Stockpiles cause firms big headache

Businesses are struggling with rising inventory on the back of a bleak economy.

Inventory volumes at processing and manufacturing firms hiked 17.8 per cent against the same period in 2010.
For instance, around 500,000 tonnes of steel now sit idle at steel firm stores, according to the Vietnam Steel Association (VSA).
VSA deputy chairman Nguyen Tien Nghi said permissible stockpile volumes at firms would be around 250,000 tonnes. “Firms must pay VND150 billion or $7.2 million on interest per month for such huge stockpiles,” Nghi added.
Current cement stockpiles amounted to around two million tonnes, according to Vietnam Cement Association chairman Nguyen Van Thien.
Thien noted high stockpiles would linger until the year’s end in the face of ample supply and cuts in public investment into construction works.
Electrical and machinery production sectors incurred the same fate.
According to Ministry of Industry and Trade figures, current stockpiles of air-conditioners rose 33.3 per cent, of freezers jumped 63.1 per cent against the same period in 2010.
An electrical and machinery enterprise representative said soaring demand for refrigerators in 2009 and 2010 made scores of retailers jump into importing the item. However, sold amounts grew slightly since early year though firms launched out rounds of sales promotion via price discounts.
“Firms’ stockpiles would not be settled unless there were improvements in people’s purchasing power. However, since people’s income remains unchanged the situation will extend into early 2012,” said Hanoi Supermarket Association (HSA) chairman Vu Vinh Phu.
HSA’s latest survey show that buyers’ goods basket now averages VND120,000 ($5.8) against VND200,000 ($9.7) previously.
“There was a sharp decline in the amount of money spent in supermarkets while up to 70 per cent of spending was on food. Electrical and machinery items at supermarkets nosedived in sales volumes,” said Phu.
Latest General Statistics Office statistics show that total retail sales and service revenue mounted to VND1,392 trillion ($67.3 billion) in the year ending September, surging 22.8 per cent on year. However, nine months’ retail sales revenue just hiked 3.9 per cent if the price hike factor was excluded. – VIR

Posted by VBN on Oct 1 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