After worries about the shortage of raw materials for production due to the supply cut in China, enterprises in the textile and garment industry, etc. continue to struggle with the situation that the goods cannot be delivered to Europe and the US due to travel restrictions to prevent the spread of the Covid-19 epidemic in these two economies.
Struggling with the domestic retail market losing 85% of its sales due to the epidemic, Viet Thang Jean (Vitajean) Co., Ltd. now continues to face the situation of being unable to export its goods to the foreign markets in Europe and America. Mr. Phan Van Viet, Chairman of Vitajean Board of Directors, said that the European Union (EU)’s decision to close the border for 30 days for non-citizens of the bloc to prevent the Covid-19 epidemic is causing Vitajean's EU import partner to suspend all import orders during this period.
The decision to close borders of the EU in response to the Covid-19 pandemic began on March 17, and since then Vitajean's activities of exporting goods to some markets such as Germany, Italy, Spain, and Turkey have been stopped.
A number of US states have also issued regulations restricting travel during certain daily hours within 3 weeks to cope with the spread of the Covid-19 epidemic, starting on 16th March. This also makes the operation of a number of domestic exporters, including Vitajean, more difficult when the import partners from this country have also announced to suspend the import during this time. Mr. Viet said the European market accounted for about 20% and the US market accounted for more than 30% of Vitajean's total exports, so it is greatly affecting the production and employment situation of workers.
As the Vice-Chairman of Ho Chi Minh City Textile and Garment Association (AGTEK), Mr. Viet said many member businesses had also shared information in the association that exports to both the EU and US markets were being heavily-affected by Covid-19.
Specifically, the AGTEK member businesses said that import customers in the EU and US markets had issued a notice of temporary suspension of the full import of goods according to the aforementioned time. AGTEK currently has hundreds of members with goods exported to these two markets.
“With the temporary closure of the two largest export markets, businesses will face many difficulties due to the characteristics of the textile and apparel production industry, which is seasonal production. This will greatly affect the production and business plans of enterprises, "Mr. Viet shared. The suspension of export orders to the EU and US markets is also happening to businesses operating in other industries such as furniture.
Mr. Dien Quang Hiep, Chairman of Binh Duong Wood Processing Association, one of the localities with a large concentration of wood processing enterprises across the country, said that the member businesses exporting goods to the European market had reported that they were affected as soon as the area took measures to close its borders to control the spread of disease over the past few days.
Tan Thanh Furniture said that two of its 40 export customers in the US had announced the transfer of import orders from April to July. Tan Thanh Furniture Director Pham Chan Quang said that the US market accounted for about 50% of the company's total export turnover. Therefore, Mr. Quang was concerned that the "closure" to prevent the epidemic in the US would cause import partners in this market to suspend or delay the import time to another time.
Analysts said that the temporary closure of the aforementioned markets would lead to negative impacts. In the immediate future, consumers would refrain from buying shoes, clothes, furniture, phones ... which are Vietnam's strong export items to the EU and US markets.
In the group of footwear items, the volume of Vietnamese exports to the EU and US markets is also very large, but according to some export enterprises, so far, no information has been received from partners requesting to suspend the import of this commodity group.
In the midst of numerous difficulties caused by the Covid-19, the suspension of the import of goods from the EU and US markets is considered to be the next blow to businesses in many fields, including manufacturers of textiles, footwear, furniture, etc. which are the major export items to these two markets.
According to Mr. Phan Van Viet, regarding current potential export markets, enterprises in the garment industry can only rely on Asian markets such as those in Japan, Korea, etc. However, even though Korea accounts for a large proportion in this area, the import volume of this market has also decreased by 50% compared to the same period last year. Meanwhile, the domestic market is almost paralyzed with consumption falling by more than 80%.
Many small-scale household-style garment facilities that are members of AGTEK have suspended operations. For a number of large enterprises, workers have to start laying off their workers to maintain their production. However, the ability to pay the waiting wages of businesses can only be maintained for 2-3 months.
"If by the end of April, import partners in the EU and US markets still cannot import because of Covid-19, the risk of many workers at many factories being forced to leave full-time jobs is completely possible,” Mr. Viet predicted, and said that manufacturing enterprises were very worried.
Similarly, the situation of production and business activities is also very difficult for businesses in the wood processing industry. "The situation of the export market is very difficult. Because the suspension of the import of the EU and US markets has just happened, the difficulties of enterprises have not been seen yet. However, coming to the next month, I think that these difficulties will show up quite clearly, "Hiep said.
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