Upgrading value chain, expanding export market

Many businesses are exploring new markets to mitigate risks from US reciprocal tariffs. They are also innovating production processes and promoting trade to enhance their competitive advantage.

Minimize negative impacts

In the first quarter of 2025, many key export sectors in the province, including wood, textiles, and leather shoes, saw an increase in orders compared to the same period in 2024. However, starting in April 2025, fluctuations in the global market, particularly the increase in reciprocal tariffs imposed by the United States on several countries, including Vietnam, forced businesses to proactively adjust their production and export activities to cope with the unpredictable market changes.

Mr. Le Duc Nghia, Chairman of An Cuong Wood Joint Stock Company, noted that some of the company's export products now face new reciprocal taxes when entering the US market. The future of their operations will depend on the outcome of bilateral negotiations. He mentioned, “If the tax rate remains at 15-20%, our export activities can still be effective. To take advantage of the temporary suspension of countervailing taxes, we are accelerating production to deliver orders to our US partners on time. We have proactively reduced prices for customers, shared the burden of high shipping costs, and offered discount programs to maintain our market share.”

Mr. Nguyen Minh Nhat, Director of Nhat Nam Production - Trading Company Limited, emphasized that his company is striving to maintain production, retain workers, and balance finances. Currently, wood industry companies are actively sourcing raw materials, diversifying markets, and enhancing competitiveness and transparency to minimize the negative impacts of US tariffs and other trade fluctuations. Enterprises hope that authorities will provide more favorable conditions in granting certificates of origin and will promptly notify them about the origins of raw wood used in export products.

Meanwhile, textile and garment enterprises have reported that some customers are proposing a 2% reduction in selling prices, as they are willing to absorb an additional 10% tax from the US market to avoid raising prices for consumers. To manage fluctuations in input costs, these businesses have proactively signed long-term contracts with raw material suppliers and planned to stockpile materials to stabilize purchasing prices amid rising raw material costs. Ms. Phan Le Diem Trang, Vice President of the Binh Duong Textile and Garment Association, stated that in the current volatile export market, domestic enterprises that have not established a strong market position or improved their value are at risk of becoming vulnerable. Presently, customers are facing numerous requirements and challenges from major export markets, including the "sustainable textile" strategy, which includes three standards: durability, reusability, and recycling from fiber to fiber, as well as mandatory recycled content.

Value upgrade

According to experts, Vietnamese goods face several challenges due to their low position in the value chain, resulting in difficulties with competition, low profits, and obstacles in market expansion. Additionally, most input materials are imported, leading to a low ratio of domestic value added to total export output. Therefore, it is essential to accelerate the value enhancement of these goods at this time. Businesses need to shift their image from low-cost producers to reliable alternative suppliers capable of offering unique, high-value specialty items.

Mr. Huynh Quang Thanh, Director of Hiep Long Wood Company Limited, emphasizes that transitioning from an OEM (Original Equipment Manufacturer) model to an OBM (Original Brand Manufacturer) model requires investment in brand building, innovation, and customer base development. Under the OBM model, businesses are responsible for all aspects of production and development, supply chain management, delivery, and marketing. The advantage of this model is that businesses can sell their products under their own brand name, which adds value. Additionally, it helps reduce costs by minimizing various issues. However, this transition is a long-term process that requires careful investment.

Mr. Tran Ngoc Liem, Director of the Vietnam Federation of Commerce and Industry (VCCI) - Ho Chi Minh City Branch, notes that there are still many open markets with potential and tariff advantages that Vietnam has not effectively exploited, such as those in the Middle East and Latin America (specifically Brazil, Argentina, Chile, and Colombia). The VCCI - Ho Chi Minh City Branch supports businesses in accessing new markets, finding suitable partners, and developing products that cater to specific segments and market needs, especially in markets with similar cultural backgrounds where direct interaction is possible.

Reported by T.My, A.Tuan - Translated by Ngoc Huynh