The Viet Nam - Finland Forestry Sector Co-operation Programme. The Department of Agriculture and Rural Development of Bac Kan Province

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1 Page 1 of 9 The Viet Nam - Finland Forestry Sector Co-operation Programme The Department of Agriculture and Rural Development of Bac Kan Province TECHNICAL REPORT No. 10 REVIEW ON INTERNATIONAL TRADE STATISTICS: WOOD AND NON-WOOD FOREST PRODUCTS IMPORTS FROM VIETNAM IN 1995 REPORTING COUNTRIES: JAPAN, CHINA, USA AND THE EUROPEAN UNION Prepared by Jukka Tissari October, 1997 The Vietnam-Finland Forestry Sector Co-operation Programme in brief The Programme started in March 1996 and the first phase will last three years. The Programme is financed jointly by the Governments of Finland and Vietnam. The geographic coverage of the Programme is concentrated in the mountainous regions of Bac Kan Province where forestry is taken as a key potential activity which could contribute to social and economic development. Local population, mainly people from different ethnic minorities, suffer from social and economic problems due to lack of income generating opportunities. At the same time the mountainous regions are facing severe deforestation and forest degradation due to mismanagement and non-optimal use of the resources. The development objective of the Programme is to contribute to sustainable rural development in the mountainous regions of Vietnam, through the integration of forestry activities in the rural land-use and economy. The target groups of the Programme are rural households, ethnic groups, professional personnel at province, district and commune level and in national forestry administration. The Programme strategy is to introduce and disseminate sustainable forest management and other farmforestry practices as viable alternatives to shifting cultivation and other forms of unsustainable land use. The Programme implementation will be a continuous process of participatory learning and application. The following Programme components form the implementation strategy (i) community development, (ii) capacity building, (iii) dissemination and (iv) monitoring and evaluation. The immediate objectives respective to the above components are (i) established and tested mechanism to assist farmers/forest owners at the village level, (ii) improved capacity of the existing institutions in providing services for forestry extension, (iii) transferred practical experience from the pilot villages/communes to neighbouring areas, province level and finally national level and (iv) established monitoring and evaluation system at different levels. The implementing agencies of the Programme are Department of Agriculture and Rural Development in Bac Kan Province and Ministry of Agriculture and Rural Development, while the People s Committee of Bac Kan Province and the Ministry of Agriculture and Rural Development are the competent authorities of the Programme. The supporting consultant is Indufor Ltd. in partnership with Enso Forest Development Ltd. and FTP International Ltd. The team members Department of Agriculture and Rural Development, Bac Kan province Mr. Nguyen Van Viet, Programme Director, Director of the Department Mr. Vu Luan, Programme Secretary, Forest Officer Mr. Ngo Tan, Accountant

2 Page 2 of 9 Ms. Bui Thi Khoa, Cashier Forest Enterprise in Cho Don District Mr. Hoang Van Hoi, Director of the Forest Enterprice Mr. Truong Quoc Tu, Chief of the planning section in the Forest Enterprice Mr. Dong Khanh Hung, Forest Engineer Mr. Hoang Van Tuyen, Forest Technician Mr. Hoan Van Chiem, Forest Technician Mr. Vi Huu Kia, Forest Technician Mr. Ta Huu Huynh, Forest Technician Agriculture Extension Station in Cho Don District Mr. Luan Sy Thi, Forest Engineer Programme advisors and their assistants Contact information Mr. Petri Lehtonen, Chief Technical Advisor (CTA), Indufor Oy Mr. Anders Wikberg, Field Advisor, Enso Forest Development Ltd Ms. Dinh Thi Van, CTA s assistant, interpreter Mr. Le Tien Phong, Field Advisor s assistance, interpreter. Vietnam-Finland Forestry Sector Co-operation Programme Programme office in Bac Kan Province: Department of Agriculture and Rural Development Bac Kan Tel +(84-281) , Fax +(84-281) Programme office in Cho Don district: Cho Don Forest Enterprise Tel + (84-281) , Fax + (84-281) Hanoi: c/o Secretariat of the International Support Group, Ministry of Agriculture & Rural Development. 1A Nguyen Cong Tru Tel +(84-4) , Fax +(84-4) FOREWORD The first joint consultancy on marketing of wood & non-wood products and application of appropriate technologies in wood & non-wood processing was carried out from mid September to mid November 1996 principally in the Programme s pilot area in Cho Don district. The results of the consultancy were published in the Technical Report No.2. The consultancy gave a general overview of market opportunities and possibilities to apply appropriate technologies in the Programme area. The second consultancy on marketing and application of appropriate technologies took place from the end of April to the end of May The starting point for this consultancy was the products produced in the demonstration farms. Majority of the products are non-wood forest products. The results of the second study were published in the Technical Report No. 6. After finalising the second consultancy the Programme decided to carry out a desk study to review the international markets for Vietnamese wood and non-wood forest products in order to analyse export possibilities for potential wood and non-wood forest products from Bac Kan province. We wish to thank Mr. Jukka Tissari for writing this report based on international trade statistics. Mr. Nguyen Van Viet Mr. Petri Lehtonen

3 Page 3 of 9 Director of the Programme Chief Technical Advisor TABLE OF CONTENTS EXECUTIVE SUMMARY 1. INTRODUCTION 1.1 Background 1.2 Objectives 1.3 Product Coverage 1.4 Methodology and Data Sources 1.5 Limitations 2. IMPORTS OF VIETNAMESE WOOD AND NON-WOOD FOREST PRODUCTS INTO THE MAJOR INTERNATIONAL MARKETS IN Japan Wood Products Structure of Imports Market Shares Major Competitors Unit Prices Non-Wood Forest Products Structure of Imports Market Shares Major Competitors Unit Prices 2.2 China, Hong Kong and Taiwan Wood Products Structure of Imports Market Shares Major Competitors Unit Prices Non-Wood Forest Products 2.3 USA Structure of Imports Market Shares Major Competitors Unit Prices Wood Products Structure of Imports Market Shares Major Competitors

4 Page 4 of 9 TABLES Unit Prices Non-Wood Forest Products Structure of Imports Market Shares Major Competitors Unit Prices 2.4 The European Union Wood Products Structure of Imports Market Shares Major Competitors Unit Prices Non-Wood Forest Products Table Structure of Imports Market Shares Major Competitors Unit Prices Total Imports of Vietnamese Wood and Non-Wood Forest Products into Selected Countries in 1995 Table 2.1 Imports of Selected Wood Products in Japan in 1995 Table 2.2 Unit Prices for Selected Wood Products Imported from Vietnam in Japan in 1995 Table 2.3 Imports of Selected Non-Wood Forest Products in Japan in 1995 Table 2.4 Unit Prices for Selected Non-Wood Products Imported from Vietnam in Japan in 1995 Table 2.5 Imports of Selected Wood Products in China, Hong Kong and Taiwan in 1995 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 2.10 Table 2.11 Unit Prices for Selected Wood Products Imported from Vietnam in China, Hong Kong and Taiwan in 1995 Imports of Selected Non-Wood Forest Products in China, Hong Kong and Taiwan in 1995 Unit Prices for Selected Non-Wood Forest Products Imported from Vietnam in China, Hong Kong and Taiwan in 1995 Imports of Selected Wood Products in the USA in 1994 (Jan-Nov) Imports of Selected Non-Wood Forest Products in the USA in 1994 (Jan-Nov) Unit Prices for Selected Non-Wood Forest Products Imported from Vietnam in the USA in 1994 (Jan-Nov) Table 2.12 Imports of Selected Wood Products in the European Union in 1995 Table 2.13 Unit Prices for Selected Wood Products Imported from Vietnam in the European Union in 1995 Table 2.14 Imports of Selected Non-Wood Forest Products in the European Union in 1995 Table 2.15 Unit Prices for Selected Non-Wood Forest Products Imported from Vietnam in the European Union in 1995

5 Page 5 of 9 EXECUTIVE SUMMARY Total Imports by Selected Countries The total international market sizes of the selected wood and non-wood forest products were almost equal in size in Both product groups were imported worth USD 16.4 billion by the four main markets that year (Table 1). It has to be noted that this represents only those products that were considered in this study, i.e. products which were exported also by Vietnam. Vietnam supplied on average 0.3% (USD 46.8 mill.) of the wood products and 2.3% (USD mill.) of the NWFP supply into these international markets. This confirms the significant role of NWFPs in Vietnam s forest-based exports. Japan appears to be the main market for Vietnamese wood products studied in this report. It imported wooden products from Vietnam worth some USD 28.5 mill. in This was more than three times higher a value than the imports by China and the European Union (both USD 9 mill.). USA was the least important market for Vietnam what is not surprising taking into account the geographic and political reasons. In the case of NWFPs, the European Union was the biggest buyer of Vietnamese products with USD mill. purchased in This was mainly due to the large volume of coffee trade. Japan was the second largest market with USD 69 mill. imports from Vietnam. In China, the Vietnamese NWFPs held a significant 10.5% market share but the value remained small at USD 11 million. The actual role of the Chinese market is greater than reflected by the international trade statistics because a lot of unrecorded trade takes place across the Vietnam-China border. Table 1: Total Imports of Vietnamese Wood and Non-Wood Forest Products into Selected Countries in 1995 Products / Reporting Countries Japan China ( * USA ( ** EU Total Selected Wood Products - USD million - - total imports imports from Vietnam share of Vietnam (%) Avg. 0.3 Selected Non-Wood Forest Products - total imports imports from Vietnam share of Vietnam (%) Avg. 2.3 ( * includes China mainland, Taiwan and Hong Kong ( ** Jan-Nov data The Japanese market 1. Wood products: total imports from Vietnam: USD 28.5 mill. main products: non-coniferous wood chips (USD 19.9 mill.); sawnwood (USD 4.5 mill.); statuettes and ornaments (USD 1.3 mill.) biggest market shares: fuelwood (22%); tropical veneer sheets (6.3%); statuettes, ornaments and wood marquetry (5-6%); teak sawnwood (2.6%) major competitors: Australia, USA (wood chips); Canada, USA, Malaysia, Indo-nesia (sawnwood);

6 Page 6 of 9 China, Taiwan (secondary processed products) prices: a lot of anomalies in data but higher prices for Vietnamese sawnwood and secondary processed products 2. Non-wood forest products: total imports from Vietnam: USD 69.1 mill. main products: raw coffee (USD 44.1 mill.); aloeswood (USD 6 mill.); natural rubber (USD 5.3 mill.); basketwork and wickerwork (USD 4.9 mill.) biggest market shares: aloeswood (59%); selected species of preserved fruits (38%); cinnamon in powder form (37%); "other" essential oils (16%) major competitors: Brazil, Colombia, Indonesia (coffee); Thailand (rubber, fruits); China, India (a large number of NWFPs) prices: usually discounted Vietnamese prices: e.g. coffee (-25%); basketwork & wickerwork ( %); but also premium prices for e.g. green tea, cinnamon, rubber, etc. The Chinese market 1. Wood products: total imports from Vietnam: USD 9.1 mill. main products: logs (USD 2.9 mill.); sawnwood (USD 2.6 mill.); plywood (USD 2.3 mill.) biggest market shares: wood charcoal (45%); casks, barrels & vats (13%); hardwood logs (6%) major competitors: Taiwan (charcoal); Malaysia, Myanmar (logs); Malaysia, Indonesia, Myanmar (sawnwood) prices: mixed patterns with 40-50% higher prices for hardwood logs and sawnwood; 10-20% lower prices for plywood; 2. Non-wood forest products: total imports from Vietnam: USD 11.1 mill. main products: cashew nuts (USD 4.5 mill.); rattan (USD 2.5 mill.); bananas (USD 1.1 mill.) and medicinal plant Rhizoma coptidis (USD 0.85 mill.) biggest market shares: Rhizoma coptidis (86%); green tea (45-85% depending on type); cashew nuts (50%); bamboos (47%) major competitors: other South-East Asian countries, e.g. Thailand, Philippines, Myanmar (fruits); Philippines, Cambodia (cashew nuts); Myanmar (rattan); Taiwan (bamboo) prices: poorly available, but the following price premiums were observed: +50% for cashew nuts; +28% in cinnamon; +11% for Rhizoma coptidis; +31% in rattan The US Market (Jan-Nov data)

7 Page 7 of 9 1. Wood products: total imports from Vietnam: USD main products: secondary processed wood products such as jewellery boxes (USD ); statuettes & ornaments (USD ); wood marquetry (USD ) and "other" secondary products (USD ) biggest market shares: categorically very small ( %) major competitors: China, Taiwan (tableware & kitchenware, wood marquetry); Canada (joinery and carpentry products); Mexico, Thailand (wooden frames) prices: reliable data not available 2. Non-wood forest products: total imports from Vietnam: USD 27.7 mill. main products: robusta coffee (total USD 26.2 mill.); black tea (USD ); cashew nuts (USD ) biggest market shares: cinnamon in powder form (2.6%); sassafras essential oil (2.6%); robusta coffee (2.5%) major competitors: Argentina (black tea, natural honey); Colombia, Brazil (coffee); Indonesia (cinnamon, rubber); China (bamboo & rattan products, sassafras oil) prices: fairly close to average prices, but clear premiums obtained in cinnamon (8-12%); green tea and baskets, bags of bamboo & other plant materials ( %) The EU Market 1. Wood products: total imports from Vietnam: USD 9 mill. main products: wood marquetry and inlaid wood (USD 3.4 mill.); tableware & kitchenware (USD 1.4 mill.); builder s joinery and carpentry (USD 1.3 mill.) biggest market shares: tableware & kitchenware (2.5%); wood marquetry (1.7%); otherwise very small major competitors: former Eastern Europe (mainly Poland, the Czech Republic, Hungary) where strong traditions in secondary processed wood products prevail; Indonesia in builder s joinery; USA (casks, barrels) and Brazil (tools, handles) prices: extreme deviations, but in most products Vietnamese suppliers received % of the average prices 2. Non-wood forest products: total imports from Vietnam: USD mill. main products: coffee (USD mill.); natural rubber (USD 17.9 mill.); basketwork & wickerwork (USD 5.7 mill.) biggest market shares: cinnamon (6.8%); essential oils (6.4%); plaits and plaiting materials (5.5%);

8 Page 8 of 9 coffee (4.3%) major competitors: China (e.g. in bamboo, essential oils, plaits, basketwork); former Eastern Europe in a wide variety of plant-based products; Thailand, Indonesia and Malaysia (rubber); Colombia, Brazil (coffee). Also internal trade within the EU and re-exports of Vietnamese products play a major role in this market. prices: usually 10-25% discounts on Vietnamese products, but price premiums were obtained e.g. in anise, ginger, medicinal plants and some rubber grades 1. INTRODUCTION 1.1 Background After the two studies covering the local, national and export markets for wood and non-wood forest products of Cho Don District, the Vietnam - Finland Forestry Sector Cooperation Programme deemed necessary to carry out a statistical review on the Vietnamese exports to the major international markets based on the original import statistics of the respective countries. In order to take full advantage of this report, it should be read in connection with the earlier studies. 1.2 Objectives The main objectives of the work were: 1. to reveal the structure of Vietnam s exports of wood and non-wood products into the leading world markets; 2. to establish the market shares held by Vietnam in different products and in different markets; 3. to identify the major competitive suppliers in various products and markets; and 4. to compare the unit prices paid for the Vietnamese products vs. competitive suppliers. This data is not available in Vietnam, so the collection was organised in Finland by the Consultant. 1.3 Product Coverage The products covered in this study range from roundwood (logs) to wood-based panels and secondary processed wood products (statistical headings ). Furniture and pulp and paper products were excluded. In non-wood forest products, a wide selection of relevant items were analysed, covering e.g. fruit, spices, mushrooms, essential oils, coffee and tea, as well as products of rubber, bamboo and rattan. It has to be noted that the selection is not intended to be complete, but it is well representative for Vietnamese exports. 1.4 Methodology and Data Sources Volumes (kg or m 3 ) and values (converted into USD) of imports were collected per heading and reported (i) for the total imports, (ii) for the three biggest suppliers and (iii) for Vietnam. This allowed direct comparisons between the various supplier countries. Market shares were based on volume of imports from each source and calculated for every product subheading (e.g. not for total sawnwood). Total cumulative imports were presented on value terms only. Data sources were the official foreign trade statistics of Japan, China (including Taiwan and Hong Kong), the USA and the European Union (Eurostat CD-ROM). The European Union import figures refer to goods

9 Page 9 of 9 originating outside the Union area, so internal trade between the member countries is excluded. The latest complete statistical reporting was for the year 1995, which was chosen as a base year for the report. An exception was made with the USA, where Jan.-Nov data was the latest available. Whenever possible, the 1995 data has been supplemented with more recent price and market developments. This has been done for revealing the most imminent changes in the world markets and for assessing Vietnam s changing role in trade. Each market is covered in a separate chapter in the report, discussing both wood and non-wood products. Statistical data is given in multi-page tables at the end of each chapter. Data on competitive countries has been excluded due to the size of the files. Limitations A lot of statistical anomalies were observed during the work. They were usually associated with the unrealistic unit prices of the Vietnamese products. This reflects either incorrect reporting of value and volume or erratic statistical classification of products. No attempts were made to rectify these mistakes as reliable supplementary data was not available. Unit prices were compared to the average price under each product heading. Price ratios were calculated for this purpose. When this ratio is smaller than 1, it indicates a discounted price of the Vietnamese product. It was generally assumed that Vietnam has a competitive disadvantage in the export markets due to e.g. insufficient processing facilities, poor packaging and limited marketing skills. This notion is presumably justified, but there was no possibility of verifying this by desk research. A deeper analysis would require research on intermediaries engaged in Vietnam s foreign trade.

10 Page 1 of Non-Wood Forest Products Structure of Imports Vietnam sold non-wood forest products worth USD 69.1 million to Japan in 1995, as recorded for products considered in this study (Table 2.3). As previously stated, this may be a controversial figure as some products may be lacking. On the other hand, some products which are strictly speaking agricultural commodities are included here. For example, the dominant product was coffee (not roasted) which alone accounted for USD 44.1 million of the total value of imports (64%). Also tea in its various forms and qualities brought significant imports revenue, USD 1.8 million or 2.6% of the total NWFPs. Aloeswood (Aquilaria crassna), widely praised incense wood for its fragrance ingredients, was imported with USD 6 million from Vietnam. Its value made up 8.7% of the total imports. The quality of Vietnamese aloeswood is widely acknowledged in the world markets, even though a large part of the traded volume is presumably originating from Laos. Natural rubber in its various forms accounted for 7.7% of total imports, equivalent to USD 5.3 million. Basketwork and wickerwork of bamboo, loofah and similar materials earned USD 4.9 million (7.2% of total). Different spices from Vietnam earned USD 1.7 million in the Japanese import markets (2.5% of total). Mushrooms fetched USD 1.4 million or 2.1% of total import value. Table 2.3: Imports of Selected Non-Wood Forest Products in Japan in 1995 Name of Product Product code Country Quantity Market share Value Share of total value kg % USD % Natural honey Total Vietnam , ,5 Cashew nuts, fresh or dried Total Vietnam , ,7 Bananas, fresh Total Papayas, jackfruits, mangoes, litchis, etc., not added sugar, uncooked or cooked, frozen Other fruits and nuts, not added sugar, uncooked or cooked, frozen Coffee, not roasted or decaffeinated Green tea, excluding waste unfit for beverage Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , ,2 Partly fermented tea Total Black tea, excluding waste unfit for beverage Partly fermented tea, excluding waste unfit for beverage Vietnam , , Total Vietnam , , Total Vietnam , ,1

11 Page 2 of 8 Pepper, dried, not in containers for retail sale Cinnamon and cinnamon-tree flower (neither crushed or ground) Cinnamon and cinnamon-tree flower (crushed or ground) Cardamoms (neither crushed or ground) Ginger (provisionally preserved in solution) Ginger, fresh (not provisionally preserved in solution) Ginger, not fresh (not provisionally preserved in solution) Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , ,1 Aloeswood Total Vietnam , ,7 Job's tears Total Plants and parts of plant for perfumery, pharmacy, etc. (fresh or dried) Vietnam , , Total Vietnam , ,4 Urushi (Japanese lacquer), crude Total Vietnam , ,03 Bamboos Total Mushrooms, prepared or preserved, with sugar "French" mushrooms, prepared or preserved, in containers, no sugar Mushrooms, prepared or preserved, in containers, no sugar Bamboo shoots, prepared or preserved, no sugar, not frozen Cashew nuts, prepared or preserved, no sugar Pineapples, prepared or preserved, with sugar, in Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total

12 Page 3 of 8 containers, chopped or crushed Mixed fruit, fruit salad and cocktail, prepared or preserves, with sugar Mixtures of fruit, prepared or preserved, with sugar, other than in pulp form Durian, rambutan, passion-fruit, litchi and carambola, prepared or preserved, with sugar, other than pulp form Other fruit, prepared or preserved, with sugar, other than pulp form Bananas, avocados, mangoes, guavas and mangosteens, prepared or preserved, no sugar, other than pulp form Other fruit, prepared or preserved, no sugar, other than pulp form Peppermint oil from Mentha arvensis Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total Vietnam , ,1 "Other" essential oils Total Vietnam , ,7 Rosin and resin acids Total Vietnam , ,5 Snake skins Total Vietnam 680 2, ,1 Smoked sheets of natural rubber Total Technically specified natural rubber Other natural rubber, not latex, in plates, sheets or strips Mats, matting and screens of Juncus effusus or Cyperus tegetiformis Mats, matting and screens of vegetable materials, n.e.s. Product of plaiting materials of vegetable material ton Vietnam 228 0, , Total Vietnam 580 0, , Total Vietnam , , Total Vietnam , , Total Vietnam , , Total

13 Page 4 of 8 Basketwork, wickerwork and other articles of bamboo Basketwork, wickerwork and other articles of loofah and other vegetable materials, n.e.s. Vietnam , , Total Vietnam , , Total Vietnam , ,1 Raw silk, 26/29 denier Total Total imports: from all sources kg Vietnam 600 0, , ,0% from Vietnam Avg. 1,1% Avg. 1,9% Market Shares Market shares are calculated based on volume and presented in Table 2.3. The total volume of Vietnamese non-wood products in the Japanese market was tons in This was only 1.1% of the total imports of these commodities in Japan. Vietnam is boosting its exports of coffee and tea as a part of deregulation and diversification of foreign trade. Vietnam s total coffee exports were around tons in 1996, making it the second largest Asian exporter after Indonesia. During the first quarter of 1997, Vietnam exported tons of coffee, so record-high exports are expected for this year. A massive expansion is also taking place in the tea industry where the country was expected to reach tons annual output in The Japanese coffee market is still firmly controlled by the South American producers. Brazil and Colombia held around 20% shares each. Although Vietnam supplied a substantial volume ( tons) to Japan, it is still a minor source, accounting for 0.1% of the total imports of "raw" coffee. It was a more important supplier of tea with a 9.5% market share (597 tons). Green tea accounted for most of this volume. Natural honey imports from Vietnam amounted to 535 tons, which was 1.4% of the total in that commodity. In fruits, the product group including bananas, avocados, mangoes, guavas and mangosteens (prepared or preserved, not in pulp form) was the most prominent article from Vietnam, taking a 37.9% market share with the 68 tons sold. In terms of volume, Vietnamese pineapples (chopped or crushed) were the biggest merchandise with 398 tons sold, but this was only 0.01% of the total market in that item. In aloeswood, which is a very rare timber species, Vietnam was the biggest supplier with a 59% share of total imports (34 tons). This is due to the fact that aloeswood is mainly growing in Indochina and Vietnam has established functioning trade links to the export markets. Also landlocked Laos uses Vietnamese trade channels for exports. The recent announcement of the Vietnamese government to ban all log exports for years is likely to interrupt legal aloeswood trade in the future, unless exceptions to the law are allowed. Illegal trade may continue unchanged, however. Ginger and cinnamon in their various forms were the major Vietnamese spices sold in Japan. Ginger was sold mainly as preserved in solution (611 tons) and dry (135 tons). In ginger Vietnam supplied, however, less than promille of the total volume. Unprocessed cinnamon and cinnamon-tree flowers (neither crushed or ground) were sold in quantity of 242 tons, while crushed or ground cinnamon reached 148 tons trade volume. Vietnam s market share was 12.4% in the former and 36.9 % in the latter grade. Around tons of essential oils (of e.g. mint, cinnamon) were imported from Vietnam. Vietnam held a 13.8% market share in these oils. Roughly 18 tons of unprocessed cardamom (of Amomum spp.) was imported from Vietnam, and it occupied

14 Page 5 of 8 7.4% of the total market of that product in Japan. Around tons of natural rubber in different products were imported from Vietnam, accounting for merely 0.5% of total imports. Volume of mushroom imports from Vietnam was 761 tons, equal to a 3.4% share of the market in those mushrooms Major Competitors The Asian countries are naturally the biggest suppliers of many non-wood forest products into the Japanese market. China, Thailand and India were most often among the leading supplier countries. China was a dominant source e.g. in the following products: natural honey (90% of total market size), frozen fruit (41-47%), green tea (58%), raw and crushed cinnamon (78% and 48%, respectively), as well as bamboo shoots (84%) and mushrooms (80-90%depending on the type). Trade in essential oils, peppermint oil and rosin and resin acids was also dominated by China. It was the leading supplier of various handicrafts such as mats of vegetable materials and basketwork and wickerwork of bamboo and similar materials. Thailand dominated the deliveries of natural rubber (79%) and several prepared or preserved fruit. Also ginger preserved in solution came mainly from Thailand (55%) into the Japanese market. Philippines had an exceptionally strong position in fresh bananas as it supplied 78% of the total deliveries. India was the biggest source of cardamoms (65%) and cashew nuts (97%). The only non-asian market leaders were found in "raw" coffee (Brazil 23%), 26/29 denier raw silk (Brazil 82%), prepared/preserved cashew nuts (USA 78%) and mixed fruit salads and cocktails (South Africa 32%) Unit Prices In most of the non-wood products, Vietnamese goods were sold at lower unit prices than the competitor s products on average. This is evident from the price ratios smaller than 1 in the majority of products (Table 2.4). Regarding the major items sold, such as coffee and green tea, Vietnamese exporters obtained fairly righteous prices - even better than average in green tea. In coffee, however, there was a typical 20-25% price premium paid for South American imports. There was a USD 300 price gap between the Indonesian and Vietnamese imports, but this has been decreasing over time. USD 150 difference was reported in 1997 and the quality of Vietnamese arabica coffee has been acknowledged in the world markets. In natural rubber, bananas, pineapples, cashew nuts, mushrooms and cinnamon, Vietnamese products obtained healthy price premiums compared to the average. The wide price discrepancy in "other" essential oil prices refers to very high-value imports of refined oils from Europe and North America. Part of their trade is actually based on importing and adding value to Vietnamese and other Asian raw essential oils before re-exports. Vietnamese essential oils obtained 5-10 times lower prices than the European oils when imported in Japan. The reason for wide deviations in the prices for bamboo and bamboo shoots remains unknown. Quite recently, the world market prices for pepper have climbed on their highest level for the past ten years, roughly USD /ton, or double compared to 1995 prices in Japan. Table 2.4: Unit Prices for Selected Non-Wood Products Imported from Vietnam in Japan in 1995 Name of product Product code Country Unit price Price ratio USD/ton Vietnam/Avg. Natural honey Average 961,4 Vietnam 636,2 0,66 Cashew nuts, fresh or dried Average 4 853,2 Vietnam 5 304,6 1,09

15 Page 6 of 8 Bananas, fresh Average 458,1 Papayas, jackfruits, mangoes, litchis, etc., not added sugar, uncooked or cooked, frozen Other fruits and nuts, not added sugar, uncooked or cooked, frozen Vietnam 683,9 1, Average 2 094,4 Vietnam 1 337,6 0, Average 2 519,1 Vietnam 1 041,8 0,41 Coffee, not roasted or decaffeinated Average 3 333,9 Vietnam 2 574,7 0,77 Green tea, excluding waste unfit for beverage Average 2 184,3 Vietnam 2 326,8 1,07 Partly fermented tea Average 6 767,5 Vietnam 3 690,4 0,55 Black tea, excluding waste unfit for beverage Average 2 890,4 Vietnam 1 015,4 0,35 Partly fermented tea, excluding waste unfit for beverage Average 3 129,4 Vietnam 1 434,2 0,46 Pepper, dried, not in containers for retail sale Average 2 947,5 Cinnamon and cinnamon-tree flower (neither crushed or ground) Cinnamon and cinnamon-tree flower (crushed or ground) Vietnam 2 350,7 0, Average 2 143,4 Vietnam 2 659,8 1, Average 2 186,9 Vietnam 2 626,6 1,20 Cardamoms (neither crushed or ground) Average 8 988,4 Vietnam 8 083,2 0,90 Ginger (provisionally preserved in solution) Average 757,1 Vietnam 658,5 0,87 Ginger, fresh (not provisionally preserved in solution) Average 719,5 Vietnam 607,9 0,84 Ginger, not fresh (not provisionally preserved in solution) Average 1 525,4 Vietnam 364,0 0,24 Aloeswood Average ,4 Vietnam ,6 0,97 Job's tears Average 686,0 Plants and parts of plant for perfumery, pharmacy, etc. (fresh or dried) Vietnam 483,5 0, Average 1 849,8 Vietnam 695,0 0,38 Urushi (Japanese lacquer), crude Average ,1 Vietnam 6 155,6 0,29 Bamboos Average 389,2 Vietnam 1 334,7 3,43 Mushrooms, prepared or preserved, with sugar Average 3 613,1 "French" mushrooms, prepared or preserved, in containers, no sugar Vietnam 7 376,1 2, Average 1 588,0

16 Page 7 of 8 Mushrooms, prepared or preserved, in containers, no sugar Bamboo shoots, prepared or preserved, no sugar, not frozen Vietnam 2 159,0 1, Average 2 271,9 Vietnam 1 640,4 0, Average 1 324,0 Vietnam 1 171,2 0,88 Cashew nuts, prepared or preserved, no sugar Average ,0 Pineapples, prepared or preserved, with sugar, in containers, chopped or crushed Mixed fruit, fruit salad and cocktail, prepared or preserves, with sugar Mixtures of fruit, prepared or preserved, with sugar, other than in pulp form Durian, rambutan, passion-fruit, litchi and carambola, prepared or preserved, with sugar, other than pulp form Other fruit, prepared or preserved, with sugar, other than pulp form Bananas, avocados, mangoes, guavas and mangosteens, prepared or preserved, no sugar, other than pulp form Other fruit, prepared or preserved, no sugar, other than pulp form Vietnam 6 887,8 0, Average 725,7 Vietnam 936,4 1, Average 1 071,1 Vietnam 649,0 0, Average 1 028,4 Vietnam 1 142,5 1, Average 1 476,7 Vietnam 1 313,9 0, Average ,1 Vietnam 1 513,8 0, Average 1 526,3 Vietnam 1 106,6 0, Average 905,5 Vietnam 2 119,4 2,34 Peppermint oil from Mentha arvensis Average 7 628,3 Vietnam ,5 1,57 "Other" essential oils Average ,6 Vietnam 4 995,4 0,19 Rosin and resin acids Average 690,3 Vietnam 609,1 0,88 Snake skins Average ,0 Vietnam ,3 0,73 Smoked sheets of natural rubber Average 1 418,5 Vietnam 1 714,7 1,21 Technically specified natural rubber Average 1 477,8 Vietnam 1 526,4 1,03 Other natural rubber, not latex, in plates, sheets or strips Average 1 429,3 Mats, matting and screens of Juncus effusus or Cyperus tegetiformis Vietnam 1 471,5 1, Average 2 895,6 Vietnam 671,1 0,23 Mats, matting and screens of vegetable materials, n.e.s Average 2 975,3 Vietnam 1 390,5 0,47 Product of plaiting materials of vegetable material Average 2 569,6

17 Page 8 of 8 Vietnam 4 187,5 1,63 Basketwork, wickerwork and other articles of bamboo Average 3 801,8 Basketwork, wickerwork and other articles of loofah and other vegetable materials, n.e.s. Vietnam 2 986,9 0, Average 3 956,3 Vietnam 3 532,5 0,89 Raw silk, 26/29 denier Average ,1 Vietnam ,9 0,71

18 Page 1 of 7 2. IMPORTS OF VIETNAMESE WOOD AND NON-WOOD FOREST PRODUCTS INTO THE MAJOR INTERNATIONAL MARKETS IN Japan Wood Products Structure of Imports According to the Japanese foreign trade statistics, total imports of wood products from Vietnam amounted to around USD 28.5 million in Concerning the huge value of Japanese imports in these products (USD million), Vietnam accounted for a negligible 0.4% share of the total (Table 2.1). The bulk of this was in the form of non-coniferous (mainly eucalyptus) wood chips, accounting for 70% (USD 19.9 million) of the total import value. There is a steady demand for eucalyptus and acacia chips in the Japanese pulp mills. They have ensured their virgin fibre supply by establishing plantation projects and joint venture companies for procurement and shipping of chips in several Asia-Pacific countries. Another important article shipped from Vietnam to Japan was sawnwood (15.7% of Vietnam s total deliveries or USD 4.48 million). Secondary processed wood products together accounted for USD 3.47 million, or 12.2% of the total deliveries. Within this sector, statuettes and ornaments of wood were the most important group, worth USD 1.3 million (4.7% of the total value). Around 936 cubic metres (worth USD 0.3 million) of plywood were imported from Vietnam, but that accounted only for 1.1% of Japan s total purchases in those plywood grades. Table 2.1: Imports of Selected Wood Products in Japan in 1995 Name of product Product code Country Quantity Market share Value Share of total value ton % USD % Fuelwood Total Wood in chips or particles, nonconiferous Vietnam 23 22, , Total Vietnam , ,8 Coconut shell charcoal Total Vietnam 220 0, ,2 Wood in the rough (e.g. Cassia siamea) Total Sawnwood, planed or sanded (Pinus, Abies, Picea spp, thickness mm) Sawnwood, rough (Pinus spp., thickness mm) Sawnwood, planed or sanded, other coniferous Sawnwood (Chamaechyparis spp., thickness mm) Sawnwood (Chamaechyparis spp., thickness more than 160 mm) m 3 Vietnam 25 0, , Total Vietnam , , Total Vietnam 540 0, , Total Vietnam 79 0, , Total Vietnam 56 0, , Total

19 Page 2 of 7 Vietnam 23 0, ,3 Sawnwood, teak Total Vietnam 17 2, ,02 Sawnwood, Asian tropical timbers Total Vietnam 61 0, ,2 Sawnwood, mahogany, etc Total Sawnwood, planed or sanded, Cassia siamea, etc. Sawnwood, planed or sanded, Dipterocarpaceae Vietnam 11 0, , Total Vietnam 23 1, , Total Vietnam 16 0, ,02 Sawnwood, other n.e.s Total Veneer sheets, Asian tropical timbers, thickness less than 6 mm Wood continuously shaped (tongued, grooved, etc.), Pinus, Picea, Abies spp. Wood continuously shaped (tongued, grooved, etc.), other coniferous Vietnam , ,5 m Total Vietnam , ,4 m Total Vietnam 5 0, , Total Vietnam 6 0, ,05 Drawn wood of bamboo Total Wood continuously shaped (tongued, grooved, etc.), Cassia siamea, etc. Wood continuously shaped (tongued, grooved, etc.), n.e.s. Plywood, tropical outer ply, thickness less than 3 mm Plywood, tropical outer ply, thickness 3-6 mm Plywood, tropical outer ply, thickness mm Plywood, other non-coniferous outer ply, thickness at least 6 mm Plywood, coniferous outer ply, surface worked, thickness at least 6 mm kg Vietnam , ,01 m Total Vietnam 71 0, , Total Vietnam 72 0, , Total Vietnam 24 0, , Total Vietnam 598 0, , Total Vietnam 48 0, , Total Vietnam 250 0, , Total Vietnam 16 0, ,02

20 Page 3 of 7 Laminated lumber, n.e.s Total Veneered panels and similar laminated wood, n.e.s. Vietnam 8 0, , Total Vietnam 14 0, ,1 Wooden frames for paintings, etc Total kg Vietnam , ,4 Cases, boxes, crates, etc Total Vietnam , ,1 Wooden tools, handles, brooms, etc Total Vietnam , ,2 Assembled parquet panels Total Vietnam , ,2 Transom of wood Total Vietnam 155 0, ,01 Carpentry of wood Total Vietnam , ,2 Waribashi (chopsticks) Total Vietnam , ,1 Tableware and kitchenware of wood Total Vietnam , ,0 Statuettes and other ornaments of wood Total Vietnam , ,7 Wood marquetry or inlaid wood Total Vietnam 290 5, ,03 Caskets and cases for jewellery, etc Total Vietnam , ,7 Clothes hangers of wood Total Other articles of wood, Cassia siamea, etc. Vietnam 808 0, , Total Vietnam , ,5 Kushi of bamboo Total Vietnam 600 0, ,01 Fans and hand screens of wood Total Vietnam 150 0, ,02 Other articles of wood, n.e.s Total Vietnam , ,1 Total Imports: from all sources Total ton m m from Vietnam Vietnam ton Avg. 1, Avg. 0,4 m Avg. 0,1 m Avg. 6,3 100,0

21 Page 4 of Market Shares Vietnam is in most products only a very small supplier to the Japanese wood products market. This is partly due to the enormous size of total imports to Japan, but also indicates Vietnam s limited participation in the international wood products trade. It has to be noted that the market shares presented here are calculated only for the specific product headings listed in the data tables and can not be generalised into larger product categories. As an example, Vietnam delivered tons of hardwood chips to Japan, but this captured only 1.4% of the total market size. The recent information from 1996 indicate that Vietnam has expanded its chip shipments substantially to Japan, mainly through VIJACHIP joint venture with the Japanese chip users represented by Nissho Iwai trading house. In many products Vietnam accounted for less than one promille of the total supply, making it a marginal player in the market. Some exceptions to this rule were e.g. veneer sheets of Asian tropical species (6.3% of total supply), sawnwood of teak (2.6%) and Cassia spp. (1.9%) and some labour-intensive secondary processed wood products (5-6% of statuettes, ornaments and wood marquetry). Sawnwood was imported under 11 different headings but the total volume was only less than m Major Competitors In wood chips, the leading suppliers Australia and USA sold nearly 3 million tons and held 27-29% market shares in Japan. In sawnwood, the world s leading exporters were well represented in the market. In coniferous sawnwood, Canada, USA, Russia and Chile held the biggest market shares, while in sawn hardwood, Malaysia and Indonesia shared a major part of deliveries. Malaysia was the main source of veneer sheets, while Indonesia had a clear lead in the plywood trade, which it has been dominating for more than a decade. China (boxes, tools, transoms, chopsticks, tableware), Taiwan (wooden frames) and Thailand (parquet panels) were outstanding suppliers of secondary processed wood products. There was usually one clearly dominant supplier which held a 30-90% market share in each product Unit Prices A lot of unreliable unit prices were obtained based on the reported quantities and values of the Vietnamese wood products. Prices were usually many times higher than on average and can not be considered correct, unless they refer to some rare species or special quality. A price ratio (Vietnamese price per average price) was used for comparisons. As an example, most grades of sawnwood from Vietnam were clearly higher priced than imported sawnwood on average. Reasons for this are either related to high-quality special grades of seldom traded species or to erratic reporting. In the largest product heading "sawnwood, not elsewhere specified" the price ratio was 1.16, indicating premium prices for Vietnamese sawnwood (Table 2.2). It is noteworthy that several secondary processed wood products from Vietnam were clearly better priced than the competitors products. This reflects the high quality of hand-made carpentry of Vietnam and the willingness of the Japanese to pay for exclusive artesan products. In the case of bulky products such as wood chips (0.90), plywood ( ) the price ratios reflect discounted prices for Vietnamese products. Table.2.2 Unit Prices for Selected Wood Products Imported from Vietnam in Japan in 1995 Name of product Product code Country Unit price Price ratio USD/ton Vietnam/Avg. Fuelwood Average 1 829,7

22 Page 5 of 7 Vietnam 695,9 0,38 Wood in chips or particles, non-coniferous Average 150,4 Vietnam 135,7 0,90 Coconut shell charcoal Average 241,3 Vietnam 226,5 0,94 USD/m 3 Wood in the rough (e.g. Cassia siamea) Average 1 058,3 Sawnwood, planed or sanded (Pinus, Abies, Picea spp, thickness mm) Vietnam 786,2 0, Average 313,7 Vietnam 551,3 1,76 Sawnwood, rough (Pinus spp., thickness mm) Average 254,9 Vietnam 866,9 3,40 Sawnwood, planed or sanded, other coniferous Average 342,1 Sawnwood (Chamaechyparis spp., thickness mm) Sawnwood (Chamaechyparis spp., thickness more than 160 mm) Vietnam 2 632,7 7, Average 680,3 Vietnam 4 035,3 5, Average 897,8 Vietnam 3 766,8 4,20 Sawnwood, teak Average 2 649,7 Vietnam 408,6 0,15 Sawnwood, Asian tropical timbers Average 600,2 Vietnam 1 056,2 1,76 Sawnwood, mahogany, etc Average 643,1 Vietnam 841,4 1,31 Sawnwood, planed or sanded, Cassia siamea, etc Average 2 228,1 Vietnam 1 321,2 0,59 Sawnwood, planed or sanded, Dipterocarpaceae Average 813,4 Vietnam 384,6 0,47 Sawnwood, other n.e.s Average 615,3 Veneer sheets, Asian tropical timbers, thickness less than 6 mm Wood continuously shaped (tongued, grooved, etc.), Pinus, Picea, Abies spp. Wood continuously shaped (tongued, grooved, etc.), other coniferous Vietnam 711,9 1,16 USD/m Average 1,07 Vietnam 1,13 1,05 USD/m Average 346,6 Vietnam 420,7 1, Average 455,4 Vietnam 2 263,3 4,97 USD/ton Drawn wood of bamboo Average 1 428,5 Vietnam 833,6 0,58 USD/m 3 Wood continuously shaped (tongued, grooved, etc.), Average 2 275,8

23 Page 6 of 7 Cassia siamea, etc. Wood continuously shaped (tongued, grooved, etc.), n.e.s. Vietnam 731,0 0, Average 901,5 Vietnam 556,3 0,62 Plywood, tropical outer ply, thickness less than 3 mm Average 510,8 Vietnam 437,0 0,86 Plywood, tropical outer ply, thickness 3-6 mm Average 424,1 Vietnam 292,2 0,69 Plywood, tropical outer ply, thickness mm Average 403,5 Plywood, other non-coniferous outer ply, thickness at least 6 mm Plywood, coniferous outer ply, surface worked, thickness at least 6 mm Vietnam 307,0 0, Average 407,9 Vietnam 386,4 0, Average 361,5 Vietnam 363,8 1,01 Laminated lumber, n.e.s Average 784,1 Vietnam 1 075,0 1,37 Veneered panels and similar laminated wood, n.e.s Average 603,4 Vietnam 1 789,7 2,97 USD/ton Wooden frames for paintings, etc Average 6 251,4 Vietnam 2 450,3 0,39 Cases, boxes, crates, etc Average 1 440,2 Vietnam 2 926,5 2,03 Wooden tools, handles, brooms, etc Average 1 493,3 Vietnam ,0 17,14 Assembled parquet panels Average 2 401,3 Vietnam 799,5 0,33 Transom of wood Average ,8 Vietnam ,6 1,35 Carpentry of wood Average 1 665,4 Vietnam 957,0 0,57 Waribashi (chopsticks) Average 1 096,5 Vietnam 976,2 0,89 Tableware and kitchenware of wood Average 4 745,1 Vietnam 3 783,3 0,80 Statuettes and other ornaments of wood Average ,8 Vietnam 7 965,1 0,60 Wood marquetry or inlaid wood Average ,3 Vietnam ,2 0,26 Caskets and cases for jewellery, etc Average 4 211,5 Vietnam 4 336,7 1,03 Clothes hangers of wood Average 3 522,5 Vietnam 4 334,9 1,23 Other articles of wood, Cassia siamea, etc Average 5 801,0 Vietnam ,3 2,49