IKEA supports Vietnamese woodwork makers

Countries, particularly Sweden, pay great attention to low-end woodwork products made by ASEAN developing countries. Although, in recent years, export turnover of Vietnam’s woodwork products has increased sharply, from US$220 million in 2000 to US$560 million in 2003, Vietnam’s share in the world remains modest with 7.3 percent of import turnover of Japan, 0.86 percent of the US and 0.2 percent of the EU.
     August Wingardh, chief representative of IKEA in Vietnam, said that one of the reasons that Vietnam remains in the low-end woodwork market is that most woodwork processing enterprises in Vietnam are of a small scale with few foreign-invested enterprises in woodwork export, so they cannot meet large orders.
     Statistics of the Ministry of Trade show that only 49 out of 139 foreign-invested enterprises in wood processing invest in making woodwork products. Vietnam should therefore, attract more foreign investors in woodwork processing, especially multinational corporations, operating in both production and distribution.
     Another reason is that Vietnamese makers have yet to understand customers’ psychology so they have yet to concentrate investment on diversifying designs and promoting marketing and advertisement activities. In addition, Vietnam’s poor infrastructure, high logistic costs and material shortages are also problems.
     Companies in Sweden are now seeking outsourcing contracts and subcontractors in other countries. This is a good opportunity for Vietnamese woodwork makers to access more markets and increase their export value.
     Wingardh stressed that one of the top requirements of Sweden and other European countries is the application of Corporate Social Responsibility (CSR). He said that the target of IKEA is to ensure that all products of the corporation originated from forests under proper management, and therefore Vietnamese makers must prove that their products were made in accordance with the law and existing regulations on forestry.
     IKEA has provided and will continue to provide guidelines and support for Vietnamese enterprises to meet the CSR standard. To do so will create a very great advantage for the Vietnamese widely over the costs.
     Wingardh admitted that Vietnam had great advantages in labour force with skilled workers, various materials, politic stability and the governmental support. However, Vietnamese enterprises have yet to fully tap their advantages.
     He also advised that Vietnamese enterprises should gather together to create a competitive force in collecting materials and signing contracts with partners, while promoting their participation in fairs and exhibitions to seek more opportunities.
     To promote the development of the wood industry, in recent years, IKEA has provided support for Vietnamese woodwork processing enterprises by organizing customers’ conferences and discussions on trade exchange between IKEA and local enterprises. Through these meetings, the two sides have opportunities to exchange experiences in production and distribution of handicrafts and interior decoration items.
     Asia accounts for 31 percent of IKEA’s purchasing volume. Vietnam is considered as the third largest handicraft and fine art exporter, after China and Thailand. Vietnam is expected to become a trading centre of IKEA in Asia.

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