Recently, Vietnam, a major manufacturing powerhouse that has been attracting much attention, has heard a major news, and the country has also experienced a shortage of orders. Even the big funder in Vietnam - Samsung Electronics (Samsung Electronics) has compressed the production capacity of the country's factories. What happened?
01
Orders have dropped sharply and will not improve in the short term
Vietnam Textile and Clothing Association (Vitas) Deputy Secretary-General Tran Thi Tuyet Mai said that at the beginning of this year, companies received a lot of orders, but lacked workers. Many factories have to find places to reduce outsourcing.
However, in the second quarter, the outbreak of the Russian-Ukrainian conflict, rising oil prices, and the epidemic affected people's consumption habits. The purchasing power of fashion clothing products has dropped significantly and inventory cannot be sold. Brands do not sign new orders. Some factories have no orders, forcing them to reschedule employment plans, such as Saturday holidays and workers’ leave.
After a strong recovery in the first half of the year, in the second half of the year, many factories in Vietnam experienced order shortages in , and had to shorten production time, stop recruiting workers, and reduce labor.
Thanh Cong Textile Investment and Trading Company's Nguyen Huu Tuan said the factory is still operating normally, but orders will be lost by September and October. According to the plan, the company will arrange workers to take leave, and the factory will be suspended for 8 days in conjunction with the National Day holiday.
In addition, because the inflation problem in the United States is still serious, a manager of a Vietnam company specializing in children's clothing said that in the past, they received new orders for 80,000 to 100,000 pieces of clothing from US partners every month, but the number of new orders in has decreased by 20-30% in recent months, and the situation will not improve in the short term. Tran Viete Anh, vice chairman of the Ho Chi Minh City Business Association (HUBA), said that not only electronic products, textiles, but also wood and steel production... are also facing many difficulties due to the decline in purchasing power in key markets such as the United States and Europe.
02
33's advantages weaken, and labor costs increase
In addition, although the increase in labor costs is inevitable, it does have an impact on the country's economy . Recently, due to the continued increase in foreign investment after the epidemic, Vietnam's labor and land costs have also risen.
Many Taiwanese businessmen reported that the recent shortage of labor is no longer as serious as at the beginning of the year. The main reason is that many large or low-cost products can no longer bear the increasing freight and other costs. Therefore, many American brands have quietly transferred their orders to South American suppliers.
Taiwan Yongan Shoe America Co., Ltd. has several shoe factories in Vietnam, employing 16,000 workers to make shoes for the world's top shoe brands.
As the living expenses in Vietnam rise, in order to help low-wage workers, the local government announced that it would raise the minimum wage by 6% to $200 per month. After the minimum wage of was raised, employee costs rose by one percentage point, and employee expenses increased, accounting for about 20% of the total production costs.
The company's deputy general manager said that if the minimum wage of is raised every year, the shoe factory may have to end its local production line in 6 years.
Some experts said: "The problem of the rise in minimum wage is that it is adjusted in the middle of the year. So for many companies exporting through global supply chains, they have signed orders with customers, but they don't know that the mid-year minimum wage will be adjusted."
03
33inventory is overstocked, and the operating rate of large factories is low
At the same time, against the backward trend of economic uncertainty swept the world, workers in Samsung factory in Vietnam began to have no work to do. You should know that Samsung Group is not only the country's largest foreign investor, but also Vietnam's largest exporter, and a company contributes one-fifth of Vietnam's exports.
As more and more American retailers said at the second quarter financial report meeting that they had too much inventory and consumer purchasing power declined, the weight of these words has been transmitted to Southeast Asia.
According to media, the two Samsung production bases in Taiyuan Province in , Taiyuan Province, learned that the world's largest smartphone supplier, 's production capacity utilization rate has dropped to about half. According to Samsung's official website data, among the company's 270 million mobile phones shipped each year, the production capacity of the Vietnam factory alone reaches 100 million.
is too stocked and there are too few new orders. According to the workers in the factory, compared to the previous six days a week, now only works three days a week, and some other production lines can work four days a week. There is no doubt that doesn’t need to work overtime now, so naturally the overtime salary is ruined.
However, regarding the current situation, Samsung factory said that it has not discussed reducing the production targets of Vietnam factory. Workers also said that expected cuts in working hours are enough to cope with changes in global demand, and there is no news of layoffs in the factory at present.
