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Vietnamese Handicraft Products: Difficulties Remain
31/12/2013

Lack of creativity is a “bottleneck” in the development of Vietnam’s craft sector and hinders the sector’s success. 

Many craft products of Vietnam rely too much on foreign designs, lacking creativity and new methods of production, which leads to their backwardness compared to global consumer trends. Apart from some enterprises which have export contracts of high value with foreign partners, almost all craft producers are retailers. This is an obstacle for Vietnam handicraft products on the way to overseas markets.

Low prices due to lack of new design

According to the Vietnam Handicraft Exporters Association (VietCraft), the export turnover of craft products in 2012 reached US$1.6 billion. The USA still maintains the position as the largest import market (40 percent) and the EU market ranks second (30 percent). However, Mr Le Ba Ngoc, Secretary General of VietCraft, said that compared to 2011, profit made by export enterprises went down, just reaching more or less than ten percent (against 15-20 percent as usual). With this profit rate, it is really difficult for enterprises to plough back their profit. Mr Dang Quoc Hung, Director of Kim Boi Limited Company, shared that in 2012, his company witnessed its orders reduced by 60 percent against 2011. In 2013, price continues to decrease (averagely 5 percent against that of the previous year). There are even products whose prices go down by 10 percent. “In this context, reaching the break-even point is a demanding enough task,” complained Mr Hung.

This is explained by Mr Le Ba Ngoc: “Vietnamese craft enterprises often enter partnerships with big importers. The smallest order ranges between US$2 million and 3 million. Total purchasing value per year is around US$100 million. According to such importers, despite large value of such orders, the generated profit is low. Hence, all the importers annually request a price reduction of 3-5 percent as a condition to continue doing business. Nevertheless, another problem lies in the fact that many enterprises keep operating their production in an old manner without making any investment in technology renovation or having new ideas, which brings about low prices of products and lack of diversity. On the other hand, designs of almost all Vietnamese handicraft products are simple, mainly based on traditional products which are already out of date compared to global consumer trends. Since Vietnam’s integration into the global economy, its handicraft making enterprises have to cope with quite a few challenges, including tough competition with two powerful suppliers in this field, namely China and India. These are the reasons why Vietnam’s production of craft products runs into more difficulty, given the context that it is absolutely dependent on export.

Customers’ demand remains unknown

Although a lot of bamboo rattan products, lacquer and ceramic products, etc. strongly reflect national cultural features and appeal to foreigners, producers of craft items have not made real efforts in studying customer taste. They have just stopped at offering what they have instead of supplying what the market needs. Head of Ho Chi Minh City-based Representative Office of Trade Promotion Agency, Ms Nguyen Thi Thanh An, stated: “A lot of enterprises are following the model of craft villages in the daily manufacturing, business and export of their products. They still churn out products with old designs, conduct production when orders are made or just wait for customers who are mainly retail ones to come. Large markets like the USA and the EU have strict requirements on cultural and artistic content of the products. However, not many craft products of Vietnam can meet these criteria.

Every year, Vietnam exports about seven million US dollars worth of carpets of different types, US$16 million of silk items and nine million US dollars of ceramic products to overseas markets. Nevertheless, Mr Hiroshi Sakamoto, an expert on interior decorative furniture of ASEAN – Japan Trade, Investment and Tourism Promotion Centre (AJC), commented that the above figures did not reflect the full potential of the Vietnamese handicraft sector if it manages to grasp factual demand of Japanese consumers.

To this end, it is necessary that Vietnamese handicraft enterprises thoroughly study the tastes of this market instead of simply waiting for orders to be made. They should also cooperate with Japanese designers in order to capture new trends of consumers and thereby churn out appropriate and unique products. Mr Sakamoto emphasized that enterprises should not copy other suppliers’ designs, but do it themselves to produce new products of their own.

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