Dongwha leads wood panel industry in Vietnam

A bird’s eye view of a VRG Dongwha MDF factory is seen in Minh Hung Commune, north of Ho Chi Minh City, Vietnam. / Courtesy of Dongwha Enterprise

By Park Jae-hyuk

Dongwha Enterprise is rapidly expanding its presences in the Vietnamese market with its high quality medium-density fiberboard (MDF), which is mainly used as furniture material.

In 2008, the Incheon-based top-tier wood panel manufacturer, established a joint venture VRG Dongwha MDF in Minh Hung Commune, north of Ho Chi Minh City, Vietnam, collaborating with Vietnam Rubber Group (VRG), a state-owned timber company there.

VRG Dongwha began to operate a 384,600-square-meter plant in 2012 and posted 111.5 billion won ($95 million) in sales in 2015 for an operating profit ratio of 36 percent.

In addition, the wood board plant has shown the highest productivity among such factories in Asia, as it has produced 300,000 cubic meters of MDF a year with Asia’s longest 47-meter-long press machine.

Dongwha said the success could be achieved thanks to VRG’s large rubber tree plantation with a competitive advantage in securing raw materials within a 50 kilometers distance.

Dongwha also cited Vietnam’s fast growth rate being another key factor of its success. The country has expanded 5.9 percent a year on average for last five years, according to International Monetary Fund data, and is expected to maintain a 6 percent growth rate for a while.

With economic growth, the Southeast Asian country’s domestic demand for MDF has grown explosively, Dongwha said. The company decided to build its second production line in 2015, which is expected to produce 180,000 cubic meters of MDF a year.

VRG Dongwha expects its revenue will rise 30 percent when the second production line begins operation this June. Also, it plans to build a melamine faced board (MFB) plant this year.

According to Dongwha, more than 92 percent of MDF made by VRG Dongwha has been consumed in Vietnam’s domestic market. The enterprise will likely create new demand there, as China and Taiwan-based furniture firms in Vietnam prefer products of VRG Dongwha.

Furniture makers are seeking to export their products to North America, so VRG Dongwha’s MDF, which meets the U.S. quality standards, will have the advantage compared to other wood panel manufacturers without the technological edge to meet those standards.

Meanwhile, VRG Dongwha said it has also tried to win the hearts and minds of Vietnamese with various educational programs, as well as attracting them with the company’s quality products.

VRG Dongwha has offered internships to local people who want to work for the company and has granted them scholarships. Some of the employees have even had chances to work in Korea and learn the Korean language.

“Our company has been popular with Vietnamese interested in the Korean wave,” said a Dongwha official. “We will attempt to be an excellent example of a Korean firm in Vietnam, promoting Korea’s technologies and management knowhow there.”