The demand for importing wooden furniture and interior decorations from Canada is quite large, although the proportion of Vietnamese goods in this market is still modest. It is forecasted that Vietnamese furniture and interior decoration products still have many opportunities to boost exports to Canada, even though this is a "gateway" to penetrate deeply into the North American market.
Canada imports an average of US$7 billion/year
Canada is one of the top 10 furniture manufacturers in the world. The country has a long history of expertise in furniture manufacturing. However, according to the Ministry of Industry and Trade, in recent years, due to a rapid increase in imports and decrease in exports, Canada has become a net importer of furniture products.
Mrs. Tran Thu Quynh, Director of Vietnam Trade Office in Canada, said that the average consumption demand of this item of a household in Canada was about US$700/year, of which the highest consumption was in the state of Ontario. In the period 2014 to 2021, Canada imported on average about US$550 million/month, about US$7 billion/year. The peak of imports was usually the last months of the year and the lowest was in January, February and July every year.
Mrs. Nguyen Thi Thu Thuy, Deputy Director of the Export Support Center (Trade Promotion Department, Ministry of Industry and Trade) said that in 2021, Vietnam's wooden furniture exports to Canada reached US$416.4 million, an increase of 27.4%, accounting for 16.7% of Canada's total import value. This showed that Vietnam's wooden furniture products have met the consumption demand. At present, at large supermarket chains such as COSTCO, IKEA, and LEON'S it could easily see furniture products made in Vietnam.
According to a source from marketingsightsreports.com, Canada's home furniture market is forecasted to grow at an average growth rate of 6% in the period 2021-2025. This growth figure is achieved thanks to the improvement in construction activities, especially the housing sector in many parts of Canada. The majority of furniture purchases are driven by consumers moving into new houses.
According to Mrs. Nguyen Thi Thu Thuy, the prospect of increasing Vietnam's export of wooden furniture and interior decoration products to the Canadian market is very positive, first of all, thanks to the large consumption demand and the positive impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
"Especially, if exploiting the Canadian market well, Vietnam's furniture and interior decoration products would also have the opportunity to promote to other markets in North America, because this is considered a "gateway" to enter this area," Thuy said.
Fear of lack of raw materials
Although ranking in 13th place among the countries exporting furniture and interior decoration to Canada, according to Mrs. Tran Thu Quynh, it is worth noting that Vietnam's market share in Canada is still very small compared to other countries.
From the perspective of businesses and industries, Mr. Nguyen Liem, Chairman of Binh Duong Wood Processing Association, said: "Vietnam's wood industry had changed a lot in recent years and had well-grasped market trends. For Canada, Vietnamese wood products were already present, meeting the consumption demand, but the number of exports compared to the market size was still small.”
To promote the export of furniture and interior decoration to Canada and North America in general, the difficult problem shared by many wood industry enterprises is the lack of birch wood raw materials which is used to manufacture kitchen cabinets due to import difficulties and greatly affected by the Russian-Ukrainian conflict. In fact, although Vietnam is not a country that directly imports a lot of wood materials from Russia, it indirectly imports a large amount through intermediate markets, typically China. After importing from Russia, Chinese wood enterprises will process and export to other markets, including Vietnam. On average, Vietnam annually imports more than 70,000 m3 of lumber and nearly 200,000 m3 of wood planks from China, including birch, yellow maple, oak and pine originating from Russia.
"Enterprises are looking forward to the support of state management agencies to find alternative sources of imported wood," Mr. Nguyen Liem said.
Sharing experience in trading furniture and interior decoration with the Canadian market, Canadian importers informed that there were many ways to sell goods through Canada. In particular, there were two main ways that were selling product components through Canada to assembly and sale of finished products.
For example, with the way of selling product components, enterprises have the advantage of compact packaging and convenient transportation, however, the high labor costs in Canada must be considered. Meanwhile, with semi-finished products, transportation costs will increase because large finished products are difficult to save space in packaging. Therefore, businesses need to find out information about the distribution of finished products. They can choose a retail channel or the help of an agent or sell directly to customers via the internet.
Mrs. Tran Thu Quynh added that Canada owned many high-end furniture brands. Therefore, Vietnamese enterprises could coordinate to cooperate in production and operating business in the form of OEM (original equipment manufacturer). The reason is that the labor cost in Canada is high, especially in the wood industry where workers are difficult to find, while manufacturing in Vietnam can solve these bottlenecks. In addition, domestic wood enterprises can also consider the possibility of “merge and acquisition” or start-up in Canada in the direction of investment
The Director of the Vietnam Trade Office in Canada also mentioned that domestic enterprises could also coordinate in training human resources, especially the combination of many types of materials in wood products, learning experience in wood and paint treatment, automation in production, taking advantage of the sales system of Canadian partners to bring goods to the US market.
"The Canadian government is strongly supporting enterprises to develop supply chains, many ancillary products for the Canadian wood industry are lack of supply and domestic enterprises are likely to participate," Mrs. Tran Thu Quynh said.
Source: VCN
Keywords: exports, Canada, North American market, wooden furniture, interior decorations, wood industry
