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Many seafood enterprises may default because of COVID-19

Many seafood enterprises may default because of COVID-19

Friday 10, 04 2020
The impacts of COVID-19 on the seafood export is unavoidable, and enterprises will suffer greatly unless the disease is properly controlled.

Currently, only 30-50% of orders are still being delivered according to plan, while the rate of orders which are postponed by customers is 20-40%, and the rate of those which are canceled by customers is 30%.

The Vietnam Association of Seafood Exporters and Producers (VASEP) says that according to the survey results of several member businesses of VASEP, due to the impacts of COVID-19, especially in the first two weeks of March 2020, the production, trading, and export activities of seafood businesses are being severely and increasingly damaged.

According to many enterprises, January 2020 is the start of the struggle in seafood trading activities. The epidemic has developed and been rapidly widespread since March, resulting in more increasingly serious impacts.

Facing this situation, there has been an interview with General Secretary of VASEP Truong Dinh Hoe to understand thoroughly the effects of COVID-19 on the operation of the seafood industry and its enterprises.

According to the Association, what will be the impacts of COVID-19 on the seafood industry in the coming time?

COVID-19 has spread and been affecting 209 nations and areas in the world, as well as damaging people’s lives and the global economy. Particularly, the spread of the disease is the most severe in nations such as China, Korea, Japan, Europe, and the US, etc. which are also the key export markets for Vietnam seafood.

Thus, the Vietnamese seafood export industry is suffering from apparent impacts. It is estimated that the seafood export in March 2020 reached only 549 million USD, decreasing by nearly 20% over the same period last year.

Vietnam seafood export in the first 3 months of 2020 is estimated to have reached more than 1.5 billion USD, dropping by 14% compared to the same period last year, in which the export to major markets all fell sharply: the seafood export to the European market dropped by 40%, that to the Chinese market dropped by 25%, that to the Korean market dropped by 24%, and that to the Japanese market dropped by19%.

For the seafood export to the American market, as the COVID-19 outbreak in the US started later than that in other nations, the export turnover to this market only dropped relatively slightly by 8.6%, and at the moment the Vietnamese seafood products are still retaining market share in the retail segment.

However, with the current complicated developments of the disease in Vietnam as well as in the world, in the coming time, the seafood export of Vietnam may continue to drop.

Enterprises still have not been able to escape the situation of export orders dropping, being postponed, or being canceled, difficult goods transportation conditions, unfavorable payment, resulting in the potentials that many enterprises, especially small ones, will not be able to survive.

Many seafood enterprises may default because of COVID-19

How will the COVID-19 epidemic affect the seafood export goals this year?

As mentioned above, if the epidemic continues to develops complicatedly, the seafood export of Vietnam in the coming time will continue to drop. Thus, comparing to the original plan of reaching 9 billion USD in 2020, the actual number will be different.

According to the surveys of enterprises, currently, only 30-50% of orders are still being delivered according to plan, while the rate of orders which are postponed by customers is 20-40%, and the rate of those which are canceled by customers is 30%.

The markets with the high rate of customers postponing or canceling the delivery of goods tend to be China, Europe, and Korea, etc. Particularly, in the EU market, most shrimp orders are asked to be postponed or canceled, while Pangasius products are less affected, partly because of the lower prices and the fact that they are mainly sold to supermarkets.

Does the Association have any recommendations on reducing the negative impacts of the COVID-19?

The impacts of COVID-19 on the seafood export is unavoidable, and enterprises will suffer greatly unless the disease is properly controlled.

​However, in the current context, enterprises are all at a passive position, and the best method is for them to self-organize their production plans, labor force, export markets, etc. to reduce costs and continue the production activities of the enterprises, trying to maintain the operation of the plants to meet the demands of orders.

VASEP regularly gathers enterprises’ ideas regarding difficulties and challenges caused by COVID-19 to propose timely solutions to the Government to help enterprises overcome this crisis period.

How will the business results of enterprises, as well as the domestic production, export, and consumption be?

In the context of COVID-19 not being properly controlled in countries which are the major seafood export markets of Vietnam, in 2020, it is estimated that all industries, including the seafood one, may not see a bright future.

If the epidemic is controlled in June, markets will still need time to recover, and the people will also need to stabilize their lives, and even though food is a necessity, at that moment, people will be more considering and cheaper products may have a better chance at widening the consumption market share.

Generally, in 2020, enterprises may only be able to maintain their operation and export at a defensive level, and it will be even more challenging for medium and small enterprises if the epidemic lasts until the end of the few next months.

It is also not easy for the domestic market as many enterprises have temporarily stopped operation or been working at a sustaining level, workers have been losing jobs or receiving reduced wages, etc.

Therefore, the domestic consumption situation will also significantly drop. People are hoping that the epidemic will be internationally controlled by the end of the second quarter of 2020, thus allowing the market to recover and the Vietnamese seafood industry to gradually get back on its feet in the last few months of the year.

​>> Unless COVID-19 ends soon, only 15% of enterprises will maintain operation

Source: https://cafef.vn/

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