Vietnam's interior furniture market has seen a significant transformation between 2015 and 2020, driven by a burgeoning middle class and a steady economic growth. This period marked the entry of renowned global brands into the Vietnamese market, capitalizing on the shift in production from traditional manufacturing countries to Vietnam. The luxury export furniture segment, in particular, has become a magnet for investment, with South Korean luxury brand Dongsuh Furniture establishing a strong presence. This article delves into the dynamics of the market, consumer trends, and the challenges faced by the industry, providing a detailed overview of the sector's evolution.
In July 2019, Dongsuh Furniture, a South Korean luxury furniture brand, made a significant entry into the Vietnamese market by opening two large factories in Binh Duong, covering over 10,000 square meters. The company's product range includes leather sofas, sofa tea tables, wooden TV shelves, beds, modern dressing tables, wooden wardrobes, and dining sets. Mr. PARK YOUNGNAM, the Managing Director of Dongsuh Furniture in Vietnam, highlighted the strategic importance of the Vietnamese market, which led to the brand's early entry after successful ventures in China and Japan.
The market's potential also attracted King Mattress, backed by the American mattress giant Casper, to introduce the Amando high-end mattresses in Vietnam. The brand is currently in talks to collaborate with Dongsuh Furniture for distribution in the country.
Vietnam's furniture market is bustling with thousands of businesses, with the high-end segment featuring prominent names like Pho Xinh, Nha Vui, and Index Living Mall. These brands are drawn to the Vietnamese market due to the significant opportunities it presents.
Data from the Ho Chi Minh City Association of Fine Arts and Wood Processing (HAWA) indicates that the average furniture consumption demand in Vietnam is $21 USD per person per year. In 2018, the domestic wooden furniture consumption reached approximately $4 billion USD.
Mr. Phan Dang Chuong, Deputy General Director of ERNST & Young Vietnam Limited, noted that the past five years have seen the emergence of 400,000 - 500,000 townhouses and high-class apartments in Vietnam. Each apartment typically invests 1-2 hundred million dong in interior furnishings, contributing to a market worth nearly 100,000 billion dong.
The growth of the middle class in Vietnam has influenced consumer aesthetics and demand. Customers now view furniture as an expression of lifestyle and sophisticated taste. In 2018, Vietnam imported nearly $500 million USD worth of furniture, a figure expected to rise in subsequent years.
Eric Dinh, Marketing Director of Dongsuh Furniture, shared that the middle and high-end product segments have a wide price range, from tens of million to nearly 400 million dong per product. The segment below 50 million VND accounts for 40% of the company's sales. However, he also pointed out that many products in the market are overpriced, sometimes by 3 to 5 times their actual value.
Dongsuh Furniture is pioneering the online furniture sales model in Vietnam, aiming to make luxury furniture accessible at affordable costs. This approach is expected to revolutionize the Vietnamese furniture market, especially with the rise of IoT and e-commerce platforms.
Dongsuh Furniture plans to open three more production factories and two additional stores in Ho Chi Minh City and Hanoi in the fourth quarter of the year. Over the next five years, the company aims to open 15-20 furniture stores in Vietnam, positioning the country as a hub for exploring the ASEAN market.
Vietnam is a leading player in the global furniture export market, ranking first in Southeast Asia, second in Asia, and fourth worldwide. In 2015, Vietnam's furniture export turnover to the European market reached $7.2 billion, with an additional $1.7 billion from home decor items. The industry is projected to grow at a rate of 9.4% annually.
Despite its export success, Vietnam's domestic furniture market is predominantly import-driven, with products mainly originating from China, Malaysia, and Thailand. The domestic consumption of wooden products, although significant, has not received adequate attention.
A report by the Ministry of Agriculture and Rural Development highlighted that the domestic market, with a consumption of 90 million people estimated at $1-2 billion USD annually, is underexploited. This is partly due to incorrect product pricing, which causes hesitation among consumers, despite the generally good quality of Vietnamese furniture.
Statistics indicate that Vietnam's domestic wooden furniture market accounts for about one-third of its export turnover. With an average GDP growth rate of 6% per year and the development of construction and real estate sectors, household income and spending on interior furnishings are expected to increase.
Vietnamese consumers are increasingly seeking modern and convenient shopping experiences, leading companies to invest in e-commerce and technology applications. Dongsuh Furniture, for instance, offers a diverse range of furniture products online, focusing on design and detailed descriptions to enhance the shopping experience.
The interior sector is heating up with the smart product race, driven by the 4.0 industrial revolution. Consumers' needs have evolved beyond mere housing to spaces that offer relaxation and enjoyment. The demand for smart furniture is growing, with products that are compact, multifunctional, and suitable for various living spaces.
The interior decoration market is witnessing the integration of digital technology into design, with consumers favoring modern and comfortable products. Neutral colors are preferred for their elegance and ability to create a personal impression.
Local wooden furniture businesses are focusing on design and utility, moving away from antique and carved wood products to modern, block-style furniture suitable for contemporary homes. Customer care and after-sales services are also becoming a priority.
The Vietnamese furniture market is competitive, with both domestic and international enterprises vying for market share. Large companies like Dongsuh Furniture, AKA furniture, and Index Living Mall dominate the landscape.
The Vietnamese home furniture market is expected to undergo positive changes in the next five years, with an estimated annual growth rate of 5%. The kitchen furniture segment, in particular, is predicted to boom due to increasing urbanization and investment in the hospitality sector.
Vietnam's wood processing industry has recorded impressive growth, with exports of wood, wooden furniture, and non-timber forest products reaching about $8 billion USD in 2017. The industry faces challenges such as the shortage of raw materials, but free trade agreements like EVFTA provide opportunities for manufacturers to enhance competitiveness and increase sales.
Vietnam's interior furniture market has shown remarkable growth and potential, with a strong export presence and an evolving domestic market. The industry's future looks promising, with continued expansion and innovation expected in the coming years.
