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Vietnam Looks to Meet Global Demand for Sustainable Handicrafts

With consumers in the EU, in particular, demonstrating a clear and enduring appetite for sustainable artisan hand-crafted products, Vietnamese SMEs – many with government backing – have been swift to raise their export game.

Photo: Authenticity, sustainability and fair trade: The apparent hallmarks of Vietnam’s handicraft sector. (Shutterstock.com)
Authenticity, sustainability and fair trade: The apparent hallmarks of Vietnam's handicraft sector.
Photo: Authenticity, sustainability and fair trade: The apparent hallmarks of Vietnam’s handicraft sector. (Shutterstock.com)
Authenticity, sustainability and fair trade: The apparent hallmarks of Vietnam's handicraft sector.

The atmosphere at this year's Lifestyle Vietnam event was decidedly upbeat, with many exhibitors keen to capitalise on the growing global demand for sustainable products. Tellingly, while the majority of exhibitors were local export-oriented businesses, there was also a substantial representation from Laos, Cambodia and Myanmar.

Currently, the outlook for Vietnam's home-décor and furniture sector is overwhelmingly positive, with a recent report by the EU-Vietnam Business Network predicting 9% growth per annum over the next three years. In reality, this upturn for the industry is not down to just one factor, but relates to several separate developments.

Firstly – and, perhaps, most importantly – there has been the widespread availability of a range of government-backed business support initiatives, particularly in the fields of product design, innovation and market compliance, as well as growing overseas demand for sustainable designs made using natural materials. On top of that, more opportunities are expected to open up as several Free Trade Agreements (FTAs) recently signed by Vietnam come into effect.

One company to have benefitted from this largely supportive environment is Hasa, a Bing Duong-based manufacturer of outdoor pots and indoor home accessories. Assessing the impact of these combined elements on his own business, Sales Executive Nguyen Thi Kim Phuc said: "As Vietnam's economy is doing well, we have a largely positive outlook this year.

"The demand for furniture and handicrafts is growing both locally and overseas, while we're also getting better access to foreign investment. Many buyers are also starting to shift away from Chinese suppliers in favour of Vietnamese companies, which has, again, been something of a boost."

Overall, the domestic home-décor sector is dominated by handicrafts, which account for some 90% of all production. Most of these items are produced in craft villages, then exported to one of more than 160 destinations around the world. In Hanoi alone there are 1,350 craft villages, about 90% of which are locally owned SMEs.

According to 2014 figures from Trade Map, a Geneva-headquartered market-research body, some 44% of Vietnam's ceramic exports are destined for the EU, while a further 29% go to the US. Both of these markets are increasingly keen on sustainable products and ethical work practices and are frequently willing to pay a premium for qualifying items. This has seen a growing number of opportunities opening up for small, artisanal producers across Vietnam and in a number of neighboring countries.

Phnom Penh-based Villageworks, for instance, trains women and teenagers in small villages across Cambodia to turn indigenous materials into genuine handicraft items. Outlining the reasons behind the company's export success, Sales Executive Tessa Polder said: "We mainly supply Europe, as consumers there are increasingly concerned with more than any given product's aesthetic qualities or price point. They also want to know how the production materials were sourced, how the manufacturing process impacts on the local environment and the nature of the working conditions of those who make such items."

Similarly playing the sustainable production card was Secoin, a Vietnamese manufacturer of non-fired, handmade encaustic tiles, with eight factories across the country. Emphasising the company's green credentials, Sales Executive Emily Dao Dang said: "We don't use clay, only cement. Our tiles are also non-burnt, which means there are no environmentally harmful by-products."

For some companies in the sector, their mission statement and back story are, essentially, their USP. This approach was pretty much embodied by Fairweave, a Phnom Penh-based producer of traditional hand-woven textiles.

Photo: Haca: Government-backed garden products.
Haca: Government-backed garden products.
Photo: Haca: Government-backed garden products.
Haca: Government-backed garden products.
Photo: Secoin: Environmentally friendly tiling.
Secoin: Environmentally friendly tiling.
Photo: Secoin: Environmentally friendly tiling.
Secoin: Environmentally friendly tiling.

Expanding on his company's approach, Chomnab Ho, the Founder of Fairweave, said: "We believe it's hugely important to tell our story – what we're trying to accomplish, how we make our products, who we employ to make them and why.

"We try to communicate that at every opportunity as we're in the business of empowering women and alleviating poverty rather than in textile production. It's a crucial element of our marketing strategy."

It's an approach that is not limited to Cambodia, with Myanmar-based TK-Interiors adopting a similar strategy. Acknowledging this, Aung Kyaw Khaing, the company's Production Manager, said: "We use solely locally sourced rattan and only employ local craftsmen. At present, our primary export markets are Germany, the Netherlands, Belgium and the US."

Such practices are also growing in popularity in Laos, where Vientiane-based Saoban Crafts has already carved out a successful export business. Explaining his presence at the expo, Shuimeng Ng, the Founder of Saoban Crafts, said: "Basically, we are a social business that works with traditional craftsmen to preserve and promote traditional Lao village skills.

"Before coming to Ho Chi Minh City, we took advice from a number of European experts as to the current market trends. This helped us decide which products we should showcase in order to appeal to overseas buyers."

This growing demand for authentic handicraft items from many of the developed economies – and from Europe in particular – has seen the Vietnam government opt to support the sector through a number of initiatives. Overall, one of the main shortfalls was seen as a failure by many businesses to invest in product innovation or design. In order to address this, Hanoi's local government entered into a partnership with Lund University, a Swedish school of industrial design.

Among the companies to have benefitted from these government initiatives is Doanket 1, a Hanoi-based manufacturer and exporter of handmade products for home and garden use. Acknowledging the importance of state backing, Sales Executive Ngoc Anh Nguyen said: "While we do supply the local market, we primarily target the US, Japan, New Zealand, Italy, Germany and Australia. Given our export focus, it's really important that all of our products comply with the local requirements of each market.

"We have been lucky in that Hanoi has a number of supportive government programmes. In particular, we've benefitted from input from the Vietnam Trade Promotion Agency [VIETRADE] and the Vietnam Handicraft Exporters Association [VIETCRAFT]."

Hoang Xuan Phuong, Sales Manager of Haca, a Ho Chi Minh City-based manufacturer of decorative home and garden products, also cites government backing as having played an essential role in the success of his business, saying: "We get tremendous support when it comes to product design, market knowledge and training. This helps us deliver the kind of quality that differentiates our handicrafts from mass-produced Chinese imports."

Increasingly, though, for any Vietnam-based business, it's no longer all about exporting. In 2016, Vietnamese households collectively spent about US$12.3 billion on household furniture, home textiles and related services, according to the Economist Intelligence Unit. Given Vietnam's projected GDP growth rate of 6% per annum for the next three years, suppliers are understandably optimistic that the domestic market will prove ever more lucrative.

Certainly that's something EMSA, a German manufacturer of kitchen and gardenware with production facilities in Vietnam, seems to be counting on. Outlining his company's ambitions, Export Sales Manager Dennis Rost said: "Initially, our Vietnam factory was geared to serving the German market. At present, we're the market leaders in Germany, Switzerland and Austria, but we remain fairly unknown in Asia.

"As a result, we are now looking to widen our distribution in Japan, Thailand, Malaysia, and the Philippines. As we're also now looking to cater to the local market, it's likely we'll be competing within Vietnam against products imported from China, Malaysia and Thailand."

Among all of the exporters in attendance, hopes were high with regard to the FTAs Vietnam is now a signatory to, 11 of which are already active, with five more to be phased in. This is seen as certain to increase the country's exports within the ASEAN bloc, while also paving the way to streamlined trade with the EU. Waiting in the wings, of course, is also the Trans-Pacific Partnership (TPP). Should this controversial FTA ever be fully ratified, it is certain to boost the interests of many of the country's exporters.

Photo: Fairweave: More in the business of empowering women than selling textiles.
Fairweave: More in the business of empowering women than selling textiles.
Photo: Fairweave: More in the business of empowering women than selling textiles.
Fairweave: More in the business of empowering women than selling textiles.

Lifestyle Vietnam 2017 was held from 19-21 April at the Saigon Exhibition and Convention Center (SECC) in Ho Chi Minh City.

Geoff de Freitas, Special Correspondent, Ho Chi Minh City

Content provided by Picture: HKTDC Research
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