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| Production activities at Tan Quang Minh Trading and Production Company Limited (Bidrico). Photo from the company. |
Standing steady by transformation
While major export markets such as the US and Europe have a large inventory of goods and a sharp decrease in purchasing power, wood exporters continue to face negative growth. However, they still make great efforts to survive, step by step, and overcome the storm.
Ms Do Thi Kim Loan, General Director of Sao Nam Trading and Production Company Limited (Binh Duong) said that 100% of the company’s floorboard products were only focused on exporting to the US market in the past, but the demand for this market had dropped sharply from the end of 2022, which made the export volume were only about 35-40% of the factory’s production output. As a result, the Sao Nam company shifted to find customers in other markets, such as Australia and Canada, to partially offset the decrease in volume from the main market.
“Australian wood board importers have transferred materials to the company as a temporary import for re-export. We will do the processing, packaging and export back to them. The proportion of participation in these products is only about 40-50%, but this is an adaptation to maintain the factory’s operations and create jobs for workers in difficult times”, shared Ms Do Thi Kim Loan.
In particular, thanks to the timely transition to green production, Trung Quy Textile and Garment Co., Ltd (Hai Son Industrial Park, Long An) has had more export orders and stood firm in difficult times. Recently, this company has exported two containers of organic fabric to an import partner from the US. Mr Tran Van Quy, Chairman of the Board of Directors, General Director of Trung Quy Textile and Garment Co., Ltd., said that orders of traditional products had not been recovered, but some partners placed new orders for fabrics of organic origin and recycled material.
“Realizing the market demand has a good sign for the new product line; the company has developed another 20 fabrics of organic origin, ready to be produced when customer demand increases. In addition, about 10 major European and US brands are researching Trung Quy’s environmentally friendly products, ” added Mr Tran Van Quy.
Nguyen Dang Hien, General Director of Tan Quang Minh Production and Trading Company Limited (Bidrico), said that in 2022, thanks to the production process’s greening, the company’s export revenue increased by more than 60% compared to its plan. From the beginning of 2023, in addition to maintaining market share in Korea, Japan and Southeast Asia, the company had increased export orders to the US and China thanks to its green transformation capacity.
Still need much assistance
Many enterprises still face difficulties mobilizing and accessing capital, increased production and business costs, and narrow export product markets.
Mr Nguyen Ngoc Hoa, Chairman of Ho Chi Minh City Business Association, said that the shortage of orders continued to be the biggest worry of enterprises in the first 5 months of 2023, especially in the fields of textiles, apparel and footwear, manufacturing, construction, materials, electricity – electronics. The shortage of orders forced many enterprises to reduce their production scale by more than 50%.
Stimulating domestic demand in the context of export difficulties was necessary to energize and bring new “breath” to enterprises. Dr Tran Du Lich, a National Financial and Monetary Policy Advisory Council member, said that the total revenue of goods and services increased well in the first quarter of 2023 but began to slow down after April; the market purchasing power was very low. Even tourism visitors were still sparse. Therefore, the domestic market stimulus was very limited. For the economy to recover soon, it must rely on the macro-economy and increase the purchasing power for the market by implementing the policy of stimulating domestic aggregate demand through both tools of the State and the tool of enterprises.
Accordingly, it was necessary to continue researching to reduce VAT for each industry, needing stronger solutions than reducing it to 5%-6%, boosting domestic market demand through consumer credit. However, enterprises should have campaigns to accept discounts and stimulate the market because in this difficult export context, if not pulling up the domestic market, it would affect inventories, production and business activities, Dr Tran Du Lich emphasized.
Ms Ly Kim Chi, Chairman of the Ho Chi Minh City Food Association, said that lending interest rates should be below 10% per year to help enterprises increase competitiveness, thereby increasing the ability to consume goods and products among enterprises by stimulating customer consumption demand. At that time, the domestic demand increase would offset the export turnover decrease. As with the food industry, the current rate of return was about 11%-12%/year (excluding depreciation and interest). Therefore, enterprises with interest rates above 10 %/year would suffer losses if they had to borrow.
Accordingly, commercial banks need to raise the ratio of loans to collateral because the current collateral value has been greatly reduced after re-valuation.