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Purchasing power gets weaker than ever

VietNamNet Bridge – Small merchants have been sitting idle, while manufacturers have to scale down the production, saying that they have never seen such a low purchasing power before.

VietNamNet Bridge – Small merchants have been sitting idle, while manufacturers have to scale down the production, saying that they have never seen such a low purchasing power before.



Dang, who has been in charge of developing the domestic market for a trade company for the last 10 years, said the market demand has dropped to the deepest low.

Dang said that the total sales of the company by the end of April was just equal to 80 percent of the same period of the last year.

Since the market demand is low, Dang has to apply all possible measures to boost sales. He has been running a lot of sales promotion programs, trying to offer products at good prices to attract buyers. The company also has to offer preferences to retail agents to share difficulties with them.

As a result, the company’s sale costs increased sharply in the first months of the year, which meant the sharp falls in the profits.

However, according to Dang, maintaining high profits should not be the top priority for the company for now. The company has to try everything it can now just to maintain the production, retain workers and keep the inventories at reasonable levels.

The Deputy Director of a sweets company said though he knows it’s now the low sales season for sweets products, he cannot imagine the purchasing power would be so weak, with the sales lower than the same periods of all the previous years.

Dang Chi Hung, a senior executive of Kim Hang Company, the plastics and aluminum product manufacturer, complained that the weak demand has forced the company to spend more money on the distribution, because the company has to run costly sales promotion programs to boost sales.

“We have to keep the salesman staff, while we have to slash the selling prices and offer higher discounts to sales agents,” he explained.

However, Hung fears that the bigger difficulties are still ahead. There has been no good sign of the macro economy, while consumers tend to fasten their belt in anticipation of the worsening situation,

“Consumers would have to spend more money in the time to come, especially when they have to prepare their children for the new academic year. Meanwhile, their income tends to decrease because of the sharp rice and rubber price decreases,” Hung said.

Hoang Thuy Dung, the owner of a fabric shop at Ben Thanh, the biggest market in HCM City said the sales have dropped by 40 percent.

Nguyen Phuong Thao, Director of Maximark Cong Hoa in HCM City, one of the biggest retail chains, has confirmed that the purchasing power is very weak, saying that the manufacturers of non-essential goods are the biggest sufferers, since consumers don’t intend to spend much money on luxury goods.

“Consumers go to supermarkets nowadays just to buy food, drinks and essential goods,” she explained.

When asked about the turnover, Thao said the sales have increased slightly, but the growth rate was far below the expectations.

According to the General Statistics Office, the total goods and services retail turnover in May was VND215.5 trillion, an increase of 0.8 percent over May and 13.4 percent over the same period of the last year.



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