October 29, 2008
Vietnam's seafood exporters seek relief in domestic market
The plummeting demand from major markets hit by the global credit crunch has resulted in seafood companies looking for assistance in the domestic market.
Seafood exporters are targeting domestic consumers by processing more catfish products to supply to restaurants and supermarkets.
An executive from the Vinh Hoan Seafood Company said the trend of using processed seafood products was escalating due to the reasonable prices and increased convenience. Seafood exporters could find stability amid the global turmoil if they know how to manipulate the domestic market potential.
This year's aim for export of US$4.2 billion has become steeper declivitous for Vietnam's seafood industry as the volumes shipped to major markets like the US and EU decline with the recent global financial crisis.
The Vietnam Association of Seafood Exporters and Processors (VASEP) say more than 930,000 tonnes of seafood were shipped in the first nine months of this year, generating US$3.35 billion, for a 23 percent year-on-year increase.
However, seafood, one of the country's major exports by value was seeing a cascading trend in export
volume in the fourth quarter.
Le Van Quang, chairman of Minh Phu Seafood Joint-Stock Company said before the US recession, they paid up for their goods immediately upon receiving them, but now they are deferring payment as their consumers buy goods on one-month credit and therefore though his company did not have supply problems, it had refused some orders from US importers.
Quang said his company was negotiating better payment terms with importers facing capital shortages as a result of US banks tightening their policies.
Ho Quoc Luc, a chairman of Sao Ta Foods Joint-Stock Company said his firm's South Korean partners has just suspended plans to import goods as the currency continued to decline. According to Bloomberg, South Korea's currency extended its loss this year to 35 percent to be enlisted as Asia's worst performer.
VASEP official Tran Thien Hai said some foreign clients just ignored contracts signed with Vietnamese exporters though they had given detailed orders beforehand.
Nguyen Dinh Huan, deputy general director of the An Giang Fisheries Import and Export Joint-Stock Company (Agifish) said though the company was yet to encounter difficulties in export, he was pessimistic about the near future and that purchase orders will be reduced.
Manager of the Binh An Seafood Company, Vo Thanh Khon predicted that some countries in response to the global credit crunch would re-establish precautionary measures while consumers reduce their spending, therefore causing the Vietnamese to face stiff challenges next year.
While input material costs had increased 40 percent compared to the beginning of the year, there was no rise in output prices, instead plummeting in some instances.
Local fisheries should not just focus on Us and EU markets, instead they should look for new markets like Malaysia as it is a potential market with an annual per capita seafood consumption that is expected to reach 61 kilogrammes by 2010 from the 45 kilogrammes at present.
Nguyen Van Ben, general director of the Vietnam Food Industry Company (Vifon), said the company's US and EU partners wanted to adjust purchase volumes monthly, and not sign year-long contracts as earlier.
The importers also required Vifon to give notice of price increases, if any, two or three months before the effective day with clear reasons.
Ben said as demand in traditional markets of Western Europe and North America tumbled, Vifon was trying to penetrate into other markets like Japan, South Korea, Singapore, Malaysia, the Philippines, and Eastern Europe.
Meanwhile, Vu Thanh Phat, director of Mekong Lotus Company, said increased thrift among US and EU citizens can bring more opportunities for medium-priced Vietnamese seafood products to enter the market.
The company has seen that while premium seafood such as tuna and shrimp saw a drop in export volumes, there was greater demand for cheaper seafood like basa catfish and cuttlefish.