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Furniture Industry
 - Vietnam & Global Market Outlook




Equatorial Hotel – Ho Chi Minh City
28 March 2013

DAM HUY BINH
Business Development Director
Dun & Bradstreet Vietnam
AGENDA

• Vietnam Timber and Furniture Industry

• Global Furniture Market Outlook

• US: Opportunities & Challenges for Vietnam Wood Furniture Exporters

• Solutions For Development of Vietnam Furniture Export




                                                                    2
Vietnam Timber & Furniture Industry




                                      3
VIETNAM TIMBER AND FURNITURE SUMMARY


• Processing & Manufacturing:
   o 2,500 domestic invested enterprises and 400 FDI enterprises
   o 1.796 enterprises in South East Area, Dong Nai (827), Bình
     Dương (762), Ho Chi Minh (207)
• Employment contribution:     300,000 persons
• Global export coverage :     Over 100 countries
• Export (90%); home consumption (10%)
• Material for manufacturing and export: Over 80% import from overseas




 Source: MOIT, GSO

                                                                     4
VIETNAM IMPORT OF TIMBER

         Timber Import Value in the past 5 years                                      Key Import Markets

        USD Million                                                     USD Million
1,600                                                     1,500
                                                                          285
                                                                  300
1,400                                             1,362           250
1,200                                                                           200 196
                 1,098                   1,147                    200
1,000
                                905                               150
 800                                                                                      89   86
                                                                  100                               62   50
 600                                                              50                                          31   28   26
 400                                                                -
 200

    -
               2008      2009     2010     2011   2012




        Source: MOIT

                                                                                                                        5
VIETNAM EXPORT VALUE OF TIMBER AND
FURNITURE IN THE PAST 5 YEARS

     USD Million
                                                    4,670
    5,000
                                            3,955
    4,000                          3,436
                   2,829
                           2,598
    3,000

    2,000

    1,000

         0
                   2008    2009    2010    2011     2012


 Source: MOIT

                                                            6
VIETNAM EXPORT OF TIMBER AND FURNITURE
2012
  Export turnover:                                  US$4.67 Billion - 19% YOY

  Ranking in Worldwide Furniture Export:             6th in the world, 2nd in SEA

                          Vietnam Key Export Market 2012


                                Other                        United
                     Korea
                              Countries,                    States of
                     South,
                                 13%                        America,
                      5%
                                                              39%
               EU,
               14%



                 Japan,
                  14%
Source: MOIT                               China,                                   7
                                            15%
KEY CHALLENGES

•   Product design competitiveness :
      o Weaker than China , Taiwan, Malaysia and Thailand
      o Monotonous, not diversified, so much dependent on foreign designs
•   Global competitiveness: have not appropriate plans and strategies of sales &
    marketing for world market penetration
•   Skilled manpower:
      o Lack of trained work force
      o Lack of professional designers for creating products of own styles
      o Lack of well trained and experienced marketing team thus losing profitable sales
         opportunities.
•   Uncontrolled production costs due to unsustainable energy price (electricity, coal,…) ,
    increase of minimum wage
•   Requirement for certificate of origin for legal timber as US LACET Act, EU FLEGT
    regulations from markets of high responsibility in society and environment




Source : MOIT, GSO, CSIL
                                                                                          8
GLOBAL FURNITURE MARKET OUTLOOK




                                  9
GLOBAL FURNITURE INDUSTRY


    World Furniture
                            •   China, Poland, Vietnam, Malaysia
     Production


 World Major Export         •   China, Italy, Germany, Poland, Vietnam, US, Canada,
     Countries                  Malaysia, Mexico


World Major Imports
                            •   US, Germany, France, Japan, UK, Canada
     Countries


                            •   EU, Norway, Switzerland, Iceland, North America:   46%
 World Consumption          •   Asia Pacific:                                      44%




Source: WTO, CSIL (Centre
                                                                                         10
for Industrial Studies)
GLOBAL FURNITURE INDUSTRY

Common furniture products:               Wood and metal household, office, and institutional furniture;
                                         mattresses; wood kitchen cabinets; commercial showcases and
                                         shelving


                                                                                                                                        USD Million
                                   Hong
                             Italy Kong
2012 sales revenue gained                            Samson Holding             423.44
from Global Furniture
Brands                                                         Natuzzi          629.79
                                      US



                                                            La-Z-Boy             1,231.68
                                      US




                                                        Temper-Pedic              1,402.90
                                      US




                                                        Herman Miller             1,724.10
                             US rlands Japan US




                                                                  HNI              2,004.00

                                                  Okamura Corporation               2,283.29
                                Nethe




                                                      Hunter Douglas                2,573.00

                                                           Steelcase                 2,749.50
                                  US




                                                       Leggett & Platt                   3,720.80
                             Swed
                              en




                                                                IKEA                                                                                  27,500.00

                                                                         0.00       5,000.00        10,000.00   15,000.00   20,000.00    25,000.00      11
                                                                                                                                                      30,000.00
PRODUCT DESIGN TRENDS BY MAJOR MARKETS

                                    Market            Design Trend
Current Global Designs
                                •   Europe            : Classic Designs
      Movement
•    Green, Sustainable &
     Healthy Designs (People    •   USA & Australia   : Contemporary Designs
     & Nature)
•    Multi Function             •   Middle East       : in between COMBI CD& CTD
•    Multi / Alternative
     Materials
                                •   East Asia         : Modern Designs (Including
                                    Korea, Japan,     modular system)
                                    Taiwan & India




    Source: WTO, CSIL (Centre
                                                                                    12
    for Industrial Studies)
GLOBAL: FURNITURE MERCHANT
   WHOLESALERS – 174,193 COMPANIES

   Size by revenue break                    Global Merchant Wholesalers

       1,000M - 10,000M         7

          500M - 1,000M         11

             50M - 500M         375

             10M – 50M              2,144

               5M - 10M             2,505

                1M - 5M                       14,260

                      <1M                                                         68,399

                            0         10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
Source: D&B Hoovers                                                                        13
                                                       No. of companies
GLOBAL: FURNITURE RETAILERS – 307,623
   COMPANIES


    Size by revenue break                Global Retail Trade Companies

      1,000M - 10,000M          20

          500M - 1,000M         27

             50M - 500M         259

              10M – 50M         1,050

                5M - 10M        1,479

                 1M - 5M                 19,096

                      <1M                                                               123,263

                            0         20,000   40,000   60,000   80,000    100,000 120,000 140,000
Source: D&B Hoovers                                     No. of companies                          14
US FUNITURE MARKET
OPPORTUNITIES AND
   CHALLENGES




                     15
US FURNITURE INDUSTRY – 2012 REVENUE OF
    MORE THAN USD 60 BILLION
                                           Institutional
                                             furniture
                                              (used in
                                              schools,
                                             hospitals,      Office
                                               and…        furniture,
                                                                               Household
                                                              30%
                                                                               furniture,
                                                                                  60%
               Household Consumption
                        Blinds and
Mattresses ,             shades ,                               Major Product Consumption
   15%                     10%          Wood
                                       kitchen
                                       cabinet,
                                         35%

           Non-
        upholstered
         furniture,
            20%
                                           Upholstered
                                            furniture,                                      16
 Source: D&B Hoovers
                                               20%
US FURNITURE INDUSTRY

   •   Country Risk - Household and office furniture sales depend on the health of the US
       economy

   •   Design Trend — Focus more on Design, Quality.
        o Office Furniture: More flexible to support changing work styles and greater
           numbers of wires and cables for computer equipment accommodation
        o Household Furniture: for more multipurpose rooms, with distinctions between
           kitchens, living, and dining rooms disappearing.

   •   Large installation of Inventory Control Systems to:
        o to track and age merchandise and monitor product availability
        o to fill customer orders on time
        o to decrease inventory costs at maximum
         Will require vendors of good production assemblies, finance in good condition,
          time-delivery committed transportation services for on time product delivery

   •   Finance Trend – More long term credit requirement to Sellers due to smoothing
       uneven cash flow from US buyers
Source: D&B Hoovers                                                                         17
US - OPPORTUNITIES FOR VIETNAM FURNITURE
    EXPORTERS
                                                                  USD million
                                                              1,000M – 10,000M           2

      US consumer spending
                                                                   500M – 1,000M         7
     on furniture and bedding
     forecast to grow 4.3% in                                         50M - 500M         56
               2013
                                                                       10M - 50M         271

                                                                        5M - 10M         361

     US Furniture Merchant Wholesalers –                                  1M - 5M                4,560
                      16,537 companies
USD million                                                                   < 1M                                                                40,406

50M - 500M       15
                                                                                     0        5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

                                                                                                           US Furniture Retailers –
 10M– 50M        240
                                                                                                              52,957 companies
  5M - 10M        323


   1M - 5M               1,598

                                                                     13,264
      <1M

                                                                                                                          Source: D&B Hoovers       18
             0         2,000     4,000   6,000   8,000   10,000    12,000 14,000
POTENTIAL MARKETS FOR 2013 EXPORT


   Traditional Markets:
   • US (Increase homebuilding index in 50 years)
   • Japan (Rebuilding after tsunami)
   • Singapore
   • Australia

   Emerging Markets:
   • Middle East: Saudi Arabia, UAE, Bahrain
   • Africa: Egypt, Algeria, Morocco, South Africa
   • Russia, Kazakhstan Chile




Source: CSIL, World Furniture, MTIB , D&B Hoovers    19
SOLUTIONS FOR DEVELOPMENT OF VIETNAM
FURNITURE EXPORT

•   Upgrade trained and skilled work force; esp., design team
•   Always monitor, update and establish plan to meet with consumer behaviors,
    preferences, designs, financial and legal developments in targeted markets;
•   Build global supply management system to avoid hidden supply disruption;
•   Aggressively penetrate global markets, actively approach various customers:
     o Direct buyers
     o Independent retailers
     o Hypermarkets
     o Contract manufacturing
     o Hotels and resorts, public projects
      Always be proactive in your business development plan, minimize
     your dependence on few of your key customers



                                                                                  20
SAMPLE OF A GOOD SALES LEADS FOR
VIETNAM FURNITURE EXPORTERS




                                   21
SAMPLE OF A GOOD SALES LEADS FOR
VIETNAM FURNITURE EXPORTERS– KEY PEOPLE
CONTACTS




                                          22
HOW TO GET YOUR BUSINESS INDENTIFIED
GLOBALLY




                                       23
You need more than information…




              Thank you



                                  24

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Furniture industry vietnam summary & global market outlook

  • 1. Furniture Industry - Vietnam & Global Market Outlook Equatorial Hotel – Ho Chi Minh City 28 March 2013 DAM HUY BINH Business Development Director Dun & Bradstreet Vietnam
  • 2. AGENDA • Vietnam Timber and Furniture Industry • Global Furniture Market Outlook • US: Opportunities & Challenges for Vietnam Wood Furniture Exporters • Solutions For Development of Vietnam Furniture Export 2
  • 3. Vietnam Timber & Furniture Industry 3
  • 4. VIETNAM TIMBER AND FURNITURE SUMMARY • Processing & Manufacturing: o 2,500 domestic invested enterprises and 400 FDI enterprises o 1.796 enterprises in South East Area, Dong Nai (827), Bình Dương (762), Ho Chi Minh (207) • Employment contribution: 300,000 persons • Global export coverage : Over 100 countries • Export (90%); home consumption (10%) • Material for manufacturing and export: Over 80% import from overseas Source: MOIT, GSO 4
  • 5. VIETNAM IMPORT OF TIMBER Timber Import Value in the past 5 years Key Import Markets USD Million USD Million 1,600 1,500 285 300 1,400 1,362 250 1,200 200 196 1,098 1,147 200 1,000 905 150 800 89 86 100 62 50 600 50 31 28 26 400 - 200 - 2008 2009 2010 2011 2012 Source: MOIT 5
  • 6. VIETNAM EXPORT VALUE OF TIMBER AND FURNITURE IN THE PAST 5 YEARS USD Million 4,670 5,000 3,955 4,000 3,436 2,829 2,598 3,000 2,000 1,000 0 2008 2009 2010 2011 2012 Source: MOIT 6
  • 7. VIETNAM EXPORT OF TIMBER AND FURNITURE 2012 Export turnover: US$4.67 Billion - 19% YOY Ranking in Worldwide Furniture Export: 6th in the world, 2nd in SEA Vietnam Key Export Market 2012 Other United Korea Countries, States of South, 13% America, 5% 39% EU, 14% Japan, 14% Source: MOIT China, 7 15%
  • 8. KEY CHALLENGES • Product design competitiveness : o Weaker than China , Taiwan, Malaysia and Thailand o Monotonous, not diversified, so much dependent on foreign designs • Global competitiveness: have not appropriate plans and strategies of sales & marketing for world market penetration • Skilled manpower: o Lack of trained work force o Lack of professional designers for creating products of own styles o Lack of well trained and experienced marketing team thus losing profitable sales opportunities. • Uncontrolled production costs due to unsustainable energy price (electricity, coal,…) , increase of minimum wage • Requirement for certificate of origin for legal timber as US LACET Act, EU FLEGT regulations from markets of high responsibility in society and environment Source : MOIT, GSO, CSIL 8
  • 10. GLOBAL FURNITURE INDUSTRY World Furniture • China, Poland, Vietnam, Malaysia Production World Major Export • China, Italy, Germany, Poland, Vietnam, US, Canada, Countries Malaysia, Mexico World Major Imports • US, Germany, France, Japan, UK, Canada Countries • EU, Norway, Switzerland, Iceland, North America: 46% World Consumption • Asia Pacific: 44% Source: WTO, CSIL (Centre 10 for Industrial Studies)
  • 11. GLOBAL FURNITURE INDUSTRY Common furniture products: Wood and metal household, office, and institutional furniture; mattresses; wood kitchen cabinets; commercial showcases and shelving USD Million Hong Italy Kong 2012 sales revenue gained Samson Holding 423.44 from Global Furniture Brands Natuzzi 629.79 US La-Z-Boy 1,231.68 US Temper-Pedic 1,402.90 US Herman Miller 1,724.10 US rlands Japan US HNI 2,004.00 Okamura Corporation 2,283.29 Nethe Hunter Douglas 2,573.00 Steelcase 2,749.50 US Leggett & Platt 3,720.80 Swed en IKEA 27,500.00 0.00 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 11 30,000.00
  • 12. PRODUCT DESIGN TRENDS BY MAJOR MARKETS Market Design Trend Current Global Designs • Europe : Classic Designs Movement • Green, Sustainable & Healthy Designs (People • USA & Australia : Contemporary Designs & Nature) • Multi Function • Middle East : in between COMBI CD& CTD • Multi / Alternative Materials • East Asia : Modern Designs (Including Korea, Japan, modular system) Taiwan & India Source: WTO, CSIL (Centre 12 for Industrial Studies)
  • 13. GLOBAL: FURNITURE MERCHANT WHOLESALERS – 174,193 COMPANIES Size by revenue break Global Merchant Wholesalers 1,000M - 10,000M 7 500M - 1,000M 11 50M - 500M 375 10M – 50M 2,144 5M - 10M 2,505 1M - 5M 14,260 <1M 68,399 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Source: D&B Hoovers 13 No. of companies
  • 14. GLOBAL: FURNITURE RETAILERS – 307,623 COMPANIES Size by revenue break Global Retail Trade Companies 1,000M - 10,000M 20 500M - 1,000M 27 50M - 500M 259 10M – 50M 1,050 5M - 10M 1,479 1M - 5M 19,096 <1M 123,263 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 Source: D&B Hoovers No. of companies 14
  • 15. US FUNITURE MARKET OPPORTUNITIES AND CHALLENGES 15
  • 16. US FURNITURE INDUSTRY – 2012 REVENUE OF MORE THAN USD 60 BILLION Institutional furniture (used in schools, hospitals, Office and… furniture, Household 30% furniture, 60% Household Consumption Blinds and Mattresses , shades , Major Product Consumption 15% 10% Wood kitchen cabinet, 35% Non- upholstered furniture, 20% Upholstered furniture, 16 Source: D&B Hoovers 20%
  • 17. US FURNITURE INDUSTRY • Country Risk - Household and office furniture sales depend on the health of the US economy • Design Trend — Focus more on Design, Quality. o Office Furniture: More flexible to support changing work styles and greater numbers of wires and cables for computer equipment accommodation o Household Furniture: for more multipurpose rooms, with distinctions between kitchens, living, and dining rooms disappearing. • Large installation of Inventory Control Systems to: o to track and age merchandise and monitor product availability o to fill customer orders on time o to decrease inventory costs at maximum Will require vendors of good production assemblies, finance in good condition, time-delivery committed transportation services for on time product delivery • Finance Trend – More long term credit requirement to Sellers due to smoothing uneven cash flow from US buyers Source: D&B Hoovers 17
  • 18. US - OPPORTUNITIES FOR VIETNAM FURNITURE EXPORTERS USD million 1,000M – 10,000M 2 US consumer spending 500M – 1,000M 7 on furniture and bedding forecast to grow 4.3% in 50M - 500M 56 2013 10M - 50M 271 5M - 10M 361 US Furniture Merchant Wholesalers – 1M - 5M 4,560 16,537 companies USD million < 1M 40,406 50M - 500M 15 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 US Furniture Retailers – 10M– 50M 240 52,957 companies 5M - 10M 323 1M - 5M 1,598 13,264 <1M Source: D&B Hoovers 18 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
  • 19. POTENTIAL MARKETS FOR 2013 EXPORT Traditional Markets: • US (Increase homebuilding index in 50 years) • Japan (Rebuilding after tsunami) • Singapore • Australia Emerging Markets: • Middle East: Saudi Arabia, UAE, Bahrain • Africa: Egypt, Algeria, Morocco, South Africa • Russia, Kazakhstan Chile Source: CSIL, World Furniture, MTIB , D&B Hoovers 19
  • 20. SOLUTIONS FOR DEVELOPMENT OF VIETNAM FURNITURE EXPORT • Upgrade trained and skilled work force; esp., design team • Always monitor, update and establish plan to meet with consumer behaviors, preferences, designs, financial and legal developments in targeted markets; • Build global supply management system to avoid hidden supply disruption; • Aggressively penetrate global markets, actively approach various customers: o Direct buyers o Independent retailers o Hypermarkets o Contract manufacturing o Hotels and resorts, public projects  Always be proactive in your business development plan, minimize your dependence on few of your key customers 20
  • 21. SAMPLE OF A GOOD SALES LEADS FOR VIETNAM FURNITURE EXPORTERS 21
  • 22. SAMPLE OF A GOOD SALES LEADS FOR VIETNAM FURNITURE EXPORTERS– KEY PEOPLE CONTACTS 22
  • 23. HOW TO GET YOUR BUSINESS INDENTIFIED GLOBALLY 23
  • 24. You need more than information… Thank you 24