Shrinking demand in key markets leads to Vietnam’s furniture exports reduction: Vietnam’s economy is projected to maintain a growth rate of 6.6% in 2023 and 2024, continuing to lead the top five economies in Southeast Asia, according to a report by the Organisation for Economic Co-operation and Development (OECD). The Philippines, Indonesia, Malaysia, and Thailand also show relatively stable growth trends. In the Southeast Asian furniture market, Vietnam and Indonesia have maintained leading positions. Notably, Vietnam surpassed China in 2022 to become the top furniture exporter to the U.S. The country saw its exports to the U.S. rise by 7%, reaching nearly USD 9.7 billion for 2022, while China’s business fell by 7%, dropping it to about USD 8.5 billion and reducing its share of the overall market to 28%. However, 2023 proved to be a challenging year for Vietnam’s furniture industry, as demand shrank in major markets such as the U.S., EU, Japan, U.K., and South Korea. In the first half of 2023, Vietnamese exports of timber and wood products fell by 28.8% year-on-year, and in terms of value, furniture exports dropped by 29%. Many Vietnamese furniture manufacturers had to scale back operations to cope with these challenges.
Potential growth opportunities emerge in the Indonesian furniture market: Indonesia’s furniture industry has been designated as a priority sector. Despite being affected by the pandemic in recent years, the industry remains robust. Moreover, the industry’s potential opportunities have attracted significant investment, totalling USD 20.084 billion over the last eight years from 2016 to 2023, reaching a peak of USD 4.834 billion in 2022.
Southeast Asian automobile industry showed a narrow downtrend in 2023: The low base effect of 2021’s Southeast Asian automobiles output led to a significant surge in output in 2022. In 2023, the output is expected to stabilize at 4.323 million units, a 1.4% year-on-year decrease. Thailand, Indonesia, and Malaysia are the main automobile producers within Southeast Asia, accounting for 89.5% of the region’s total output.
China’s increasingly close relations with ASEAN are driving the growth of automobile exports to Southeast Asia: In the first half of 2023, China’s imports and exports to ASEAN increased by 5.4% year-on-year to CNY 3.08 trillion, representing 15.3% of the country’s total imports and exports during the same period. China-ASEAN economic relations are growing closer, and the Version 3.0 China-ASEAN FTA was successfully held in Thailand. Additionally, on June 2, 2023, the Regional Comprehensive Economic Partnership (RCEP) took effect for all 15 members. Overall, ASEAN is not only China’s important trading partner but also key targets for internationalization and expansion. Several Chinese automakers have rapidly expanded into ASEAN through methods such as complete vehicle exports, knock-down (KD) assembly, and establishing factories. In 2022, Chinese exports of automobiles to ASEAN increased by 48%, with a 26% share in the total imports of automobiles into ASEAN. The market share of Chinese auto brands in ASEAN has risen from less than 1% to over 6% over the past five years. Moreover, Thailand plans to provide a budget of 40 billion baht between fiscal 2023-2025 to promote EV consumption, while Malaysia’s EV tax exemptions will further drive the growth of Chinese automobile exports to Southeast Asia.
