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Fearing recession in EU, Vietnamese businesses try to seek new markets

While many Vietnamese manufacturers have been relying on the EU as the main export market, other businesses have been trying to diversify the export markets, for fear that the serious public debt crisis and the bad performance of the EU’s economies would badly affect their exports.

Garmex Saigon, a garment company, has been known as an export-oriented company. However, the company’s board of directors has decided that the company would also focus on developing the domestic market. The new strategy, a long term one, was kicked off in August 2011.

Garmex Saigon plans to cooperate with a domestic garment company to make the products which bear the brand of the company or of Garmex Saigon, which will be distributed on the domestic market through the existing retail network of the partner company.

The decision has been made after Garmex found some bad signs from the EU, always considered the biggest market which consumes 80 percent of Garmex’s production capacity.

According to Le Quang Hung, Chair of Garmex, he can see some bad signs in the export to the EU. Some European partners still accept to import the products they ordered before, but have asked for the delays in deliveries for 2-3 months, accepting to pay additional storage fees.

Also, Hung said, a loyal client of Garmex has placed orders for April and May of 2012 as usual, but the orders are smaller than usual.

“The volume of products ordered for the next spring and summer is smaller than this year. Meanwhile, the demand for the autumn and winter remains unclear,” Hung said.

Garmex’s main products for the export to the EU are sportswear that serves the mountain climbing and skiing. Meanwhile, the unfavorable weather has led to the low demand for the sportswear. Besides, the public debt crisis which has forced consumers to fasten their belt has also been cited as the reason behind the decreasing demand. In Europe now, there is a tendency, though it is still not clear, that consumers re-use the sportswear for skiing for one more year.

Unlike Garmex, which has focused on developing the domestic market, but foreseeing that the EU market is not bright, the Hoang Mai Group, which specializes in making fine art products for export, have been eyeing the US and Asian markets instead of relying on the EU market.

Chair of the Hoang Mai Group, Tran Xuan Mai, said at a recent business conference held in HCM City that the company has had some new designs reserved for new markets, including Hong Kong, and that the group has got the orders which ensure enough jobs for workers until the end of the year.

Vu Dinh Hai, Deputy General Director of the Dong Nai Garment Company (Donagamex), has also said that European importers now still have big inventory volumes since the demand has decreased, therefore, they do not place big orders, while setting up lower prices.

However, Hai said that it is lucky enough for his company that since the beginning of the year, the company has been focusing on making products for the export to Japan after realizing that the export market accepts higher prices. In 2010, the European market consumed 30-35 percent of Donagamex’s exports, while the number has dropped to 15 percent.

“We have small orders for making products for the European market in October. After that, we will gather strength on making products for the Japanese market,” Hai said.

Deputy Director of the European Market Department under the Ministry of Industry and Trade, Tran Ngoc Quan, has confirmed that a series of European economies have fallen into the public debt crisis, and the euro has depreciated.

However, Quan said he still cannot see big changes with the market, because European countries are still making efforts to settle debts. Vietnam’s exports to the EU still have seen the high growth rates of 30-50 percent in comparison with the same period of the last year.

From VietNamBusiness

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