Optimistic market insights

Not pessimistic about the market, enterprises strive to overcome hardship and challenges to maintain production and business development; at the same time, propose to all levels and sectors for specific supporting solutions which can be implemented instantly.

Manufacturing shoes for export at Dai Hoa Co. Ltd. in Tan Uyen town

Face the challenge

According to the Department of Statistics, although the export turnover was higher than the same period last year, the import value in the first 6 months of 2022 of the province was estimated at USD 12,792 million, decreasing 5.8% over the same period. Imported goods were mainly machinery and raw materials for production. Some major import markets such as China, Japan, Taiwan, EU etc. decreased slightly over the same period. The sharp increase in transportation costs due to high gasoline prices was a disadvantage for import and export activities. The cost reduction is a long story including the policy system on infrastructure and efforts to improve the capacity of enterprises in terms of human resources and technologies. Enterprises still have purchase orders to fulfill, but due to difficulties, the number of orders was only in large inventory.

According to Mrs. Phan Le Diem Trang, Deputy Chairwoman of the provincial Textile and Apparel Association, the production and business results in the first 6 months of the year were quite positive, but still it could not be confirmed as completely favorable. The reason, at present, is that many enterprises in the textile and garment industry are facing tremendous challenges as the COVID-19 epidemic has not been completely controlled even in many countries where the outbreak is still resurgent. Meanwhile, the production and business activities of the textile and garment industry depend a lot on anti-epidemic policies in the world in general. Along with that, the world situation is still too complicated to affect the price of energy and raw materials.

Recently, industry associations like Binh Duong Business Federation have focused on discussing the production and business situation, difficulties and challenges of enterprises and industries in terms of production costs, output prices, consumption markets, supplying chain, labor, capital, and credit in the first 6 months, and forecast the business situation in the last 6 months to seek for development directions. Mr. Pham Van Xo, Chairman of the provincial Import-Export Association, said the biggest difficulty in the current period is input prices. According to Mr. Xo: "Many enterprises in the association have signed regular purchase orders, but the problem is the price of input materials greatly affected by gasoline price which hike the cost of production, export and transportation. This is a very great problem.”

Open market expectations

The business community expect that by the end of 2022, export markets will continue to be expanded in many countries. Especially, with a "super market" from countries participating in important FTAs, Binh Duong's main manufacturing and exporting industries such as: textiles, footwear, wood products, and electronic components are forecasted to grow by over 10% compared to 2021.

Mr. Iron, Production Director of Dai Hoa Co. Ltd. in Tan Uyen town, said that in 2022 this enterprise set a growth rate of 10%. It was expected that in the near future, the number of orders would increase thanks to FTAs. In order to make good use of FTAs, enterprises have actively diversified input sources, increased the number of stockpiles as well as opened more factories and links to form a product finishing process. In particular, the company has also invested in modern machinery and technology, and deployed high-value-added export products.

Mr. Nguyen Quang Vu, Chairman of the Association of Leather Shoes and Handbags, said that enterprises in the leather shoe-making industry have been receiving purchase orders until the third quarter of the year. Enterprises have actively transformed and diversified the supply of domestic raw materials and accessories to take the initiative in delivery time and save transportation costs; at the same time, to regularly negotiate and look for new customers and orders to ensure regular production and stable jobs for employees.

Another advantage, through the survey, is that enterprises with foreign direct investment (FDI) are also looking for input suppliers in Vietnam. This is a great opportunity for domestic enterprises, but also a competitive problem in terms of price, technology and quality. To participate in supplying input products for FDI enterprises, domestic enterprises must invest into and offer competitive products. Currently, hundreds of enterprises have become auxiliary suppliers to supply raw materials for FDI enterprises in civil electronic products, electronic assembly services, electronic circuits, rubber and plastic products, and supporting products in industries. When it is possible to supply products to domestic FDI partners, through these partners, the export market of Vietnamese enterprises would be more open.

Reported by Tieu My – Translated by Vi Bao