Investing in value-added research and development, and penetrating deeper into global distribution and value chains, is both an opportunity and an effective method that many wood industry businesses in Binh Dinh are pursuing to sustainably expand their export markets.
With Tet (Lunar New Year) approaching, the furniture manufacturing workshop of Tien Dat Woodworking Joint Stock Company continues to operate at a rapid pace to meet the strict requirements of the global value chain distributed by MasterBrand (FBHS Group, USA). Mr. Do Xuan Lap, Director of Tien Dat Woodworking Joint Stock Company, stated: "To ensure MasterBrand's technical requirements, we spent a year restructuring production; investing in modern production lines and equipment, automatic fire protection systems, environmental treatment, and production safety standards. In return, we are shipping 3 containers per week, equivalent to $27,000 per week. This single factory alone accounts for 30% of the total revenue of all five factories; more importantly, it has expanded our export market sustainably.".
It's not just about changing technology; businesses also need to improve their organization, production processes, and invest in training their workforce. Ms. Nguyen Thi My, a worker at Tien Dat Woodworking Joint Stock Company, shared: “Every worker on the production line must meet occupational safety requirements. Even in the finished product packaging department, a very strict and precise error control process must be followed, and gloves must be worn to ensure there are no blemishes on the products.”.
Deeply involved in the global supply chain, Khai Vy Group Joint Stock Company (part of Khai Vy Group) is currently a supplier of wooden furniture to global supermarket chains like Ikea, Home Depot, and Lowe's for the US and European markets. Thanks to its participation in the supply chain, the company has grown, expanded its market, and achieved an average annual revenue increase of 201 million USD. Mr. Doan Van Trang, Chairman of the Board of Directors of Khai Vy Group, stated: “To become their partner, we strictly adhere to the regulations of international organizations and the demanding market, including FSC forest harvesting certifications, ensuring that raw materials have a clear origin and traceability; and a quality management system that meets ISO 9001:2008 standards…“.
Binh Dinh currently has over 150 enterprises engaged in wood processing for export, with a capacity exceeding 25,000 containers per year. In 2018, the wood industry achieved an export turnover of 423 million USD, accounting for 531% of the province's total export value. Mr. Le Minh Thien, Chairman of the Binh Dinh Wood and Forest Products Association, believes that Binh Dinh wood enterprises have many opportunities to participate more deeply in the global supply chain from new generation free trade agreements, including the Voluntary Partnership Agreement (VPA) FLEGT between Vietnam and the European Union signed in 2018.
However, Mr. Thien also pointed out three challenges for businesses participating in the chain: the supply of certified wood raw materials; production costs and labor productivity; and the distribution channel system. This requires, along with support and connectivity from the Government, ministries, and localities, proactive action from the businesses themselves, including resources, direction, and specific, systematic actions based on vision, core values, and long-term, sustainable goals.
According to Ngo Van Tong, Director of the Department of Industry and Trade, with the project to promote Vietnamese businesses' direct participation in foreign distribution networks by 2020, the Department of Industry and Trade is organizing for businesses to participate in promotional activities in international markets and access foreign distribution companies. Regarding the issue of improving forest management and the legality of wood products for export, the province has directed the Department of Industry and Trade and the Department of Agriculture and Rural Development to re-plan forests to meet standards in 2019.
