Business

Businesses to consider solutions for supply chain

SGGP
As air and road supply of raw material from China is cut off due to the rampaging nCoV virus, most Vietnam-based companies have to rethink their strategy in face of the impending hindered factory operation.

Businesses are to take prompt actions to procure material supplies

Businesses are to take prompt actions to procure material supplies

In the most recent turn of events, about ten companies based in Saigon Hi-tech Park have sent desperate letters to the government requesting a solution to their imminent shortage of materials. Most of these companies major in hi-tech end products and rely heavily upon components delivered by plane from China.
Businesses in other industries like textile and apparel or leather and footwear share the same concern as most of their raw materials suppliers are from China, and the remaining stock would only last them until the end of February.
Small and medium-sized companies suffer even more during this plight as they usually order raw production materials in small batches.
Speaking for the Vietnam Association of Small and Medium Enterprises, Vice President To Hoai Nam noted that domestic businesses have not been seeking out other suppliers outside of China since the Chinese raw material market is overly abundant in quantity and variety as well as offers highly competitive prices.
As a result, when China-based producers are forced to close their factories due to the epidemic, Vietnamese enterprises are affected almost immediately.
In light of these events, many businesses are considering importing alternative materials and components from other countries like South Korea and Japan. But since this would certainly increase production costs and expenses, they are banding together to request financial supports from the government while also negotiating prices with their own clients.
It is suggested that the government write off or extend loan terms for domestic businesses at least until the epidemic is under control and productions have recovered to a certain extent.
At the same time, creditors are recommended to offer favorable loans to businesses to aid their expansion and importing of materials. It is also said that the Ministry of Industry and Trade should to direct trade counselors to look for new sources of material and promote business relations to help business gain access to such sources.
Regarding goods transport, many companies urgently request that Hanoi and Beijing relieve the abundance of goods still being held at customs.
Businesses to consider solutions for supply chain ảnh 1 Businesses to seek out other material supplies to continue production
Many end product producers at Saigon Hi-tech Park believed that the ban on cargo flights to and fro China should be lifted to maintain production flow and only passenger flights should be prohibited.
Chairman of Hepza Business Association (HBA) Nguyen Van Be stressed that, in addition to air transport, the permission for land and sea transportation of goods must also be considered to reduce the pressure caused by lack of raw material in the near future.
According to economic experts, if multiple businesses are forced to discontinue production, unemployment will ensue, leading to incurred costs like social policies and unemployment benefits that businesses in particular and national economy in general will have to bear.

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