While the main markets are on a downward trend in the first months of the year due to the recessionary economic situation, the UAE market is being evaluated as a potential market in the wood manufacturing industry and other industries. wood products. The UAE is a country with the most developed economy in the Middle East, in addition to being a “giant in the field of mining”, investing in infrastructure in the UAE is important. Construction and furniture are two industries with a high proportion, so the demand for raw materials for these two industries also grows strongly. The high-end furniture market in the United Arab Emirates (UAE) is expected to reach around $3.72 billion by 2022 and is expected to grow by 4.09% per year over the next four years.
So, what are the opportunities and challenges for Vietnamese wood and wood product manufacturers in this potential market?
In 2022, bilateral turnover reached $4.4 billion, of which Vietnam’s exports to the UAE reached $3.8 billion and imports from the UAE reached $582.6 million, up 1.6% compared to 2021. Currently, Vietnam accounts for about 2.2% of the import market share in the UAE and the UAE accounts for about 0.2% of Vietnam’s import market share.
As for wood products, according to data from the General Department of Customs, Vietnam’s export turnover of wood products to countries in the Middle East market increased sharply in the first four months of 2023. In which, the UAE is the main market, Vietnam’s export of wood and wood products to this market in the first 4 months of the year reached 11.2 million USD, up 38% compared to 2023. Main products exported to this market: wooden furniture used in construction (HS 4418); seats (HS 9401); furniture (HS 9403). Currently, Vietnamese wood industry enterprises are surveying the potential in terms of opportunities as well as potential products to export to this market.
The UAE is a transit hub for many markets such as Europe, the United States, the Middle East, Iran, and Egypt. On the other hand, in Dubai, there are few factories producing wood and wood products, the main trend is import. Vietnamese products meet the needs of customers. In addition to construction, the UAE culture when renting a house will change all the furniture, and when checking out, they will have to move out, leaving only the rough. These are advantages for Vietnam’s wood industry.
However, businesses will also face difficulties, the challenge is that production costs and logistics are not optimal, and technology is not the most modern. While this is a fiercely competitive market in both price and quality, this is also the biggest challenge for Vietnamese businesses.
Another challenge is that Vietnamese enterprises have to compete directly with businesses from competitors who enjoy preferential treatment when exporting goods to the UAE when they have signed FTAs such as India, Indonesia, Israel, and Turkey…
In order to further promote the export of Vietnamese goods to the UAE, Vietnamese enterprises need to apply advanced science and technology in production, change management methods, and reduce average costs. time, in order to reduce product costs and increase the competitiveness of Vietnamese products. In addition, because the UAE is a Muslim country, so Vietnamese businesses need to learn about the culture and consumption needs of Muslims when exporting to this market.