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Exporting is one of Vietnam’s most important pillars for growth. However, some key export items such as textiles and garments, seafood and woodwork are facing difficulties. Because of the sharp fall in orders, workers have been laid off or have taken temporary leave, affecting social welfare.
Production slows, workers take alternate leave
“The situation is very tough. We are maintaining production at a moderate level,” said Thang Van Thong, deputy general director of Hao Hung Co Ltd, a large wooden furniture manufacturer.
Recalling this time last year, Thong said there were so many jobs that his enterprise, with several thousand workers, had to refuse many orders.
But things are different this year. “The number of orders we have had so far this year is just 30 percent of last year's,” he said.
Previously, Hao Hung employed 3,600 workers in different factories. But now, as it lacks orders, the staff has been cut to 2,200 and they now work in rotation.
According to Thong, difficulties began late last year, and no sign of improvement has been seen since then.
After the pandemic was contained, Hao Hung sent a group of senior executives to Europe, the US and Asia to seek orders and new export markets.
“There’s nowhere we don’t go. In order to find orders, we will depart immediately when we can see signs of opportunities,” he said.
However, it has been difficult to enter familiar markets such as the US and Europe.
“The number of orders has plummeted to just 10 percent of the same period last year, so we don’t expect too much. The new markets in Asia, such as Turkey and India, have shown good signs, but we still are waiting and no deal has been made,” he said.
The need for orders has put a burden on wooden furniture manufacturers. The situation is getting worse as VAT refunds, worth trillions of dong, are still stuck because of complicated procedures.
“I’ve never seen such big difficulties in the woodwork industry before, and it is now among the top 5 in the world,” Thong said.
Seafood companies also need orders. Tran Van Linh, CEO of Thuan Phuoc, said by this time last year, the company had enough orders for the fourth quarter. But now he has only small orders. The company has maintained production at a moderate level.
A chair of a large seafood export company confirmed that the number of orders by the end of the first quarter of 2023 had decreased by 27 percent compared with the same period last year.
In 2022, his enterprise had revenue of $135 million, up 35 percent over 2021. But he is not optimistic about the business performance this year because signs of difficulties turned up in the fourth quarter of 2022.
He said that exports have slowed and international B2B partners have refused to receive more goods because purchasing power in their countries has decreased.
“After the 2008 global economic crisis, 2023 is expected to be the toughest year for seafood companies as many factors affecting production and business are occurring at the same time,” said Truong Dinh Hoe, secretary general of the Vietnam Association of Seafood Exporters and Exporters (VASEP).
“Meanwhile, internal problems, including the lack of land for aquaculture, higher input costs and high interest rates have had an adverse impact on seafood exports,” he said.
Hoe confirmed that seafood orders have dropped by 20-50 percent in the first quarter of 2023, while inventories have increased.
Regarding the textile and garment industry, the HCMC-based Song Ngoc Co Ltd said the US partner now cannot sell products. In previous years, the partner had always urged Song Ngoc to fulfill their contracts soon, but this year, it has refused to accept deliveries sooner than scheduled.
Exports down
Nguyen Ngoc Luan, CEO of Meet More Coffee, said Australia has raised the interest rate four times so far this year and Australians now have to tighten their purse strings amid high inflation.
The purchasing power in the country has decreased by 20 percent and sales of imports from Vietnam have also been affected.
Vietnam’s agricultural export turnover reached $11.19 billion for the first quarter of 2023, down 14.4 percent year on year. Many key export items saw sharp decreases in export turnover, including woodwork, rubber, cassava and seafood products.
Tam An - Tran Chung