July 8, 2022

Southeast Asia’s furniture production is facing a slow-down

It seems that tide has turned.

June marked the start of an unusually high number of order cancellations by our Vietnamese customers. Luckily, most of our orders were prepaid or not yet shipped. Others were not so lucky; one of our Brazilian suppliers informed us that they have many containers of Pine sawn timber either cancelled, on their way to or stuck at HCMC port.

Vietnam, next to China, is the largest exporter of low-end to medium-range furniture to the USA and Europe. Different than during the two Covid years, these major target markets are facing a dropping end users’ demand for this range. Many American and European buyers report full warehouses and showrooms, which can last them well over six months. Consequently, many foreign importing buyers have stopped consignments of current, ready-to-be shipped orders with their Southeast Asian suppliers. The general market optimism of the last two years has turned, most probably due to the fast-increasing inflation, which resulted in dramatically reduced furniture purchases.

This situation is more visible in Vietnam and Malaysia since both countries have a high percentage of big factories producing low to medium-priced but less in Indonesia, where many factories focus on high-end furniture. Furthermore, the slow-down seems not as drastically affect other types of product segments like finger-jointed laminated panels, engineered doors, etc. One can conclude that “big” is not always better since these big manufacturers always face the sudden impact of any economic downturn. In contrast, the smaller, more customer-specific producers seem less affected.