Tran T. Cao, Huynh T. Nha.

Ho Chi Minh City Open University Journal of Science, 10(2), 27-41 27

Analysis of export market structure for Acacia wooden

furniture in Vietnam
Tran Thanh Cao1, Huynh Thanh Nha2*
1
Forest Science Institute of South Vietnam, Vietnam
2
Can Tho University of Technology, Vietnam
*
Corresponding author: htnha@ctuet.edu.vn

ARTICLE INFO ABSTRACT

DOI:10.46223/HCMCOUJS. The paper aims to identify the structure of the export market
econ.en.10.2.575.2020 for Acacia wooden furniture products, simultaneously determine
the fundamentals of forming the market structure and propose
marketing solutions for market development. The inequality index
(GINI) and the concentration ratio (CR) were used to analyze the
market structure. GINI coefficients calculated over the transaction
Received: June 30th, 2020 value of sellers and buyers were 0.63 and 0.60 while the
concentration ratios (CR5) were respectively 33.18% and 39.24%.
Revised: August 3rd, 2020 The results reflected the market's situation as monopolistic
Accepted: August 15th, 2020 competition with a high concentration level from both sellers and
buyers. A large population of sellers and buyers filled the market.
However, economic efficiency in terms of scale was a primary
barrier creating restriction when entering the market. Market
development solutions include: improve capacity on design;
develop standards and brands for wood materials and products;
certification of goods according to international standards and
Keywords: regulations; restriction towards export of low-pricing products;
sustain existing markets and exploit new markets; support
market structure, wooden enterprises to implement the B2C trading model by Vietnamese
furniture, Acacia wood, Furniture associations; establish a specialized center of information
export and exhibitions for Vietnam’s wooden furniture.

1. Introduction
In 2018, the export of wood and wood products from Vietnam reached nearly US$ 9 billion,
up 15.7% compared to 2017, being one of the 10 largest export items and accounting for 3.6% of
total national export turnover (Ministry of Industry and Trade, 2019). Vietnam's wood and forest
products processing industry has displayed a continuously high growth rate, averaging over 13%
per year in the period 2010 - 2018. In 2018, Vietnam's export turnover of wood products reached
US$ 8.476 billion, up 14.5% (equivalent to US$ 1.07 billion) compared to 2017 (P. X. To, C. T.
Cao, H. L. Tran, Q. T. Nguyen, & H. V. Huynh, 2019). Vietnam’s exports of wood products were
ranked second in Asia and 5th in the world in terms of export turnover, accounting for 6% of global
timber market share (Prime Minister, 2019).
The Prime Minister issued Directive No. 08/CT-TTg on March 28, 2019, on solutions for
the fast and sustainable development of export wood and non-timber forest products processing
industry. In particular, the goals were increases in the export turnover of wood and non-timber
28 Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41

forest products to US$ 11 billion in 2019, 12 billion US$ by 2020, 18 to 20 billion US$ by 2025;
and a gradual increase of the share of export of highly processed products with Vietnamese brands.
Promoting plantations for timber and wood raw material and supplying certification of sustainable
forest management as required by the International market are the important tasks of this Directive.
Currently, Acacia is the main planted forest tree species accounting for 80% to 90% of the
total plantation area in Vietnam (Ministry of Agriculture & Rural Development, 2014). This is an
important domestic source of raw materials for the wood processing industry. Vietnam Timber
and Forest Product Association (VIFORES) and Information Center for Agriculture and Rural
Development (AGROINFO) have annually reported on the export of timber and timber products
from Vietnam. However, the detailed analysis of acacia wood products and export market structure
was not mentioned. Therefore, this study was conducted to provide more information on the export
market of furniture made from acacia plantation timber in Vietnam.
The purpose of this paper is to answer the following three research questions: (1) What is
the export market structure of Vietnamese acacia furniture? (2) Which factors are determining the
export market structure of acacia furniture in Vietnam? (3) Which solutions can be applied for
developing the Vietnam export market of acacia furniture?
2. Theoretical basis
Market structure is an economic term used to describe the characteristics of relationships
between market participants including buyers and buyers, buyers and sellers, sellers and sellers.
The theory of economic competition is applied to analyze the market structure. The approach
method of this study to market competition is “feasible competition”. The market structure reflects
the competitive power or market power of participants.
Markets are classified according to their structure, based on the levels and characteristics
of competition. Key factors include the number of buyers and sellers, degree of substitution
products, cost, ability to join or withdraw from the market, and degree of interdependence
(Charles, 1997). Economists often characterize the levels and characteristics of competition
relative to three general types: perfectly competitive markets, monopolistic competition markets,
and monopoly markets (N. K. Le, 2008; Mankiw, 2011). However, many economic researchers
have analyzed the structure of specific product markets broken down into four categories according
to the increasing degree of monopoly as follows: (1) Perfect competition - a market with many
sellers of standardized products; (2) Monopolistic Competition - there are many sellers of a
differentiated product; (3) Oligopoly or group monopoly - a limited market of sellers of
standardized or differentiated products; and (4) Monopoly - a market where there is only one seller
with a product that has no close substitute (Charles, 1997).
The degree of competition or monopoly can be expressed through the concentration of the
market calculated by different indicators. The concentration of the market is measured by the GINI
coefficient and the Lorenz curve (Bukar, Mohammed, Wakawa, Shettima, & Muhammad, 2015;
Luu, 2006). If the GINI coefficient is Gr = 0, the concentration level is very low - highly
competitive, the Lorenz curve is overlapping with the diagonal. If Gr = 1, the level of concentration
is very high - the market is concentrated in hands of a few suppliers, the Lorenz curve is
perpendicular to the perpendicular. When 0 < Gr <1, the market is both competitive and
monopolistic. The Concentration Ratio (CR) market share index was applied to analyze (Ismail,
2017; Luu, 2006; B. T. Nguyen, H. T. T. Hoang, & V. D. Phan, 2015; K. V. Nguyen & L. T.
Nguyen, 2011; Pavic, Galetic, & Piplica, 2016). According to Article 24 of Vietnam's Competition
Law 2018, the CR index has 4 cases: CR2, CR3, CR4, and CR5. Herfindahl - Hirschmann Index
Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41 29

(HHI) was used to assess the concentration of the market (Beck, Scott, & Yelowitz, 2010; Ismail,
2017; Khan, Ahmad, & Gee, 2016; B. T. Nguyen et al., 2015; K. V. Nguyen & L. T. Nguyen,
2011; Pavic et al., 2016). According to international practice, competition authorities often classify
markets according to the following bases: HHI <1,000: Markets are not centralized; 1,000 ≤ HHI
≤ 1,800: the level of market concentration is moderate; HHI > 1,800: the level of market
concentration is high. The Lerner Index is a direct measure of market power. The Lerner index
ranges from a low value of 0 to a high of 1. Lerner's higher values indicate more market power
and less competitive conditions (Chambers, Färe, & Grosskopf, 2014; Khan et al., 2016; Lerner,
1934; Moyo, 2018; T. D. Nguyen, A. T. Ha, & B. T. T. Nguyen, 2019). The Boone Index was used
to measure the competitiveness of enterprises (Chambers et al., 2014; Khan et al., 2016;
Leuvensteijn, Bikker, Adrian, Rixtel, & Sorensen, 2007; Moyo, 2018). Boone Index shows that
competition helps strengthen the capacity of the company’s operating efficiency and weaken the
ability of the company’s operating inefficiency. Thus, lower profits or smaller market share are
reflected.
Vietnam’s export market of timber and wood products has been analyzed by several recent
studies. Ministry of Industry and Trade (2019) used descriptive statistical methods to reflect the
growth of Vietnam's export and import markets for timber and wood products and described
simultaneously the proportion of some major markets in 2018. P. X. To et al. (2019) reported
Vietnam Timber Export and Import in 2018 looked back one year using descriptive statistical
methods to analyze the export and import markets of timber and wood products for Vietnam and
indicated trends for 2019. The results reflected the growth of Vietnam's export and import markets
for timber and timber products, described the proportions of some major markets, and gave
detailed information on some key product categories as well as major raw materials for each
market. The gap in the export market of timber and wood products of Vietnam has not analyzed
generally yet the market structure and the market of products from Acacia wood in particular.
Based on the results of market structure analysis, solutions for market development would be
proposed in the coming time. For research objectives and the theory of competition, the analytical
model was derived as follows:

Market development solutions:

Market structure analysis:
+ Product Market
+ Market concentration ratio
+ Price development
+ Factors forming market
+ Place
structure.
+ Promotion

Figure 1. The analytical framework

3. Methodology
3.1. Methods of analyzing market concentration
Descriptive statistical methods were applied to analyze product structure in this study. The
criteria used include % rate, max, min, mean, mode.
The market structure was assessed through the GINI (G) and calculated by the following
formula:

(1)
30 Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41

where y1, y2, y3, …, yn are the export values of n enterprises sorted in descending order, y is the
average export value and n is the number of enterprises.
In addition, the index CR (Concentration Ratio) was also used to analyze and reconcile
with Article 24 of the Law on Competition year 2018 of Vietnam to assess the level of market
concentration. The CR Index is calculated by the following formula:

𝐶𝑅𝑖 = ∑𝑛𝑖=1 𝑆𝑖 (2)

Where CR is the concentration ratio, Si is the market share of the enterprise which is ranked
th
i in the top of the largest enterprises; n = 2; 3; 4; 5.
3.2. Methods of analyzing the factors that shape the market structure
The analysis method combined descriptive statistics from the collected data sources and
inherited previous studies related to the export market of household wooden products of Vietnam.
Each type of market structure of a specific commodity is formed from basic factors such
as the nature of the product and the characteristics of market participants.
Each type of market structure of a commodity was formed from basic elements such as the
nature of the products and the characteristics of the participants in the market. Fundamentals of
the market resulted in forming the structure of the market. The factors to be analyzed include:
+ Number of sellers and buyers operating in the market;
+ Concentration ratio of the enterprise showed how the largest market share was held;
+ The nature of goods and services provided to the market;
+ Differentiation of products and services of each enterprise;
+ Quantity and type of replacement goods when customers were ready to change their choice;
+ Barriers to entry or exit from a specific market;
+ Economic efficiency of scale;
+ Links between relevant stakeholders in the market to create the strength of the group.
3.3. The method to propose market development solutions
The proposed solutions for market development were based on the results of concentration
analysis and the factors that shaped the market structure. Each commodity, every business has
different tools to create a competitive advantage to develop the market. In this report, 4P integrated
solutions included Product, Price, Place, and Promotion. This tool is popularly used.
3.4. Description of data source
The primary data was collected by a convenient method. The data was collected from
25.000 custom declarations as a part of the total data source of the General Department of Customs.
Furniture code (HS code 94) and time of declarations distributed on 11 months in 2018 are two
collected criteria. After that, the data tool of Microsoft Excel was used to filter out products made
from wood and acacia wood. The result was 361 declarations of acacia wood furniture from the
custom declarations mentioned above. The summary of the research data characteristics is
presented in Table 1.
Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41 31

Table 1
Information summary of research data source
Total exported Exported furniture
Data information
wood Furniture from acacia wood
Number of custom declarations 1,908 361
Number of places for custom declaration 50 26
Number of businesses declared 413 102
Number of commodity code (HS 94***) 22 16
Source: Aggregated from Vietnam Customs data source in 2018

4. Results and discussions

4.1. The concentration of the market for exported furniture from Acacia wood
4.1.1. GINI index
Vietnam’s export market of wooden furniture operated entirely according to the market
mechanism. Acacia wood is a common wood used to process many types of furniture as many
other kinds of wood for exported markets. The market of wooden furniture from acacia has been
participated by many businesses in the manufacturing and exporting products that were similar in
usability but had differentiated features. Differences in wooden furniture could be tangible
elements of the product (style, material, color, durability) and intangible differences (standard
conformity, geographical location, brands, sales style, and value-added services). Since
manufacturing and exporting enterprises had little monopoly benefit with their products’ specific
characteristics and to compete with competitors keeping similar products and substitutes,
Competitive monopoly sale market was formed.
The 2018 data analysis of Vietnam Customs showed the inequality index in exported
wooden furniture from acacia wood GINI = 0.63. This index indicated that the market had a
Monopolistic competition structure but deviated heavily toward monopoly.
The exported market for wooden furniture in Vietnam has been changing. Previously,
Vietnamese wood processing enterprises only focused on transshipment markets such as Taiwan
(China), Singapore, South Korea ... to re-export to third countries, up to now, Vietnamese wood
furniture has been exported. Export directly to more than 120 countries and regions. Major markets
such as the US, EU, Japan, and China are continuing to grow. Meanwhile, potential markets and
new markets are also being formed (Ministry of Industry and Trade, 2019). Thus, the Vietnamese
furniture market has many buyers, so it is not possible to monopolize the purchase. Analysis of
the 2018 data source of Vietnam Customs showed the inequality index of imported wooden
furniture from acacia wood GINI = 0.60. Similar to exporters, the import market had a Competitive
monopoly structure but deviated heavily toward monopoly.
32 Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41

Figure 2. Lorenz curve and GINI index of export Figure 3. Lorenz curve and GINI index of export
Source: Analysis, the summary from Vietnam Customs data in 2018

4.1.2.Concentration ratios
In 2018, the private sector enterprises (including FDI) accounted for 95%, the state sector
accounted for 5% of the total number of wood processing enterprises in Vietnam. Small and micro,
medium, and large enterprises accounted for 93%, 5.5%, and 1.5%, respectively (Ministry of
Industry and Trade, 2019). This data showed that most wood processing enterprises in Vietnam
were small and super small. Therefore, the market focused on medium and large enterprises.
According to the analysis from Vietnam Customs, the CR index of the acacia wood exported
market was very high, specifically as follows: CR2 = 17.71%; CR3 = 24.06%; CR4 = 28.70%;
CR5 = 33.18%. As compared with Article 24 - Competition Law year 2018 in Vietnam, the
exporters of wooden furniture from acacia wood did not have a dominant market position.
However, CR10 = 50.10% showed that only the top 10 large enterprises have accounted for over
50% of exported market share. Like sellers, the market structure of importers was very
concentrated. CR indicators for buyers of the acacia wood exported market in Vietnam were as
follows: CR2 = 23.81%; CR3 = 30.96%; CR4 = 35.28%; CR5 = 39.24%. Thus, enterprises
importing acacia wood furniture in Vietnam did not have a dominant position in the market.
However, CR10 = 50.10% indicated only the top 10 large importers have accounted for over 50%
of the market share.
4.2. Factors to form market structure
4.2.1. Number of sellers, buyers active in the market
The country currently has about 4,500 businesses, processing wood, including 3,900
domestic enterprises, 600 enterprises with foreign direct investment (including mainly China and
Taiwan China, Japan, Korea, EU) (Ministry of Industry and Trade, 2019). According to data from
Vietnam Customs, the market had at least 412 export furniture enterprises, of which 102
enterprises were exporting acacia wooden furniture (accounting for 24.75%). Thus, the exported
market of wooden furniture from acacia wood had many sellers. But some sellers unevenly
distributed among key economic regions of Vietnam. Statistics from Vietnam Customs showed
that the number of enterprises participating in export accounted for 91.18%, 3.92 % and 4.90% of
total enterprises exported wooden furniture from acacia wood in the South, North, and the central,
respectively. If considering each key economic region, few enterprises were participating in export
in the North and Central Vietnam, which were likely to have monopoly selling. Currently, the
Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41 33

number of enterprises distributed among key economic regions is not equal due to the difference
in market size among regions. The Southern region accounted for 83, 12% of the market size. The
Northern and Central regions respectively accounted for a small proportion of 15.34% and 1.54%
of the remaining market.
According to the data of the Vietnam Customs, at least 596 importers involved the wooden
furniture market in Vietnam. In which, there were 121 enterprises imported furniture from acacia
wood of Vietnam (accounted for 20.30% of 596 importers). Where 6 enterprises (accounted for
5.80%) were also exporters (the same corporation or parent company). In 2018, the acacia
household wood products of Vietnam were exported to 20 countries and Vietnam export
processing zones penetrated the major markets such as the US, EU, and China. Thus, the export
market for acacia wood furniture had many buyers.
Table 2
The participation rate of acacia wood products in the value of exported furniture in 2018

Participation rate in total export

No. Market Product
turnover

1 USA Seat 5%

2 EU Seat 21%

Seat 11%
3 China
Furniture 8%

Source: P. X. To et al. (2019)

4.2.2. The nature of goods and services provided to the market

Wooden furniture is generally both essential and luxury goods. Tables, chairs, beds,
wardrobes are common items in most families. However, as these items were made of high-quality
materials and designed specifically, only the rich could be able to own them. Acacia wood was a
common wood that could be used to process a variety of household wooden products for the export
markets. Acacia auriculiformis could replace natural forest timber, especially in high-class
furniture production. The acacia wood furniture for exporting was very diverse in types, materials,
and designs.
There were 22 wooden furniture categories (22 HS codes) exported from Vietnam. Where
16 acacia wooden furniture categories were recorded. This indicated the large proportion of acacia
wood furniture categories of the total exported wooden furniture categories. The categories of
exported wooden furniture were summarized into 7 main groups, including: 1) HS 94016 - Seats;
2) HS 94033 - Office furniture; 3) HS 94034 - Kitchen furniture; 4) HS 94035 - Bedroom furniture;
5) HS 94036 – furniture for other; 6) HS 94039 - Parts of furniture; 7) HS 94 *** - Other furniture.
34 Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41

PERCENTAGE OF ACACIA WOOD AND OTHER WOODEN FURNITURE

IN TOTAL TURNOVER OF EXPORT FURNITURE
25.00% 22.64% 22.90%

20.00% 18.24%

% Furniture from other

15.00% wood

% Acacia wooden furniture

10.00% 7.68%
6.85%
5.59% 5.88%
5.00% 3.85%
2.21%
0.69% 0.89% 1.37% 0.88% 0.33%
0.00%

Figure 4. Participation rate of acacia and other wood in the total value of exported furniture in 2018
Source: Analysis, aggregated from Vietnam Customs data source in 2018

Seat products, bedroom furniture, and others contributed a large proportion of total exports.
Acacia wood also participated in many similar types as other woods (Figure 4).
Most household wooden products were difficult to market by of e-commerce because of
their bulky. Although manufacturers tried to design products that could be conveniently assembled
to logistics stages, logistics costs still accounted for a high proportion of the price of goods.
4.2.3. Product and service differentiation of enterprises
Material diversity to produce wooden furniture was very high. In addition to the main wood
material, the others including steel, aluminum, plastic, glass, mica, stone, and leather ... were also
used in combination to create the main body of wooden furniture. Decorative materials and colors
of furniture products were also very diverse. The abundance of materials stimulated creativity in
design and created product specificity. Thus, businesses owning the design also certainly created
exclusive capabilities.
In Vietnam’s exported wooden furniture market, most designs were supplied by buyers, so
the copyrights belonged to the importers. A small number of foreign enterprises (FDI) carried out
all activities in the value chain from design, production to consumption. According to the Ho Chi
Minh City Association of Fine Arts and Wood Processing (HAWA), there were about 5% domestic
designed products of Vietnam's exported wooden product group and the rest was mostly
outsourced for foreign customers (H. Le, 2019). Therefore, Vietnam's wood furniture exporters
have not yet got their cultural identities or foundations to build their brands. However, wooden
furniture in general is also fashionable, so the designs were constantly changed. Therefore, the
exclusive design of wooden furniture only exists temporarily. The abundance of product
characteristics caused difficulties for consumers in comparing prices between the same similar
products, so good marketing strategies are important to secure good prices.
Branding product and corporate identities were issues not noted by many wood enterprises.
Some countries focused on developing brands for raw materials. Countries (the United States,
Japan, and New Zealand) attached great importance to promoting timber brands to foreign markets.
The American Hardwood Council cooperated with Vietnamese Wood Magazine to publish a
Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41 35

special page about American hardwoods in Vietnam. Radiata pine brand of New Zealand was also
quite famous. Also, the world wood market had the Hinoki wooden brand - the symbol of Japanese
wood. Vietnam Acacia wood has been exported to more than 20 countries for many years but
building its brand has not been invested yet. If the brand name is "Vietnam Acacia Wood", then
wooden furniture from Acacia wood will make a difference.
Certification and labeling of goods in accordance with international practice created the
value-added wood products on global markets. In developed countries, customers usually required
a certificate of social and environmental responsibility as well as the legality of the goods as
wooden furniture. The international market required wood materials to be certified for sustainable
forest management - Forest Management (FM). Businesses participating in the supply chain must
also be certified by the chain of product management - Chain of Custody (CoC). Besides, the
requirement of legal timber origin became a mainstream trend in many markets. The US Lacey
Law, the EU Forest Law Enforcement, Governance and Trade (FLEGT) Program of the EU,
Australia's Anti-Illicit Logging Law are examples of this trend (P. X. To, T. T. T. Nguyen, & D.
T. T. Nguyen, 2016). However, data sources of Vietnam Customs in 2018 show that the proportion
of the value of Vietnam’s exported household wooden furniture from FSC - FM certified materials
was very low (1.01%). This indicated that Vietnam's wooden furniture exporting businesses was
focusing on affordable markets in which high standards were not required. In particular, Acacia
wooden furniture with FSC - FM certified materials had an even lower rate (0.69% of the total
value of acacia wooden furniture). This situation was due to the very small area of Acacia
plantations gaining FM certification. According to updated data of FSC, up to July 2019, the total
area of production forest in Vietnam certified FSC/FM was 236,990 ha (6.8% of total plantation
area?). Certification of the goods according to international rules is an issue for acacia wooden
furniture at the present. Therefore, any enterprise with an FSC-FM certified timber source had
market power.
Wooden furniture should generally meet the standards for raw materials. Acacia wood in
Vietnam had no unified standard on markets so the quality of wooden furniture was not stable.
Standard for round timber (Basic dimensions TCVN 1073-1971 and Quality classification
according to defects TCVN 1074-86) and standard for lumber (term and definition of TCVN 4739-
89; Basic dimensions TCVN 1075-1971 and Quality classification according to defect TCVN
1758-86) were the Vietnamese standards. However, these standards were built for natural forest
wood in the 1970s and 1980s, so they are not for plantation timber, especially acacia wood.
Meanwhile, imported sawn timber sources have clear standards. For example, the grading
regulations for lumber from hardwood species of the United States by the National Association of
lumber from hardwood species (NHLA) have FAS (first and second class) and F1F (FAS on one
side), No.1C (popular class 1), No.2C (popular class 2), No.3C or row AB - ABC. European Oak
grading - Edged wood has quality standards from QF-1 to QF-4. The lack of wood quality
standards is a weakness of Vietnamese acacia wooden furniture.
4.2.4. Quantity and types of substitutes
There were three substituted commodities for exported acacia wooden furniture including
1) Supplies of wood products from other wood materials; 2) Goods produced with other materials;
and 3) Furniture from other countries.
Vietnam’s wooden products for export were usually made from acacia, rubber, other
domestic plantation timber, and imported timber from legal sources. Input wood used for products
exported to the EU was mainly from domestic planted timber sources (acacia, eucalyptus) and
imported timber sources (oak and pine). Chairs were commodity groups with the highest turnover,
which reached over US$ 200 million in 2018. The wood types most used included acacia, pine,
eucalyptus, and rubber which accounted for 21%, 23%, 8%, and 5% of total exports, respectively.
36 Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41

The most common timber used to make chairs for export to the United States was domestic rubber.
In 2018, chairs made from rubberwood reached a turnover of US$ 228.7 million and accounted
for 29% of total chair exports to the US. Other woods also used to make chairs for the American
market were MDF, acacia wood, and pine timber which accounted for 19%, 5%, and 8%, of total
turnover respectively. In 2018, the most used timber for chairs to export to China was rubberwood
(accounted for 32% of the total export turnover of this item), khaya wood (11%), and acacia wood
(11%). The value of wooden furniture exports to China in 2018 reached US$ 135 million. Padauk
wood used popularly accounted for 40% of the total export turnover of this commodity group,
followed by rubberwood (10%) and acacia wood (8%). Rubber, acacia, and pinewood were also
the most used species for furniture and seats exported to the Korean market (P. X. To et al., 2019).
Many materials can substitute for wood to produce interior and exterior products. These
materials could replace some detailed parts of a wood product or the whole product. In general,
the trend of using alternative materials like aluminum, iron, glass, plastic, industrial wood, plastic
wood, rattan, bamboo was gradually dominating rather than the traditional wood materials to many
users. The reasons for replacing other materials for wood materials were aesthetic needs in design;
the increase of wood prices; durability and ease of assembly/disassembly and transport; and
consumer wishes to participate in environmental protection.
Many countries and territories are involved in the world’s wooden furniture market. Other
Asian countries were direct competitors of Vietnamese in wooden furniture markets, especially
acacia wooden furniture. In 2017, the export market share of wooden furniture products of Asian
countries to Europe were respectively China 49.8%, Vietnam 12.2%, Indonesia 5.3%, Malaysia
3.2%, India 3.2%, Thailand 0.9% (White, 2018).
4.2.5. Barriers to entry or exit from a market
According to Vietnamese law, administrative procedures were not a barrier for businesses
to enter or withdraw from the market. The biggest barrier for wood processing enterprises was
their resources or production and business conditions.
According to Vietnam Customs data, enterprises producing and exporting acacia wood
products were highly specialized, each business focused on only very few product types. Most
businesses exported only one or two product types. Similar to exporters, importers also focused
on a few categories of products. This phenomenon showed that businesses tried to focus their
resources on increasing monopoly rather than expanding product categories.
Table 3
Enterprises grouped by the exported and imported number of acacia wood furniture categories
Export enterprise Import business
Business type
Number Ratio (%) Number Ratio (%)
Trading in 1 product category 48 47 64 53
Trading in 2 product categories 34 33 32 26
Trading in 3 product categories 10 10 19 16
Trading in 4 product categories 8 8 3 2
Trading in 5 product categories 1 1 1 1
Trading in 6 product categories 1 1 2 2
Total 102 100 121 100
Source: Analysis from Vietnam Customs data in 2018
Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41 37

Moreover, export-import enterprises of acacia wooden furniture had very few partners. The
analysis results from Vietnam Customs data showed that the majority of enterprises had only one
or two import and export partners and a maximum of 4 partners. This indicated that the ability to
expand their market was very low because of dependence on a small number of partners. At the
same time, businesses were vulnerable to the failure of their partners. Thus, the firm scale was a
barrier to market participation.
Table 4
Enterprises grouped by the number of import and export partners of acacia wood furniture
Export business Import enterprise
Business type
Amount Ratio (%) Amount Ratio (%)
Business with 1 partner 75 74 111 92
Business with 2 partners 17 17 5 4
Business with 3 partners 8 8 4 3
Business with 4 partners 2 2 1 1
total 102 100 121 100
Source: Analysis from Vietnam Customs data in 2018

Besides, an analysis of export records indicated 100% of goods consumption was sold by
businesses (Business to Business - B2B). Due to the geographical distance, most of Vietnam's
small and medium-scaled export enterprises were not eligible to access overseas retail markets but
they had to sell their products through import enterprises.
4.2.6. Economic effect of enterprise-scale
Domestic plantation timber processing enterprises and small-scale furniture exporters had
higher costs for production and business activities than large-scale enterprises, especially the cost
of raw material purchasing and goods delivery procedures.
Domestic plantation timber in general and acacia did not have a centralized timber market,
so the cost of raw materials was quite expensive. Meanwhile, there was a VITACO “Western
Wood Market” for imported timber in Dong Nai, where the trade of raw wood was very favorable.
Usually, large enterprises with stable export orders will boldly sign contracts to purchase
raw materials with large quantities and preferential prices and less volatility. Typically, large
enterprises had stable export orders, they would confidently sign contracts for the supply of raw
materials in large quantities at preferential prices, low volatility. Meanwhile, small businesses only
bought raw materials when they held export contracts. At that time, businesses might have to
accept the price of raw materials according to market fluctuating price and geographical distance
of supply. Additionally, businesses buying origin unknown timber would also face the risk of wood
quality because acacia raw materials did not have standards yet.
Normally, the logistic unit cost of large enterprises was cheaper than those of small
businesses. Large enterprises had active plans in freight forwarders, so they would easily negotiate
with carriers for getting lots of promotions. Besides, large quantities of goods uniform in size
would easily be transported in containers with lower costs as compared with bulk shipping.
38 Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41

4.2.7. Links between relevant stakeholders on the market

Currently, the forestry section in general and import-export activities of forest products had
very few links between actors of the wood industry. In the existing models of linkage, the model
of horizontal linkage aimed to create mainly raw material resources. Vertical integration of the
value chain for exported wooden products was very rare. It was impossible to form a monopolistic
group or a monopoly market from the current situation of linking between entities.
4.3. Marketing solutions proposed to develop the market
4.3.1. Product development solutions
There are three competitive overall strategies to increase the competitiveness of businesses.
They include: 1) Cost optimization; 2) Differentiation and 3) Centralization strategy (Porter,
1985). Vietnamese enterprises in the wood processing industry in general need to participate
actively in the design stage and regain design rights in the hands of buyers as at present. Some
businesses are gradually changing their views from manufacturing and trading furniture products
(tables, chairs) to supply interior space, which is enhancing the design value and the difference.
Design activities enhance both product value and its own identity. However, the wood processing
industry needs to have a common orientation that can maintain typical Vietnamese cultural
traditions as well as meet the requirements of customers’ utility and tastes. Especially, the unique
feature of Vietnamese wooden furniture can be exploited from the characteristics of Acacia wood
material.
Standards for wood and wood products from plantation forests and acacia plantation are
required to ensure stability for customers. Also, international standard certification for Vietnamese
wood products is also necessary to overcome the technical barriers of developed countries.
4.3.2. Price solutions for products
European customers recognized the difference in the prices of furniture. Vietnam was the
country that supplied the lowest prices for wood furniture, followed by China, Thailand, and
Indonesia. EU and Malaysia were considered the least competitive in terms of price (White, 2018).
Some Vietnamese enterprises acknowledged that the current competitive price of Vietnamese
wood furniture was affordable. Thus, Vietnam's timber industry could be following the wrong way
as the rice sector. There have been many lessons about affordable price strategy on the market.
When consumers used cheap goods, they automatically assumed that the goods were of poor
quality. Some distributors also used cheap goods as promotional gifts with the main product, which
accidentally reduced the quality of goods in the minds of customers. Timber industry associations
need to work closely to find solutions that can limit competition by price tool and gradually
increase the value of Vietnamese wood products including acacia wood products. The solution to
increase the selling price can be used to improve designs, apply product standards, brand materials,
and certify goods because these intangible values are difficult to be measured by customers.
When deciding on the prices of a product, suppliers need to compare their products with
comparable products on the market to offer an appropriate price for both sellers and users.
Although acacia is a common wood, Vietnamese businesses should target their products to middle-
class customers rather than affordable customers.
4.3.3. Solution for consuming goods
Furniture export results in 2018 showed that some other markets continued to have growth
such as Australia with a turnover of US$ 193.1 million, up 14.1%. Besides, some Asian markets
had a strong breakthrough such as Malaysia 102.2 million US$, up 86.2%; Thailand 38 million
Tran T. Cao, Huynh T. Nha. Ho Chi Minh City Open University Journal of Science, 10(2), 27-41 39

US$, up 49.4%; and Saudi Arabia 27 million US$, up 16% (Ministry of Industry and Trade, 2019).
The acacia wooden furniture export markets developed in line with other wooden export markets,
maintaining the traditional market, continuing to penetrate, expand, and exploit potential markets
and new markets for acacia wooden furniture are necessary.
Vietnamese furniture export enterprises need to cooperate to sell goods to consumers
(Business-to-Consumer - B2C). In case, each enterprise sells its goods by B2C, the selling cost is very
high. However, if many businesses cooperate, this cost will be significantly reduced. The distribution
stage is profitable, but it belongs to foreign enterprises because of their advantage of scale.
Online sale is a channel that Vietnamese wood enterprises should exploit. The nature of
bulky goods and geographical distance makes it difficult to deploy e-commerce to wood acacia
furniture. However, if there are representative offices and warehouses in foreign countries,
Vietnamese wood enterprises can sell online easily.
4.3.4. Solution of trade promotion
There are many solutions to trade promotion, but businesses need to consider which option
can be applied and bring the highest efficiency. In today's flat world, using social networks as a
tool to promote products is an effective solution that is selected by many businesses. Building
specialized wood information and exhibition center to introduce products at reasonable costs is the
solution that businesses can be aiming for. This solution needs supports from the State. Wood
industry associations should open representative offices in major markets such as the US, Japan,
Australia, and Europe to promote trade. Building up the brand of acacia wood material in Vietnam
will also contribute to promoting the image of acacia wooden furniture to the world market.
5. Conclusion
The export markets of acacia wooden furniture were evaluated to be competitive and
exclusive markets with a high degree of concentration in both buyers and sellers.
The basic factors of acacia wooden furniture export markets showed that there were many
buyers and many sellers on the market. Wooden furniture was a diversified commodity, both
similar in function and different in characteristics (both tangible and intangible). Businesses did
not have any ability towards monopoly.
Solutions to develop markets include: businesses should enhance design capacity; State
management agencies should develop standards of raw materials and products; businesses should
brand for raw materials and products; businesses should improve management capacity to achieve
certification according to international practices; Enterprises should restrict the export of cheap
goods; Businesses should continue to maintain the traditional market and exploit new markets;
Wood Industry Associations should link businesses to join the B2C model; The Government
should support the Wood Industry Association to build a wooden furniture information and
exhibition center in Vietnam that needs to be implemented in a synchronized manner.

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