Factories find ways to deal with decreasing exports

After seeing orders from Europe plunge by 70% in recent weeks, shoemaker Chang Shuen in the southern province of Binh Duong quickly turned to the U.S., a market it has yet to pay attention to for nearly a decade.

According to Doan Sy Loi, its CEO, the prices of products made for the U.S. market are always at least 15% lower than for the European market.

When exporting to Europe, Chang Shuen only needs to make 5,000 pairs of shoes a day to turn a profit, but needs 6,000-6,500 pairs in the case of the U.S., he said.

“During difficult times I have to do more to make a profit.” However, one advantage is that orders from the U.S. are five to 10 times larger than from Europe, he said.

He added that the larger volumes attune workers, making production smooth and speedy. Garment company Dony in Ho Chi Minh City recently sent executives to the Middle East to meet and negotiate with wholesalers for big brands, its director, Pham Quang Anh, said.

If the price is good, importers are willing to order in bulk and take delivery over one or two years, he said. “I offered a lower price than before. They immediately agreed to increase the order quantity by 300%.”

With the extended delivery time, the factory could better manage its production schedules, he said.

Often it had to buy raw materials at short notice and thus high prices, he said. Workers had to work overtime, increasing labor costs, or the factory had to hire causal labor with poor skills, often resulting in faulty goods.

Pham Xuan Hong, president of the HCMC Association of Garment-Textile-Embroidery-Knitting, said many businesses are also looking for niche markets and new partners.

They are developing green products from recycled materials, and targeting high-end segments and customers.

He expects orders to recover by 90% by the end of the third quarter.