31 Aug 2012 Intellasia Finance Vietnam - Hong Kong Business ...

FINANCE
Vietnam finance & business 31 August 2012
Businesses Ask For
Delay On Salary
Increases
"Vietnamese exporters tend to sell their products at low prices to attract buyers, but get
themselves into trouble with US anti-dumping lawsuits."
The statement was made on August 28, at a conference for trade promotion with the
US, held in Hanoi. He added that domestic exporters should focus on quality and pay
more attention to quality and more environmentally-friendly products if they wish to
create sustainable trade with the United States.
Khien said that from 50-60 percent of Vietnam's footwear products exported to the US
are only half-finished because Vietnamese firms lack design expertise. Most Vietnamese
companies receive design models and materials from their US partners, working
as subcontractors for firms from Hong Kong, Taiwan or South Korea, instead of being
direct contractors for American firms.
The larger Vietnamese apparel firms have the capacity to act as a bridge for small local
exporters to help them reduce overhead, he suggested.
Opportunities pose challenges
The US, home to the largest overseas Vietnamese community in the world, with
around 1.5 million, is a significant market for Vietnamese goods. The US market is also
widely considered to be less demanding than that of Japan or Europe. Vietnam's entry
to the WTO, along with the removal of Permanent Normal Trade Relations (PNTR)
and garment and textile export quotas have paved the way to increased exports to the
US.
However, Vietnamese exporters still face many challenges for entry of their goods to
the US market. Currently China accounts for about 75 percent of the total footwear imported
to the United States. For other apparel, China accounts for 33 percent, for electronics,
32 percent, seafood, 18 percent and plastics, 25 percent.
China is not Vietnam's only major competitor, however. Indonesia and Bangladesh are
also competing for exports. Another obstacle is that there is only one direct shipping
rout linking Vietnam with the US. The long distance adds to high shipping fees, along
with other practical problems, such as potential pirating and the Bio-terrorism Act.
Khien suggested that Vietnamese companies set up catalogues and websites in both
Vietnamese and English to promote their products. This is something, he said that
would help Vietnamese businesses increase the prestige of their brands and introduce
them to potential foreign partners.
http://www.dtinews.vn/en/news/018/24532/vietnamese-companies-lack-strategy-forexports-to-us-.html
31/AUG/2012 INTELLASIA | DTINEWS.VN
A number of enterprises have asked for a three to six-month delay on the planned adjustment
to basic salaries, citing tough economic times as the reason.
The Ministry of Labour, War Invalids and Social Affairs (Molisa) proposed two plans
for a salary increase, to be applied from January 1, 2013.
Under the first plan, the new basic salary will be divided by area, with highest salaries
going to the most developed areas. Area 1 includes Hanoi, HCM City, Quang Ninh,
Danang, Binh Duong, Dong Nai and Vung Tau, which will have salaries increased to
VND2.7 million (USD130).
Area 2 includes Hai Phong, Vinh Phuc, Thai Nguyen, Khanh Hoa, Binh Phuoc, Tay
Ninh, Long An, An Giang, Can Tho and Ca Mau, and will have VND2.4 million as a
basic salary. The area III and IV will respectively set VND2,130,000 and VND1,930,000
as basic salaries.
Under the second plan, VND2.5 million will be the basic salary for workers in area I,
while salaries will be raised to VND2,250,000 in area II. Workers in areas III and IV will
have VND1,950,000 and VND1.8 million for basic salary, respectively.
However, the Department of Salary and Wage cited the General Statistical Office of Vietnam
that nearly 26,000 enterprises had shut down in the first half of 2012, a 5.4 percent
increase from the same period last year. In HCM City, 70 percent of enterprises
have reported losses.
Because of the bad financial state of these businesses in the last half of the year, many
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