Investing in design to achieve higher value along the supply chain, Vietnamese furniture businesses are adapting to the new demands of the global market.
Proactive Business Approach
"After more than 30 years of pursuit, the dream of unique names in Vietnam's furniture stepping onto the global market is now taking shape," commented Ms. Vo Thi Thu Ha, Brand Director of Jadora, at the HawaExpo 2024 International Furniture Fair, which opened on March 6 in Ho Chi Minh City. With a scale of up to 2,500 booths and an exhibition area of 12,000 square meters, the expo is expected to attract over 30,000 buyers and visitors from both domestic and international markets.
The event takes place against the backdrop of a remarkable turnaround for the export of wood and wood products from Vietnam in the first month of 2024, following a significant decline in 2023. Particularly noteworthy is the U.S. market, which has witnessed an increase of over 123% compared to the same period last year.
Gathering a design team of over 20 people, Jadora brings a distinctive voice to the exhibition with multifaceted living spaces. The two collections, Valente and Rudo, exude elegance and sophistication. Aiming for an interior style rich in Vietnamese culture, Jadora presents the collections Lộc and Hùng King. "All designs come from young Vietnamese talents," stated Ms. Thu Ha. This effort reflects a strategy to innovate and expand the market for Vietnamese businesses, working towards achieving export goals in 2024.
Jadora has chosen to pursue an Original Design Manufacturing (ODM) business model, unlike the majority of Vietnamese furniture companies that focus on export-oriented Original Equipment Manufacturing (OEM). According to Ms. Ha, this approach requires the company not only to ensure manufacturing quality but also to proactively invest in creative aspects, including design and brand building. Although this demands additional effort, it provides Jadora with full autonomy in business operations, eliminating dependence on specific orders.
"When taking control of the brand and participating in higher segments of the supply chain, the surplus value will be better. Additionally, possessing these values allows the business to operate in a proactive stance, minimizing the impact when the market experiences fluctuations. This was a key factor that contributed to the challenges faced by many Vietnamese furniture businesses when orders sharply declined in the past year of 2023," stated Ms. Ha.
The effort to open up new markets.
The Handicraft and Wood Processing Association of Ho Chi Minh City (Hawa) has announced that the Vietnamese wood market is undergoing recovery. In the first month of 2024, wood exports reached USD 1.5 billion, marking a significant increase of 72.5% compared to the same period in 2023. Currently, orders at many businesses have recovered up to 40%. However, the trend indicates that customer demands are becoming more stringent, requiring continuous changes in standards and designs, and prices must remain competitive. Additionally, businesses are putting efforts into expanding into new markets and diversifying sales channels to ensure annual targets are met.
Mr. Nguyen Chanh Phuong, Vice Chairman of HAWA, mentioned that in addition to the U.S. market, new markets are also showing strong growth and great potential, such as India, Canada, and the Gulf region. However, these markets impose high requirements on design, meeting green standards in both environmental and social aspects, and aligning with the global trends of sustainable production and consumption.
Jadora targets customers in Australia, Japan, the United States, and Canada. These markets all demand high product quality and adherence to sustainable environmental standards. The entire skilled workforce of AA Corporation, the parent company, is responsible for Jadora's manufacturing. This factory has obtained certifications such as FSC (Forest Stewardship Council) - ensuring controlled wood source, ISO 9001, ISO 14001, and the BSCI social responsibility standard.
In parallel with Jadora, AA Corporation has also introduced Abella, a brand providing comprehensive solutions for hotel interior projects in the mid-range to high-end segment, specifically targeting 3 to 4-star hotels. Currently, the creative team at Abella has successfully completed 40 hotel room and apartment studio designs, featuring diverse designs and areas, all crafted with laminate materials.
The investment in AA Corporation's new brand represents a bold move, showcasing efforts to elevate Vietnamese furniture to international standards. In June, Jadora will exhibit its latest collections at the International Index Exhibition in Dubai, one of the markets with significant potential for Vietnamese furniture. Alongside this international focus, Jadora also aims to serve domestic consumers, with Nha Xinh being the exclusive distributor for Jadora in the domestic market. "We are confident that Vietnamese innovations have the capability to appeal to international consumers and conquer the domestic market, valued at 5 billion USD," stated Ms. Ha.
Alongside promising prospects in the U.S. and European markets, the Vietnamese wood industry is aiming for a target of $16 billion in export turnover in 2024. According to Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Product Association (Viforest), despite signs of recovery, the wood industry still faces potential risks in 2024. "In 2024, the wood industry remains in a volatile position. The most critical solution for 2024 is to create an image of sustainable development and increased innovation for the Vietnamese wood industry. The industry association will intensify trade promotion efforts to regain growth momentum," stated Mr. Lap.
