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Handicraft Industry in Vietnam

Vietnamese have always produced substantial hand-made products.  It is both cultural and also a matter of necessity in what has been till recently a very poor but also very art and culture loving society.  Promoting a rapidly growing handicraft industry in Vietnam is a part of the Vietnamese government’s plan to foster economic development across all regions of the country, reducing unemployment, especially in the rural areas, and raising exports. With more than 1500 ancient handicraft villages, Vietnam is gradually revealing both its potential and the wide range of its products to the international handicraft markets.

While most handicraft villages cluster around the Red River and Mekong Deltas in the North and the South, Central Vietnam is also blessed with abundant natural materials and thus, has been targeted as a major supply center. The handicraft industry has created millions of jobs for local workers, elevating their living standards while helping to preserve ancient traditions. Handicraft villages also bring about benefits as tourism destinations, attracting an increasing numbers of tourists every year (Asia Science and Education for Economic Development Organization).

One of the Oriental countries with cultural origins that trace back thousands of years, Vietnam has been amazing the international markets with both the variety of its handicraft items and its handicraftsmen’s and women’s skills. Valued craft items from Vietnam include wooden furniture, porcelains, lacquers, embroidery, candles, jewelry, imitation flowers and glass products. Although the export turnovers from the handicraft industry does not compare to other industries such as oil & gas or textile, handicrafts have an advantage of low overall production costs (production costs account for about 35% of the export value). In 2005, handicraft export turnovers were valued at $565 million. According to the Ministry of Trade, the target for this year is $800 million, and turnover is expected to reach $1.5 billion by 2010.

Currently, the three major export markets are the US, Japan and the EU. Since the US government imposes no tariffs on handicraft imports, the handicraft industry appears a potential factor to enhance the trade relationship between Vietnam and the US. Vietnamese authorities have acted to take advantage of this fact: the US has remained the number one importer of Vietnamese home decorations and handicrafts for the last three years. Especially in the furniture sector, according to Vietnam Economy News Online (August 9, 2004), more and more US enterprises are seeking partnerships with Vietnamese furniture enterprises to meet the increasing demand of furniture products in the US. Japan and the EU have also made their moves to promote their own imports of Vietnamese handicrafts by increasing marketing and directly discussing existing issues with Vietnamese authorities.

Despite the favorable conditions from both the Vietnamese government and the export markets, the handicraft industry in Vietnam still is confronting fierce competition from other countries, including China and Thailand. In addition, foreign customers have also commented on Vietnamese handicraft producers’ limited production capacity and lack of information on the market’s current demand, which leads to insufficient and outdated designs, styles, and production. However, these above issues are solvable as Vietnam is also working on bringing technology to even the most rural areas.

Foreign business people interested in this sector should keep in mind that in Vietnam, large producers tend to be either cooperatives or to have a less typical business organization.  The remainder of producers is often smaller family run companies, which often produce excellent quality products but sometimes need more lead-time to produce in large quantities.  In dealing with either form of company the importance of having a knowledgeable person on the ground to assist you can be critical and Runckel & Associates has considerable expertise in this area. 


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