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1 Wood industry opportunities in Vietnam and Korea Access of a 5.9Bn USD market!
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Page 1: Vietnam and Korea wood sector opportunities

1

Wood industry opportunities

in Vietnam and KoreaAccess of a 5.9Bn USD market!

Page 2: Vietnam and Korea wood sector opportunities

2

VietnamDiscover a 2.6Bn USD wood imports market!

Page 3: Vietnam and Korea wood sector opportunities

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

Page 4: Vietnam and Korea wood sector opportunities

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

Page 5: Vietnam and Korea wood sector opportunities

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

Page 6: Vietnam and Korea wood sector opportunities

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

Page 7: Vietnam and Korea wood sector opportunities

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

Page 8: Vietnam and Korea wood sector opportunities

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

Page 9: Vietnam and Korea wood sector opportunities

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

Page 10: Vietnam and Korea wood sector opportunities

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

Page 11: Vietnam and Korea wood sector opportunities

11

South-KoreaAccess over $3.3bn markets

Page 12: Vietnam and Korea wood sector opportunities

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?

Page 13: Vietnam and Korea wood sector opportunities

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

Page 14: Vietnam and Korea wood sector opportunities

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

Page 15: Vietnam and Korea wood sector opportunities

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.

Page 16: Vietnam and Korea wood sector opportunities

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

Page 17: Vietnam and Korea wood sector opportunities

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).

Page 18: Vietnam and Korea wood sector opportunities

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

[email protected]

+84 903 903 443

FinnSEA Vietnam

IBC Building

1A Me Linh Square

District 1, Ho Chi Minh City

Vietnam

FINLAND

Pietro Karjalainen

[email protected]

+358 40179 5755

FinnSEA Oy

Opus Business Park

Hitsaajankatu 22-24

00840 Helsinki

Finland

18

SOUTH KOREA

Hannes Humala

[email protected]

+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