VietNamNet Bridge – Vietnamese exporters have got new orders for the last months of the year. However, the new orders have brought more worries than joys.

Opportunities coming alongside challenges

More and more orders from foreign partners are coming, but Vietnamese businesses said they cannot take all the orders. Many of them have scaled down the production recently because of the economic downturn, high bank loan interest rates and labor shortage. Therefore, they seem not to have sufficient resources to step up production.

Tran Quoc Manh, General Director of Sadaco, a wooden furniture manufacturer, said that it is really the good news that orders are leaving China for Vietnam, but admitted that it is impossible to take all in the orders.

The Japan External Trade Organization (Jetro) has informed that Japanese investors are looking for new manufacturers instead of placing orders with Chinese ones, because the labor cost in China has increased sharply, which has led to the higher production costs. Vietnam, which can offer the labor cost just half of China’s, could be the new choice for the Japanese investors.

Pham Xuan Hong, General Director of the Saigon 3 Garment Company, also said that he received a lot of new orders from Japan in July.

“The number of orders has increased by 20 percent over the same period of the last year,” he said.

However, he has admitted that it would be a big challenge for the company to fulfill the new orders in the current circumstances.

Hong said that the labor shortage is the biggest headache for him now. The average pay for a garment worker has climbed to 3.5-4 million dong a month, which is unaffordable for many companies which have been burdened with the increasingly high expenses.

“The big difficulties in last three years make us unable to pay such a high salary,” he admitted.

Meanwhile, director of a company said that he has sold a production line to a South Korean business. The director said he tried to struggle to exist in the last year, but he finally still had to sell the production line to pay the due bank debts.

“Though new orders are coming, we do not have capital to maintain production,” he complained.

Struggling to survive

Vietnamese exporters have no other choice than taking new orders to overcome difficulties.

According to Manh of Sadaco, as for the new orders, he asks the partners to make payment soon in order to have enough capital to keep production. Foreign partners understand well the current difficult situation of Vietnamese exporters and they accept to advance money to help the exporters to fulfill the orders.

Enterprises have been trying to apply all possible measures in order to have more capital and cut down expenses. Some ask the import partners to open L/C (letter of credit) in order to enjoy discount interest rates. Wooden furniture manufacturers are negotiating for purchasing timber at low prices and enjoying the preferential credit policy from the import countries, which allows them to borrow money at the interest rates lower than the domestic rates.

Meanwhile, garment companies have decided to cooperate to fulfill the orders. They have sit together to check the inventory materials and share materials with each other. With such a method, it would be easy for them to control the inventory materials to optimize the production costs.

Hong said Saigon 3 has transferred a part of its orders to the Saigon Leather Garment Company and Tan Phu Factory of the Gia Dinh Textile Company.

“We need to deliver products on schedule, or we will lose the clients,” he explained.

Source: TBKTSG