Continuing the series of articles on sharing experiences in starting a business in the export industry, this article will be my practical experiences when researching and understanding wood export products. Among the key export items of Vietnam, wood and wood products also belong to the group of key commodities.
So this article will help you get an overview of wood export. Thereby, it helps you to choose the right products for export.
What products does wood export include?
export wooden products
Vietnam currently only allows the export of timber belonging to the group of planted forest timber such as acacia, melaleuca, pine, rubber.... In addition, we also encounter enterprises exporting teak wood, but according to my understanding, most of this teak wood source comes from Laos. Acquired by Vietnamese enterprises and exported in the form of temporary import for re-export.
Low value export wood products can be mentioned as follows:
Round timber: Export of logs is often discouraged because of its low value and waste of wood resources. Thereby directly affecting the supply of wood for Vietnamese enterprises in the wood processing industry and wood products.
Sawn timber: is also a group of planted timber, but instead of being sold as logs, it will be sawn to the required size of the partner, usually sawn to make pallets or flooring....
Laminated wood: is the form of small wooden bars that are mortised (mortal or vertical) to connect to form long wooden bars. Many long wooden slats are linked together to create standard sized wooden planks (1m22 x 2m44) with various thicknesses. There are also cases where the size of the wooden plank is created according to the individual requirements of the customer.
rubber wood joins bars
Small wooden slats are mortised
plywood for export
Many wooden slats are assembled into a standard size plank
Peeled board: the wooden slats are peeled into thin boards, then left to dry to be used as raw materials for plywood production.
peeled board
Drying peeled boards
General characteristics of this wood group:
The above forms of wood bring low export value but affect the supply of raw materials for the domestic wood processing industry, so the government restricts exports by imposing a 25% tax. Only peeled board is 10% - 15%.
You can understand the above problem as follows: export wood processing enterprises such as manufacturing furniture, wooden housewares, plywood or pallets can compete with businesses in the world based on to the abundant and cheap supply of wood in the country.
If now this wood supply is allowed to be exported massively, it will lead to a supply shortage, indirectly full of high raw material prices, causing difficulties for export wood processing enterprises.
In addition, the above 4 types of wood products have low export value and do not bring too many benefits to our country.
Therefore, the government imposes taxes to control the export of this wood.
High value export wood products can be mentioned as:
Plywood: made from many thin wooden planks stacked on top of each other to form a standard sized wooden board (1m22 x 2m44).
Film coated plywood
Plywood of various types such as plywood for packaging, pallets; plywood for making furniture; film-coated plywood; plywood covered with bintangor, covered with veneer….
Most of Vietnam's plywood is considered low quality and is often exported for packaging, so the value is still not high.
A country that is highly rated for plywood for furniture production is Malaysia. The value of this plywood item is very high.
Wooden furniture: products such as wooden tables and chairs, wooden beds, wooden bookshelves, etc. are highly recommended for export because they bring high value for export and create many jobs for domestic workers.
Wooden luggage rack
This item is often produced and exported by large companies that invest in a methodical factory.
Wooden housewares: can be mentioned as wooden spoons, wooden chopsticks, wooden spoons, wooden cutting boards, wooden boxes…. These items are also encouraged to be exported by the government.
Export of wooden bird cages
Some other wood products: wood chips to produce seconds or raw materials for the production of pellets, MDF boards, flooring....
The above-mentioned high-value export wood products are encouraged to be exported, so they are given preferential treatment with a tax rate of 0%.
The main markets of wood exports
The main markets of wood export are China, India, Korea, Japan, Europe, America...
In there:
China usually imports logs and sawn timber to make pallets, logs timber for furniture production, and plywood to make plywood.
India imports logs, sawn timber, peeled boards, plywood and laminated timber
Korea imports sawn timber, plywood, laminated timber and furniture
Japan imported plywood and furniture. In addition, Japan often requires wood products to have FSC certification - certification of sustainable forest planting and harvesting.
Europe and America import plywood and furniture. These countries also require FSC certification for wood products.
Thus, China, India and Korea are the three countries that import the most wood from Vietnam, but most of it is in raw or low-value form to produce products of higher commercial value. These countries also often offer quite low prices, but in return they do not require too high a quality and often buy in large quantities.
Imagine if no export tax was imposed on these low-value wood products, with the import price being reduced by 25%, the three countries would export and resell high-value commercial products at a high price. 25% off.
Then how can our export wood processing enterprises compete???
Vietnam's wood export advantages
sawn acacia wood
Acacia lumber workshop
Countries with a developed wood processing industry such as China, India, and Korea do not have too many raw materials, so they are forced to import.
When the source of natural wood from Africa or Eastern Europe is increased because of the reduced area and long transportation distance.
Vietnam, with abundant and cheap plantation timber, has a close distance. In addition, the wood quality of Vietnam's planted forests is considered to be quite good, suitable for the requirements of the wood processing industry.
Therefore, our country emerges as a potential destination to import timber.
Challenges of wood exports
Besides the advantages, the export wood industry is also facing many difficulties such as:
Most enterprises still do not have enough potential to invest in factories and equipment to produce high-value products that are only being exported raw or of low value and quality. Leading to less wasted revenue for the country and pressure on raw material prices for enterprises processing fine products.
The supply of plantation timber is high among the people, so most of the wood origin has not been certified by FSC. Limit the export market. In the future, many timber importing countries will require this FSC certification. If we don't solve it soon, it will be very difficult for our businesses to develop.
Massive development without control and planning leads to unfair competition between businesses. Lower the selling price. (This only benefits the Chinese guys selling machines.)