Seafood firms cornered as inputs flow to China

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), more than 50 per cent of the seafood manufacturers have to reduce or even temporarily halt production since most raw materials have been purchased by Chinese traders.

Nguyen Thu Sac, VASEP’s deputy head, said the Chinese businessmen have even approached Vietnamese fishermen amidst the sea besides offering to buy up inputs at ports and on land.
She said these foreign traders offer very competitive prices and have so far ‘ousted’ 150 domestic firms.

Nguyen Dien, director of Danang-based Procimex Corporation, said his company fails to compete with Chinese traders though it is willing to buy at high prices.

Some seafood processing companies said the Chinese traders will buy seafood directly from domestic fishermen and then illegally export it to China to evade taxes.

To cope, Sac called for imposing a ban on seafood exports like Indonesia.

According to the Vietnam Rubber Association (VRA), domestic rubber raw materials can be exported both legally and illegally to China.

But Chinese traders prefer the illegal path since this will help them evade both export taxes in Vietnam and import duties in their home country, lamented Nguyen Thanh Minh, director of the Long Binh Rubber Company.

Many Vietnamese rubber manufacturers have complained they could not buy raw rubber from the domestic market but have to import at high prices instead.

Dinh Ngoc Dam, director of Danang Rubber Company, said domestic firms could hardly get the materials from VRA’s members since companies belonging to this association prefer exports.
“Rubber for export is tax-free, while rubber serving the domestic market is taxed at 5 per cent, which will discourage the domestic rubber consumption,” Le Quang Thung, VRA’s head explained.

According to Tran Thi Thuy Hoa, VRA’s general secretary, rubber exports to China accounts for 60 per cent of Vietnam’s total production capacity of 780,000 tonnes this year.

Analysts thus warned the domestic rubber industry against a too heavy reliance on Chinese traders.

The Vietnam Rubber Association has also instructed its members to search for other alternative markets.

Vietnamese enterprises would be heavily damaged if Chinese traders abruptly end purchasing or change their tax policy when export prices rise, experts warn.