More than 100 Japanese enterprises operating in the manufacturing industry in Vietnam reported that the disease situation caused by Covid-19 is affecting the supply chain of raw materials and parts from China.
The above information was conducted by the Japan Business Association in Ho Chi Minh City (JCCH) in collaboration with the Japan External Trade Organization (JETRO) office in Ho Chi Minh City in an emergency survey on the impact of the Covid-19 epidemic last week.
According to JETRO in Ho Chi Minh City, there are 209 Japanese manufacturing enterprises and 217 Japanese non-manufacturing enterprises in Ho Chi Minh City, Dong Nai, Binh Duong, Long An, Ba Ria - Vung Tau and other localities surveyed in this phase.
In particular, more than half of manufacturing enterprises (53%) said it had affected the supply chain, including about 110 enterprises, and 76% of businesses responding that their supplies were "affected" indicated that their supply of raw materials and accessories from China had been delayed or interrupted.
Although the influence on the supply chain is evident in manufacturing, according to Hirai Shinji, JETRO Chief Representative in Ho Chi Minh City, even in the non-manufacturing sector, the number of surveyed enterprises which said that they were affected also accounts for 28%.
The influence on supply is reflected in the interrupted input of products and materials, the 1-2 week delay, and rising material prices, etc. According to these enterprises, it is expected that from the end of February to the middle of March, inventory components will not be enough to produce.
Therefore, it is highly possible that after this period, many businesses will start to be affected. Many businesses said they were or would have to consider rebalancing their inventory, finding alternative products/materials, changing suppliers, relocating their production sites. Besides the slow reopen of factories in China, Japanese enterprises' production activities in Vietnam are also affected by restrictions on goods circulation (logistics) and restrictions on the entry of Chinese technical experts.
According to this trade promotion organization, the impact on the circulation of goods is reflected in the rising costs, stalled road transport from China, and the long procedure for importing goods due to due to quarantine, resulting in the necessity for transportation routes alteration or supply substitutes.
Regarding the forecast that will affect business activities this year due to Covid-19, about 22% of Japanese enterprises said that they would be less affected, with sales down by 10% compared to the same period last year; 7% of businesses were forecasted to be greatly affected, with sales down by 20-40% compared to the same period last year; and only 1% of businesses were expected to be badly affected, with revenue falling by more than 50% compared to 2019 ...
However, according to a representative of JETRO in Ho Chi Minh City, this survey showed that Japanese enterprises operating in Vietnam were less affected than Japanese enterprises in Thailand, where more than 80% of Japanese manufacturing enterprises said they were affected by the supply of components from China and about 10% of businesses are forecasted to be severely affected with the business result reduced by more than 50%.
However, the number of manufacturing enterprises in Thailand participating in the survey is not as large as that in Vietnam.
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