Vietnam: The king for now, but will the reign last?

Vietnam’s shift over the past several years has run directly counter to China’s: Its rise has been meteoric.

Vietnam was the top furniture exporter to the U.S. in 2023, according to Furniture Today research, exporting around $7.76 billion in furniture for the year, a 40% increase from the $5.5 billion seen in pre-pandemic 2019.

Over the years of the pandemic, Vietnam was in close competition for that No. 1 spot with China, with each country trading narrow blows in 2020 and 2021. In 2022, however, Vietnam was $1 billion ahead. In 2023, it beat its rival by $1.8 billion.

Vietnam’s strengths are plentiful. It avoids the steep 25% tariffs imposed on China during the Trump administration, in addition to being their main benefactor. Its workforce is skilled and wants to compete with China. The country’s industrialization has been swift, and its infrastructure is strong.

Matt Sorensen

“What we saw four years ago is that everyone rushed to Vietnam and Mexico,” said Matt Sorensen, vice president of sales at Classic Home, which sources from a variety of Asian countries as well as Mexico. “We still believe Vietnam is a great center for doing business. There a lot of good factories and good competitive product coming out. We feel that it will continue to be one of our top countries.”

Vietnam is strongest for case goods, says Sorensen, but is seeing growing popularity for upholstered product as well.

“We’re mostly sourcing case goods from there, but it’s good for upholstery, too,” he said. “Before COVID, you had just a handful of manufacturers there producing soft goods. Now, bigger companies are moving upholstery there, like Cheers-Manwah and Kuka.

“One of the companies I worked for, Legends, has one of the best upholstery manufacturing plants in Vietnam. Motion has become huge out of Vietnam. Stationary will get there too as long as freight rates stay lower, as it isn’t flat-packed like motion is.”

David Crimmins
David Crimmins

Flexsteel, whose business is about 85% upholstery, is most invested in Vietnam and Mexico.

“Around 50% of our product comes from Asia, and that’s largely Vietnam,” said David Crimmins, vice president of sales. “That’s where we’re focused. We’re bringing component manufacturing out of China and into Vietnam. There’s a need to derisk from China. The more we can do that, the better.”

A few concerns

Still, there is concern about Vietnam, mostly over its viability in the long term.

Industry executives believe that, as Vietnam continues its rapid pace of industrialization, the country could become less friendly toward furniture, as its factories will be attracted by more lucrative industries such as electronics and pharmaceuticals.

Pat Watson
Pat Watson

“Furniture will get pushed out eventually,” said Pat Watson, director of product development at Martin Svensson Furniture. “You’re seeing the same thing happen there that happened in China over the past 20 years. As a society starts to industrialize, furniture is one of the first things that moves in because it is raw material and labor intensive. While it does require skilled labor, it’s not as skilled as some other industries.

“If you look at Vietnam years back, it had some industry, but not an awful lot. If a pharmaceutical company tried to set up there, it would have failed, as the workforce hadn’t worked in any industry at all,” he continued.

“I remember very clearly, 15 years ago, in China, you’d go to a place, and there would be furniture, shoes, textiles; then you’d come back five years later, go to the exact same place, and now they would have flat screen TVs, electronics, laptops, etc. And five years after that, I’d see pharmaceutical and automotive factories.”

Ken Shanks, president of Outlook International, has spent his career helping Asian factories develop furniture. He agreed about Vietnam, predicting the country has about 10 years left of being dominant.

“I think Vietnam is peaking. It has a population of about 100 million,” he said, noting that’s a smaller than other competing countries. “It has a little bit of upside left, but it’ll have to move further away from the South. Labor costs are going up. Land costs are going up. Everything is leaving China, so they’re going to want to make higher value goods and steal some of that share. So it’ll move away from furniture.

“Vietnam doesn’t have any lumber of its own,” he continued. “It imports everything. It import lots of the hardware from China. Vietnam probably has 10 years of being the dominant, but it’ll start to wane.”

Crimmins at Flexsteel acknowledged that Vietnam probably does have a limited future but doesn’t see any problems for some time.

“Vietnam is in a really interesting position,” he said. “It has a path to economic growth and to lift millions of people out of poverty. It’ll happen at a very fast pace. Industrialization happens faster and faster nowadays. That’s why it’s important for us and the furniture industry to explore.

“But near-term, it’s safe. Other places still need infrastructure. So, we have at least five years. Vietnam’s infrastructure has gotten really good. It has better ports and better housing for workers. There’s a decent runway (of time) left.”

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