Vietnam: There are too many Chinese furniture enterprises, which are already “overburdened”!

Vietnam: There are too many Chinese furniture enterprises, which are already “overburdened”!

The trade situation between China and the United States has improved, and the home industry is also waiting for good news. At the same time, Vietnam may face new problems.

Vietnam: There are too many Chinese furniture enterprises, which are already “overburdened”!

Rapid increase in demand has brought a lot of opportunities

The threat of imposing tariffs on Chinese products is speeding up the transfer of furniture purchases to other countries.

With the rising labor costs in China and more and more furniture manufacturers focusing on the domestic market, furniture importers in the United States have begun to look for new procurement sites, while Vietnam is attracting interest from all sides, but also faces many challenges.

Vietnam’s domestic infrastructure lags far behind China’s, and the rapid growth of demand is overloading the capacity of local factories, transportation and other infrastructure pressures.

Vietnamese high-end furniture and hardware manufacturer Jonathan Charles (hereinafter referred to as JC) was acquired in 2018 by Merck International Home Appliances Co., Ltd. and is also facing the challenge of substantial business growth.

In addition to manufacturing products for brands, the company’s business also includes a large and growing number of OEM contractors, especially its internal foundries. To meet the demand for custom furniture hardware, next year’s production needs to be increased by 350%.

“Companies that have never done business in Vietnam before, or that have never cooperated with us, have shown great interest in us,” Jonathan Sowter, founder of JC, said in an e-mail.

“They are eager to find solutions outside China. Because of our current high-end position, we naturally become the choice of these companies. As an enterprise, our first task is not to constantly find new customers, but to develop more business cooperation with existing customers.

“Suddenly a lot of Chinese people are interested in us. We are trying to improve our factory capacity to attract more customers, hoping to attract more customers who are in line with our goals.”

He sees JC’s relationship with Merck as an advantage to meet business growth needs, and plans to increase production by 50% in 2018 and by 50% in 2019.

In addition to the huge demand for hardware, with the popularity of metal and marble, the decorative color of home products becomes darker and gloss is lower. JC OEM customers are now looking for more products with mixed materials.

Infrastructure and raw materials are “overburdened”

Sowter, founder of JC, pointed out that the influx of people and businesses into Vietnam would affect the Vietnamese economy and create more jobs.

“Our focus is on retaining key employees and skilled workers.” “New companies are in a panic, they will offer jobs to anyone who wants to accept them, and then they will screen out the people they really need,” he said.

This may become a potential factor that has a negative impact on us. We should maintain competitive wages, provide overtime allowances for hard-working employees, and strive to provide a positive working environment for employees.

As demand for Vietnam’s furniture manufacturing industry increases dramatically, the pressure on raw material supply and transport infrastructure is also rising dramatically, which will affect all industries.

In addition, the trade conflict between China and the United States will also increase this burden.

“Vietnam has not responded as quickly as they hoped, and the demand is bigger than they imagined.” “Overall, Vietnam’s material supply is not as sophisticated as China’s, and infrastructure improvements are much slower than product demand growth,” Sowter said. Therefore, it is still at the bottleneck stage, and the local supply chain can not meet the demand.

As a high-end furniture manufacturer, JC no longer relies solely on local raw materials, but uses imported raw materials.

“Because this situation will not change, we will not be affected by the local raw material supply like many other factories. At the appropriate time, we will also make purchases locally. Sowter said. “We will continue to rely on imported materials, so as to ensure that our prices will remain stable when local raw material prices rise.”

When the target of potential new customers matches the company’s quality standards, it also means that the company should say “no” to those unsuitable customers.

“It’s painful, but necessary, to achieve our growth goals.” Sowter said, “Our price is not the cheapest, but we must produce the highest quality products, focus on the needs of customers and factories, or we may become an ordinary furniture factory. “

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