According to the Institute of Strategy and Policy for Industry and Trade (Ministry of Industry and Trade), Vietnam's plastic products have penetrated the market relatively well with high competitiveness. Domestic plastic enterprises must seek opportunities to boost exports and increase resilience.

Poor profit

In 2022, looking at the individual financial statements of some plastic enterprises showed that business results were divergent among enterprises in the same industry when some enterprises increased strongly, but enterprises were going red backwards.

In 2022, DNP Holding Joint Stock Company's post-tax profit increased by more than 5 times compared to 2021, reaching VND 51.4 billion. To get sudden increase in profit in 2022, according to DNP Holding, was thanks to the savings in management costs, selling costs and contributions from financial activities. Also growing strongly was Binh Minh Plastic Joint Stock Company, when it recorded a post-tax profit 3.5 times higher than in 2021, reaching nearly VND 675 billion. Meanwhile, the post-tax profit in 2022 of Tien Phong Plastic Joint Stock Company only increased slightly by 2.2% compared to the previous year, reaching nearly 446 billion dong.

Conversely, with An Phat Holdings Group Joint Stock Company, post-tax profit went back more than 4% compared to 2021, reaching more than VND 67 billion. In particular, An Phat Green Plastic Joint Stock Company had a very strong decrease in post-tax profit in 2022 (6 times) compared to 2021, reaching just over 31 billion dong.

The profit of plastic enterprises in 2021 had the above situation mainly due to the difficult business situation in the second half of the year, many enterprises recorded heavy losses in the fourth quarter of 2022. According to the explanation of An Phat Holdings, in the fourth quarter, although it still maintained good production and business activities, the price of plastic particles decreased. At the same time, the Company had to make provisions for inventory to prevent price fluctuations in the market, leading to a decrease in profit over the same period. Similarly, Tien Phong Plastics also said that the sharp drop in sales was the cause of the decrease in profit over the same period.

Many opportunities to expand exports

In 2023, plastic enterprises must seek and take advantage of all opportunities to recover and continue developing. A Viet Nhat Plastic Production Co., Ltd. representative said that instead of looking for ways to reduce quality and reduce costs to compete in the domestic market, the Company chose to pioneer design and quality. In addition, the Company also actively participated in trade promotions to seek and expand export markets.

In particular, in terms of opportunities from export, plastic enterprises are being evaluated as having many opportunities, especially from the EU-Vietnam Free Trade Agreement (EVFTA). According to the Center for WTO and Integration - Vietnam Federation of Trade and Industry (VCCI), Vietnam's plastic industry had many advantages when exporting to the EU thanks to its good competitiveness in some product lines such as packaging, home appliances and many enterprises had invested in technology to meet market requirements. In addition, compared to many competitors, Vietnamese plastics have advantages such as more competitive prices due to cheap, abundant human resources, enjoying the EU's GSP preferential tariff, access to cheap recycled materials… Not only for export, with the EVFTA, Vietnam's plastic industry also benefits from imports from the EU market. Vietnam exports mainly finished plastic products to the EU and imports plastic materials and semi-finished products from the EU to serve the production and export of plastic products and other products.

Moreover, enterprises are constantly searching and expanding to diversify export markets. For example, Stavian Chemical Joint Stock Company - Stavian Chemical said it would boost trade, import and export activities with Indian partners and expected import-export turnover to reach about US$ 100 million in 2023 and increase to US$ 200 million in the following years. In addition, the Company would study to open factories or cooperate to open plastic, chemical and petrochemical factories in India.

However, many difficulties are still waiting for enterprises in the plastic industry, especially when the industry is still not active in the source of raw materials. The Institute for Strategy and Policy Research of Industry and Trade said that enterprises' prices and production volume were often unstable, depending on the variables of the import market, due to too much dependence (up to 80%) on imported raw materials. The clear proof was the business results in 2022, as mentioned above. In addition, many Vietnamese plastic manufacturing enterprises had not focused on branding, looking for partners and markets, nor had they focused on investing in production, so their products were not diversified.

 

Therefore, enterprises expect management agencies to actively improve mechanisms, policies and laws related to investment, mobilize large corporations and technology groups to transfer technology, and invest in a more robust rise of Vietnamese plastic enterprises. In addition, enterprises must also actively improve their competitiveness to penetrate and dominate many export markets worldwide.

 

Source: Customs News