Conjuncture Markets: the case of sofa and armchair sales in Vietnam

The development goals of private and public organizations require decisions appropriate, but the quality of them depends not only on the decision-making process but also on the information available.
In today's particularly uncertain international environment, the less information available, the greater the risk of poor decisions. Against the backdrop of a global economic slowdown and high inflation, ExportPlanning has designed the service Market Insights, containing different types of reports that enable precise measurement of phenomena in the markets of interest. To find out the most recent import dynamics of a market in monetary values, quantities and prices, one can use reports Conjuncture Markets, which provide a comprehensive economic picture of a market's imports, with detailed information on the main exporters.
For the purpose of example, in this article we will focus on the sofa and armchair sector in Vietnam.

As pointed out in the previous article “Conjuncture H1 2023: some cases of resilient markets in the world trade of Household Products”, Vietnam appears to be a particularly growing country as a destination market for furniture and furnishings and, more specifically, for the sub-compartment of sofas and armchairs, which has shown a strong bullish dynamic over the past two years. After registering an absolute high point in euro values last year (47.5 million euros), Vietnamese imports of sofas and armchairs are showing a favorable trend in 2023 as well, with a pre-estimated year-end increase of +8.3 percent (reaching close to 52 million euros by the end of the year).
Pre-forecasting 2023 is performed using appropriate nowcasting techniques, which allow for the development of estimates on the evolution of trade flows. To do this, the technique deployed by the ExportPlanning experience is that of ARIMA's 12-term product-specific and country-specific forecasting models, detailed at the 6-digit Harmonized System product code and reporting country level, which allow for very reliable short-term forecasts.

China is by far the largest exporter of furniture and sofas to Vietnam, with an estimated value in average 2023 of nearly 40 million, up sharply over the past 2 years. The most sustained increase by the dragon country occurred in 2022, when it more than doubled its sales to Vietnam. Italy ranks firmly in second place, with a value of more than 4.5 million, testifying to a supply chain that has been a flagship of Made in Italy globally for years; however, in 2023 it is showing a decline compared to the previous year, estimated at the end of the year to be in the order of -33.1%, thus returning to levels even lower than those of 2021. Next in the list of competing countries in the Vietnamese sofa and armchair market are the United States and Portugal, whose exports, especially in the past year, have been gaining market share.
For a more in-depth analysis we also show quantity values.

The dynamics of quantities roughly mirror those of values shown above, however with less pronounced changes. This suggests a particularly large price increase in the Vietnamese market in 2022 (+78.8% in the measurement in terms of average unit values), which will tend to stabilize in average 2023 (+2% in average unit values), as can be seen in the table below.

Price trends in the Vietnamese sofa and armchair market certify 2022 as a year of high inflationary tensions; especially the energy crisis, the war in Ukraine, and the general increase in the prices of major industrial commodities globally has forced almost all competitors to pass these increases on to final product prices. However, in 2023, as inflationary tensions upstream of the production chains are being reduced, this phenomenon appears to be significantly curtailed.

The analysis of average unit values by individual country competitor in the market documents very different positions in terms of the quality of products exported to the Vietnamese market. European competitors, such as Italy, Portugal, and France, offer high-end products, with FOB (Free On Board) prices averaging over €600/unit, while Asian competitors, such as China, Malaysia, and Thailand, show much lower price positioning, as does the United States. It should be noted that in the two-year period 2022-2023 price increases were mainly the prerogative of higher-quality products from EU competitors; conversely, in 2023, lower-quality products saw, on average, a reduction in the final price, as evidenced by the cases of sales from Malaysia (-18.7%), Thailand (-2.9%) and China (-2.1%), as well as that - certainly to be further investigated - of the United States (-53.4%).

Conclusioni

The analysis carried out offers information of fundamental importance for an exporting company intent on understanding as soon as possible the changes taking place in the foreign markets of interest. Continuous monitoring of the different international markets, and of the main competitor countries operating on them, can in fact represent a strategic source of information for achieving the best results from one's foreign sales in an uncertain and changing environment, favoring the optimization of company resources and directing them toward markets that are more resilient to the current phase of international economic slowdown.
With the service Market Insights ExportPlanning makes available, for one or more products and markets of interest, the types of information presented in this article, so that it can provide a particularly up-to-date picture of the relevant competitive environment.