Domestic wood enterprises are being advised to transform their business models by striving to boost online sales whilst seeking additional partners amid the growing economic impact of the novel coronavirus (COVID-19) pandemic, according to insiders.
Local experts forecast that with the COVID-19 epidemic situation still likely to remain complicated during the second quarter of the year, it will start to have a far-reaching effect on the consumption of wooden furniture in export markets such as the United States, the European Union, Japan, and the Republic of Korea (RoK).
The most recent statistics indicate that the consumption of wood products in both the EU and the RoK markets suffered annual declines of 14.9% and 15.6% respectively, in addition to a string of export shipments to the EU and the US coming to a halt in the last weeks of March as a result of the COVID-19 outbreak.
With the COVID-19 epidemic severely disrupting supply sources from China, several major clients from the US, the EU, Australia, and Japan have turned their attention to seeking production markets outside of China, with Vietnam identified as a potential prospect, therefore creating a range of opportunities for local wood firms.
Moreover, with a number of new-generation free trade agreements (FTA) coming into force such as the the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), they will serve to give a fresh impetus to the development of the wood industry thanks to import tariffs to the EU to be reduced to 0%.
Insiders have recommended that Vietnamese enterprises work to promote their sales online via e-commerce platforms as a means of seeking partners and promoting wood exports.
According to Do Xuan Lap, Chairman of the Vietnam Timber and Forest Product Association, e-commerce channels provide domestic wooden enterprises with the ability to introduce their products and production capacity to customers globally. In addition, e-commerce is an inevitable trend and long-term direction which all industries will move towards.
Sharing the same view, Nguyen Ngoc Dung, Vice Chairman of Vietnam E-commerce Association, says that with B2C and B2B applications being readily available through e-commerce channels, Vietnamese businesses will have greater opportunities to sell products to more customers throughout the world in a fast and convenient manner.
Most importantly, enterprises will be able to cut out intermediaries, thereby reducing product costs and improving the value of their product, Dung notes.