tiểu luận urniture products exporting planfor viet hoang company

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FURNITURE PRODUCTS EXPORTING PLANFOR VIET HOANG COMPANY

Group 2Nguyen Vu Thang

Vu Le Nguyen Chuong

IB3004E_46KQT: Import Export BusinessNguyen Thi Phuong Thao, MSc.The University of Danang, University of Economics

Danang, VietnamApril 26, 2023

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TABLE OF CONTENTS

1.OVERVIEW OF VIET HOANG...3

1.1. Viet Hoang’s main business activities...3

1.2. Short term goals...3

2.PRODUCT AND MARKET SELECTION...3

Table 2|Top countries exporting product 940360 in 2021...4

Table 3| Importers of product 940360 from Vietnam...4

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1.1.Viet Hoang’s main business activities

Viet Nam is one of the world's top furniture exporters, having a reputation for manufacturinghigh-quality goods at reasonable rates. Despite a challenging last year due to the pandemic, thecountry's exports of wood and non-timber forest products reached US$15.6 billion in 2021, anincrease of 18% over 2020. In that year, wood and product exports were $14.5 billion, a 17.2percent increase over 2020. To capitalize on the chance for growth in the sphere of furniture export,our objective is to deliver high-quality, creative furniture solutions to clients globally whileadhering to environmental and social responsibility standards. Viet Hoang‘s core products arewooden chairs, wooden tables, wooden beds, Upholstered sofas, and wooden cabinets.

1.2.Short term goals

Viet Hoang Corporation establish a short-term aim of extending their product offerings byinventing new plastic items that are in great demand in the market or enhancing existing products tofulfill the demands and preferences of customers. Furthermore, our company also set short-termexport goals such as conducting market research to identify potential new markets, developingexport partnerships, ensuring compliance with export regulations and standards, increasing brandawareness, enhancing logistics capabilities, and providing excellent customer service in exportmarkets to build customer loyalty and satisfaction. By fulfilling these objectives, the firm will beable to construct a solid platform for exporting its goods to new and existing countries, optimizelogistics for timely and effective delivery, and expand its reputation and client base in theworldwide market.

2.1.Product selection

As can be seen from the table below, product with HS code 940360 accounted for the highestimporting value in 2021, at 30,362,936 USD, however, of the three selected categories, 940320 hasthe biggest annual growth in value during 2017-2021 and 2020-2021, accounting for 8% and 34%,respectively. When it comes to exporting, 940360 and 940320 are two items with a lot of promise.

importedin 2021

Annualgrowthin valuebetween2017-

2021(%, p.a.)

Annualgrowth in

(%, p.a.)

940360 Wooden furniture (excluding for offices, kitchens and bedrooms, and seats)

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Import Export Business - 46KQT - Group 1

940320 Metal furniture (excluding for offices, seats and medical, surgical, dental or veterinary . . .

940390 Parts of furniture, n.e.s. (excluding of seats and medical, surgical, dental or veterinary . . .

Source: (Trade Map, n.d.)

Furthermore, Vietnam placed third in the world in terms of export value in 2021, with2,477,698 USD sold, accounting for 7.4% of global exports. Wooden furniture (excluding foroffices, kitchens, and bedrooms, and seats) was the principal product exported by Vietnam inthe HS code 9403 product category. (Trade Map, n.d.).

RankExportersValue exported in 2021 (USD thousand)Share in world exports(%)

Source: (Trade Map, n.d.)

As a result, Viet Hoang's chooses to export product 940360 Wooden furniture (except foroffices, kitchens, bedrooms, and seats).

2.2.Market selection

Company's objective is to optimize profitability and development by focusing on regions withstrong demand for their products, attractive economic circumstances, and a legislative frameworkthat promotes international commerce. The company's goal is to establish a strong market presencein the target market by cultivating a loyal client base and streamlining logistics and distributionmethods to assure timely and cost-effective product delivery. Finally, the company's mission is toprovide high-quality furniture goods that match the demands and preferences of the target market,while also achieving long-term growth and profitability in the global furniture industry.

Imported Value and Quantity

The United States is the world's biggest market for Vietnamese wooden furniture, with an import value growth rate of 17% in the 2020-2021 period, a relatively low growth rate when compared to the United Kingdom and Canada, which have growth rates of 29 and 35%, respectively. According to the chart below, the United States has the highest growth numbers in import value and volume in 2021, however the unit value is the lowest compared to the other nations in the table, at just 95 USD/Unit. Because of the negative decline in import value in the year2020-2021, Japan is not a prospective market for Vietnamese wood furniture. The growth rate of export value to the United States and Canada in the years 2017-2021 and 2020-2021 is higher and more positive than in other markets. As a result, the US and Canada are prospective markets for Vietnamese wood furniture.

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Page | 5ImportersValue

importedin 2021 (USDthousand)

Unit value (USD/Unit)

Growth inimported value between 2017-2021(%, p.a.)

Growth inimported quantity between 2017-2021(%, p.a.)

Growth inimported value between 2020-2021(%, p.a.)

Ranking ofpartner countries in world imports

United Statesof America

Source: (Market Access Map, n.d.)

Only the Canadian market has a 4.7% MFN tariffs, and the remaining four markets all have an effectively applied tariffs rate of 0% and a 0% MFN tariffs.

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2.3.Target customer group

For the US, UK, France, Canada and Japan markets, our company mainly targets thefollowing:

Homeowners: Many people in these nations take pleasure in their houses and are

ready to spend in high-quality, long-lasting furniture.

Interior designers: These nations have thriving interior design industries, and

designers frequently deal with high-end clientele searching for one-of-a-kind and customized furnishings.

Retailers: Countries such as the United States, the United Kingdom, France, and

Canada have extensive retail markets that include big-box chains, specialist stores, andonline marketplaces that are always looking for new and innovative furniture goods to give their consumers.

Hospitality industry: The tourist industries in the United States, Canada, and the

United Kingdom are all substantial, and hotels and resorts are always in need of excellent furnishings for their establishments. Japan and France both have booming tourist industries, and there is a considerable demand for high-end hotel and resort furnishings.

3.1.Voluntary adaption

Following market research in the United States, Unite Kingdom, France, Canada, and Japan,The company identified a point of convergence between these local markets in that they have asignificant preference for furniture made with sustainable and eco-friendly procedures. They alsofavor furniture designs that are one-of-a-kind and have a rustic vibe to them. In addition, in order tomeet the expectations of these markets, the furniture manufacturer decided to make voluntarychanges to its products. They begin by utilizing sustainably sourced wood and environmentallyfriendly coatings on their furniture. They also change their designs to create a more rustic andunusual appeal, which is increasingly popular in all of the mentioned markets. The furnituremanufacturer is able to offer its items to the markets and suit the distinctive wants of localconsumers by making these voluntary adjustments.

3.2.Mandatory adaption

In order to avoid the spread of pests and illnesses transmitted by wood items, the UnitedStates has strict laws in place for importing wooden furniture. The United States Department ofAgriculture (USDA) and the Animal and Plant Health Inspection Service (APHIS) enforce theserestrictions.

In terms of Packaging requirements Wooden furniture products must be packaged in a waythat prevents any pests or diseases from entering the US. This may include fumigation or heattreatment of the packaging materials.

About Documentation requirements: Importers must provide documentation that shows thatthe wooden furniture products meet the US regulations, including proof of treatment and packaging.For example: phytosanitary certificate, treatment certificate, customs declaration.

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Viet Hoang Company uses indirect channels of distribution for exporting wooden furniture tothe US market by the following reasons:

Our company choose partnering with an export management firm and trading organization,because they would use the intermediary's existing infrastructure and skills to handle the majority ofthe sales and marketing efforts. The intermediary can utilize their own sales team to advertise thewooden furniture goods to potential consumers in the United States, while also handling themajority of customer support enquiries on behalf of the firm. This means that the Viet Hoang willnot need to hire as many more employees, if any at all, saving them a substantial amount of timeand money.

The US market can be complex and challenging for foreign companies to navigate due todifferent regulations, cultural differences, and competition. By working with an intermediary, thewooden furniture exporter can benefit from their expertise in the local market, establishedrelationships with customers and suppliers, and their logistical capabilities.

Additionally, an export management company or trading company can help the woodenfurniture exporter to manage the risks associated with exporting, such as non-payment, shippingdelays, or quality issues. They can also provide valuable services such as market research, productlocalization, and marketing support to help the wooden furniture exporter to effectively compete inthe US market.

Using indirect channels of distribution can also be more cost-effective for the wooden furniture exporter since the intermediary can offer economies of scale and reduced transaction costs owing to their existing infrastructure and market knowledge.

Customizing items to match the individual demands and preferences of clients in target export

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countries may help distinguish wooden furniture from competitors and boost customer loyalty.

A solid online presence is crucial in today's digital world. Exporters can develop a website toexhibit their products, communicate with potential consumers and advertise their products on socialmedia, and participate in online marketplaces to reach a larger audience.

5.2.Plan to contact buyers.

The company looks into the US market for potential customers, such as furniture retailers,wholesalers, and distributors. We also find potential customers through online marketplaces anddirectories.

Gather potential consumers' contact information, such as email addresses, phone numbers, andpostal addresses, once you've found them. We may also connect with potential clients throughsocial media and internet channels.

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The company compiles a list of possible clients and stores our contact information in adatabase or spreadsheet. This will make tracking outreach activities and following up with clientseasier.

We send them an introduction email that introduces the firm and our wooden furniture goods.The business highlights the unique features and advantages of your goods, as well as any applicablecertifications or accolades, in the email.

Follow up with a phone call to the consumer after sending the initial email. Introduce ourcompany, we also remind them about the email, and ask if they have any questions or want to learnmore about firm’s goods.

If the consumer is interested in learning more about wooden furniture, we will set up ameeting or provide a product demonstration. This can be accomplished in person, over the phone, orthrough video conferencing.

If the client expresses an interest in making an order, we will provide a proposal or quoteexplaining the purchase's specifics, such as pricing, shipping, and delivery.

Follow up with the customer after receiving the proposal or estimate to see if they have anyquestions or concerns. This is also an excellent time to discuss any possible customisation or specialrequests.

We must carefully analyze product price based on the variables stated below, as this is an incredibly critical problem that directly influences the firm's success or failure. of the company, because it lacks expertise in the overseas market. In addition, we must constantly change the product's pricing depending on consumer input and report on the quality and quantity of items supplied to customers.

Factors for product pricing:

Seasonal demand: Our company can choose to raise prices during the peak season for

outdoor furniture to capitalize on increasing demand. During the off-season for outdoor furniture,manufacturers may opt to decrease prices to encourage sales and clear inventory. However, seasonaldemand can fluctuate depending on a variety of factors, including geography, temperature, andconsumer trends. As a result, we must continuously watch market changes and alter their pricingplans as needed to maintain competitiveness and profitability.

Brand image: We concentrate on manufacturing high-quality hardwood furniture that is

sturdy, beautiful, and practical. This will assist the organization establish itself as a credible andtrustworthy producer of high-quality items. Additionally, the firm creates an efficient marketing andbranding plan for the US market that successfully conveys the company's beliefs, mission, andunique selling factors to customers.

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Page | 10Target market: Consider the purchasing power of potential market clients. This can aid in

identifying the target market that is most able and willing to pay for wooden furniture.

Market trends: The firm exporting wooden furniture might uncover chances for creating

and marketing items that are in line with the current demand and preferences of clients in the targetmarket by carefully examining market trends. To maintain sustained success in the export market, itis critical to keep current on industry developments and change marketing and sales strategyaccordingly.

Competitive Advantage: Our firm could separate itself from rivals and boost its chances of

success in the target market by concentrating on these criteria and developing a distinctivecompetitive advantage. It is critical to undertake market research and competitive analysis todiscover areas where the firm may differentiate itself and provide value to customers.

Production cost: ($ 50,000/tons x 15tons/container)

$ 750,000

Trade Map. (n.d.).

. Retrieved April 10, 2023, from

Trade Map. (n.d.).

. Retrieved April 10, 2023, from