Due to general fluctuations in the global economy, Da Nang’s wood production and export industry has greatly been affected. Therefore, wood businesses in the city have proactively taken appropriate production plans, hoping that support policies from the national and local governments will soon be implemented.

Production is progress at the Da Nang Forest Products Export JSC. Photo: M.Q

Production scale adjustment 

The Hai Van Forestry Company Limited in the Hoa Khanh Industrial Park, Lien Chieu District, Da Nang has 30 years of experience in wood production but it has recently transferred shares to another enterprise due to a decrease of about 60% in the volume of orders. At the same time, the enterprise reduced its workforce by more than 70% and established a smaller-scale enterprise: Hai Van Forestry Production-Trading-Service Company Limited.

Mr. Nguyen Van Tam, the company’s Director said that the wood industry has recently encountered some difficulties. Many of the company's big customers previously in Hoa Khanh Industrial Park, Dien Ngoc in neighbouring Quang Nam Province, Quang Ngai Province have narrowed their production. Therefore, the company’s downsizing process is inevitable. Over  recent months, the market has shown signs of recovery so businesses hope that from now until the end of the year, there will be more positive signals.

Meanwhile, a representative of the Hoa Nhon Forest Product Processing Enterprise on Hoa Nhon Ccommune, Hoa Vang District said that the current number of orders is only 30% as compared to the same period in previous years. Given that fact, the company has just restarted operation after a temporary break. However, production is only moderate and it is forecasted that the coming time will still face many difficulties.

It can be seen that the situation of the wood industry is quite bleak. However, there are also businesses proactively staying ahead when the market tends to make recovery. Specifically, the Da Nang Forest Products Export JSC just invested in the building of a factory worth more than VND 5 billion and has been in operation for nearly one month.

Mr. Huynh Trinh, the company’s Director said that the company resumed operations last June after a 3-month break due to low orders. At present, the total value of orders the company has signed is US$ 1.5 million, the number of orders is approximately equivalent to the same period in 2022, but only equal to 60 - 70% compared to the same period in 2021. Company forecasts will reach maximum capacity next October and produce until the end of the first quarter of 2024.

Accordingly, the peak of wood exports is at the end of the year. Therefore, although the current number of orders is not many, the company is still proactively pouring investment capital into the development of more factories to increase production capacity.

Wood industry enterprises wish to receive support in terms of trade promotion and market expansion. Photo: M.Q

More support needed 

In the seven months of 2023, due to the influence of the world situation, high global inflation, the main export markets of Viet Nam's wood products, and Da Nang’s in particular, continued to shrink.

According to the data of the Da Nang Statistics Department, the production index of the wood processing industry and the production of products from wood, bamboo and cork, except for beds, cabinets, tables and chairs, those made from straw, straw and plaiting materials in July 2023 was equal to 80.81% compared to June 2023 and equal to 70.48% compared to the same period in 2022. The average of the seven months in 2023 was 87, 26% over the same period in 2022.

Mr. Nguyen Duc Huy, the Chairman of Da Nang Timber and Forestry Association, said that the association has more than 50 members who are wood processing and exporting units in Da Nang and neighbouring provinces and cities, and their main export markets are the U.S and Europe.

In recent times, due to the influence of the world economy, orders have decreased significantly. Wood processing and exporting companies have struggled to maintain operations, which drove many businesses into production suspension. According to assessments, this difficult situation will last until the end of 2023 and into 2024.

Against the backdrop of facing the difficulties of wood industry enterprises, the Da Nang People's Committee issued Document No. 4383/UBND-SCT dated August 16, 2023 on strengthening support and removing difficulties facing wood processing and wood product manufacturing enterprises.

Accordingly, relevant local agencies have solutions on forestry development, linking forestry production, especially linking production along the value chain, consistent with the city's general development orientation, promoting vocational training and skill training to meet the requirements of enterprises.

Also, heed will be paid to organising a periodic connection channel with diplomatic missions, overseas Vietnamese trade agencies, organisations, industry associations and foreign enterprises to support wood industry enterprises in the world.

In order to concretize the support work, in mid-August, the Centre for Industry Promotion and Trade Promotion under the Da Nang Department of Industry and Trade and the Da Nang Timber and Forestry Association signed a memorandum of understanding on cooperation within 3 years in order to strengthen relationships, support export promotion activities, and contribute to promoting the consumption of the association's products.

Accordingly, the two sides will accompany and participate in conferences, seminars, fairs and exhibitions to contribute to promoting Da Nang’s products and brands of the Da Nang wood industry to develop steadily and boost penetration into international markets.

It is hoped that solutions to support businesses would be quickly deploy, with a focus on businesses in terms of expanding markets and enhancing trade promotion so that businesses would have the opportunity to find new partners, specifically the markets of Australia and Eastern Europe. Besides, wood processing and exporting enterprises hope that the municipal administration would have a policy to reduce land rent, expand or reduce infrastructure usage fees in the near future.

Reporting by MAI QUE - Translating by A.THU