Minister of Industry and Trade Nguyen Hiong Dien

Therefore, in the remaining months of 2022 and the beginning of 2023, businesses have planned to cope with fluctuations, helping exports continue to accelerate, and achieving business results exceeding the set plan.

“Huge” profit thanks to exports

Vietnam is still on track to have a trade surplus of up to billions of USD. Thanks to exports, the results of many enterprises recorded strong momentum, especially after the difficult 2021 due to the pandemic. Looking back at the six-month business results of several large enterprises in Vietnam's "billion-dollar" export sectors, the acceleration for profit mainly came from export activities, especially when businesses benefit from the open market and high prices of finished products.

For example, for seafood businesses, accumulated in the first six months of the year, the "queen of pangasius" - Vinh Hoan JSC recorded a profit after tax of VND1,341 billion, 3.4 times higher than the figure of VND393 billion in the same period in 2021. According to the company's explanation, Vinh Hoan's profit increased sharply thanks to the high production and selling price of pangasius in recent years. Similarly, Nam Viet JSC recorded a profit after tax of VND447 billion in the first half of the year, five times higher than the same period last year. In the last months of 2022, Nam Viet set a long-term goal of capturing 10% of the US pangasius import market share. The company said that it was exporting five pangasius containers to the US at an export price of US$5/kg - higher than the average selling price in the first half of 2022 of US$2.9/kg.

In the textile and garment sector, thanks to the improved demand for goods and the scarcity of containers, export goods are no longer congested, so many businesses recorded "huge" profits. For example, at TNG Investment and Trading Company, in the seven months of 2022, the company's sales revenue reached VND3,994 billion, up 35% over the same period last year, the revenue in July even reached the highest level ever of VND765 billion. The TNG's leader said that, despite fluctuations in purchasing power of markets such as the US and EU, the impact was not uniform, businesses with large scale and reputations still created their advantages. TNG itself is signing with about 4-5 large customers in the Americas and Europe, but the order situation is still stable, so it is forecast that this company would exceed the year’s plan.

Difficulties remain

Footwear is also one of Vietnam's "billion-dollar" export industries as it increasingly occupies a good position in the world, which is ranked 2nd in terms of exports to China and 3rd in terms of production after China and India. In the first seven months of the year, the whole industry exported more than US$14 billion. However, Phan Thi Thanh Xuan, Vice Chairwoman, General Secretary of the Vietnam Leather, Footwear, and Handbag Association (Lefaso), pointed out many difficulties of leather and footwear exports in the remaining months of 2022 and early 2023. That is the fact that many large markets have reduced purchasing power and large inventories, which makes year-end orders somewhat slow down. "The orders from now to the first quarter of 2023 of many leather and footwear enterprises have almost decreased," said Xuan.

Along with the above difficulties, many other difficulties have been surrounding businesses for a long time. That is the cost of transportation, the price of raw materials continues to rise. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the lack of raw materials is still the biggest challenge for seafood exports in the last months of the year. Moreover, the cost of sea transportation and labor is high. The freight to the US West Coast is currently at VND400 million for a container, to Europe has also increased by four times, from US$10,000-12,000. Other input costs such as packaging and chemicals increased.

Therefore, some small-scale seafood export enterprises have “complained” that export prices increased but businesses and farmers did not benefit, due to the high cost of livestock in the past two years. Many livestock enterprises even had to suspend their business.

Moreover, according to many businesses, the high dollar price also makes import prices in major markets more expensive, reducing purchasing power from consumers. Simultaneously, the fact that many countries have increased protectionist and trade remedies also made Vietnam's export enterprises face many difficulties.

What should businesses do?

Opportunities and challenges always go hand in hand in the operation of every business. Thus, difficulties are also opportunities for enterprises to grow and improve their competitiveness in the international market. Therefore, according to experts, Vietnamese enterprises must have development strategies and plans for export growth, turning challenges into opportunities.

For example, in Vinh Hoan, to have orders till the end of the third and fourth quarters with the average selling price expected to be the same as that of the second quarter, the company is focusing on expanding its customer base in China as it tries to break into the high-end segment where prices are less volatile. According to a representative of Viet Thang Jeans Company, to keep the order, they need to find new markets besides relying on traditional markets, especially Japan and Korea. Additionally, they must develop flexible plans and scenarios to respond to the context of each period.

Recently, the Ministry of Industry and Trade recommended that enterprises that want to maintain export growth must capture information from markets to have flexibility in building and operating production plans. They also need to expand consumption of goods in other markets besides some main markets to increase export output and prevent risks.