28.6% from 2022
- Cushion-stuffed chairs (HS 94017100): $1.87 billion, up 9.1% from 2022, accounting for 66% of the total export turnover of seating products and 15% of Vietnam’s total wood export turnover, making it one of the few growth products in 2023
- Chairs with backrests (HS 94016910): $9.5 million, down 50.7% from 2022
- Other seats (HS 94016990): $539.9 million, down 32.1% from 2022
- Seat parts, other types (HS 94019099): $40.51 million, down 12.4% from 2022
Even though in the top 5 exporting wood and wood products in the world, Vietnam accounts for less than 10% of global wooden furniture output, while global demand for imported wooden furniture is $75 billion. Though Vietnamese products cannot immediately compete with those from China or the US, Vietnamese upholstered chairs are poised to increase market share, with an average growth of 10 -20% per year, particularly in the US, Canada, and EU markets.
In 2023, the Vietnam Wood and Forest Products Association reported that Vietnam exported 4.67 million tons of wood pellets, earning $679.59 million—down 4.3% in volume and 13.7% in value compared to 2022. Pellet exports account for 5.2% of the wood industry’s total export turnover, with pellets used for fireplaces, boilers, generators, or as raw materials for other industries.
Vietnam also exported nearly 14.42 million tons of wood chips in 2023, with a turnover of $2.22 billion—down 8.8% in volume and 20.4% in value from 2022. Wood chips represent 17% of the total export volume of Vietnam’s wood industry and are mainly used as fuel for thermal power, pulp production, and household activities.
Regarding timber and wood products export markets
In 2023, Vietnam exported wood and wood products to 170 countries and territories. The industry’s export turnover to five main markets—the United States, China, South Korea, Japan, and the EU—reached over $11.74 billion, accounting for over 89.13% of the total export turnover. However, growth to these markets decreased by 12% to 30% compared to 2022.
The US is the largest market for Vietnam’s wood and wood product exports, accounting for 53.9% of the total industry export output. In 2023, export turnover to the US was $7.1 billion, down 16.3% from 2022. Vietnam primarily exports two product groups to the US: HS 9401 (Seating) and HS 9403 (Other furniture and their parts), which together account for 90% of the export turnover to the US, with the remaining 10% being wood and material products of the HS 44 group. By the end of June 2024, the export value of wooden furniture to the US reached $3.45 billion, up 30% over the same period in 2023.
China is Vietnam’s second-largest market, with 13.1% of the total export turnover. In 2023, exports to China totalled $1.73 billion, primarily under the HS 44 group, which made up 97% of the total value of Vietnamese wood and wood products exported to China.
Japan ranks third, with a market share slightly lower than China’s at 12.6%. The total export turnover to Japan was $1.65 billion in 2023, down 12.5% from 2022. The main export group is HS 44, followed by pellets and wood chips, with HS 44 accounting for 76.9% of Vietnam’s total wood export turnover to Japan.
South Korea is Vietnam’s fourth-largest export market for wood and wood products, accounting for 6.1% of the total export turnover. In 2023, exports to South Korea reached $796.81 million, down 21.3% from 2022. South Korea is the largest market for Vietnam’s plywood, accounting for 29% of its exports.
The EU market, comprising 17 countries, is another important and potentially lucrative market. In 2023, exports to the EU accounted for only 3.5% of the industry’s total export turnover, amounting to $455.52 million. Despite the strict standards and legal requirements for wood origin, the EU market has significant potential. Unlike other markets where HS 44 is dominant, the EU mainly imports HS 94 products (Furniture; bedding, mattresses, mattress frames) with HS 9401 and HS 9403 codes totalling $356 million in 2023, accounting for 78% of the total export turnover to the EU.
Forest planting area for production in Vietnam
According to a 2022 report, Vietnam’s total forest area covers 14,790,075 hectares. Natural forests account for 71% of this area, totalling 10,134,082 hectares. The area of planted forests serving the economy is 4,655,993 hectares.
Regionally, the northern midlands and mountainous areas, along with the north central and central coastal regions, hold the largest forest reserves in Vietnam. These regions have 5.4 million hectares and 5.6 million hectares, respectively, comprising nearly 70% of the country’s total forest area. The Central Highlands follow in the 4th position highlighted by a large number of natural forests.
The Red River Delta and the Southeast region, being the country’s economic hubs, have lower forest coverage. The Mekong Delta, known for its extensive river systems, has very little natural forest area but is notable for its mangrove forests, which support agricultural and aquatic production activities.
Regarding the planted forest area by province for production, Lang Son leads with 316,573 hectares, accounting for 6.8% of the country’s forest reserve. Following are three northern provinces: Thanh Hoa, Quang Ninh, and Yen Bai, each with reserves between 248,000 and 254,000 hectares, contributing 5.3% to 5.5% of the national planted forest area.
Among the top 10 provinces for afforestation in terms of area, three are in the midland and mountainous regions: Lang Son, Yen Bai, and Tuyen Quang. The only province in the Red River Delta region is Quang Ninh. The North Central and Central Coast regions have five provinces in the top rankings, contributing to the highest planted forest reserves in the country. These provinces are Quang Nam, Quang Ngai, Nghe An, Binh Dinh, and Thanh Hoa. The remaining province in the top 10 is Gia Lai in the Central Highlands.
Top 10 province have largest planted forest area in Vietnam
Although national forest coverage is up to 42%, the planted forest area remains low compared to Vietnam’s wood production potential. The Vietnamese government aims to develop large, concentrated wood production forest areas to provide raw materials for processing, domestic consumption, and export, thereby increasing income for forest growers. This goal is part of a project promoting afforestation by 2030.
By 2030, the total area of large timber-production forests is expected to reach about 1 million hectares. This includes maintaining the existing large timber plantation area at 500,000 hectares and developing an additional 450,000-550,000 hectares between 2024 and 2030. The regional distribution targets are as follows:
– Northern Midlands and Mountains: 130,000-146,000 hectares
– Red River Delta: 6,000-9,000 hectares
– North Central and Central Coast Region: 280,000-348,000 hectares
– Central Highlands Region: 25,000-35,000 hectares
– Southeast Region: 7,500-10,000 hectares
– Southwest Region: 1,500-2,000 hectares
The Vietnamese government is enhancing its afforestation policy by promoting science and technology and raising public awareness about the intensive cultivation of acacia, eucalyptus, and other forestry species. The goal is to reach an average yield of 20 m³/ha/year by 2025 and 22 m³/ha/year by 2030. Currently, acacia plantations account for about 70-80% of the total planted forest area, with the remainder consisting of eucalyptus, pine, and other species, according to Forest Trends data.
This initiative is crucial for the growth of Vietnam’s wood industry. As of September 2023, nearly 500,000 hectares of Vietnam’s total forest area hold VFCS/PEFC and FSC certifications. This includes 152,000 hectares with VFCS/PEFC certification and 282,960 hectares with FSC certification, representing about 64% of the total planted forest area in Vietnam.
VFCS/PEFC certification is granted by recognized organizations to forest owners and ensures compliance with sustainable forest management standards. The certification is valid for five years, with annual monitoring and evaluation required to maintain it.
FSC certification is used to strengthen their market position, especially for exports to the EU and US. The FSC certification system includes FSC-FM (for wood from sustainably managed forests) and FSC-CoC (covering the supply chain from extraction to finished products). In the first 11 months of 2023, the export turnover of FSC-certified wood and wood products reached $226.85 million, according to the General Department of Customs.
Quang Tri was the first province in Vietnam to receive international FSC certification for natural forests. In October 2022, 2,145 hectares of natural forest in five villages in Huong Phung, Huong Son, Huong Viet, and Huong Linh communes of Huong Hoa district were certified for ecosystem services related to carbon storage and absorption. These forests store approximately 350,000 tons of CO2 and absorb about 7,000 tons of CO2 annually.
WoodCraft Villages in Vietnam – Factors that Create Identity
Vietnam boasts over 340 woodworking villages spread across the country, each comprising about 2,000 households engaged in wood processing and production. These craft villages handed down through generations, play a crucial role in preserving the quality and distinctive designs unique to each locality.
Currently, wood craft villages make up approximately 11.2% of Vietnam’s total craft villages. The Red River Delta region hosts the highest number with 182 villages (53.2%), followed by the North Central region with 61 villages (17.8%), the Mekong Delta with 33 villages (9.6%), and others scattered across the Northeast, Northwest, South Central, and Southeast regions.
Artisans in these villages, particularly those in the villages with over 30 years of foundation, possess exceptional skills honed over a lifetime. Many learned the craft from a young age, inheriting knowledge and techniques from parents and grandparents. Their craftsmanship is highly esteemed, contributing significantly to Vietnam’s economy. Several artisans have earned the title of “elite artist” for their mastery in relief carving, manipulation, and engraving of wood.
Understand more about the WoodCraft Villages in Vietnam in this article: From Craft to International Brand: Vietnamese Bamboo and Rattan Weaving Journey
The works chiseled by the talented hands of artisan Nguyen Tran Hiep not only receive high appreciation for their artistic and ideological values but also contain cultural values and Eastern spirituality.
Forestry production grew steadily at 4.6%/year
The structure of forestry production is increasingly shifting towards increasing the added value of the production chain with a stable growth of 4.6%/year. Annually, Vietnam plants more than 260,000 hectares of new forests, significantly improving productivity and quality to meet over 70% of the wood material demand for forest product processing, both for domestic consumption and export.
Revenue from forest environmental services has reached an average of 3,650 billion VND per year and is expected to rise further with the implementation of carbon certificate trading policies in the near future. This initiative is expected to bolster farmer confidence in planting large-scale timber forests and create more income to contribute to maintaining sustainable growth in the long term. At the 2023 Summary Conference, Deputy Minister Nguyen Quoc Tri highlighted a milestone for Vietnam’s forestry sector: the successful sale of 10.3 million forest carbon credits (equivalent to 10.3 million tons of CO2) through the World Bank at a unit price of 5 USD per ton, earning 51.5 million USD (approximately 1,250 billion VND).
To optimize forestry land use efficiency, Mr. Nguyen Van Tien, Vice President of the Vietnam Association of Agricultural Economics and Rural Development, emphasizes the need for state encouragement to accumulate and consolidate land for development purposes. This includes fostering large-scale production, processing, and consumption chains for concentrated forestry products. The goal is to utilize forestry land for multiple purposes, fostering a transparent business environment that encourages investments in forestry and rural areas, especially in remote regions. Additionally, enhancing accessibility to forestry land for entities involved in production and business is crucial. This includes expanding the eligibility for transferring and leasing forestry land, tailored to the specific production needs of each region.
Overcoming challenges to raise the bar
The challenge of planting large timber forests in Vietnam involves several significant barriers, which are crucial to address for sustainable forestry development:
1. Fragmented and Small Land Plots: The land available for planting large timber forests is often fragmented and scattered, making it difficult to establish cohesive, large-scale forest areas. This fragmentation hampers efficient management and limits economies of scale in forestry operations.
2. Long Gestation Period and High Investment Costs: Planting large timber forests requires a long-term commitment, typically with growth cycles exceeding 10 years. This is particularly challenging in economically disadvantaged areas where communities may struggle to wait for a decade to see returns on their investments. Moreover, the high initial investment costs deter many farmers and small to medium-sized organizations from undertaking afforestation projects.
3. Climate Vulnerabilities: Climate variability, characterized by erratic weather patterns such as windstorms during the rainy season and forest fires in the dry season, poses significant risks to newly planted forests. The absence of insurance coverage for planted forests exacerbates these risks, discouraging potential investors.
4. Market Instability and Product Quality Concerns: The market for large timber products is often unstable, affecting prices and market demand. Fast-growing tree species, like Acacia hybrids commonly used for afforestation, tend to have structural defects such as hollow parts and knots, which diminish the value of the timber.
5. Financial Constraints: Accessing capital from commercial banks is challenging due to high interest rates, complex loan conditions, and stringent procedures. Banks typically offer loans covering only a portion of the total project cost, making it difficult for farmers and organizations to expand their planting areas or invest in forestry projects.
To overcome these challenges, Vietnam is exploring various approaches to support afforestation efforts and alleviate financial burdens on farmers and organizations. These include:
1. Financial Support and Incentives: Introducing cash grants and interest subsidies for those engaged in large timber afforestation projects.
2. Policy Support: Implementing policies that promote sustainable forestry practices and provide guidance on long-term economic benefits to encourage community participation.
3. Risk Mitigation Measures: Developing insurance policies tailored to protect planted forests against climate-related risks such as storms and fires.
Addressing these issues comprehensively will be crucial for Vietnam to effectively expand its large timber forest area, enhance forest resilience, and sustainably manage its forestry resources for future generations.
Regulations on dumping investigations are creating concerns with Vietnamese wood products in major markets.
US Market Regulations:
The US Department of Commerce (DOC) officially announced the application of new regulations on trade remedies for goods imported into this market. Accordingly, DOC introduced 5 new notable regulations on anti-dumping, anti-subsidy, and anti-evasion investigations for goods imported into the US market, directly affecting the group of wooden products from Vietnam such as:
– Hardwood plywood (HS codes: 441231, 441232, 441233, 441234, 441294, 441299)
– Wooden bedroom furniture (HS codes: 9403509041, 9403509042, 9403509045, 9403509080, 9403907005, 9403907080)
– Sofas with wooden frames (HS code: 940161)
– Continuously shaped wooden bars and strips (HS codes: 440910, 440922, 440929)
These regulations are aimed at ensuring fair trade practices and preventing circumvention of existing trade remedies.
Korea Anti-Dumping Investigation:
In Korea, Vietnam faces a reinvestigation into anti-dumping duties on plywood and plywood products spanning the period from 2020 to 2023. The Vietnam Plywood Association has received indications of potential adjustments in tariff rates, which currently vary significantly, ranging from 4.2% to 13.04%. Plywood exports from Vietnam to Korea totaled 889 million USD in 2023, representing a substantial portion of Vietnam’s wood industry exports. Korea, along with Japan, the US, and Malaysia, constitutes Vietnam’s major markets for plywood, with these markets collectively accounting for 77.1% in volume and 77.4% in value of Vietnam’s plywood exports in 2023.
These developments highlight the complexities and challenges faced by Vietnam’s wood industry in maintaining market access and navigating regulatory landscapes in major export destinations.
Responding with new laws related to sustainable development from the EU and the US.
Effective from January 2025, the EUDR targets commodities including wood products, restricting their import into the EU if their production contributes to deforestation. While the EU currently isn’t a major market for Vietnamese wood products, these regulations will impact long-term strategies, especially if similar measures are adopted by the US, Korea, and other major markets.
Vietnam has a significant number of enterprises involved in wood processing and trading, with small and micro-enterprises dominating (96.2%). These enterprises are concentrated in over 340 woodcraft villages across the country. While these villages produce high-quality handicrafts, ensuring compliance with forest protection policies, especially concerning the origin of wood materials, is challenging.
Vietnamese woodcraft villages import approximately 2 million m3 of raw wood annually, primarily from Africa. The origin of this wood often poses risks due to potential illegal harvesting practices. There is growing pressure from policies to shift towards using domestically sourced or less risky imported wood. However, craft village households cannot independently transition and require support from the government, industry, and companies in managing and verifying the origin of their wood materials.
In summary, to address these challenges, to adapt to stricter international regulations and ensure sustainable sourcing practices. Collaboration between government, industry, and local communities will be essential in navigating these regulatory landscapes promoting sustainable development in the wood sector, and maintaining market access in the face of increasing scrutiny over deforestation-linked products.
