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VietnamNews_VN firms get opportunity to increase influence on global supply chains

The disruption of the global supply chain has caused many foreign businesses to source goods from Vietnamese enterprises, which has increased export opportunities for the country.

The difficult situation caused by the pandemic in the EU, the US and many other parts of the world is expected to worsen the disruption in the global supply chains of raw materials for production.

However, the pandemic is also creating new business models, bringing opportunities for the establishment of new value chains as Việt Nam attracts a wave of investments shifting from other countries.

According to the Việt Nam Trade Promotion Agency, since April requests to it from foreign enterprises to find sources of supply in Việt Nam have increased sharply, with the most orders coming from the US, China, Thailand, and Russia.

It cited the examples of the US Bridgepathway, which wants processed foods and confectionery products, some New York enterprises looking for supply of galvanised steel coil, printed products and souvenirs and Thaiwatsadu Company belonging to the Central Group of Thailand that has been looking for a large volume of construction materials, electrical devices, and household appliances for distribution.

Russian enterprises want gloves used in restaurants, hotels and hospitals from Việt Nam.

Chinese enterprises look for suppliers of semi-processed foods and foodstuffs such as frozen shrimps, tapioca starch, corn starch, and dried cassava chips for making animal feed.

A common feature of their demand is the relatively large volume and long term of contracts.

So Vietnamese enterprises should be capable of large scale and rapid supply, and must have modern production technologies and meet the quality standards demanded.

In addition to meeting the many criteria in terms of quality and prices, enterprises must also meet corporate social responsibility and on-time delivery requirements.

To grab the opportunities arising from the wave of investments, the Government needs to offer unencumbered lands in industrial and economic zones along with attractive land policies and good infrastructure, according to experts.

Việt Nam also needs to improve its investment climate and quality of human resources to meet investors’ requirements.

A 10-70 per cent rise in the prices of raw materials this year has also caused many manufacturers to struggle.

Nguyễn Quốc Anh, director of the Đức Minh Rubber Company Limited and chairman of the HCM City Rubber and Plastic Association, said in the past few months rubber prices have climbed by 60 per cent, and businesses are planning to hike product prices by 5-10 per cent, but if the cost rises continue for the next two months, 25-30 per cent hikes are likely.

Many enterprises are working to cut costs and renegotiate contracts. Some are hesitant to finalise prices for next year’s orders.

However, Deputy Minister of Industry and Trade Đỗ Thắng Hải said the major increase in prices is merely due to a cyclical upturn in the commodities market.