As per research conducted by Furniture Today, Vietnam shipped furniture worth USD 7.4 billion to the United States in 2020. This shows a marked increase of nearly 31% from the previous year, during which the total value of exported furniture was about USD 5.7 billion.
In contrast, China exported furniture worth nearly USD 7.33 billion to the United States in 2020. This is a significant drop of nearly 25% from 2019’s USD 9.7 billion.
These figures show how Vietnam’s potential and importance in the global furniture market has increased in recent years. IKEA and Kohler are some of the world’s largest brands that have set up business in Vietnam.
Vietnam emerged as a major player in the wooden bedroom furniture market due to the anti-dumping tariffs that were imposed on Chinese furniture makers starting in June 2004.
Moreover, over the past two and a half years, a more significant shift has occurred due to the United States government placing tariffs of up to 25% on all furniture categories.
Important Market Trends in 2022
How the Demand for Bedroom Furniture is Accelerating Market Growth
Beds, bedside tables, drawers, wall-mounted shelving, children’s beds, and various other similar items are examples of bedroom furniture. The sharp rise in living standards of the Vietnamese population is driving this sector’s expansion, encouraging greater production and marketing of premium-grade products. Moreover, as disposable household incomes rise, consumers’ ability to spend money increases along with their willingness to pay more for luxury goods and services.
Additionally, the emerging demand for independent housing, increasing individual household incomes, and positive economic growth is encouraging customers to spend more money on high-end bedroom furnishings.
Customers are inclined towards purchasing small, portable furniture as rooms get smaller to make the best use of the available space. It is anticipated that the demand for bedroom furniture will increase rapidly in the immediate future.
How the Export of Wooden Furniture Products is Driving Market Growth
Vietnamese wood products have seen impressive growth in recent years as the country emerges as a leading exporter of wooden furniture goods. In fact, this rapidly expanding sector is becoming a vital component in driving the Vietnamese economy. The top export market for Vietnamese wooden products is the United States, which was the main contributor to the success of the country’s wooden exports in 2021. Additionally, Vietnam is also one of the biggest suppliers of wooden furniture in China.
Vietnam’s wood furniture manufacturers have invested heavily in upgrading their production technology and operations to stay in line with global market trends. This consistent improvement in technology and the significant trade boost will further drive the expansion of the wood and furniture industry in Vietnam.
Kitchen Furniture Segment in Vietnam
Fitted kitchen units and wooden furniture make up the key components of the furniture category. The rising demand for residential kitchen remodeling and rapid urbanization are the two primary factors driving the demand for this type of furniture. With the steady expansion in the hotel industry, investments in kitchen furniture and fixtures are on the rise.
The Vietnamese home furniture and furnishings market is also seeing greater investment in kitchen furniture as a result of the high demand generated by modular kitchen trends.
In North Vietnam, Hoi An is well known for selling high-end, hand-crafted kitchenware items, including plate mats and wine holders, alongside eco-friendly items made from coconut or bamboo, i.e., bowls and spoons.
Why choose Vietnam for manufacturing furniture?
Manufacturing businesses worldwide are searching for the next best location to set up their production units in light of the escalating US-China trade conflict. Only a few economies, like Vietnam, have the requisite human capital and infrastructure to emerge as reliable manufacturing destinations in Asia.
India, which is one of the fastest-growing economies, had been a strong contender. However, according to Bloomberg, since 2014, the nation has recorded one of the lowest percentages of worker participation worldwide. In addition, the government has not made any significant efforts to improve its industrial policy, nor has it signed any free trade agreements throughout its eight-year reign.
Therefore, Vietnam stands out as a strong contender due to its stable political environment, abundant natural resources, cooperative government, and affordable skilled workforce.
Best ways to set up furniture production in Vietnam
To start manufacturing furniture in Vietnam, investors have the option of partnering with an existing manufacturer, setting up their own company and factory, or conducting an M&A of an existing manufacturer.
Outsourcing to a manufacturer
By outsourcing manufacturing to an existing local partner, you can simply send blueprints and instructions to have all your products made and shipped to you wherever you are.
- First, you need to find a factory that fits your needs (in terms of equipment, location, specialty, etc.). You can also consult a manufacturing consultant.
- After that, send your brochure and a list of specific products that you want to manufacture.
- Once you have negotiated with the manufacturer and planned out the terms of the partnership, you can work with them on a service contract. This is crucial for the ideal implementation of your manufacturing process.
- Finally, the contract will be signed, and your products will be on their way.
- Export and/or storage of the products aren’t always done with the same provider, so you might have to work with a third party (logistics and/or storage solutions).
Setting up a company
This option is more suitable for those looking to establish a presence in Vietnam in the near future. With your own business entity, you can turn Vietnam into your own manufacturing and export hub. By doing so, you’re taking advantage of not only the capable workforce but also the prospective business opportunities.
- Starting a company generally involves choosing a legal entity, preparing the documents, and going through all the compliance obligations (including accounting, tax, and HR). Read our guide to company registration.
- Then you can choose whether you want to partner with an existing factory (see the previous section), or build your own.
- To build your own, you have to apply for the relevant licenses and permits (environmental, fire safety, etc.), then find a suitable contractor.
M&A of an existing manufacturer
Mergers and acquisitions (M&A) refers to transactions between two companies combining in some form. Generally, in Vietnam, investors can acquire an existing company or factory in order to own all shares of the target company or own a majority of shares to hold operating rights.
This procedure is similar to that of a foreign investor buying an established company in Vietnam (also known as a shelf company), going through legal and financial due diligence steps to review the legality and financial position of the target company.
See our guide for buying a company in Vietnam!
Notable furniture manufacturers in Vietnam
- Kaiser (Binh Duong province) – Website: www.kaiser-furniture.com
- Tien Phu (Dong Nai province) – Website: www.noithattienphu.bizz.vn
- Dewberry (Binh Duong province) – Website: www.dewberry.vn
- Woodnet (Ho Chi Minh City) – Website: www.woodnet-ltd.net
- Thinh Phu (Binh Dinh province) – Website: www.thinhphufurniture.com
- AZ Vietnam Construction (Hanoi) – Website: www.sofaz.vn
- Saigon River Factory (Binh Duong) – Website: www.saigonriverfactory.com.vn
About Us
InCorp Vietnam is a leading provider of global market entry services. We are part of InCorp group, a regional leader in corporate solutions, that encompasses 8 countries in Asia-Pacific, headquartered in Singapore. With over 1,100 legal experts serving over 15,000 Corporate Clients across the region, our expertise speaks for itself. We provide transparent legal consulting, setup, and advice based on local requirements to make your business perfectly fit into the market with healthy growth.
Don’t take our word for it. Read some reviews from some of our clients.
