What is the magic of Vietnam?
Attracting furniture companies to layout
According to Vietnamese official statistics, one-third of the country’s foreign-invested furniture companies are moved from China. What is the magic of Vietnam, attracting the furniture industry to enter the layout?
1. Low labor
In the early years, Adi and Nike abandoned China and turned Vietnam to produce their sports shoes. In fact, it can be said that China has eliminated low-skilled factories such as Adi and Nike. As China focuses on high-tech and service industries, labor costs rise. Compared with China, Vietnam’s labor costs have dropped by about 20%, which makes Vietnam an attractive migration address for Southeast Asian countries, especially Chinese furniture companies.
2. Advantages of furniture production
As a source of imports after China, Vietnam has more than $2 billion in furniture exported to the United States each year. It is also one of the world’s largest manufacturers of wooden furniture, with mature wooden furniture making process. According to China Wood Network, the number of timber and forest products companies in Vietnam has increased to 4,500, of which 1,500 are exporting to overseas markets.
At the same time, Vietnam has extensive forestry resources and a large number of legal forestry timber. These factors have made Vietnam the fifth largest timber exporter in the world.
The development of the furniture manufacturing industry has also been put on the agenda by the Vietnamese government. As a future furniture industry zone, Vietnamese Pingyang officials said that they should make Pingyang a central city in Southeast Asia’s furniture industry, so that people from all over the world can harvest furniture manufacturing. The latest technology.
3. Reduce tariffs and respond to anti-dumping
Since the Sino-US trade friction, the United States has imposed tariffs on Chinese furniture products to protect the interests of domestic producers. The transfer of Vietnam can bypass the US anti-dumping duties and also exempt the original Vietnamese timber import tariffs.
Not only that, but not long ago, the EU also signed a self-trade agreement with Vietnam, which is expected to enter into force in 2019. The agreement stipulates that the import tariff of 65% on the EU will be lifted first, and within ten years, the two parties will eliminate the tariff of more than 99% of the trade in goods. This is undoubtedly a big boost for Vietnamese companies to open up the European market.
Lend to Vietnam
Can you use the road to expand the international market?
This trend has started in 2015. At that time, the United States had imposed import duties on beds, bedside tables and other wooden Chinese furniture products, and some Chinese furniture companies began to transfer their production bases to Vietnam.
Today, Vietnam’s advantages in this area are becoming more apparent. In the context of Sino-US trade frictions, US tariffs on products exported to China, including furniture, may further increase.
The announcement of Meike Home clearly stated that the capital increase of the three target companies in Vietnam will help to optimize the production capacity, further transform Southeast Asia into the main supply source of the company’s North American market, and improve the global allocation of the company’s supply chain.
From 2008 to 2015, Meike’s export revenue dropped at a rate of up to two digits per year, from 1.384 billion yuan in 2007 to 613 million yuan in 2016, which was more than half of the loss.
In November last year, after Meike Home completed the acquisition of M.U.S.T. and the US high-end custom sofa Rowe, Meike Home began to build a global supply chain service capability. In the first half of 2018, Meike Home International’s wholesale business achieved a rapid growth of 44%.
Huang Minli, chairman of the Board of Directors of Man Wah Holdings, made it clear that the North American market will be more optimistic in the next two years. Since Trump took office, the income of the American working class will increase, which will boost consumption including furniture.
As Vietnam has signed 16 FTAs (Free Trade Agreements) with countries including the European Union, Japan, South Korea, etc., Vietnam’s furniture exports to these markets can enjoy low tariffs, for example, most of the handicrafts exported from Vietnam to the EU. And furniture will enjoy zero tariffs.
In this regard, Henglin and Yongyi shares both stated in the announcement that investing in the production base in Vietnam not only conforms to the strategic direction of the “Belt and Road” but also helps to avoid the risk of international trade friction.
In the future, can the Chinese furniture company “transfer Vietnam” plan meet the expected benefits for a long time? Leave time to give the answer.
(This article integrates the source of the potential home, furniture fans network)