Control Of Epidemic Situation In China

On May 2, Vietnam Economic Daily reported that:

Due to China's epidemic control, many factories in Vietnam are facing shortage of raw materials and accessories, factories and warehouses are closed, truck delivery is slow, and container trucks are in short supply.

Screenshot of Vietnamese media report

Speaking of the shortage of raw materials made in China, vice president and Secretary General of Lefaso stressed the "serious impact". "The Chinese side said there was a shortage of empty containers to transport the goods, and the supply was scarce due to the shutdown of the factory due to the covid-19. There was no raw material for production and the delivery progress of enterprises slowed down." Ms. Xuan explained.

And Ms. ton Nu cat Ngoc, chief executive officer of ty company (HCMC), said that orders from garment enterprises were increasing as some buyers gradually shifted their orders from China to other countries in the region. But there is no guarantee for Vietnam.

"China is a large import market for all kinds of raw materials and accessories for the textile and garment industry. They stopped production to fight covid-19, which means that the global supply chain continues to be disrupted. If we can find another source to buy, the unit price of input will be much higher, so the profit can't make up for the effort."

DAP cau garment joint stock corporation specializes in garment processing in large markets, with up to 80% of raw materials and accessories imported from China to meet customer requirements.

Mr. Nguyen Duc thang, a director of the company, said that a lot of raw materials were shipped from Shanghai ports, so they were slow or not returned throughout the month. "For orders that do not have enough material, we are renegotiating the delivery time, but we can't delay too much and the enterprise will have to face a lot of payment risks," thang said.

Not only leather, footwear or textile industries, but also companies in supporting industries are also affected.

Metect joint stock company (Hung Yen) has a half month delay in the import of a special stainless steel order from China. The reason is that suppliers of raw materials and accessories announced that the factory was temporarily shut down for epidemic prevention. At the same time, most of the company's orders have been very difficult to replace in advance. "If raw materials cannot be imported for production, the company's orders will not be delivered on time and customers can cancel the contract," said metect's head.

Representatives of rubber and plastic industry enterprises said that relying on China's raw material supply not only affects Vietnamese enterprises, but also almost global enterprises, because China is still the largest industry of raw materials for production today. If forced to change supply, it is possible to switch to us or European imports, but the price will be much higher and the order must be agreed. This makes it difficult for enterprises to resume production

For enterprises, in the short term, they must keep production, retain customers, and ensure delivery time. Some enterprises are also focusing on the R & D investment in the production of raw materials to improve their initiative, so as to reduce their dependence on imported raw materials.

In this context, many experts suggest that Vietnamese enterprises need to diversify their markets to import raw materials and export commodities in order to avoid dependence. In addition, more policies should be introduced to develop supporting industries in the domestic market and gradually realize self-sufficiency in raw materials. This is the core issue of sustainable industrial development in Vietnam.