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Downturn forces exporters to accept higher payment risk
Local exporters say payment risks have become higher as foreign customers find it hard to pay for their orders amid the global downturn.
Nguyen Viet Binh, director of Vietnam Ceramic Corporation in the southern province of Dong Nai, said his company shipped four containers of ceramic products worth US$54,000 to Russia last December.
But the Russian customer left the shipments in port for three months and demanded a 30 percent discount before it would collect the goods, Binh said. His company finally agreed to a 20 percent shave and even had to extend the payment deadline to June.
“This is a customer that we have done business with for three years,” he said. “At least we could clear some of our inventory and didn’t have to bring the shipments back home.”
Many local exporters like Binh said they have to accept payment on delivery, extend payment terms and give credit to customers as they need new export orders to clear their growing inventories. The risk is that customers may cancel their orders or never pay for goods they receive, they said.
Vu Ngoc Thuan, director of Dong Tien Garment Company, said a UK importer could not pay bills totaling $3 million to 10 Vietnamese garment exporters, including his company.
“The British firm used to be a prestigious partner,” Thuan said. “But it has gone bankrupt and can’t pay its debts.”
Pham Xuan Hong, vice chairman of the Vietnam Textile and Garment Association, said the economic downturn has made it difficult for foreign customers to pay for their orders.
Hong, who is also chairman of Saigon 3 Garment Company, said his company chose to deal mainly with large importers but now even the big ones can delay payment by a month.
“Many Vietnamese exporters have decided to take the risk and accept unfavorable conditions as both prices and orders fall.”
Export prices have dropped 10-15 percent since last year, he said.
The government predicts export growth will slow to 13 percent this year from the scorching 29.5 percent in 2008 because of the economic downturn in important markets like the US, Europe and Japan. Exports earned Vietnam $62.9 billion last year.
According to the General Statistics Office, export earnings in the first quarter rose just two percent year-on-year to $13.48 billion.
Diep Thanh Kiet, vice chairman of the Ho Chi Minh City Shoe and Leather Association, said many exporters do not use letters of credit because they want to save on bank fees. Payment therefore depends on their relationship with customers.
Tran Quang Huy, a senior official at the Ministry of Industry and Trade, said many importers, especially in Africa, tend to pay without an L/C and this brings a lot of risk.
Local exporters need to find out if the importers are trustworthy, Huy said.
Deputy Minister of Industry and Trade Nguyen Thanh Bien said exporters can find out about their customers at the Vietnamese Trade Affair agencies in foreign countries. The ministry is piloting an export credit insurance project to assist exporters.
Mai Phuong - N. Tran Tam
Thanh nien
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