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Japan disasters take toll on local economy
The natural disasters that devastated Japan, Viet Nam's biggest export market, are also expected to have an impact on Vietnamese firms' exports to the country. But many people with experience of this market do believe they can find ways to minimise losses in their business there.
Apparel firms are likely to be among the worst hit since Japan is a major buyer and with their economy seriously damaged, Japanese consumers have to tighten their belts.
While mid-range products could expect to escape the worst effects, not so upmarket products.
Pham Tuan Kien, Managing Director of Viet Tien Garment Corporation, says Japan buys half the trousers his company makes. Just this year Viet Tien expanded production to cope with increasing orders from Japan.
Since the earthquakes and tsunami hit Japan, shipments have faced some delays in customs clearance, he says.
Pham Xuan Hong, General Director of the Sai Gon 3 Garment Joint stock Company based in HCM City, says half of his company's production, or nearly US$40 million worth a year, goes to Japan.
After the disasters, Japanese buyers asked the company to execute orders on schedule, he says.
But he thinks demand could fall for luxury garments and increase for low-priced items.
Le Van Quang, General Director of the Minh Phu Seafood Joint Stock Company, says it is still too early to say what impact the disaster will have on Viet Nam's exports, including seafood, to Japan but in the long term there will be difficulties for Vietnamese exporters.
He thinks the Japanese will have to become more thrifty to make up their losses, giving up expensive seafood products like frozen prawns.
"Before the disaster, prawn exports to Japan accounted for nearly 20 per cent of Minh Phu's total exports but this will fall sharply in the coming time."
Minh Phu has contingency plans to move the business to South Korea, a market very similar to Japan.
Many processed seafood products that are popular in Japan, like sushi and sashimi, are also favoured by consumers in many other countries, an advantage for the Vietnamese seafood industry if it looks for new export markets, Quang says.
Truong Dinh Hoe, general secretary of the Viet Nam Association of Seafood Exporters and Producers, fears the disaster will impact Viet Nam's exports, especially of seafood products, because Japan is its biggest buyer.
Nguyen Loc, Deputy General Director of the Viet Nam Electric Cable Corporation, says his company's exports to Japan have been pushed back by at least one month.
"When Japanese partners asked us to temporarily stop deliveries we knew we will make a certain loss. However, we are ready to share (Their losses) with them," he says.
Hospitality may be one of the first sectors to feel the effect of the disaster in Japan.
Almost all tours from Viet Nam to Japan and vice versa booked for March, April, and May have been cancelled. Most Japanese tourists who booked hotel rooms in Viet Nam have also cancelled them.
Nguyen The Khai, Director of Hoan My Tourism Company, says his company was scheduled to take 70 people to Japan in late March but most of them have cancelled the trip.
"Tourists are not afraid of earthquakes or tsunami since the tours are not to the affected localities but they are worried about the nuclear crisis," he explains.
Gold bar ban? Let's buy ring
People are scrambling to buy gold rings since the Government is set to tighten the screws on the trading of gold bullion - a traditional safe-haven asset in Viet Nam - but has yet to spell out what it plans to do.
In a resolution on February 24 on inflation control and economic stabilisation, the Government mentioned the possibility of banning trade in gold bars since it causes volatility in the foreign exchange market.
Nguyen Huu Nhon, the owner of a gold shop in HCM City's District 1, says he has stopped taking delivery of gold bullions from the Sai Gon Jewellery Holding Company (SJC) due to lack of demand.
On the other hand, gold rings, normally equivalent to one tenth of a tael (1.2 troy ounces), are in huge demand. So he is making them on its own to meet the demand, Nhon says.
Rings made of 99.99 gold are sought after and their sales have jumped 50 per cent since the resolution was passed, he says.
Nguyen Cong Tuong, Head of SJC's sales department, says sales of gold rings have grown 20 per cent, with most being investors rather than speculators.
Phu Nhuan Jewellery Company has also boosted production of gold rings while its bullion trade is down 40 per cent.
A similar rush to buy rings has started around the country.
In the Cuu Long (Mekong) Delta, many gold shops have run out of stock. Their owners say rings are more profitable than gold bullion.
In Ha Noi, sales of rings have surged by up to 60 per cent since rumours of a possible gold bar ban began. Trade in gold bars has declined proportionately.
Thien Ly
vietnamnews
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