>> Vietnamese coffee companies afraid of losing their own market
Many Vietnamese producers can not buy materials in the domestic market, giving the way to foreign companies.
 |
| Latex companies focus on exports |
Agricultural businesses have been trending towards selling to foreign customers as opposed to domestic ones. Since last October, latex producers have focused on exports, causing difficulties for some Vietnamese businesses.
Dinh Ngoc Dam, Director of Danang Rubber Joint Stock Company, said his company has just started building tire factory with an annual capacity of 600,000 units. The company targets US, European and ASEAN markets. When the factory begins its operations, it will need around 20,000 tonnes of latex a year, but will have trouble finding a stable domestic supply.
According to Dam, the export of raw materials brings needed foreign currency into the country, but it also limits domestic companies’ production capacity.
Le Quang Thung, Chairman of the Vietnam Rubber Association (VRA), said, “Vietnam is the fourth largest latex exporter. Still, many local firms face serious shortages of latex.”
Mr. Thung said that, each November, latex producers sign contracts for the entire year. While international companies abide by the contracts, some domestic companies attempt to change the terms according to changes in price in the global market. This type of behaviour on the part of some firms discourages producers from selling to domestic buyers.
He added that a number of rubber companies, including foreign ones in Vietnam, still opt to import rubber because they do not have confidence in the quality of domestically produced latex, because some producers mix in other materials.
There is a similar situation in the domestic coffee industry. Since the beginning of the year, dozens of foreign companies have started buying raw beans from growers in the Central Highlands.
But there is a difference for the growers when selling to domestic companies versus international ones. When selling to foreign companies, payment is received in 1 or 2 days, while domestic buyers usually take 3 to 4. Also, foreign buyers can often offer more money for their products.
On the other hand, the increase of foreign buyers of agricultural products in the Vietnamese market has pushed up prices, giving growers a higher income. It also affords them more choices and, to some extent, frees them of the monopoly that domestic buyers had in the past.