Vietnam’s timber industry faces Chinese threat

Wood manufacturers across Vietnam attended a seminar in Ho Chi Minh City on May 30 hosted by the Vietnamese Chamber of Commerce and Industry (VCCI), which focused on the risks of exporting timber products in the context of Vietnam joining the Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement (EVFTA).

The TPP is a regional free trade agreement aimed at eliminating tariffs and lowering non-tariff barriers signed on February 4 this year by 12 countries throughout the Asia-Pacific region, including Vietnam, which collectively contribute almost half of global output and over 40% of world trade, according to the Office of the US Trade Representative.

EVFTA is a free trade agreement between the collective European Union and Vietnam, the negotiation process of which was concluded on December 2, 2015.

During the seminar, many experts and business owners raised concerns over Vietnam’s timber export industry being ‘broken’ by Chinese companies.

Huynh Van Hanh, vice president of the Ho Chi Minh City Handcraft and Wood Industry Association, explained that the fear came from the recent tendency of Chinese wood companies investing in Vietnam in order to avoid an anti-dumping taxation imposed on Chinese exports by the US.

Chinese products, Hanh said, face a very high anti-dumping duty in the US, and Chinese companies are looking toward Vietnam to avoid the tax by exporting their products under Vietnamese labels.

According to Hanh, instead of manufacturing timber products in Vietnam, these companies only import goods from China, make some minor adjustments, then ‘re-export’ them to foreign markets within the TPP to take advantage of the favorable tax conditions that Vietnamese products enjoy as part of the agreement.

The surge in Chinese investment in Vietnam’s timber industry and subsequently in the country’s wood export to the US has the potential to leave domestic manufacturers vulnerable to anti-dumping lawsuits filed by American companies, Hanh explained.

According to commercial experts at the seminar, wood export is the industry with the biggest potential for growth in Vietnam’s agricultural sector over the coming years.

However, pundits have suggested that the industry be the subject of more government support and monitoring to avoid being taken advantage of by foreign companies.