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Vietnam's Vibrant Furniture & Interior Design Sector: A Guide for Investors

1. Business insights: 

1.1 Market Outlook

The Vietnamese furniture market is experiencing significant growth, driven by a rising middle class and increasing disposable income. This report highlights the key trends shaping the market, including:

  • Market Growth: The Vietnam Furniture Market size is estimated at USD 1.47 billion in 2024, and is expected to reach USD 1.92 billion by 2029, growing at a CAGR of 5.33%.

  • International Brands: Major international players like Nitori (Japan) and Central Retail (Thailand) are entering the market, offering comprehensive home décor solutions.

  • Expansion of Existing Players: Established retailers like JYSK (Denmark) are expanding their presence, catering to diverse consumer preferences.

  • Market Segmentation: The market is segmented by application (home furniture, office furniture, hospitality furniture, and other furniture), material (wood, metal, plastic, and other materials), and distribution channel (home centers, flagship stores, specialty stores, online, and other distribution channels).

  • Luxury Segment Growth: Modale's entry signifies the growing demand for high-end European furniture and full-package interior design services.

  • Foreign Investment: Increased interest from Italian furniture companies due to Vietnam's growing market and the EU-Vietnam Free Trade Agreement.


1.2 Market Characteristics

  • Trends: Vietnam’s furniture market is booming due to the country’s competitive manufacturing costs and increasing demand for modern and affordable home furnishings. There is an increasing focus on eco-friendliness and sustainability, with a growing demand for furniture made of sustainable materials.

  • Demand Drivers: Factors such as increased urbanization, the rise of residential and commercial buildings, and the demand for lightweight, adaptable, portable items with ample storage are contributing to market expansion.

  • Rising disposable income: A growing middle class with increasing spending power is fueling demand for quality furniture.

  • Urbanization: Rapid urbanization is leading to a rise in new homeowners seeking to furnish their apartments and houses.

  • Shifting consumer preferences: Consumers are increasingly looking for functional, stylish, and space-saving furniture solutions.

  • Growing online market: The online furniture market is gaining traction, offering convenience and wider product selection.


1.3 Opportunities

  • Growing Market: With a dynamic market and stable political background, Vietnam has become an attractive investment destination for foreign businesses.

  • Export Opportunities: Vietnam is a major exporter of furniture, exporting to over 120 countries, with the main markets being the United States, the United Kingdom, Canada, Australia, and Japan.

  • Low Manufacturing Costs: Vietnam’s low labor costs and favorable investment climate make it an attractive destination for companies looking to produce high-quality furniture at a competitive price point.


1.4 Challenges

  • Higher Competition: The competition from established local players and international brands is intensifying.

  • Rising raw material costs: This might impact production costs and product prices.

  • Sustainability Requirement: Ensuring the quality and sustainability of furniture production is crucial for long-term success.

The Vietnamese furniture market offers promising growth prospects for both domestic and international companies. Understanding the evolving consumer demands and adapting product offerings will be key to success in this dynamic market. 


2. Legal insights

2.1 Company establishment 

In line with other business ventures in Vietnam, prospective investors seeking to engage in the furniture industry must first establish their companies before commencing operational activities. The initial step involves registering the investment project with the Department of Planning and Investment (DPI), culminating in the issuance of the Investment Registration Certificate (IRC). We roughly divide the furniture industry into 3 main segments: 

  • Furniture manufacturing;

  • Furniture trading; and 

  • Architecture consultancy 

Each segment requires a slight difference in the IRC acquisition process due to the nature of that business segment. Particularly, manufacturing needs to obtain approval from relevant authorities, such as the Department of Industry and Trade or People’s Committee, considering factors like local plans, environmental impact, and strategic contributions. In practice, companies engaging in the manufacturing sector are usually settled in industrial zones to take advantage of the zone's infrastructure. Regarding the trading segment, the process is relatively straightforward as the most of goods involved are neither prohibited nor restricted (except regulations pertaining to wood or wood-made products), and distribution activities are accessible to investors. On the other hand, architecture consultancy is a conditional business that requires foreign investors to be entities established in a country which is a member of WTO and the Vietnam-established company shall meet some specified requirements to register and operate the business in Vietnam, such as qualification of the legal representative or compulsory notification to local authorities. 


The subsequent step involves registering the enterprise with the Business Registration Office (BRO), an affiliate of DPI, through the online National Portal. This step is expedited compared to the first, contingent upon the approved project scope outlined in the IRC.


2.2 Key consideration

2.2.1 Fire Protection Certificate 

Furniture business entities should leverage the fire protection and firefighting system fire protection to safeguard employees and assets. Since materials and goods of the furniture industry are easy to catch fire, compliance with fire protection requirements is not only a legal obligation but also a crucial measure to maintain safety and reputation. For the manufacturing line, the fire protection registration dossier for a facility depends on its production scale, and industrial zone-based establishments must adhere to the fire protection dossier of the respective zone. With regard to trading through physical stores, even though it is not legally indicated to implement Fire Prevention and Fighting (FPAF) measures, it is encouraged to adopt FPAF measures to ensure customer and staff safety, reduce accidents, and enhance customer confidence. However, these two exceptional cases shall be complied with the FPAF measures: 

  • Residential premises that concurrently undertake the production and business activities involving highly flammable goods or goods stored in fire-prone packaging, pertaining to household operations.

  • Stores within shopping centers.


2.2.2 Environmental protection 

Environmental stewardship holds paramount importance within the furniture industry, particularly within the manufacturing domain. Given the substantial ecological footprint associated with this sector, regulatory oversight often dictates the permissible volume and processes of manufacturing operations. Any deviation from approved production volumes necessitates prior authorization from regulatory bodies. Furthermore, enterprises situated within industrial zones are bound by specific production quotas and scales established therein.

Environmental Impact Assessment (EIA) is crucial in manufacturing, ensuring legal compliance and promoting environmental conservation. It aids in managing waste and energy resources, cultivates a sustainable corporate identity, and protects against financial liabilities. Adherence to EIA principles attracts environmentally conscious clients and mitigates operational risks. Businesses aligning with sustainable development can capitalize on market dynamics and contribute to a sustainable industrial landscape. In Vietnam, environmental compliance is integral to the investment project registration process for foreign direct investment enterprises.


2.2.3 Leasing contract

It is discernible that within the furniture industry, the leasing contract assumes a pivotal role in ensuring operational stability, primarily owing to the necessity for expansive spaces to serve as showrooms and storage facilities. Alternatively, companies may opt for stocking services provided by external entities, wherein goods are stored in their warehouses and subsequently dispatched to designated outlets as required. Notwithstanding the apparent expediency of this arrangement, it is imperative to acknowledge the potential drawbacks associated with such reliance on third-party service providers, including the likelihood of encountering substantial costs and operational dependencies that may give rise to inconveniences.

We outline below certain pain points when assessing leasing contracts for those intending to procure their own warehouse space:

  • Lease terms: Thoroughly review the terms of the lease agreement, encompassing duration, renewal options, and termination clauses. Alignment of these terms with operational requirements and long-term objectives is imperative.

  • Cost analysis: Conduct a comprehensive analysis of associated costs, encompassing not only monthly rent but also maintenance, utilities, and potential ancillary fees. Clarity regarding all financial obligations is crucial for effective budget management.

  • Security provisions: Evaluate the security measures in place at the warehouse facility, including surveillance systems, access controls and fire fighting and protection. 

  • Insurance coverage: Clarify insurance responsibilities and liability provisions outlined in the lease agreement. Understanding the extent of insurance coverage and liability allocation mitigates risks associated with potential damages or losses.

  • Exit strategies: Anticipate potential termination scenarios by reviewing termination clauses and exit strategies within the lease agreement. 

  • Other terms that are relevant to your specific business.


2.2.4 IP registration 

Trademark registration is a crucial strategy in commerce for establishing and fortifying brands. It safeguards a company's reputation, maintains product quality standards, and deters counterfeiting. Upon registration, trademarks become valuable assets, increasing businesses' value and enabling diversification and expansion. Trademark protection provides a competitive advantage by preventing unfair practices and unauthorized use. It also aids in strategic brand management, fostering consumer trust and loyalty. Trademark registration is a catalyst for global market penetration, enabling businesses to navigate international markets with confidence.


In conclusion, Vietnam's furniture and interior design sector offers significant opportunities for investors, with a projected market size of USD 1.92 billion by 2029 and a CAGR of 5.33%. The country's competitive manufacturing costs, skilled workforce, and favorable investment climate make it an attractive destination. However, companies must navigate an increasingly competitive landscape, rising raw material costs, and the need for sustainable production practices. To succeed, businesses must establish a strong legal foundation, comply with regulations, and carefully consider leasing contracts and trademark registration. By understanding market trends, consumer preferences, and legal requirements, investors can capitalize on the growing demand for quality furniture and establish a strong presence in this promising market.


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