Furniture Industry

- Vietnam & Global Market Outlook

DAM HUY BINH

Business Development Director

Dun & Bradstreet Vietnam

Equatorial Hotel – Ho Chi Minh City

28 March 2013

• Vietnam Timber and Furniture Industry

• Global Furniture Market Outlook

• US: Opportunities & Challenges for Vietnam Wood Furniture Exporters

• Solutions For Development of Vietnam Furniture Export

AGENDA

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Vietnam Timber & Furniture Industry

3

• Processing & Manufacturing:

o 2,500 domestic invested enterprises and 400 FDI enterprises

o 1.796 enterprises in South East Area, Dong Nai (827), Bình

Dương (762), Ho Chi Minh (207)

• Employment contribution: 300,000 persons

• Global export coverage : Over 100 countries

• Export (90%); home consumption (10%)

• Material for manufacturing and export: Over 80% import from overseas

VIETNAM TIMBER AND FURNITURE SUMMARY

4

Source: MOIT, GSO

VIETNAM IMPORT OF TIMBER

5

-

50

100

150

200

250

300 285

200 196

89 86 62 50

31 28 26

2008 2009 2010 2011 2012

Timber Import Value in the past 5 years Key Import Markets

1,098

905

1,147

1,362

1,500

-

200

400

600

800

1,000

1,200

1,400

1,600

USD Million USD Million

Source: MOIT

VIETNAM EXPORT VALUE OF TIMBER AND

FURNITURE IN THE PAST 5 YEARS

6

0

1,000

2,000

3,000

4,000

5,000

2,829 2,598

3,436

3,955

4,670 USD Million

2008 2009 2010 2011 2012

Source: MOIT

VIETNAM EXPORT OF TIMBER AND FURNITURE

2012

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Export turnover: US$4.67 Billion - 19% YOY

Ranking in Worldwide Furniture Export: 6th in the world, 2nd in SEA

United States of America,

39%

China, 15%

Japan, 14%

EU, 14%

Korea South,

5%

Other Countries,

13%

Vietnam Key Export Market 2012

Source: MOIT

• Product design competitiveness :

o Weaker than China , Taiwan, Malaysia and Thailand

o Monotonous, not diversified, so much dependent on foreign designs

• Global competitiveness: have not appropriate plans and strategies of sales &

marketing for world market penetration

• Skilled manpower:

o Lack of trained work force

o Lack of professional designers for creating products of own styles

o Lack of well trained and experienced marketing team thus losing profitable sales

opportunities.

• Uncontrolled production costs due to unsustainable energy price (electricity, coal,…) ,

increase of minimum wage

• Requirement for certificate of origin for legal timber as US LACET Act, EU FLEGT

regulations from markets of high responsibility in society and environment

KEY CHALLENGES

8 Source : MOIT, GSO, CSIL

GLOBAL FURNITURE MARKET OUTLOOK

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GLOBAL FURNITURE INDUSTRY

10

World Furniture

Production • China, Poland, Vietnam, Malaysia

World Major Export

Countries

• China, Italy, Germany, Poland, Vietnam, US, Canada,

Malaysia, Mexico

World Major Imports

Countries • US, Germany, France, Japan, UK, Canada

World Consumption • EU, Norway, Switzerland, Iceland, North America: 46%

• Asia Pacific: 44%

Source: WTO, CSIL (Centre

for Industrial Studies)

Common furniture products: Wood and metal household, office, and institutional furniture;

mattresses; wood kitchen cabinets; commercial showcases and

shelving

GLOBAL FURNITURE INDUSTRY

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27,500.00

3,720.80

2,749.50

2,573.00

2,283.29

2,004.00

1,724.10

1,402.90

1,231.68

629.79

423.44

0.00 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 30,000.00

IKEA

Leggett & Platt

Steelcase

Hunter Douglas

Okamura Corporation

HNI

Herman Miller

Temper-Pedic

La-Z-Boy

Natuzzi

Samson Holding S

we

de

n

US

U

S

Neth

erl

an

ds J

ap

an

U

S

US

U

S

US

It

aly

H

on

g

Ko

ng

USD Million 2012 sales revenue gained

from Global Furniture

Brands

PRODUCT DESIGN TRENDS BY MAJOR MARKETS

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Current Global Designs

Movement

• Green, Sustainable &

Healthy Designs (People

& Nature)

• Multi Function

• Multi / Alternative

Materials

Market Design Trend

• Europe : Classic Designs

• USA & Australia : Contemporary Designs

• Middle East : in between COMBI CD& CTD

• East Asia

Korea, Japan,

Taiwan & India

: Modern Designs (Including

modular system)

Source: WTO, CSIL (Centre

for Industrial Studies)

GLOBAL: FURNITURE MERCHANT

WHOLESALERS – 174,193 COMPANIES

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68,399

14,260

2,505

2,144

375

11

7

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

<1M

1M - 5M

5M - 10M

10M – 50M

50M - 500M

500M - 1,000M

1,000M - 10,000M

Global Merchant Wholesalers Size by revenue break

No. of companies Source: D&B Hoovers

GLOBAL: FURNITURE RETAILERS – 307,623

COMPANIES

14

123,263

19,096

1,479

1,050

259

27

20

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000

<1M

1M - 5M

5M - 10M

10M – 50M

50M - 500M

500M - 1,000M

1,000M - 10,000M

Global Retail Trade Companies Size by revenue break

No. of companies Source: D&B Hoovers

US FUNITURE MARKET

OPPORTUNITIES AND

CHALLENGES

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US FURNITURE INDUSTRY – 2012 REVENUE OF

MORE THAN USD 60 BILLION

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Household furniture,

60%

Office furniture,

30%

Institutional furniture (used in schools,

hospitals, and …

Wood kitchen cabinet,

35%

Upholstered furniture,

20%

Non-upholstered

furniture, 20%

Mattresses , 15%

Blinds and shades ,

10%

Major Product Consumption

Household Consumption

Source: D&B Hoovers

• Country Risk - Household and office furniture sales depend on the health of the US

economy

• Design Trend — Focus more on Design, Quality.

o Office Furniture: More flexible to support changing work styles and greater

numbers of wires and cables for computer equipment accommodation

o Household Furniture: for more multipurpose rooms, with distinctions between

kitchens, living, and dining rooms disappearing.

• Large installation of Inventory Control Systems to:

o to track and age merchandise and monitor product availability

o to fill customer orders on time

o to decrease inventory costs at maximum

Will require vendors of good production assemblies, finance in good condition,

time-delivery committed transportation services for on time product delivery

• Finance Trend – More long term credit requirement to Sellers due to smoothing

uneven cash flow from US buyers

US FURNITURE INDUSTRY

17 Source: D&B Hoovers

US - OPPORTUNITIES FOR VIETNAM FURNITURE

EXPORTERS

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40,406

4,560

361

271

56

7

2

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

< 1M

1M - 5M

5M - 10M

10M - 50M

50M - 500M

500M – 1,000M

1,000M – 10,000M

13,264

1,598

323

240

15

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

<1M

1M - 5M

5M - 10M

10M– 50M

50M - 500M

US Furniture Retailers –

52,957 companies

US Furniture Merchant Wholesalers –

16,537 companies USD million

USD million

US consumer spending

on furniture and bedding

forecast to grow 4.3% in

2013

Source: D&B Hoovers

Traditional Markets:

• US (Increase homebuilding index in 50 years)

• Japan (Rebuilding after tsunami)

• Singapore

• Australia

Emerging Markets:

• Middle East: Saudi Arabia, UAE, Bahrain

• Africa: Egypt, Algeria, Morocco, South Africa

• Russia, Kazakhstan Chile

POTENTIAL MARKETS FOR 2013 EXPORT

19 Source: CSIL, World Furniture, MTIB , D&B Hoovers

• Upgrade trained and skilled work force; esp., design team

• Always monitor, update and establish plan to meet with consumer behaviors,

preferences, designs, financial and legal developments in targeted markets;

• Build global supply management system to avoid hidden supply disruption;

• Aggressively penetrate global markets, actively approach various customers:

o Direct buyers

o Independent retailers

o Hypermarkets

o Contract manufacturing

o Hotels and resorts, public projects

Always be proactive in your business development plan, minimize

your dependence on few of your key customers

SOLUTIONS FOR DEVELOPMENT OF VIETNAM

FURNITURE EXPORT

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SAMPLE OF A GOOD SALES LEADS FOR

VIETNAM FURNITURE EXPORTERS

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SAMPLE OF A GOOD SALES LEADS FOR

VIETNAM FURNITURE EXPORTERS– KEY PEOPLE

CONTACTS

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HOW TO GET YOUR BUSINESS INDENTIFIED

GLOBALLY

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Thank you

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