Records from companies exporting textiles, shoes, furniture and seafood in June 2023 show that the lack of orders continues. The market is shrinking, but companies still have to try to keep up production according to old orders to wait for new orders for export. In addition, the fact that companies have to maintain production to keep employees has led to large inventories.

In its economic outlook report for the second half of 2023, Maybank Securities Company Limited (MBKE) said that excess inventory has caused US retailers to be reluctant to place new orders. Therefore, it is very important for export companies today to sell and acquire new orders.

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In Vietnam, processing and manufacturing industry inventories are currently showing signs of rising in some locations that are considered “capitals of industrial production”. In Ho Chi Minh City, for example, the manufacturing and manufacturing inventory index is estimated to have increased by 4% in May 2023 compared to the previous month.

Moreover, in the first five months of this year, this index has increased by 11.6% compared to the same period in 2022. Similarly, in May 2023 in Dong Nai, the industry’s manufacturing and manufacturing inventory index rose by about 5% compared to the previous month. The inventory index is quite high in a number of industries, such as: food production and processing increased by more than 56%; Beverage Production Up Nearly 149%; the production of other means of transport increased by almost 20%; Textile industry grew by almost 8%…

An increase in inventories means that capital is stuck in goods and companies are left with no cash to manage. Businesses are looking for ways to turn inventory into cash while still having to produce or producing in moderation to keep workers employed.

In the past two months, Mr. Huynh Cong Tien and the sales department team of Toan Tien Co.,Ltd. (HCMC) – a specialist in apparel products for big brands – roam around to sell and resell. New approaches customers. “Hundreds of workers and machinery and equipment cannot remain idle, as well as the amount of export processed goods worth more than $50,000 since the epidemic, prompting the company to find every opportunity to sell goods,” he said . Tien said .

Mr. Nguyen Thanh Tuan, general manager of Viet Au My Wood Joint Stock Company (Binh Duong), said the purchasing power of the timber industry has never been weaker than this year. From the fourth quarter of 2022 to date, export orders in the main markets of Great Britain and the USA are declining. The cost of raw materials increased, inventories increased and liabilities also increased. The current situation makes companies in the wood industry more and more difficult and is under pressure with bank loans, labor costs and raw materials.

The situation is similar with the seafood export companies. Inventories of finished goods and rising interest rates are putting pressure on the production and business activities of key commodities in the important agricultural region of the Mekong Delta. According to Ms. Nguyen Thi Thu Sac, Chairwoman of the Vietnam Seafood Exporters and Producers Association (Vasep), many forecasts indicate that the markets’ demand for seafood is likely to decline further in the third quarter of 2023 as previously forecast.

According to companies, the biggest concern today is the cost of maintaining operations and managing inventory. That said, there is always a source of money in production and keeping orders. After a long time, the resources of companies are rapidly declining. In order to survive, they are forced to restructure their products, learn about the market, purchasing power and the real needs of the market. “This time of year, companies can prepare for year-end orders, but this year the situation is very calm. Therefore, companies hope that consumption in the market will recover soon,” said the owner of a beverage shop in Ho Chi Minh City. Bien Hoa shared…

The content of the article was published in Vietnam Economic Review No. 27-2023 on July 3, 2023. Welcome readers to read below The:

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