Workers produce wood products for export at Hiep Long Fine Furniture Co in the southern province of Binh Duong. — VNA/VNS Photo Thanh Vu

HA NOI (Biz Hub) — Craft villages making wooden products in Viet Nam need to work closely and develop a distribution system to increase their domestic market share and challenge foreign products.

According to Nguyen Ton Quyen, General Secretary of the Viet Nam Timber and Forest Products Association, there were around 1,000 craft villages making wood products throughout the country.

However, not too many companies showed interest in the domestic wood market even though the local demand for wood products was rising.

Quyen said that with the rising demand for interior decoration from households, hotels, offices and new urban areas amid a recovery of the property market, the local market for wood products had good potential.

This seemed strange, considering the fact that Viet Nam was ranked sixth in the world for wood and wood exports with a turnover of US$5.3 billion last year and a presence in around 120 countries and territories.

Nguyen The Truong, Director of the Department of Rural Development of northern Nam Dinh Province, where around 20 villages with 300 wood processing companies were located, said local companies mainly used outdated machinery and simple technology in production due to their limited financial capabilities.

As a result, they mainly processed raw material for big companies and their products for local consumption were just basic designs, he said.

Ngo Sy Hoai, vice president of the Association of the Viet Nam Timber and Forest Products Association, said that local producers were unable to challenge foreign competitors who could, more easily, meet the demands of consumers opting for modern designs at reasonable prices.

"Local producers can see the potential in the market, but cannot compete due to higher production costs," he said, pointing to the lack of distribution systems that added to the difficulty in expanding their presence in the local market.

Experts also said that promotional activities and application of e-commerce by trade villages in the distribution of wood products also remained weak.

The local consumption of wood products was still not focused and also lacked a consistent development strategy, said Vo Thanh Do, Deputy Director of the Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production.

While some villages coordinated with each other to specialise in production, unhealthy competition still existed during the sale, said president of well-known Dong Ky Wood Carving Village Association, Vu Quoc Vuong.

Deputy President of the Viet Nam Trade Villages Association, Trinh Quoc Dat said craft villages producing wood products should join hands to develop a nationwide distribution network to bring their products to local consumers.

In addition, renovation in materials, designs and quality were necessary to cater to consumer tastes.

The Ministry of Agriculture and Rural Development aimed to develop the local market for wood products to reach $4 billion by 2020 from the current $2.25 billion. — VNS