Mar 31, 2013

Vietnam - Vietnamese play nasty tricks on each other, foreigners run away

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VietNamNet Bridge – The disunity has a part in the current difficulties Vietnamese businesses are facing.

The prices of many export items have been on the decrease. A lot of businesses complain about the lack of orders. It’s now very difficult to import materials for domestic processing. Vietnamese have been cheated by foreign partners. The main reason behind all these is the lack of cooperation among Vietnamese businesses.

Each person has their own job

Vietnam’s rice export prices have decreased dramatically in the world market. Its 5 percent broken rice is cheaper by $190 per ton than Thai rice and $75 per ton than Cambodian products. Meanwhile, in the low quality rice market segment, Vietnam’s products are $40-50 per ton cheaper than Indian and Pakistani rice.

The rice export price decreases have been attributed to the more profuse supply in India, Pakistan, Thailand and Cambodia and the stable demand in the world.

However, Nguyen Hung Linh, Director of the Kien Giang Trade and Tourism Company, said the main reason behind this is the disunity of rice exporters.

“Rice companies, both small and big have been playing tricks on each other to scramble for clients,” Linh said. They would be ready offer lower prices than other companies, or even accept the prices lower than the floor prices, to persuade foreign partners to break the contracts with others to sign contracts with them.

The same thing is happening in the seafood sector. Nguyen Van Dao, General Director of Go Dang JSC, said exporters have been fighting each other to scramble for contracts.

“Instead of joining hands to make benefits, enterprises have been trying to harsh others’ business plans by offering lower prices to he partners,” he said.

“Just some small enterprises which dump products in the market would be enough to kill all the enterprises in the same industry,” he added.

As Vietnamese enterprises spontaneously lower the sale prices for scrambling for clients, foreign partners have reasons to put pressure to Vietnamese exporters to press the prices down.

Hung, a broker, who has a deep understanding about the African market, said he knows a Vietnamese businessman who set up a farm produce import-export company in Singapore, which then bought rice from his business in Vietnam. The businessman, acting as a foreign company, contacted other Vietnamese exporters, paid low prices, collected rice in big quantity and then exported the rice from Singapore to enjoy the country’s low export tariffs. The businessman, by setting up his company in Singapore, fabricated a “virtual importer” to collect information about other domestic enterprises.

Also according to Hung, Vietnamese enterprises have also been doing harm to each other when importing raw cashew nuts from Africa for domestic processing.

“Vietnamese won’t give warnings about the possible risks about the cheating, low quality deliveries or trade frauds to help others avoid the same mistakes. As a result, many enterprises met the same difficulties when dealing with the same African exporters,” Hung said.

Associations cannot help

Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Producers VASEP, said the association plans to set up minimum export prices in order to ensure profits for Vietnamese companies and protect the positions of Vietnamese exports in the world market.

However, experts say they are not sure if the floor price mechanism would help.

Truong Thanh Phong, Chair of the Vietnam Food Association, said the association’s member companies have committed not to export rice at the prices lower than the floor prices. However, other exporters would break the promise and offer the lower prices to scramble for clients.

Phuoc Ha

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