Handicraft industry copes with difficulties
Despite being listed in Vietnam’s top 11 commodities that have the highest export revenue, the Vietnam Handicraft Exporters Association (Vietcraft) said until now, handicraft products are facing difficulties to fulfill the export revenue target of US$1.5-1.6 billion.
Despite increased export revenue of the handicraft industry, the profits of handicraft enterprises have sharply declined
Increased export revenue, reduced profits
According to reports from the General Statistics Office, the export revenues of handicraft products in the first half of this year increased by 18.3 percent year on year and higher than the country’s total export growth rate of 16.1 percent. Of which, the export revenue of handbags, wallets, suitcases, hats and umbrellas reached US$925 million (up 23.6 percent); pottery products US$218 million (up 6.6 percent); and of rattan, bamboo and sedge products reached US$110 million (up 5.3 percent).
Despite the industry’s increased export revenue, the profits of enterprises have sharply declined. General Secretary of Vietcraft Le Ba Ngoc said low profits made enterprises unable to maintain investment for production while the input costs continued to rise.
Director of Kim Boi Handicraft Company Dang Quoc Hung said enterprises in the handicraft industry are facing a host of difficulties from production to finding consumer markets and price squeezes from importers. For example, customers of Hung’s company asked to reduce sale prices by 20 percent and would not make orders until the second quarter of 2014. Difficulties in consumer markets plus rising input costs had resulted in lower profits for handicraft enterprises. Most of them are only maintaining production activities without counting on business growth and they even accept to receive orders of making cheap craft products. At present, major export markets for Vietnam’s traditional handicraft products include the US, Japan and Germany, of those the US is the only market that has registered growth while others are witnessing many difficulties.
Vietcraft said almost every enterprise in the handicrafts industry is either a small or medium in size. Subsequently, they have suffered a lot from recent changes in the economy. According to the association’s statistics, 30 percent of the industry’s enterprises recorded losses in production in the last two years, so they had to cut production back or even stop production.
A breakthrough needed
According to the Import-Export Department under the Ministry of Industry and Trade (MoIT), the export revenue of the handicraft industry in 2013 is estimated to range from US$1.5-1.6 billion, equivalent to last year’s figure and accounting for 1.5 percent of the world’s market share. To realize this target, Vietcraft said enterprises must leave behind the habit of living from hand to mouth. Instead, they should invest technologies into production and focus on target products and categories. They should also combine technologies and hand-making methods in a bid to increase labor capacity while maintaining the fine and distinctive features for the products.
According to MoIT’s statistics, each year the world handicraft market consumes about US$100 billion of value, with the American market accounting for US$40 billion (44 percent of the total market share), Japan 13 percent and Germany – the biggest consumer in the EU from US$5-9 billion.
In the long term, enterprises should coordinate with other related agencies to develop new designs for Vietnamese handicraft goods. Vietcraft also reported that in the coming time it would organize training courses and coordinate with international organizations to hold seminars on promoting Vietnamese handicrafts exports to key markets, contributing to improving production capabilities and competitiveness for handicraft enterprises.