Export orders of wood enterprises are declining strongly, especially in the US and EU markets. According to the forecast of enterprises, this situation will remain from now to the end of the year. 80% of enterprises reported a decline in revenue compared to last year and are in urgent need of capital support to survive.
THERE ARE ENTERPRIESE THAT NO LONGER HAVE EXPORT ORDERS
The General Department of Customs reported that in July, the export value of wood and wood products was estimated at $1.31 billion, down 7% from the previous month. Cumulatively over 7 months, exports of wood and wood products were estimated at $9.7 billion, 1% higher than the same period last year. Of which, exports to the US had the largest volatility, cumulatively $5.56 billion in 7 months, down 5.6%.
The report “Changes in export markets of the wood industry: From the enterprise perspective” published by the Research Group of Wood Industry Associations on 52 enterprises shows that: in the US market, the number of enterprises with orders decreased by an average of 45.4%; some enterprises no longer have export orders. In the EU market, the average decrease level of the business is about 44.6%, in which a business has a decrease in orders of 80 – 100%. The UK market also saw a very strong decline, on an average of 47.3% with some businesses falling 100%. The number of export orders to other markets also decreased strongly, about 36.3% on average; some enterprises reduced up to 80%.
The situation of export in other markets is similar but the level of decline is lower. For example, South Korea fell 5% over the same period in 2021, to $79.5 million. Or Canada went down 15% to $22.4 million. Smaller markets such as France and Germany fell by 18% and 24% respectively. The other market group also fell by 23%.
Vice President of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), Mr. Nguyen Chanh Phuong, said that the above figures partially reflect the picture of the wood market in the previous time. From April and May, the number of orders tended to decline in exports to the US and the EU. The high inflation causes consumers to reduce their spending, moreover, furniture is not too important at this time.
Along with that, the order quantity of the buyer has fluctuated. During Covid-19, buyers placed a lot of orders to spare when the supply chain breaks. However, after Covid-19, the inventory is very high. At this time, buyers have to restructure their inventory system, which takes from 6 months to 1 year.
The Dong Nai Wood and Handicraft Association also said that its members are facing declines, delays, cancellations, or no orders, followed by declines in labor resources and financial difficulties.
Export orders of wood enterprises declined. (Photo: Internet)
RELIEVE THE FINANCIAL PRESSURE
Enterprises forecast that the number of orders to all markets will continue to go down strongly in the remaining months of the year. Currently, 80% of businesses reported a decline in revenue compared to 2021. The average decline in orders in the US, EU, and UK markets is forecast to be over 40%. Up to 60% of enterprises asked said that they are under financial pressure; 70% of enterprises are under pressure for labor costs and inputs.
According to Mr. Nguyen Chanh Phuong, when the order slows down, the goods that cannot be exported will affect the cash flow of the business, leading to the difficulty of paying critical loans to the bank. At this time, enterprises need the support of the State, especially in terms of capital. “Banks can support businesses in terms of the due debts, then give them an extension. Therefore, the business will not get into bad debt, and when the crisis passes, the business will recover quickly. ” Some enterprises still have export orders, can produce inventory, enterprises also need working capital to solve raw materials issues and pay for labor.
The General Secretary of the Vietnam Wood and Forest Products Association, Mr. Ngo Sy Hoai, proposed that banks should have preferential policies with wood enterprises. Accordingly, banks can support enterprises to reduce interest rates, extend loans due, lend inventory, mortgage, or access preferential capital sources. The Ministry of Finance shall consider and issue policies on taxes such as reduction and delay of corporate income tax, reduction of land rent; refund of value-added tax as soon as possible to return the capital to enterprises.
At the same time, Mr. Hoai recommends that enterprises need to diversify their markets. Currently, exports to the US account for 60% and mainly the group of common furniture with a low selling price. Exporting more groups of higher value-added products will reduce the risk of taxes. In particular, it is necessary to build a brand name in the global market, constantly looking for new markets, do not “put eggs in one basket”, Mr. Hoai said.