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China’s investment in Vietnam’s wood products industry has soared!

China’s investment in Vietnam’s wood products industry has soared!

November 1, 2019 source: Forest Trends Association

The number of foreign direct investment projects entering Vietnam’s wood processing industry continues to surge. The investment mainly focuses on chip production, processing industry services, wood pallet production and composite plate products.

According to forest trend, most of the investment comes from China. In the first five months of 2019, China’s cumulative investment exceeded US $50 million, 1.7 times that of the same period in 2018.

Tran Quoc Khanh, Deputy Minister of industry and trade of Vietnam, called for the establishment of a registration system to enable the sector to track investment and exports in key industries such as panel products, where an effective management of the export supply chain is required. This will help customs eliminate false labels and prevent fraud, he said.

Vietnam exports about 3-4 billion US dollars of wood products to the United States every year, which is the second largest supplier of wood in the United States, second only to China. Tran Quoc Khanh said it was an opportunity for Vietnamese companies to fill the US import gap, but it would require them to address their productivity, marketing and procurement policies.

Dien Quang Hiep, chairman of Vietnam Binyang wood processing Association (bifa), pointed out that one of the biggest disadvantages at present is that there is no production cluster and network between Vietnamese companies, which gives the new entrants of the industry an advantage.

In 2018 and the first six months of 2019, Vietnam administration of industry and commerce, together with the customs and Vietnam administration of industry and commerce, inspected a number of Vietnamese enterprises and found that the export volume of these enterprises increased dramatically. The purpose of the investigation is to expose false export labels.

The U.S. customs also sent a team to Vietnam to investigate a sudden increase in exports of wood products that also seem to originate from Vietnam, raising doubts about cross-border trade re exports between Vietnam and China.

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