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1
Wood industry opportunities
in Vietnam and KoreaAccess of a 5.9Bn USD market!
2
VietnamDiscover a 2.6Bn USD wood imports market!
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
An industry that have doubled its size in 5 years!
Annual needs of Vietnam wood sector are estimated to be around 7-8 Million m3 RWEequivalent. The industry is highly dependent of imported raw materials, over 80% of timberconsumption is imported for a value of 2.3Bn USD from over 100+ different countries.
Import volumes have been multiplied by 4 between 2001 and 2008, since that the imports haveremained quite stable (around 5 Million RWE per year) but we can note an increase in timberprices and a trend to import better quality products (50-65% of import value is related to thewood price)
111
240 258
601
74
253
657
16
0
100
200
300
400
500
600
700
Import of wood per country (Millions USD)
2009 2014
905 1,1521,362 1,359
1,6482,2391,836
2,4522,850
3,347
4,085 4,619
762984 1,105 1,253
1,4771,613
0
1000
2000
3000
4000
5000
2009 2010 2011 2012 2013 2014
Vietnam timber imports and exports (Millions USD)
Timber imports Timber products export
Timber material exports
3
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
A market with good opportunities for Finnish sawmills
Three main products that are imported toVietnam:
Sawn wood (6mm) (55%)
Logs and roughly processed wood (15%)
MDF, plywood etc. (30%)
Timber imported from Laos is exotic sawnwood and round wood, from Cambodia it’sexclusively exotic sawn wood. Theseimports are used for outdoor furnitureexport to Asia and luxury indoor furniturefor Asian markets. Origin can rarely bedetermined.
Imports from China are mainly MDF
New certification laws in Europe and USAare believed to be an opportunity forVietnamese wood processing industry butalso for western wood exporter toVietnam
3% 4%4%
5%
5%
6%
6%
12%
18%
37%
Vietnam timber imports by category
Hevea Plywood
Burmese Ironwood Eucalyptus
Poplar Hard wood
Oak Pine
MDF Not defined
4
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
A market with good opportunities for Finnish sawmills
Main exports products from Vietnamare: living room furniture , bed roomfurniture, chairs and raw materials.
Between 2007 and 2013, timberprocessing and furniture exportingmarket has grown at an average of15.5% per year.
80 % of Vietnamese wood productexports are for USA, Japan and Europeas furniture (Total exports: 6.3 Bn USDin 2014)
Exports to China have increased dueto high demand on rare exotic woodharvested mainly from Laos andCambodia and transformed in Vietnam(demand multiplied by 3 in between2011 and 2012).
5
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
A huge market which exports is concentrated
Vietnam have 3,000 wood processingcompanies, of which 95% is privatelyowned. Around 30% of them export theirproducts to western markets. 70% ofcompanies are under 200 employees.These factories are relatively smallscaled, produce low quality products orhand made destined to Asian market
Wood processing enterprises areconcentrated in 3 major clusters:
The south (Ho Chi Minh City, Binh Duong,Dong Nai),
Central (Binh Dinh, Da Nang, Dak Lak)
Northern (Hanoi and surroundings)
Wood sector is important in Vietnam, forsome provinces it generates over 60% ofthe provinces income.
6
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
The northern cluster (Hanoi andneighboring provinces) manufacture homeaccent and traditional wood furniture,with exports only to Asian countries. Thiscluster accounts for 10% the countryproduction.
The Central Highland (Gia Lai and Dak Lak)and South Central Vietnam (Binh Dinh, DaNang and Quy Nhon) cluster is home tohundreds of outdoor furniture factories.Main imports from Laos and Cambodia areused in this area.
The Southern cluster (Binh Duong, Ho ChiMinh, Dong Nai and Long An) is home tonearly 70% of 600 biggest companies in thecountry and have as focus both indoor andoutdoor furniture. The quality ofproduction is middle-end and high-endlevel that are destined to export to Europeand US.
7
A huge market which exports is concentrated
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
Woodworking machine market opportunities
Woodworking Machine technology isrelatively poor and old (between 6and 15 years old)
Taiwanese, Japanese and Chinesecompanies prefer to source theirmachinery from their home base.Vietnamese companies prefer to buyEuropean machinery, main advantagefor European machinery is technology,strength and competitive pricing.However the European companieslack of marketing and after salesservices.
Machinery value chain includes adozen of distributors who have closeties to major wood processingfactories.
38%
23%
9%4% 3% 3% 2% 2% 1% 1% 0%
12%
0%5%
10%15%20%25%30%35%40%45%
Imports of Woodworking Machines in Vietnam
2009 2012
8
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
Domestic furniture market and local timber
Locally harvested timber isgenerally small an most ofproduction is used for woodchips.
The country have sets targets toincrease total area of plantationforests by 33% by 2020. Howeverthe land has been a big issue asthat most of the land that couldbe used has already been allocatedto household and other usergroups. Thus the country willcontinue to import wood.
Domestic furniture market isvalued around 1Bn USD, butsupplied at 80% by Asian imports.Wooden furniture are made fromlow quality wood and cheaper MDF.
This doesn’t seems to be marketfor Nordic wood. Nearly impossibleto penetrate with Nordic woodquality and price levels
9
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
What’s happening in 2015?
VIFA Expo 2015 is the major annual furniture and home accessories international fair in
Vietnam. In 2015, the fair will be on 11-14 March 2015. Contact us for more details.
Vietnam Wood 2015 is the major bi-annual woodworking industry fair in Vietnam. In
2015, the fair will be on 14-17 October 2015. Contact us for more details.
10
Step 2
planning market
entry
Step 1
Going
International
Step 4
improve your
market position
Step 3
establishing
presence
Our internationalization services
11
South-KoreaAccess over $3.3bn markets
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015 12
Overview
Small domestic production – high reliance on wood imports
• Korea is highly reliant on imports of wood and wood materials for
commercial and industrial use.
• An estimated 10% of total consumption of wood and wood materials
originate from domestic wood, the rest is imported.
• $3.37 Bn import markets awaiting in Korea.
• Pine is an important wood material as interior and design material in
Korea.
Growing and
sizeable
markets
Sales
approach and
turnkey
concept
Solid
experience
and vast
network
Korean
opportunities
identified
Public funding
possible (e.g.
TEKES)
Korean wood markets with us?
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015 13
Import market & size
Raw Timber, Plywood and Wood pellets
In 2014, Korea’s annual wood imports stood at record
$3.37bn, which is a 17.2% increase from year 2013
($2.87bn).
Raw timber is the main wood type imported to Korea,
counting roughly for 21.2% ($714m) of all wood imports.
Plywood is a strong second with 21.1% ($709m) of
imports. The third biggest import category was sawn
wood (planed or non planed) at 19% ($640m) an increase
of 18% (YoY) from 2013.
Increasingly important import category of wood is fuel
wood and especially wood pellets, which has increased
from $127m in 2012 to $442m in 2014.
Source: Korea Customs Service data 2015.3
Source: Korea Customs Service data 2015.3
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015 14
Overall Opportunities
Possibilities and Trends
Steady growth in wood imports in the long term.
An increasing demand for high quality materials.
Currency fluctuations; EUR has gained competitive edge
compared to USD in regards to wood imports
Possible trends related to wood imports Construction technology in extreme environment
Next generation infrastructure construction technology
Modular construction technology
Technology for long life of building
Intelligent green construction/structure management
technology
Eco-friendly organic/inorganic material technology with
Improvement of fuel efficiency performance
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015 15
Market opportunities for Finnish wood exporters
Materials:
Sawn timber and paneling (indoor and outdoor)
Beams and logs
Flooring, window frames and door frames
Decking and outdoor decoration
Furniture
Technologies:
Insulation and low energy consumption buildings
Wood processing and carving
Development projects:
Hanok development project – new materials for
traditional Korean wood houses (Hanok).
Interior materials - custom materials for cost-efficient
high quality interior materials.
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015 16
Quick Facts: Korea Overview
Access to markets – time to sales (month)
3 6 9 12 15 180
Evaluation and validation of technology Purchase decision Korea
China
Japan
Population : 51 million
GDP : $1.2 trillion (12th largest in world)
GDP Growth rate : 2.8%
Ease of doing business : 8th (out of 193 economies)
World trade : 7th leading exporter, 9th leading importer
Free Trade Agreements : Korea-Chile FTA, Korea-Singapore FTA, Korea-EFTA FTA, Korea-ASEAN FTA,
Korea-India CEPA, Korea-EU FTA, Korea-Peru FTA, Korea-U.S. FTA (only NEA country)
Main imports from Finland to Korea: Machinery and Transport equipment (63.1%),
Basic manufactures (21.7%),
Chemical and related products (8.1%)
Main exports from Korea to Finland: Machinery and Transport equipment (78.7%),
Basic manufactures (10.7%),
Chemical and related products (5.5%)
Sizeable and potential sectors and industries in Korea:
• ICT: Semiconductor, Display, Communication network , Information and Communications Media, Knowledge-based service,
Software, Computing, LED/Light
• Transport : Car, Construction and Transportation, Aerospace, Shipbuilding Marine
• Energy : Electricity or Resource Smart Grid, New and Renewable Green Energy, Nuclear Power, Thermal power
• Materials and Resources : Bio, Environment, Natural resource, Fiber, Chemistry, High polymer chemistry material, Convergence material,
Ceramic material, Steel nonferrous
• Equipment and plant : Machine Production System, Plan Engineering, Robot, Medical Device
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015 17
Our Experience & Services
1-to-1 sales
meetings with
qualified partner
candidates.
Tailored local
training and sales
support.
Experienced
market and area
specialist.
Tailored pre-
market coaching
for value offer and
sales materials.
Optional travel
package for the
business trip.
Detailed market
entry or expansion
report, and
profiles of partner
candidates.
Our Services
Over 60 executed
projects (combined).
Many years active in
Korean Wood industry.
5 major delegation visits
organized in Korean
wood industry.
All market experts are multi-
lingual.
All market experts have vast
experience in Korea-Europe
business.
All market experts are highly
rated by our clients.
Multi-country projects
possible through Asia.
Access to full range of
supporting experts (e.g..
Legal, financial).
www.finnsea.com – Claudio Karjalainen
May 2015 Vietnam and Korea wood market opportunities - © FinnSEA & Second Opinion 2015
WANT TO HEAR MORE? WE ARE HAPPY TO MEET YOU!
VIETNAM
Claudio Karjalainen
+84 903 903 443
FinnSEA Vietnam
IBC Building
1A Me Linh Square
District 1, Ho Chi Minh City
Vietnam
FINLAND
Pietro Karjalainen
+358 40179 5755
FinnSEA Oy
Opus Business Park
Hitsaajankatu 22-24
00840 Helsinki
Finland
18
SOUTH KOREA
Hannes Humala
+82 10 5000 9755
Second Opinion
#317 Tahoe Business Center
8F Anyang Trade Center
161 Simin-daero Hogye-dong
Dongan-gu, Anyang-si, Gyeonggi-do
Korea 814-827