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Vietnam has been identified as the biggest beneficiary of the US-China trade war, gaining around 7.9% of its gross domestic product directly from new business created by the conflict.1 In particular, Vietnam’s furniture industry has profited from greater access to the US market. How can Vietnamese furniture manufacturers take advantage of these opportunities?

Architecture

Background

While Vietnam has a long and distinguished history of producing furniture products for the domestic market, it has only had a single recognizable furniture industry for the last 20 years. Today, Vietnam’s furniture industry is one of the most dynamic operating in the world. It is currently the second largest exporter of furniture in the Asia-Pacific region, and fifth in the world, behind China, Germany, Italy, and Poland. In 2017, furniture exports were valued at around USD 7.66 billion, increasing to USD 8.66 billion in 2018.2

Vietnam’s manufacturers have sought to consolidate their position on the global stage by becoming an ever more attractive option for foreign companies looking for offshore manufacturers. Currently, Vietnam has around 1,500 furniture exporters, with around 450 of them being FDI (foreign direct investment) companies, accounting for over 45% of furniture exports.3

Vietnam’s key advantage is high flexibility. Originally focusing on outdoor furniture, in recent years it has begun to concentrate on creating new indoor furniture lines and has increased investment in advanced production techniques, which has encouraged foreign importers.4 To capitalize on this growth and encourage trade, a representative of the Ministry of Agriculture and Rural Development has recently stated the government’s wish to develop a world furniture center in the southern province of Dong Nai.5

Opportunity and Changing Consumer Demand

Changes in global trade relations are all expected to have a positive effect on Vietnam’s furniture manufacturers. The EU-Vietnam free trade agreement, the Comprehensive Progressive Tran-Pacific Partnership Agreement (CPTPP), and the current trade war between the US and China, are all expected to positively impact Vietnam’s furniture production market.6

A beneficiary of the US-Chinese tariff war, Vietnamese products currently enjoying zero tax, while Chinese manufacturers (the largest operator in the market) must contend with a 10% tariff. This may even rise to 25% if the trade war escalates.7

Consumers in EU countries, the US and Japan are, however, increasingly demanding that wood used in the construction of furniture is only sourced from legal sources. At a conference held by the Handicrafts and Wood Industry Association of Ho Chi Minh City in December 2018, Tran Quoc Khanh, Deputy Minister of Industry and Trade, stated that the Vietnamese goal of sustainable growth in the sector was dependent on strict compliance with the recently signed Voluntary Partnership Agreement on Forest Law Enforcement, and the markets ability to supply only products contain legal timber to international buyers.8

From humble beginnings 20 years ago, Vietnam’s furniture sectors is now the fifth largest in the world. If growth continues in the way that is envisioned, it is predicted that, within the next eight years, Vietnam will be the second largest producer of interior furniture in the world.9

SGS Vietnamese Furniture Capabilities

SGS in Vietnam has responded to this growth and opportunity by expanding its capabilities offered to the furniture sector. Testing, inspection and certification (TIC) services are provides for a range of furniture products, including:

  • Outdoor furniture – seating and table
  • Domestic furniture – seating, tables, storage & beds
  • Office furniture – seating, tables, cabinets and panel system
  • Children’s furniture – seating, tables, bunk bed and baby cribs
  • Non-domestic furniture – seating, tables, storage

To access the US market, our laboratories provide mechanical testing against:

  • ANSI BIFMA X5.1 – chairs
  • ANSI BIFMA X5.3 – vertical files
  • ANSI BIFMA X5.4 – lounge seating
  • ANSI BIFMA X5.5 – tables
  • ANSI BIFMA X5.6 – panel systems
  • ANSI BIFMA S6.5 – small/home office
  • ANSI BIFMA X5.9 – storage, cabinets
  • ANSI SOHO S 6.5 – office furniture
  • ANSI BIFMA X6.1 – educational seating
  • ASTM F 1427-07 – children's/picnic tables
  • ASTM F 1838 – children's tables
  • ASTM F 2057 – storage, cabinets

To access EU markets:

  • Seating – EN 12520, EN 1022, EN 1335, EN 13761, BS 4875
  • Tables/desks – EN 12521, EN 1730, EN 527-2
  • Outdoor furniture – EN 581 Part 1, 2, 3
  • Contract furniture – EN 15732, EN 16139
  • Glass shelves – BS 6206
  • Cabinets – BS 4875-7
  • Domestic and kitchen storage units and worktops – safety requirements and test methods EN 14749, EN 16121

In addition, we can offer furniture testing for the Australian and Japanese markets, packaging testing based on the ISTA standard, chemical testing against standards relating to lead content, formaldehyde emissions, phthalates, PCP content, total cadmium content, azo dyes, pentachloro phenol, and against flammability regulations. In addition, SGS can also provide the inspection, auditing and certification services to furniture industry.

SGS has been offering quality, independent, TIC services in Vietnam since 1989. With laboratories in Ho Chi Minh City and Hai Phong, SGS provides a one-stop solution for furniture manufacturers looking to export their products.

For more information, please contact:

Joe Wong
Hardlines Laboratory Manager
SGS Vietnam Ltd.
t: +84 225 355 2722 ext.317

Thanh Tran
Hardlines Sales Manager
SGS Vietnam Ltd.
t: (84 28) 3816 0999

Sources

1 It’s not China or the US: Here are the trade war’s winners — so far
2 About Vietnam’s Furniture Industry
3 The Furniture Industry in Vietnam
4 Vietnam wooden furniture products now target high-end market
5 Vietnam expected to become second largest furniture exporter
6-7 Vietnam aims to become furniture hub
8-9 Vietnam expected to become second largest furniture exporter