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Exporters feeling the pinch from falling demand
Local exporters, struggling to stay in production after new orders from key markets such as the US and Europe have slumped, say they do not know what the future will bring.
Nguyen Hoang Vu, deputy general director of the Saigon–Vientiane Import–Export Company, commonly known as the Savimex Corporation, said his company had received about US$3.5 million in furniture orders for the first quarter but only after great efforts to reduce prices as much as possible.
“Never before have we faced such a difficult time as this,” Vu said, noting both his company and its partners had been affected by the economic downturn. He estimated that new orders from the US had dropped by 30-40 percent over the past few months.
A chairman of a footwear company, who did not wish to be named, said about 1,000 of the company’s employees were working on an order for 200,000 pairs of shoes and slippers for the US and European markets. However, the order was one of a few left-overs from last year, he said.
“I usually receive orders for the first five months in January every year, but now I can only think about getting enough work to do for each month.”
The chairman said orders from the US had declined by 35 percent compared to the same period last year. Meanwhile, many European partners were still comparing prices and some have even canceled their orders.
Minister for Industry and Trade Vu Huy Hoang told a meeting in Hanoi last week that Vietnam may find it hard to achieve its export growth target of 13 percent with the global economy mired in difficulties in 2009. Vietnam’s exports last year rose 29.5 percent to $62.9 billion.
Pham Minh Huong, managing director of Phong Phu Corporation, one of the largest textile and garment companies in Vietnam, said at this juncture it was hard to win a contract from US customers because “most of them only want to order products of the highest quality but at the cheapest prices.”
Huong said her company had received about $4 million in orders for the first quarter this year but selling prices had been lowered by at least 8 percent.
Diep Thanh Kiet, deputy chairman of Ho Chi Minh City Association of Garments, Textiles, Embroidery and Knitting, said despite the 30 percent drop in orders, most business in the garment sector were still trying to maintain production.
But the difficulties would not be felt clearly until the end of the first quarter when foreign importers make final decisions about orders for the fall-winter season, he said.
Le Tien Truong, deputy general director of the Vietnam National Textile and Garment Group (Vinatex), said 2009 would be a tough year for local garment companies because of the worsening global economy.
In the US, Vietnamese companies face harsher competition because US safeguard quotas on Chinese apparel and textiles expired on January 1, leaving China free to export even more textiles and garments to the US, he said.
Vietnam’s garment and textile exporters have been set a target of generating $9.5 billion this year but local companies will need to work really hard to meet the target, Truong said.
Phong Phu Corporation’s Huong said her company has recently turned to the European and Japanese markets to offset reduced orders from the US.
Savimex’s Vu said local exporters need to maintain the quality of their products, deliver goods on time and keep prices competitive if they want customers to continue placing orders.
He said US customers were very demanding and when times were tough there was a high chance they would switch suppliers if there were any mistakes.
“Right now producers need foreign importers more than the other way around,” Vu said.
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