Furniture Sourcing & Manufacturing in Vietnam OVERVIEW

Vietnam is becoming one of the “brightest star” in the wood-based furniture production and exports for the world, with furniture exports accounting for about 6% of the global market share, with large markets as: USA, Japan, China, EU, Korea and some new potential markets such as Canada, Russia, India …

Vietnam is currently one of the world's largest wooden furniture exporters with many factories, skilled workers and competitive prices. Not only that, thank to Vietnamese government has signed 11 out of 13 free trade agreements since joining the WTO, which has made exports more favorable.

Wooden furniture market

Vietnam’s furniture industry has been active long time but has received more and more attention in recent years. From big companies like IKEA to small-to-medium-sized furniture manufacturers like Wendelbo are based here.

Vietnam placed second place (after China) to be a big furniture exporter and there are some reasons for this:

- Supply chain: as a country with forests spanning the entire territory, there is no shortage of timber and many suppliers of sustainable logging. With the awareness of environmental protection in recent years of countries, governments have requested that one of the conditions for importing wooden furniture is to provide certificates of origin. Importers should have no trouble finding Vietnamese suppliers that are FSC certified and meet legal requirements. Many plantation and wood suppliers in the country can harvest wood sustainably and have FCS Certification

- Wood and furniture industry: there are about 1,500 exporters and 30% are FDI. Half a million Vietnamese are employed in this industry and 5,600 companies manufacture furniture, either for domestic use or for export, or both.

- Markets: furniture made in Vietnam has now been exported to more than 120 countries in the world. US, UK, Canada, Australia and Japan are the main markets.

- The epidemic broke out in 2019 and affected from daily life to industries such as tourism, textiles... but for this industry, it is the opposite. According to statistics, in 2021, Vietnam's wooden furniture exports increased by more than 20% compared to 2020.

- Indonesia, Thailand and Malaysia are Vietnam competitors. However, Vietnam is in the lead because it is difficult to find legal timber suppliers in Indonesia meanwhile Thailand and Malaysia have higher timber costs. While in Vietnam, there are many suppliers can meet this.

Type of furniture can be found in Vietnam

Even though, the dominant export furniture is indoor products, but you can also find many manufactures that produce outdoor and decor items with different materials.

With the strength of producing indoor furniture, people can easily find products such as: case goods, tables, chairs, beds, sofas, armchairs, office desks.

Vietnam suppliers are strong in the wood segment, and they could work with other materials required such as: plastic, aluminum, and steel. If your design has leathers or fabrics part as outer cover, you can find some suppliers can produce that too.

For outdoor products, wicker/ rattan and wood are often used in this country. Besides that, sunbeds and hammocks can be widely provided as well.

Vietnam workers are already known for their skillful hand therefore, beside making their own design you could ask them to do with custom design according to your need.

Type of woods are using in Vietnam

Vietnam is located in Southeast Asia so they are popular for these wood:

- Acacia: This is the most used wood and known for its durability, light modern color, and solid look. It’s suitable for furniture that must sustain tough weather conditions. It doesn’t warp as easily and has anti-mold and anti-bacterial properties.

- Another type is rubberwood: there’s a large supply available and it’s also environmentally friendly. It’s also easy to engrave, paint, and nail well. The wood doesn’t tend to shrink after drying and you’ll have fewer issues with warping.

- Plywood: furniture makers in Vietnam have expertise in the production of plywood, Medium Density Fiberboard (MDF), High-Density Fiberboard (HDF) veneers, and particle boards.

Above are the local wood type that can be source easily but if your idea is a different type of wood, Vietnam suppliers can import raw material for the production. Here are some wood that need to be import:

- Oak

- Beechwood

- Pine

- Teak

- Eucalyptus

- Walnut

- Ash

Import Duties for Furniture from Vietnam

EU, ASEAN, South Korea, Japan, New Zealand, Australia, the UK, Canada, Mexico, Chile, and Peru: Vietnam have joined a free trade agreement (FTAs). You also need to check for HS code and ask if your suppliers can provide all the documents required for the tax exemption, especially the country of origin, which is Vietnam.

Import duties to the US:

Compared to China, importers can enjoy lower tariffs with products from Vietnam thanks to they have a bilateral trade agreement. US importers can check the Harmonized Tariff Schedule to see the HS codes and related duties. In general, furniture products from Vietnam are not charged high duties, or not charged at all.

For example, in the Harmonized Tariff Schedule, dining table item which has HS code is: 9403.40.90. The general tax is noted as “free”. This mean this item is exempted from import tariffs for item from Vietnam to US.

Import duties to the EU:

The European Union Vietnam Free Trade Agreement (EVFTA) took effect on August 1st, 2020 paving the way for increased trade between the EU and Vietnam and helped to reduce the tariffs for furniture imports.

The EVFTA is expected to help eliminate nearly 99% of customs duties between the EU and Vietnam, depending on the products, the rates vary. According to the Ministry of Planning and Investment (MPI), the FTA is expected to increase Vietnam's GDP by 4.6% and exports to the EU by 42.7% by 2025. While the European Commission forecasts GDP of EU will increase by 29.5 billion USD by 2035.

For example, wooden furniture has HS code 9403.60.10 or HS code 9403.50.00 is exempted from taxes when imported from Vietnam to the EU and within EVFTA.

Supply Chain Challenges

Vietnam is the second-biggest exporter of furniture globally and they have signed many free trade agreements and EVFTA with EU so importers can have lower tariffs or exempted from taxes.

Workers from Vietnam are skill and can work with different material: wood, wicker, rattan, fabric, leather for indoor to outdoor furniture and can working with custom design.

Based on the above analysis, we can see that the potential for goods in general and furniture in particular in Vietnam to become part of the supply chain from other countries are massive.

The upside is that, but one of the biggest risks you have to face are controlling the quality of product.

Commonly, these businesses do not promote a dynamic supply chain environment with transparency at all levels. They also unfamiliar with a common set of quality systems, technical production standards, including raw material standards, transport standards, product specifications, and quality standards for finished products. Therefore, quality control is a significant issue for furniture production in Vietnam.

Quality Control in Vietnam

Moreover, Vietnam's developing economy having issues with sustainability, logistics, environmental, and labor issues (code violations and forced labor).

With a professional third-party support for quality control from the beginning such as supplier selection advice, evaluation and testing, test execution and product management, Ceratropic can help you with check and avoid problems in quality control.

We are located in Vietnam since 1997 so we are very familiar with the market, the way companies work and have a wide connection with this country.

Partnering with Ceratropic can help ensure your specifications and standards are being met and promote a holistic end-to-end supply chain.

Ceratropic is your best choice for quality control in Vietnam.

Just let us know your requirement.