24 July 2018
Vietnam Looks to Woo European Consumers with Homely Handicrafts
While the majority of exhibitors at the Lifestyle Vietnam expo were local handicraft businesses looking to export, there were also – perhaps in a sign of things to come – several overseas companies keen to win over domestic consumers.
The handicrafts sector is big business. According to London-based research company Technavio, it will exceed US$700 billion globally in value terms in 2019. In Vietnam, the sector already generates $1.7 billion in annual sales, and is growing by about 15% a year. The industry also employs a total workforce of about 1.5 million, with more than 100 recognised traditional products, according to the Vietnam Association of Craft Villages.
The brisk growth of handicrafts in the country is also helped by surging tourist numbers and the low cost of setting up production. As a consequence, its suitability for providing employment in smaller communities places it high on the list of supportive government programmes.
Taking place over four days in Ho Chi Minh City, the Lifestyle Vietnam expo was billed as a forum for bringing together local handicraft producers and international buyers. The country has developed an international reputation for its rattan and wicker products, with one particular exhibitor – MK Handicraft – specialising in a number of the more traditional Vietnamese wicker products.
The company, operating out of the central coastal city of Danang, creates a wide range of wicker products, including baskets, brushes and even food covers, many of which are sold internationally. Its Sales Manager, Duong Nguyen, noted that the traditional food covers in natural materials are especially popular in South America, saying: "We sell many covers in Brazil. They use them to protect food against insects."
While handicrafts are still something of a cottage industry, some manufacturers in Vietnam are growing in size, while remaining true to hand-crafted values. Wooden Toys, a family business based in My Tho City, for instance, was originally started by high-school teachers and dedicated to producing high-quality wooden toys. Over the past 20 years the company has diversified into children's chairs and educational tools, as well as household gifts.
Despite this growth and diversification, Nguyen Huu Bao Tran, a Sales Executive for the company, was keen to emphasise that handcrafted educational toys still remain the main focus. He said: "Each of our products is unique. They are handcrafted and produced to a very high quality."
This traditional quality would seem to be a winning formula, with Wooden Toys having grown and found success in several international markets, as Tran explained: "Now the company has more than 200 workers, and our biggest markets are Japan, closely followed by Denmark, Germany and Thailand."
Despite a thriving industry in Vietnam, Tran felt that the show was somewhat subdued, with seemingly fewer visitors than previous events.
One of the largest exhibition stands at the show belonged to Ho Chi Minh City-based Lam Thanh S&T, manufacturer of a wide range of terracotta vases. The types of ornamental vase it produces are now common sights in trendy back gardens across Europe, and finding customers in such far-flung locations is a key focus for the business.
Outlining the company's current priorities, a spokesperson said: "Our market is mainly in Europe, so we use tradeshows like this primarily to meet potential overseas distributors. This year, I think the show could have been better. I don't think it is big enough for European distributors to feel it has been worthwhile making the trip."
Lam Thanh was not alone in seeking out overseas buyers at the show, with nearly all the exhibitors targeting international visitors. There was, however, also a handful of foreign companies testing demand in the Vietnamese market. South Korean EcoLife, for one, is headed by the Korean-Vietnamese partnership of Yu Sung Ho and Huong Nguyen. The company makes aromatherapy products, with a focus on using natural ingredients to prevent aging, drawing on Korea's expertise and its international reputation for skincare products.
According to Nguyen, Vietnam is a logical market for its products, as local consumers are already accustomed to the types of ingredients used. She said: "The fact that many of the fragrances the company uses, such as bamboo, lemongrass, and cinnamon, are already very familiar to the Vietnamese helps in boosting appeal in the local market."
Although a good fit for EcoLife products, Vietnamese consumers lack the buying power found in other markets. Ngyuen was, however, convinced that sheer volume could compensate, saying: "Our best market is currently Japan. We can charge $45 for our soaps there, whereas in Vietnam, the recommended retail price is only about $17. However, we believe this market has a lot of growth potential as it is still in a very early stage of development.
"We have found this show very useful as a platform to promote our business as Vietnam is still unfamiliar with organic products. We have had a lot of interest from people here at the show."
In a novel move, EcoLife introduced a range of products focused on the pets' market. Ngyuen, however, did concede that this particular project presented a number of unique challenges, saying: "The use of certain ingredients that are fine with humans can affect a dog's sense of smell. So, we had to conduct extensive research to find aromas that don't upset dogs' sensitive noses."
Another overseas exhibitor was Japan's Ando, a business that specialises in selling fabrics made in its Laos-based factories. Ratchani Khanthi, a Sales Manager for the company, also noted certain difficulties in finding buyers with sufficient spending power in Vietnam, saying: "This is our first time in Vietnam and, so far, we have not experienced very high demand. Our challenge is that Vietnam has an emerging – but not yet established – middle class, which is typically our target market."
While the relatively low wages paid in Vietnam may be a problem for foreign companies trying to sell into the country, it has proven to be a boon for manufacturers. Several exhibitors at the event reported taking advantage of the low production costs to set up manufacturing facilities, with a view to target overseas markets.
A prime advocate of this was American-born Bruce Parisi, founder of Hanoi-based Milano Series Designs, specialists in European-style furniture. Outlining his current thinking, he said: "We originally set the operation up in China, but found that our costs were starting to go through the roof and the quality was going through the floor. So, eight years ago we decided to move the whole operation to Vietnam and we haven't looked back since."
Like most exhibitors, the company hopes to sell to external markets in Europe and the United States. However, Parisi also believes that domestic consumers are increasingly valuable, saying: "We are finding that the Vietnamese market is starting to open up."
Sharing a similar outlook was Huong Dang, a Vietnamese businesswoman, who set up Word of Art Craft in Ho Chi Minh City on her 2005 return from Australia. Initially, she used contacts and experience of western culture to export craft products to Australia, but the company has since expanded into new markets.
As well as targeting western consumers, Huong described finding increasing success in other affluent markets, saying: "The company specialises in creating European-style lacquer furniture, vases and lamps, creating a fusion of east and west. Our core markets are, of course, Europe and the US, but we are increasingly selling into the Middle East, too."
One local exhibitor operating at the high end of the market was Thien Thuong Antique Sailing Boat. Established in 2001, the company makes small models of classic European and American ships from the age of sail to the modern day. Although producing replicas of famous historical ships, such as HMS Victory, USS Constitution and RMS Titanic, much of its business comes from one-off client commissions.
Company director Vuong Dinh Sac reported a roaring trade serving high value overseas customers, saying: "Most of the boats we build are unique, and are custom-made for clients. We now get orders from all over the world, especially Japan, Korea and the United States. Currently we are also expanding into the Middle East and South America."
Lifestyle Vietnam 2018 took place from 18-21 April at Ho Chi Minh City's Saigon Exhibition and Convention Center.
Marilyn Balcita, Special Correspondent, Ho Chi Minh City