Enterprises try to find more export orders
Mr. Nguyen Hoang Ngan, General Director of Binh Minh Plastic Company, said that the company's revenue in the first nine months of 2022 was relatively good when it reached VND561 billion (US$23,254,558), exceeding the whole-year plan of VND560 billion. This result came from the decrease in the price of raw materials in the market.
Accordingly, at the end of 2021, the price of importing PVC plastic materials was $1,800 a ton, but now the price has dropped by nearly half. Moreover, after TPC Vina Plastic - Chemical of Thailand and the AGC Group of Japan poured their investment in Vietnam and can supply 400,000 tons of PVC powder per year, the proportion of locally-made PVC raw materials has accounted for 90 percent, only about 10 percent of PE plastic raw materials must be imported.
As a result, the competitiveness of the company in particular and domestic plastic manufacturers in general increased sharply because of reducing logistics costs and taking initiative in the source of raw materials.
However, according to Mr. Ngan, the market trend in the fourth quarter of 2022 and early 2023 is not positive, because in the short term, consumer demand in the market is still strongly affected by world fluctuations while not many construction projects started.
Also concerned about this issue, Mr. Do Phuoc Tong, Chairman of the Members' Council of Duy Khanh Mechanical Company, said that the number of orders for molds of the company has decreased sharply recently. Not only that, because most of the enterprise's raw materials are imported, when the dollar appreciated, there have been certain negative impacts on the firm’s production costs.
He disclosed that currently, the enterprise is trying to renegotiate and adjust product supply costs in export orders with partners, but the chance of success is zero.
In the field of apparel, Mr. Pham Xuan Hong, Chairman of the Board of Directors of Saigon Garment 3 Company, Chairman of Ho Chi Minh City Textile and Embroidery Association, said that many textile enterprises had to reduce production frequency from three shifts per day to one shift per day because of lack of production orders following the sharp decrease in demand for textiles and garments in Europe - Vietnam's main textile and garment export market - from the third quarter of 2022 leading to a fall of 70 percent of orders.
Mr. Xuan Hong said that in the first six months of the year, businesses had to increase labor productivity to three shifts per day but still could not handle all orders, even many businesses had to refuse to accept orders because they could not meet demand whereas at present, workers are working one shift a day.
Faced with a difficult reality, Mr. Pham Xuan Hong expressed, in the short term, many enterprises in the field of textile and garment still have to maintain a production capacity of one shift a day to retain workers. Currently, many enterprises have shifted to increase their export market share to the US and Japanese markets while a few firms increased exports to new markets such as Canada, Australia, Russia and Korea. It is expected that the situation can only get better by the end of the first quarter of 2023.
Particularly in the field of supplying supporting industry products, businesses are turning to take care of the domestic market. Mr. Do Phuoc Tong said, in addition to the rapid increase in foreign investment attraction, many foreign enterprises making end products have continuously expanded production in Vietnam. Therefore, many domestic enterprises are rapidly transforming their investments and improving their production processes to meet their standards of becoming a supplier in the global chain. Small-scale enterprises should link together to create a multi-detailed product "Make in Vietnam", increase the position of Vietnamese enterprises in the supply chain as well as shorten the time to consolidate the capacity to become higher-level suppliers in the global supply chain.
Furthermore, businesses need to take advantage of the golden time that free trade agreements (FTAs) allow to enter and expand market share. Ms. Nguyen Thi Thu Thuy, Deputy Director of the Export Promotion Center under the Ministry of Industry and Trade, shared that a sharp drop in purchasing power in the European market in the short term is inevitable. However, the export turnover of Vietnamese goods only accounts for 2 percent of the total import turnover of this market. Therefore, if businesses are more proactive in approaching partners, they will be likely to get more orders.
The Ministry of Industry and Trade said that it has continuously worked with business associations and Vietnamese trade counselors abroad to increase trade connectivity for export businesses. Therefore, enterprises need to quickly change production methods and product categories to meet the requirements of export markets; at the same time, they need to maintain stable and reliable quality in the long term to maintain the market's trust.
Ms. Le Nguyen Duy Oanh, Deputy Director of the Supporting Industry Development Center under the Ho Chi Minh City Department of Industry and Trade, announced that foreign direct investment capital in Vietnam in the first nine months of 2022 was estimated at US$15.43 billion, up 16.3 percent compared to the same period last year. This is the highest amount of foreign direct investment capital realized in nine months in the past five years including 1,355 newly licensed projects. Currently, foreign businesses are aggressively hunting for suppliers of supporting industry products in Vietnam.
The Supporting Industry Development Center in Ho Chi Minh City under the Department of Industry and Trade has recently had a list of more than 500 supporting industry products that foreign businesses are finding domestic suppliers. This is a golden opportunity for domestic enterprises to transform production to join the global supply chain of foreign enterprises.
