The price of input materials is continuously increasing and there is no sign of “cooling down”. That leads to the risk of enterprises (DN) having to compensate for their own losses, both worrying about lack of capital to stock up on raw materials, and worrying about problems with export orders if they raise prices to cover costs…

Revenue increased but no profit

The difficulty for many exporters of plastic products, paper, paint, etc. is now facing many difficulties when negotiating with partners to increase prices, in order to offset input costs… Therefore, they accept to bear losses to maintain maintain production.

These days, the machinery lines at the factory of Duc Minh Rubber Company Limited (Hoc Mon District, Ho Chi Minh City) are continuously operating to keep up with orders for partners in the Japanese and Korean markets. Each year, this enterprise exports tens of millions of products with brackets installed in household electrical appliances such as washing machines, refrigerators, air conditioners…

Although the orders were positive, Mr. Nguyen Quoc Anh, director of this company, said that export revenue in the first 6 months of 2022 increased by 20% compared to the same period in 2021, but the profit was almost non-existent.

“Production costs have all increased, labor is hard to find and costs are high; while the selling price remains unchanged. We have to sustain production by cutting operating costs, trying not to lose,” said Mr. Quoc Anh.

The rubber industry breaks out

Vo Hoang An, Vice President and General Secretary of the Vietnam Rubber Association, said that the total export value of Vietnam’s rubber industry in 2021 will be estimated at US$9.5 billion, up 20.8% over with 2020. In the first 6 months of this year, the export of this industry continued to maintain high momentum. Specifically, natural rubber exports were estimated at more than 787,000 tons, worth nearly $1.4 billion, up 10.3% in volume and 13.3% in value over the same period last year. Meanwhile, most of Vietnam’s rubber products exported recorded positive growth, with total export turnover estimated at more than $2.2 billion, up 12.9% over the same period last year. .

Mr. Hoang Trung Son, Director of Dong Tien Paper and Packaging Co., Ltd., Vice Chairman of Vietnam Pulp and Paper Association, said that the price of recycled paper materials increased from 150 USD/ton to over 300 USD/ton. Enterprises face pressure on both input and output. Paper enterprises accept technical losses, do not calculate depreciation to maintain production activities.

“Right from the beginning of 2022, paper industry enterprises have faced price increases, but they have to try to balance the market and adjust prices appropriately, but because demand is too low, they cannot increase prices. Now, enterprises are still in the reverse situation of having to reduce prices to get orders, which is a big difficulty, “said Mr. Son.

Mr. Son also said that businesses accept to give up all depreciation, remove all unnecessary costs, just need to feed the workers, maintain the operation, we will try.

In the past few months, goods exported to China have been very difficult to export, so the export turnover of the packaging paper industry has also decreased, leading to oversupply. In this July, August, the paper industry’s production is even more difficult.

Many businesses try to maintain production while costs are high Photo: U.P

Difficult to predict

Plastic enterprises also face many difficulties and the paint industry is no exception. Ms. Nguyen Thi Lac Huyen, Chairman of Vietnam Paint – Ink Association, said that paint – ink is an auxiliary product, supporting other industries, mostly serving the domestic market and depending on imported materials. . The scale of this industry is over 600 million liters/year, with a value of more than 2 billion USD and an average growth of 10% per year.

However, the paint – ink industry is in a “catastrophic” situation, even many businesses have negative growth – something that has never happened in the past 20 years. The increase in gasoline prices has a great impact on the paint industry because most raw materials have to be imported, so when the supply chain is broken, the high price of petrol has dealt a “fatal” blow to this industry.

“Many member enterprises only operate in moderation, even incurring losses to maintain operations and create jobs for workers. Therefore, it is difficult to forecast input material prices from now until the end of 2022. Enterprises cannot come up with a stable business plan until the end of the year. However, according to the forecast, the total output of the paint – ink industry will still decrease,” – Ms. Huyen said.

Business associations said that the high gasoline prices caused great difficulties for production and business activities. Although the price of petrol has just had a significant decrease, the reality has not yet penetrated because the previous continuous price increases have had a strong impact on commodity prices.

Chairman of the Ho Chi Minh City Rubber – Plastic Association – Mr. Nguyen Quoc Anh informed that the price of plastic materials has increased by 30-50%, logistics costs also increased by 50% according to the price of petrol, which has had a great impact on the plastic industry, disrupting the supply chain. response.

Accordingly, the cost of transporting a container from Vietnam to Korea was about 17 million VND, now it has increased to 30 million VND; Domestic freight also increased by 20-30%, making businesses lose profits even though they had to increase the selling price of products by 5-7%.

Meanwhile, the consumption of many plastic products in the country decreased by 10-20%, the US and Western European markets were in the same situation. “What we are most worried about in the last six months of the year is that if costs continue to increase and orders decrease, profits will be greatly reduced.

Specifically, plastic toys in the beginning of 2022 have decreased by 20%, it is forecasted that the end of the year will decrease by 30%; Other items reduced less. In the prospect of 2022, many member enterprises of the Rubber – Plastic Association said that revenue can be guaranteed, but profits will certainly decrease deeply, because export prices cannot be increased, “- Mr. Quoc Anh said.

“In order to offset production costs, businesses should focus on building product brands to expand markets, thereby increasing consumption. Enterprises need to gradually change technology, replace old production lines with low productivity to modern production lines with high productivity; Applying digital transformation to management to optimize the entire system’s operating apparatus.

The change in new technology and modern management will help businesses “better and stronger” to overcome all difficulties,” noted Mr. Pham Ngoc Hung, Vice Chairman of Ho Chi Minh City Business Association.

T&G Import-Export Joint Stock Company

Address: 352 Hue Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi

Hotline: 02473010868

Email: hrm@tginterjsc.com

Website: http://tgimportexport.com