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Vietnam: Back on Top and Widening the Import Gap

A year after a near dead-heat between China and Vietnam for the bragging rights as the top furniture exporter to the United States in 2021, Vietnam reclaimed the top spot it first earned in 2020 and widened the gap as well.

Vietnam saw its exports to the United States rise by 7%, reaching nearly $9.7 billion for 2022, while China’s business fell by 7%, dropping it to about $8.5 billion and reducing its share of the overall market to 28%. In 2021, China and Vietnam each accounted for 31% of the U.S. export market and just $17.5 million separated them.

For Vietnam, it was a mixed bag of categories that propelled it to the No. 1 spot, Furniture Today research shows. Unlike 2021, when all categories grew to give Vietnam a 23% gain in business, 2022’s 7% was based primarily on increases in miscellaneous wood furniture, wood bedroom furniture and wood beds in contrast to dips in upholstery, both wood frame seats and chairs.

China was down by double-digits in 2022 in three of its five leading categories—wood frame upholstered seats and chairs and miscellaneous wood furniture — while making smaller gains in its new top category, metal outdoor seats with textile-covered cushions — and metal frame upholstered seats.

Jade Russell, chief operating officer at Marietta, Ga.-based interior design firm Design Environments and a global sourcing expert, said she’s not surprised that Vietnam has reclaimed the role as the lead importer to the United States or that China has lost some ground.

“There’s still great capacity out of Vietnam and China…and China isn’t going away” she said, but ongoing tariffs have made it more difficult for China to keep pace, especially as some owners of Chinese furniture operations have purchased factories in Vietnam. “The shift isn’t surprising and it could continue,” she said.

In keeping with the more moderate scenario in 2022, the world total for furniture exports rose by 7%, topping the $31 billion mark from just more than $29 billion in 2021. Looking at the past several years, the United States has experienced a rollercoaster ride within the import market, with negative growth in 2019 and 2020, followed by a 28% jump in 2021 and now 2022’s modest gain.

With the exception of China, all other countries within 2022’s Top 10 largest sources countries for U.S. household furniture imports saw their numbers go up. And bypassing Vietnam’s 7% gain, all others experienced double-digit growth—albeit not to with the same robustness as in 2021.

For example, Mexico, which remained the No. 3 source for the United States, experienced a 20% rise to around $2.3 billion, but that pales in comparison to 2021’s 61% year-over-year increase. Mexico has cemented its position as the third-largest source, however, putting space between itself and Malaysia.

Mexico’s major categories for products imported to the United States were led by wood frame upholstered seats, which grew by 31% and displaced miscellaneous wood furniture for the top spot, which was flat in 2022. Its greatest increase, however, came via a 50% jump in wood kitchen furniture, which grew by $100 million to $304.4 million.

Calling Mexico “a great option,” Russell noted that suppliers turned to Mexico when container rates were soaring and found it was a convenient alternative to dealing with a fractured supply chain. Russell likened the current situation in Mexico to the early days of doing business in Asia, with a learning curve on quality and delivery.

“It’s a different culture and region. They’ll give you what you want, but on-time delivery is a problem,” she said. Now that container rates have come down, and the infrastructure still exists in China and other parts of Asia, the reliance on Mexico may shift, she said.

Still, she said, “Mexico has a lot of capability,” especially in seating and case goods, and increasingly in metal fabrication.

Four countries — Malaysia, Canada, Indonesia and Italy — have tightened ranks, with any one of them likely to claim the No. 4 spot at the end of 2023 based on 2022’s figures.

Malaysia’s 10% growth was the smallest among the foursome, bringing it to nearly $1.571 billion and just ahead of Canada, which sent $1.546 billion in product to the U.S., up 18% over 2021. Growing at rates of 20% and 24%, respectively, Indonesia and Italy, have put themselves into the running as well with just $181.2 million now separating the No. 4 and No. 7 countries.

Despite the recent numbers put up by Canada, Russell said the U.S.’s northern neighbor continues to struggle with labor issues, both in finding new workers and retaining existing ones, which could keep it from greater growth.

Indonesia, which Russell labeled “someplace to watch,” has long been on the radar of American Woodcrafters and its CEO and Owner Chuck Foster, who has been doing business there for more than 15 years.

“We focused our bedroom business in Indonesia when tariffs first hit China,” said Foster, noting they work with five to six manufacturers and have consolidated their business there. A selling point for Indonesia is its access to natural resources such as plantation-grown mahogany, acacia wood, rubberwood, pine “and teak, if you want to pay for it,” he said.

As to its growth potential, Foster said the current business climate is keeping Indonesia’s manufacturers from making large investments in infrastructure right now. Still, he said, “the price, scale and skill level there fits our needs really well.”

Both Russell and Foster said there is more fluidity in where people do business these days, coming off the pandemic and the challenges it presented along with the current focus on managing labor costs.

“People are now exploring,” said Russell. “They are seeing what others can do. It’s a little bit of uncharted territory, in do they have the expertise to deliver the quality that you need?”

India, which is No. 7 among the Top 10 source countries for the United States, is similar to Indonesia, said Russell, and is likely to grow. “It’s how close are they to natural resources and do they have the resources and materials that people want?”

Although a significantly smaller player in the U.S. import market, Thailand saw its numbers increase by 29% to nearly $593 million after a 55% rise in 2021. India and Poland, ranked 8th and 10th, respectively, each exported 10% more to the United States in 2022, although not on par with 58% for India and 46% for Poland in 2021.

With smaller producing countries such as Poland, Russell said it’s more about the ability of companies there to meet demand on the level that U.S. buyers may be seeking. “It’s a place to watch,” she said, especially if they target the right price points and niche needs in the marketplace.

Within the next tier of countries from which the United States is importing household furniture, Cambodia, Germany, Spain and Romania all grew their business by 20% or more, while more significant growth was registered by France (48%), Lithuania (63%) and Norway (80%).

Source : Furniture Today