Plastic enterprises: potential room available for export

Plastic enterprises have invested in many factories to proactively source raw materials. In the photo: The production line in the factory of An Phat Holdings Group. Photo: H.D

Expanding export markets

Many manufacturing sectors have bounced back after the pandemic, creating favorable conditions for plastic enterprises to expand their business and connect with more customers.

According to businesses, in 2022, the plastic industry is expected to benefit thanks to the implementation of series of new-generation free trade agreements, opening up to attract investment not only with FTA partners but also with others to invest and produce goods in Vietnam to fully take advantage of the FTAs.

According to the representative of Nam Thai Son Import-Export Joint Stock Company, business has a good output. From the first months of 2022, the Company has stable and regular export orders, most notably an order of about 4,000 tons to the European market, with a value of more than 8 million USD.

Recently, An Phat Holdings officially cooperated with Nexeo Plastics - the world's leading plastic resin distributor to bring biodegradable plastic materials to the US, Canada, and Mexico markets. Mr. Pham Anh Duong, Chairman of the Board of Directors of An Phat Holdings, said that the North American market, including the US, is always a strategic goal of the enterprise in expanding the international market. The group has successfully registered a trademark for the AnEco biological product line in the United States. This is not only protected by law but also paves the way and created great opportunities for the group to carry out business cooperation projects.

In addition, the company broke ground to build a PBAT biodegradable plastic factory with a capacity of 30,000 tons/year in Hai Phong, which is expected to deliver an abundant supply of raw materials. Therefore, An Phat Holdings will have many outstanding advantages to dominate the market as well as expand to other international markets.

As stated by the Import-Export Department (Ministry of Industry and Trade), despite the negative impact of Covid-19, in 2021, Vietnam's plastic product export turnover still reached US$4.93 billion, up 34 .9% compared to 2020. Major markets such as the US, EU and Japan all increased import orders from Vietnamese suppliers. In which, the US imported plastic products from Vietnam worth nearly 1.85 billion USD, up 68.6%, accounting for 37.47% of the total export turnover of plastic products.

Obstacles from raw material supply

Despite the bright profit picture of plastic enterprises in the 1^st quarter, there is still a gray area. For example, Dong Nai Plastics Joint Stock Company - DNP Holding recorded a profit after tax of more than VND 5,000 billion, up 55% compared to the same period in 2021. However, given the individual reports, profit decreased more than 32% over the same period. The leader of DNP Holding explained that the decrease in revenue and profit was mainly due to the fact that the general market demand had not yet recovered, while the costs of raw materials, selling and administrative expenses all increased due to the influence of other global political instability.

According to a representative of Dong A Plastic Group Joint Stock Company, due to the heavy depends on imported raw materials, the fluctuations in the price of plastic materials, the disruption of the global supply chain and the increase in voyage transportation costs challenge plastic enterprises much. In 2021 alone, the annual price of raw materials increased to the highest level in more than 10 years, PVC plastic powder up to 1,800 USD/ton while in March 2020, it only traded at 700 USD/ton.

According to Mr. Chu Van Phuong, General Director of Tien Phong Plastic Joint Stock Company, the company faces many increasing challenges in the market, such as higher competition due to more manufacturers investing in machinery and equipment to build factories in Nghe An, Bac Giang. PVC raw material prices are at a high level, surpassing 2021 and unusual developments of the disease may occur domestically and internationally. Therefore, in 2022, the company's leadership has set a target with net revenue of VND 5,175 billion, output of 102,000 tons and profit of VND 465 billion, maintaining the maximum growth rate of 6%.

Due to the above difficulties, in addition to overcoming by proactively sourcing raw materials and increasing the "buffer" in finance, businesses long to get more supportive policies from management agencies, such as: tax incentives, credits and premises, as well as support for trade connections for businesses to make more breakthroughs.