Tan Phu Plastic Company produces safe products to serve the local market. The "Zero COVID" policy of China means many Vietnamese producers lack input materials. (Photo courtesy of the firm) The worstsufferers were the electronics, wood, textiles, and footwear industries.According to the Ministry of Industry and Trade (MoIT), China was an importantmarket for the export and import activities of Vietnam as it provides themajority of input materials for Vietnam's production, especially electroniccomponents, machinery parts, fabrics and chemicals.
MoIT saidfrom 50 to 55 percent of raw materials and accessories for the textile,garment, and footwear industries originated from China.
The countrywas currently implementing the "Zero COVID" strategy, which forcedmany factories there temporarily stop production to fight the pandemic.The import-export activities in the neighbouring country were affected alot by the shortage of containers at ports.
Phan ThiThanh Xuan, Vice Chairwoman and General Secretary of the Vietnam Leather, Footwear and HandbagAssociation, said businesses in the industry had to slow down export deliveriesbecause their Chinese partners lacked empty containers for transporting rawmaterials and accessories.
She addedthe supply of raw materials from China also decreased because many factorieshad to suspend operations.
Nguyen Duc Minh,Director of Duc Minh Rubber Company and Chairman of the HCM City RubberPlastics Association, said: "The Vietnam's rubber industry depends on upto 70 percent of raw materials, especially chemicals.
"However,the supply from this market is being blocked due to the Chinese side'simplementation of Zero COVID. If the supply from this market continues to beinterrupted, enterprises are forced to import from the Japanese and Koreanmarkets at 15-20 percent higher prices. With this input material price,enterprises are at risk of not being profitable, making their productsdifficult to compete in the world market."
Phan Anh Tuan,General Director of Tan Phu Plastic Company, said besides the ZeroCOVID, the escalating fuel prices forced the plastic materials prices togo up, influencing his firm's input source.
Tuan saidthough operation costs were also put higher due to higher logistic prices,the Tan Phu company still kept prices of all products stable to supportconsumers.
Tuan said:"We keep modernising the production process to improve products and cutcosts the most."
The companyalso aimed to use safe and high-technology materials so that the consumerscould reuse them to protect the environment and avoid more consumption ofplastic.
Tuan saidthey organised a campaign called "Live green, live Japanese style" toencourage customers to exchange the old products for the new ones instead ofbuying new products.
While theplastic company seemed to find a way to fix its problem, the textileand garment, an industry with a lot of imported materials, was stillstruggling.
Local mediareported that Dap Cau Garment Corporation, specialising in garment processingfor major markets and imports up to 80 percent of raw materials from China, gotorders until September, but it also had to postpone the delivery of many ordersdue to the lack of raw materials.
Thecompany's leader said: "For orders that do not have enough materials, wehave to renegotiate the delivery time. However, the delivery time cannot be tooslow because that makes businesses face many payment risks."
In thiscase, MoIT asked local enterprises to adapt to an appropriate strategy.
"Themost important task of enterprises at this time is to restructure productionsoon, find alternative sources of supply to offset the shortage of thecurrent raw materials and outdated equipment. Enterprises also need to promotelinkages, support and use made-in-Vietnam products in production and businessactivities to reduce dependence on external resources," MoIT said.
The ministryasked them to find new sources of supply outside of China besides negotiatingwith partners to share risks and extend the delivery time, but Nguyen Duc Thang,Director of the Dap Cau Garment Company, said: "It's not an overnightissue because China is the world's factory, supplying many raw materials andaccessories at reasonable prices. In addition, most of the raw materials the DapCau company imports are pre-assigned by partners."
Vu Duc Giang,Chairman of the Vietnam Textile and Apparel Association, said that it wasnecessary to effectively promote the role of foreign trade counsellors tostrengthen the search for markets to supply raw materials along with supportingthem to access to a reliable source with good prices.
He said:"This not only increases competitiveness for local enterprises but alsominimises the risks of dependence on a supply market."
Arepresentative of MoIT's Department of Industry emphasised that in the longterm, there must be solutions to develop supporting industries and severalimportant primary material industries in order to minimise dependence onimported raw materials, components and input accessories./.
VNA
