Purchasing power drops sharply, exports face many difficulties

Difficulties piled up

For a long time, wood chips of Nghe An PP Paper Materials Joint Venture Company Limited in Khanh Hop Commune (Nghi Loc) have mainly been exported to countries such as China, Korea, etc. However, the Company currently has over 2,500 tons of wood chips in stock. The Company's representative said that since the beginning of 2023, partners have stopped purchasing, and the factory has had to operate at a low level to retain workers. The company has 70 employees, but had to cut by half. In the first 6 months of 2023, the unit only achieved a turnover of 604,000 USD, a decrease of 1.4 million USD compared to the same period.

Similarly, products such as MDF and finger joint boards are facing difficulties in exporting because the United States and European countries are conducting investigations to avoid anti-dumping and anti-subsidy taxes on plywood using hardwood materials imported from Vietnam. Some businesses such as Tan Viet Trung and The Gioi Go have had to stop operating.

At the Frescol Tuna Factory (Nam Cam Industrial Park), production was stagnant, workers had to reduce working hours. It is known that due to the impact of the El Nino phenomenon, seafood production decreased, the source of wild-caught tuna decreased seriously, the supply was in short supply and scarce globally. The raw material supplier could not provide enough, the factory was forced to close, temporarily suspend production (for 1 month) due to lack of raw materials.

According to businesses, some industries such as seafood, wood and wood products, iron and steel, and plastic products are facing pressure from trade defense investigations. The problem of high input material costs also affects the competitiveness of exported goods.

Data from the Department of Industry and Trade shows that in the first 6 months, besides some items that grew compared to the same period in 2022, there were many items with a decrease in turnover compared to the same period in 2022. That is, textiles decreased by 11.6%, electronic components decreased by 22.3%, steel sheets of all kinds decreased by 19.1%, wood chips decreased by 28.2%, cassava and cassava products decreased by 26.7%; textile fibers of all kinds decreased by 68.5%; pine resin and pine resin groups decreased by 28.6%, superfine white limestone powder decreased by 19%,...

The biggest reason for the current decline is the decrease in consumption demand, stemming from high inflation, and customers focusing on essential goods more than other consumer goods. The United States is a volatile market. Textile and garment companies with orders mainly exported to the United States have decreased sharply, such as: May Minh Anh Do Luong export turnover decreased by 57.4%, Minh Anh Kim Lien decreased by 43.4%, May An Hung decreased by 80.6% compared to the same period in 2022 (except for some textile and garment enterprises with orders from designated parent companies in Asia, the turnover is still quite stable such as Kido Vinh, May An Nam Matsuoka, ...).

For yarn products alone, in addition to the general decrease in demand, China's opening up also brings challenges, as Vietnamese businesses have to compete with their domestic businesses after a long period of closure due to the Covid-19 pandemic.

Regarding electronic components, there were 2 enterprises with a sharp decrease in export turnover in the first quarter: Merry&Luxshare Vietnam Company (down 51.4%) due to a sharp decrease in orders (phone headsets are non-essential goods, the export market is the United States with a sharp decrease) and Emtech Company (down 89.7% due to the closure of the factory in Vinh Tan, Vinh City).

In the first 6 months of the year, businesses have made efforts to export to 126 countries and territories around the world. Some traditional markets of Nghe An businesses have decreased turnover such as: China decreased by 11.14%, the United States decreased by 1.5%, Taiwan decreased by 38.6%, Switzerland decreased by 10.6%, the Philippines decreased by 21.44%, Bangladesh decreased by 45.8%...

In general, export turnover to most markets and major trading partners decreased. In particular, the US continued to be Vietnam's largest export market with a turnover of 28.64 billion USD, but compared to the same period last year, it decreased by 21.6%, marking the first decline in many years and accounting for nearly half of the overall decrease of 15.24 billion USD in total exports of our country. The Chinese market ranked second with 15.49 billion USD, down 13% compared to the same period last year.

In addition, goods exports to the EU market reached 14.22 billion USD, down 10.6%; the ASEAN market decreased by 3.6%; South Korea decreased by 9.6%...

Expanding markets, curbing export decline

Mr. Hoang Minh Tuan - Head of Import-Export Department, Department of Industry and Trade said: Recently, some traditional export markets of Nghe An enterprises have encountered difficulties such as China, which has just opened, the supply chain has not recovered, and the policy of tightening control over agricultural products and food. Or the US market, due to economic recession, consumer demand has decreased. For the EU, due to tight monetary policy, rising inflation, increasingly strict standards and regulations, ...

Due to export market factors, all industries are facing difficulties due to high inflation and reduced aggregate demand worldwide, especially non-essential consumer goods. However, the impact on each industry is different. Industries whose main export markets are the US, EU, etc. such as textiles, footwear, wood, and seafood have the highest decline; while industries whose main export markets are Asia such as rubber, rice, vegetables, cashew nuts, etc. are less affected.

Mr. Hoang Minh Tuan - Head of Import-Export Department, Department of Industry and Trade

As mentioned, the reopening of the Chinese market has increased competition in Vietnam's main export markets, because this is also a market with a large supply capacity with similar products to those of Vietnam.

According to forecasts, import-export activities in the country in general and in the province in particular are expected to recover better in the second half of this year because inventories in major markets, especially in the US, have decreased significantly and importers are preparing to place orders again. The Government, ministries, branches and the Provincial People's Committee have been implementing many solutions to promote production and business activities, remove difficulties for enterprises...

To increase import and export, in the context of many difficulties, the Department of Industry and Trade said it will coordinate with the Ministry of Industry and Trade and relevant agencies to focus on implementing a number of solutions proposed in the Project "Developing Nghe An Province's exports in the period of 2021-2025". Innovating trade promotion activities, targeting new markets, potential markets and markets that are less affected by inflation and have positive growth such as ASEAN countries.

Continue to closely coordinate with the Vietnam Trade Office abroad to enhance the grasp of market information and arising issues affecting Vietnam's exports such as changes in policies of importing countries, technical barriers, risks in payment, and propaganda activities with ill will towards Vietnam's export goods to promptly inform relevant units and enterprises of the province to have timely response solutions.

Along with that is supporting businesses to access foreign distribution networks, connecting trade between manufacturing and exporting enterprises with foreign distributors. Supporting businesses to register for product trademark protection in international markets and coordinating with distribution corporations to promote and enhance the position and image of Nghe An products. Continuing to disseminate information on rules of origin and how to meet rules of origin to help businesses grasp the opportunities opened up by FTAs, further improving the rate of taking advantage of incentives in FTAs...

In addition to the lack of orders, one of the factors that has reduced export turnover in recent times is the decline in commodity prices. Estimated data shows that the export prices of many items have decreased by double digits in the first 5 months of this year compared to the same period last year, such as: Tea (-11.9%), pepper (-34.9%), cassava of all kinds (-12%), iron and steel (-26.5%), textile fibers (-26.5%), etc. Only a few items have increased in price, such as rice (+5.8%), coffee (+2.4%), coal (+38.5%)...