Sourcing in Vietnam’s blog

While China continues to rule the US import trade, Vietnam’s apparel industry is becoming a key component in an economic rebound that’s gaining strength, according to the latest trade data from the PIERS Global Intelligence Solutions.

That’s good news for the Port of Savannah, which in 2008 already had a nearly 30-percent market share of total US East Coast trade with Vietnam.

Now, a recently modified Suez service covering Southeastern Asia, Vietnam and South China will begin calling on Savannah this month, further strengthening the ties between Savannah and Vietnam.

Kawasaki Kisen Kaisha Ltd - more commonly known as “K” Line - will deploy nine 5,500-TEU container ships in cooperation with Mitsui O.S.K. Lines on a loop from Ho Chi Minh, Shekou, Hong Kong, Yantian, Singapore, Halifax, New York, Norfolk, Jacksonville, Savannah, Singapore and back to Ho Chi Minh.

“Savannah has become the port of choice for Suez services,” said Ports Authority executive director Curtis Foltz.

“With this service we will participate in eight of the 10 services transiting the Suez Canal to the United States East Coast and in both of the direct services to the important growth market of Vietnam.”

Until recently, container cargo between Vietnam and the US was transshipped via other Asian ports such as Singapore and Hong Kong because Vietnam’s ports were shallow and limited to small feeder vessels. However, there has been significant port development in southern Vietnam near HCM City.

The first phases of the Saigon Container Port and the Saigon Newport-managed Tan Cang Cai Mep Terminal have been receiving vessels for the last year, with another five new deepwater terminals expected to be operational by the end of 2011.

These deepwater terminals are capable of handling Panamax and post-Panamax vessels and have opened the door for direct container services between Vietnam and the US

Massive growth

Trade between the Port of Savannah and Vietnam has grown considerably during the last five years, with Savannah’s imports from Vietnam growing 148 percent and Savannah’s exports to the nation increasing 294 percent. Savannah’s main imports during 2009 were furniture, apparel, and food, specifically coffee, while key exports were food, namely poultry, cotton and lumber.

US cotton and hardwood lumber exports have helped support Vietnam’s rising textile, apparel, footwear and furniture industries.

PIERS Global Intelligence statistics reveal Vietnam swiftly growing in US imports of women’s apparel and infant wear.

During a five-year period from 2005 to 2009, Vietnam emerged as the leading country in these two categories, with imports nearly doubling on a compound annual growth rate of 17.4 percent.

This strong performance has allowed Vietnam to match Hong Kong’s market share at 11 percent.

“Rapidly rising wages in China are forcing manufacturers to reconsider production facilities. Vietnam is becoming the clear alternative for low-cost producers,” said Mario Moreno, an economist at PIERS.

Vietnam’s prime minister reported at last week’s World Economic Forum on East Asia that its economy will grow 6.5 to 7 percent this year after expanding 5.3 percent in 2009.

In the first four months of 2010, exports of computer and electronics jumped 40.8 percent, compared to the same period last year, said IMA Asia. Technology giant Intel will fuel that surge with a new packaging and testing plant in HCM City opening this year.

“In effect, we are seeing a very fast transformation of Vietnam’s light industrial base,” Richard Martin, managing director of IMA Asia, told the Journal of Commerce.SSVNEWS

Vietnam expects to increase rubber exports by 3.3 percent to 750,000 tonnes this year, betting on an economic recovery in its main markets, including top buyer China, an industry official said on Friday.

Vietnam’s export projection is small compared with the 2.8 million tonnes forecast this year by Thailand, the world’s top exporter, where rubber prices are at their highest in over half a century.

“The higher export target is based on a recovery in importing markets like China and also other countries such as India and Malaysia,” Tran Thi Thuy Hoa, general secretary of the Vietnam Rubber Association, told Reuters in an interview.

China’s economy is likely to grow faster in 2010 than previously forecast, at a rate of 9.5 percent, according to a Reuters poll.

China bought 67 percent of Vietnam’s rubber exports last year.

In total, Vietnam, the world’s fourth-largest exporter after Thailand, Indonesia and Malaysia, shipped 726,000 tonnes in 2009, up 10.3 percent from 2008, government data shows.

Other traditional buyers of Vietnamese rubber are Japan, Russia, South Korea and the United States.

The association has revised up its export projection for 2010 from the 700,00 tonnes seen last November, given an expected rise in output and gains this month on regional rubber markets, suggesting demand remained strong.

RISING OUTPUT

Vietnam’s dry latex output is expected to rise 6.4 percent from 2009 to 770,000 tonnes, but export prices could be strong, Hoa said by telephone from Ho Chi Minh City.

Vietnam’s export grade SVR L rose 1.8 percent to $3,045 a tonne, free on board Saigon Port, on Wednesday from $2,990 a tonne a week ago. Vietnamese rubber prices have risen 11.5 percent so far this year.

However, Tokyo’s June rubber contract settled 13.3 yen lower at 289.3 yen on Friday, well below a 16-month high of 306 yen struck a week earlier as commodity markets reacted to proposed U.S. government restrictions on banks.

Hoa said Vietnam planned to import 130,000 tonnes of rubber in 2010 for processing and re-export and also to use at home as domestic demand could rise 16.7 percent to 140,000 tonnes.

Last year some 144,200 tonnes was imported.

“With higher prices expected this year, we anticipate the rubber-growing area will also be expanded quickly,” Hoa said.

The Southeast Asian country could expand its rubber area to 715,000 hectares by the year end, from 674,000 hectares last year, she said.

Most new plantations last year were in the Central Highlands coffee belt, industry reports show, but Vietnamese companies are also growing rubber in Cambodia and Laos. (Reuters)

Source: Vietnam Business Finance News

Pepper exports from Vietnam, the world’s largest producer, will fall 26 percent to about 100,000 metric tons this year as stockpiles are exhausted, according to Do Ha Nam, chairman of the Vietnam Pepper Association.

We don’t have any stockpiles left, so what we produce this year will be for export, Nam said Monday. Prices will rise slightly due to supply shortages in other countries as well, he said by phone, without giving a specific forecast.

Pepper demand is rising as the global economy recovers from the worst recession since World War II. Floods in Brazil, the third-largest producer, may curb yields, according to a September forecast from A.A. Sayia & Co., a US spice brokerage.

The Southeast Asian nation last year exported a record 135,000 tons, including material drawn from stockpiles held over from previous years, an increase of 50percent from 2008, Nam said. The country earned $356 million from pepper shipments last year, according to the Hanoi-based General Statistics Office.

Vietnam produces about 100,000 tons of pepper every year and exports about 98 percent of that output, he said. The US is Vietnam’s largest pepper market, followed by Germany, according to Nam.

Source: Bloomberg

The textile and garment industry’s export revenue reached US$9.1 billion last year, making it the largest foreign currency earner in the country, said Le Quoc An, chairman of the Viet Nam Textile and Apparel Association (Vitas).The textile and garment industry is the country’s only sector whose export revenue has not declined compared to 2008 in the context of global economic recession, An said.

He said despite export declines in some traditional markets in 2009, exports to new markets have increased significantly as companies had diversified markets.

Exports to traditional markets such as the US and EU reduced by 5 per cent and 3.5 per cent, respectively.

However, exports to Japan increased by 15 per cent; South Korea up by 67 per cent; India up by 60 per cent and ASEAN up by 29 per cent.

An said garment and textile companies had increased the use of local materials in their products with local content rising to 44 per cent last year compared to 38 per cent in 2008.

Cloth imports last year reduced by 6.9 per cent against 2008. Textile fibre and cotton imports also reduced by 0.3 per cent and 15.3 per cent, respectively.

The garment and textile sector imported about $5 billion of materials last year.

$10.5 billion target

The Government has targeted export revenue of $10.5 billion this year.

“We believe the industry will meet the target as many garment and textile companies now have export orders until the end of the second quarter,” An said.

He said to meet the target, the industry would focus on investing in reorganising production, applying advanced technology, retaining traditional customers and finding new ones.

The industry will develop strategies to cooperate with large retail and import customers to stabilise export orders and learn managing and trade skills from them, he said.

Under the industry’s production restructure, garment and textile plants would be moved to rural areas to address the shortage of human sources and reduce production cost, with urban-based factories only manufacturing high-value products, he said.

He said the industry would develop industrial parks which specialise in increased local content in garment products, ensuring supplies for garment companies.

The industry would also strengthen designer training, fashion marketing and brand name development, he said.

There would be a gradual transition away from producing garments under contract, to selling products designed and produced by garment and textile companies to add value and improve industry sustainability, he said.

He added the industry would also focus on improving the lives of workers to ensure human resources and limit illegal strikes.

Source: VietNamNet/Viet Nam News

Vietnam expects that crude oil exports, the country’s second-biggest source earnings after textiles, could fall 28.2 percent in 2010 to 9.43 million tonnes, or 189,400 barrels per day, a state-run newspaper reported on Thursday. The Industry and Trade Ministry forecasts coal exports next year at 17 million tonnes, the Vietnam Economic Times newspaper cited the ministry’s industry development report as saying. Coal exports, most of which go to Japan and China, would drop 32 percent from this year’s expected 25 million tonnes, based on the projection by top coal miner Vinacomin. Source: Reuters