IKEA, the world’s largest furniture retailer plans to double its orders from Vietnam in the next three years. At the moment, the conglomerate is the largest buyer of Vietnamese hand-made products.
Mikael Demitz-Helin, manager of IKEA Trading in Southeast Asia, says Vietnamese suppliers of products like textiles, furniture, handicrafts and ceramics were highly competitive on the global market.
IKEA, which has been doing business in Vietnam for 14 years, shipped out 25,000 containers of hand-made Vietnamese products last year to its stores worldwide. Its Southeast Asian headquarters are based in Ho Chi Minh City and the firm currently does business with 42 Vietnamese companies producing textile, wood and metal products. IKEA has 1,047 suppliers, worldwide.
Demitz-Helin told Thanh Nien Weekly that Vietnam is a choice manufacturing destination due to its competitive advantages of cheap, skilled labor and abundant raw materials.
He said many Vietnamese firms hoping to break into the global market have been hindered by a shortage of investment. Without proper funding, many hand-made product manufacturers find themselves unable to increase their production to meet soaring international demand.
“Local businesses have utilized the nation’s low labor costs and need to invest in technology [to meet] bigger orders from international buyers,” said Demitz-Helin.
He said IKEA has extended technical support to small manufacturing firms seeking to become IKEA’s long-term suppliers.
Selman Aycan, a representative from Turkish Businessmen and Industrialists in Vietnam (TUSKON) said buyers in the European-Asian country have discovered Vietnam as a new source of home products like furniture, rattan and bamboo handicrafts in addition to products like building materials and plastics.
Aycan said that two-way trade between Turkey and Vietnam doubled last year nearing US$500 million.
An unofficial source said the exchanges amounted to $390 million during the first eight months of this year.
Turkish buyers had been previously unaware of Vietnam due to the geographical distance between the two countries, said Aycan, who led a delegation of Turkish businesses to join an export exhibition of furniture in HCMC last week.
He said the association will invite a delegation of Vietnamese craft sellers to visit the Turkish market next summer.
China has emerged as a major buyer of Vietnamese handmade products, according to an official from the Handicraft and Wood Industry Association of HCMC or HAWA.
Dang Quoc Hung, deputy chairman of the association, said furniture factories have reached their capacity to fill orders from international importers, especially Chinese buyers.
“It is strange that local firms have received many orders for high-quality products from China, the world’s biggest wooden product exporter,” said Hung.
Hung told Thanh Nien Weekly that Vietnam’s export of high-quality furniture to China soared from $100 million to $230 million in the first eight months of this year. Vietnam exported $890 million and $270 million worth of furniture to the US (the world’s largest importer) and Japan respectively in the same period, according to HAWA.
Chinese manufacturers have focused on low-priced products and left a big hole for high-quality furniture in the domestic market, said Hung, adding that demand for the product has grown as China’s high-income demographic continues to flourish.
Expanding Chinese wealth could bring opportunities for other producers as well, he said.
Meanwhile, Vietnam’s rattan and bamboo furniture exports have been valued at $2.41 billion and $153 million respectively. The figures represent a 34.5 and 18 percent year-on-year increase in the first nine months of 2010, according to the General Statistics Office.
The office also said the country shipped $8 billion worth of textiles and garments – a 20 percent increase from January to September.