However, some enterprises say they can now import cheap input materials from China. As such, domestic firms can be more competitive in the world market.
This company is still in operation despite fierce competition in Vietnam’s markets caused by the Yuan’s depreciation. In fact, according to this company, the currency’s devaluation has helped it decrease expenses. The company imports 40 percent of input materials from China. With a 4 percent decrease in the price of the Yuan, it has reduced 5 percent of total production costs.
Nguyen Tri Kien, Director, Minh Tien Handbag Co. Ltd. said: "The Yuan’s depreciation has helped make our company more competitive. While Chinese products have become cheaper, our products are now also cheaper thanks to cheaper input materials imported from China."
Materials for textile, footwear, and plastic production must still be imported from China. These sectors are Vietnam’s advantage. Therefore, if domestic firms can make full use of the Yuan’s devaluation, Vietnamese products will be more competitive in the world market.
Tran Viet Anh, General Director, Nam Thai Son Import-Export Joint Stock Company said: "The plastic sector imports 60 to 70 percent of its materials and machines from China. Besides, transactions are conducted in Yuan before USD. Thus, the Yuan’s depreciation helps Vietnamese products be more competitive in terms of prices. When Vietnam exports products to other countries, values are higher since we use other currencies for these transactions".
In addition, exports to China are small. Therefore, the Yuan’s fluctuation does not strongly impact Vietnamese enterprises.
Nguyen Lam Vien, Director, Vinamit Company: "Export quotas to China are not large. Moreover, transactions are conducted with Vietnam Dong, so Vietnamese enterprises receive the benefit."
According to experts, the depreciation of the Yuan is an opportunity for Vietnamese enterprises to enhance their competitiveness once the Trans-Pacific Partnership agreement is signed. Due to cheap input materials, Vietnamese products can compete with Chinese ones when they are exported to TPP countries, of which China is not a member.
