Blog: As production moves out of China, logjams mount in Vietnam and Malaysia

In this week’s print and online editions, Furniture Today covered an issue that remains one of the biggest points of discussion among manufacturers, importers and retailers alike: backlogs what it will take to help lower them in the coming weeks and months.

The issue largely has to do with high demand and the expense of getting product flowing on containers from Asia due to high demand.  As we all know, this has created production logjams as overseas manufacturers have to devote more and more space to product waiting to ship. That in turn, slows down production because many simply don’t have the space to warehouse finished goods.

But in speaking with some industry observers, this problem has been a long time coming, thanks to China tariffs in place since the third quarter of 2018. That quandary shifted much production to Vietnam and Malaysia, each of which already had a significant presence not just in furniture manufacturing, but also the supply chain necessary to produce wood furniture and other categories such as motion upholstery.

Still, few factories in Vietnam or Malaysia had the mass production capabilities available in China.

A conversation I recently had with AICO CEO and founder Michael Amini reiterated many of the challenges Vietnam in particular now faces as a result.

“It starts from the fact that Vietnam has been overcrowded with a number of orders,” he said, noting that the shift in mass production from China “has created such an impact on Vietnam.”

The impact has been dramatic. In 2019, for example, furniture shipments from China to the U.S. fell 28% to $9.7 billion, from $13.6 billion in 2018. Vietnam picked up some of that business, with a 35% increase in furniture shipments to the U.S. Malaysia’s shipments rose 28% that same year.

“A lot of factories (in China) closed, and subcontractors started shutting down as well,” Amini said of the shift. “Now we are at a crossroads in the furniture industry. The whole infrastructure we built in China over the past 30 years is melting away and being destroyed in front of our eyes.”

But furniture was not the only industry that moved out of China. Many apparel, electronics and housewares firms also shifted sourcing to places such as like Vietnam to avoid 25% tariffs. Thus, Vietnamese furniture plants not only have to compete with many of those industries for workers, but also the industry has to compete for containers and space on vessels to get their product shipped to the U.S.

Amini notes that the issue largely affects lower-priced resources that had no choice but to move to out of China to avoid an automatic 25% tariff on their goods.

“Companies with lower-priced goods did fine until this container shortage came about,” Amini noted of the impact the logistics and cost of shipping is having on the industry.

“Frankly, I feel this situation is not going to be resolved soon,” he added, noting that the demand for capacity continues amidst the logistics logjam. “As an industry, all the medium-sized to smaller companies might not last. If you don’t have the buying power, no one wants to even look at you.”

But even larger resources, as our coverage has shown, will have to wait for their backlogs to lower due to overall capacity limitations.

“The supply chain will stay like this until companies start scattering into different countries,” Amini said, noting that for higher-end resources, China could remain the best destination as it still has a lot of skilled workers, engineers and line management with years of experience in residential furniture.

With all the supply chain issues affecting backlogs, how do you see all this playing out? Will new countries emerge as sourcing destinations? As always, we want to hear from you and value your feedback.  Feel free to reach out to me at or (336) 508-4616.

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