Furniture executives from around the world are knocking at the door of Vietnam, a rapidly emerging supplier of some of the cheapest woodwork exports on the market.
And while Vietnam’s furniture boom is welcome news for global retailers from the European Union and Japan, who are cashing in on low-priced imports, it could spell more trouble for some US manufacturers.
Indeed, with goods nearly 10% cheaper than those made in neighboring China, Vietnam is being courted by US manufacturing and retail executives looking for inexpensive desks, chairs, and household sets made from pine, cajuput or rubber wood.
The socialist republic on the Indochina peninsula and its surging furniture industry has been a cause for concern among other furniture makers, especially those in the United States, where the industry is deteriorating.
American wood-furniture manufacturers, based mainly in the South, have lost more than 30,000 jobs in the last three years, according to the US Department of Labor. The loss is due in large part to a flood of cheap Chinese imports.
With the influx of Vietnamese goods in the last year, furniture makers like St. Louis-based Furniture Brands International Inc., the largest US furniture manufacturer, and La-Z-Boy Inc., based in Monroe, Michigan, have reason to be worried.
Their products are already losing retail floor space to Chinese goods that typically sell for 30% less than US furniture. By comparison, Vietnamese-made furniture is eight to ten percent cheaper than China’s, according to Morgan Keegan analyst Laura Champine.
“What you’re seeing is US furniture executives all over Vietnamese manufacturers,” Champine said.
At the same time, Vietnam’s furniture boom would help retailers like Atlanta-based Havertys Furniture Companies Inc., which has been doubling its private-label imported furniture sales on a year-to-year basis, Champine said.
“Their imports to date have come largely from China, but Vietnamese product could conceivably offer an even more compelling value to consumers,” she said.
Made in Vietnam
The cost of labor in Vietnam is roughly 20 to 40% cheaper than in China, allowing Vietnamese furniture makers to offer quality items at lower prices.
With Chinese-made bedroom furniture facing a possible US tariff this year, analysts and experts believe even more business will head to Vietnam should the tariff pass.
In quantity of shipments, furniture exported by Vietnam to the US still ranks well below that of China, Canada and Mexico. China alone sent $5.6 billion worth of furniture to the US in 2003, according to the International Trade Administration.
Still, total US furniture imports from Vietnam leaped 155% last year to $123.5 million. Of the United States’ top 25%, the next highest percentage gain last year was Mexico at 35.5%.
Vietnam’s wooden furniture exports to reach $750 million this year.
In February, the Vietnam Ministry of Trade said it expects wooden furniture exports to rise 50% to $1 billion by 2005 and will reach $750 million this year.
The US is Vietnam’s third-largest importer behind the European Union and Japan, they said.
Last year, the country earned $560 million from furniture exports, a nearly 30% increase, the ministry said.
In April, the ministry will make its first-ever appearance at the biannual International Furniture Market in High Point, North Carolina, one of the industry’s largest trade shows featuring familiar brands such as Bassett, Broyhill, Sealy and Drexel Heritage.
The ministry’s appearance at the market will come just a week before the International Trade Administration is expected to rule on an anti-dumping petition.
In November 2003, 27 US furniture manufacturers and four unions filed the petition to the US government asking for a tariff on Chinese-made bedroom furniture. The group accuses the Chinese of dumping and selling goods at unfairly low prices to the point where it is causing damage to the domestic industry.
But critics of the proposed tariff say