Local businesses well adapted to hard times in second quarter

Local companies were unwilling to expand their businesses in the first three months of the year due to a financial crunch, but most of them opted for restructuring their operation to curb the issue in the second quarter.

Many businesses at the end of last year expected the economy would rally from the global turmoil in 2011, but they soon found themselves surrounded by many challenges including a high inflation, increasing input costs and strong US dollar.

Some exporters earlier lost out all their profits by transferring dollars with low foreign currency exchange rates to foreign suppliers and selling their imports for an amount in dong, which was converted in accordance with the central bank’s lower exchange rates.

To curb the losses from the exchange rate risk, they opted for payments in other foreign currencies including Singaporean dollar (SGD) and euro (EUR), which have higher exchange rates.

They also raised their selling prices in accordance with the exchange rate they had relied on to pay for foreign suppliers and tried to improve their products’ quality.

Trinh Huu Minh, general director of the My Chau Packaging and Printing JSC, said the firm was focusing on diversifying the product range and improving the output in an effort to capture more market shares.

The Ho Chi Minh City-based company was also speeding up the progress of the plans on equipping more machinery to boost its production, Minh told Dau Tu Tai Chinh Newspaper.

“Many bankrupt firms in foreign countries are dumping their machinery with very low prices. However, local companies should only choose energy-efficient equipments,” noticed Duong Duy Viet, director of the plastic products maker Nhat Tien.

Nhat Tien has sought many different material suppliers in an effort to find out the best price, Viet said. Other firms also followed a similar pattern, asking the overseas suppliers to send their samples before making purchase orders.

Nguyen Huu Dung, vice chairman of the Vietnam Association of Seafood Exporters and Producers, said local businesses should cooperate with each other to overcome the difficult time.

“Vietnam’s exporters have achieved large sales from foreign markets, but the profit margins were very low due to the fact that they competed with each others,” Dung said.

Nguyen Huu Bieu, general director of medical equipment manufacturer Bao Viet Xanh, said Cambodia was among the potential markets that are located next to Vietnam.

“Vietnam’s businesses can save a lot of money by setting up plants in those countries. However, they should partner up with each others before foraying into new markets,” Bieu said, adding his firm owns lands in Laos and Cambodia and is willing to cooperate with other companies to expand businesses. – SGGP

Posted by VBN on May 17 2011. Filed under Enterprises. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry