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.
As a result of the US-China trade war which has spurred supply chains relocating away from China. The movement out of China into Vietnam was already underway before the current tariff crisis but it has accelerated greatly over the past two years. Today, Vietnam’s wooden furniture exports to the U.S. increased 18.6% CAGR in the 12 months to July 31 versus calendar 2016.
Vietnam’s furniture industry is very diverse, ranging from high-end custom made wood furniture to small boutique shops. Companies like IKEA, Ashley Furniture, West Elm, and more manufacture furniture in Vietnam.
The country has around 1,500 furniture exporters, with around 450 of them being FDI (foreign direct investment) companies, accounting for over 45% of furniture exports. Some of the major players currently dominate the market. However, with technological advancement and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and by tapping new markets.
Words by Marc Djandji, CFA. Investment professional accompanying clients in their expansion journey into ASEAN and Canada. Follow Marc on his LinkedIn here.