On May 8th 2020, Notice 177/TB-VPCP on the clearance of goods through the sub-border gates on the border of Vietnam and China was issued, aiming to help the economy to recover in the new normal. Sending the right message to the right people at the right time is the key to help business leaders in the import and export sector cope with their immense hardship as a result of the current pandemic.
COVID-19 is posing significantly adverse impacts on the economy in general and specifically on businesses that rely on import and export activities across the borders.
Industries that are dependent on raw materials imported from abroad such as textiles, garments, leather and footwear, are struggling to find supplies. According to the General Statistics Office of Vietnam, by the end of April 2020, the import turnover for fabric reduced by nearly 20% compared to the same period last year. Many other imports of goods also followed the downward trend such as computers, electronic products, components (30.4%, equivalent to USD 122 million), tools and spare parts (6.2%, respectively, down by 103 million USD)
This is because during the first quarter of the year, China, the key supplier of raw materials for many of our industries, resorted to closing its borders to contain the outbreak.
The policy of tightening inspection at border gates before May 8, issued by the Government, caused many difficulties for exporters. Compared to the first 4 months of last year, the export graph of many agricultural, forestry and fishery products recorded a clear downward trend such as: main agricultural products decreased by 4.5%, fishery by 10%, livestock decreased by 23.8%, rubber down by 31.1%, tea down by 14.1%, pepper by 12%, fruits down by 19.6%, catfish down by 31.9%, shrimps down by 11.8% ... ( Source: Baochinhphu.vn)
Textile industry took the hardest hit during COVID-19 as the two biggest markets in Europe and the United States, representing 60% of the export turnover in the sector, have witnessed a slump in demand. The Vietnam Textile & Apparel Association (VITAS) has made a hypothesis that if the pandemic ended by June, it would cause VND 12 trillion of damage to the textile and apparel industry and result in up to 80% of businesses cutting jobs within April and May.
The value of Vietnam's exports from January 1 to April 15, 2020 compared to the same period in 2019 (Source: Vietnam Financial Times)
In addition, tightening border checks would be extended due to the strict regulation of containing the communicable disease. Such difficulties from both inputs and outputs would lead to considerable price pressure or, even worst, a termination of contract.
Although the evolving situation is unpredictable, import and export enterprises should not sit still. The simplest and most practical move for them is to speak up, where relevant stakeholders could listen to and understand the current situation of the company in the most direct and transparent way.
Through press releases, leaders of import and export companies may describe their own difficulties in the most clear and detailed way they can, including obstacles during import/export, sudden terminations of contract and so on, while confirming the companies’ current decisions.
Top executives can use press releases as a note to their staff about undesirable and tough decisions related to human resources, such as firings, pay cuts, layoffs, furlough rotation and unpaid leave, or as an encouragement and assurance to their workers, accompanying with a compensation policy, such as an increase in bonuses or accommodation allowances.
By speaking up at the right time, import and export companies can also call for the sympathy of their partners and customers, which leads to problem-solving and win-win situations. Press releases also serve as a declaration of a positive response of an enterprise after the current crisis, hence enhancing the company’s credibility and reputation. The content of such publications can include various messages, ranging from proposing late deliveries to introducing a new discount and a discount for the next order.
Alternatively, business leaders of the import and export sector can make use of press releases for making their voices heard at the governmental level, expressing their concerns and wishes to simplify the customs administrative procedures or to be supported with some tax-related exemptions, such as value-added and profit tax, or asking the Government to be the bridge to facilitate border trade and increase demand in foreign markets. Besides, to mitigate the negative impacts of the pandemic on production and marketing activities, businesses can propose other interventions such as exemption of late payment interest, access to concessional loans, charged-off debts and debt rescheduling, etc.
Especially to avoid being in the difficult situation where production and business activities face a halt as supply chain disruptions occur because of similar events in the future, import and export enterprises can advise and consult the Government on issues such as increasing the linkage between domestic and FDI enterprises, proposing ideas for long-term trade development strategy of the industry ...
Source: Report on economic impact of COVID-19 and policy recommendation - The National Economics University
Clearly, sending the right message to the right people at the right time is what top executives of import and export businesses need to untangle themselves from the current hard times.
TIPS FROM US
At CREATIO, we have consolidated a number of lessons learnt for enterprises dealing with crisis communication. To avoid being slammed as insensitive by staff, here are 6 simple yet extremely practical moves that business leaders could spearhead right now without any additional fee:
TIP 1. MANAGE YOUR CASH FLOW
Survey data from HAWA show that 59% of businesses have reduced orders after Tet. 96% of enterprises have bank loans and are under pressure on loan interest and repayment period. Revenues are likely to take a hit this year. Some of your customers will pay you late or perhaps not at all. What can you do to improve your cash flow?
- Revisit your fixed and variable costs and estimate how long you can survive on your cash reserves and convert fixed into variable costs where possible.
- Revisit your capital investment plans and prioritize your investments so that you can start cutting investments as necessary.
- Focus on inventory management – while you probably need to hold more inventory currently due to supply chain disruptions, you do not want to have too much capital tied up.
- Discuss with your suppliers alternative payment schedules and financing options.
TIP 2. ASSESS YOUR SUPPLY CHAIN RISKS
The survey data from HAWA showed that 73% of enterprises faced disruptions and delays of their supply chain, in the form of delays in importing primary and secondary input materials, unavailability of goods and increased prices. While the situation in countries like China is improving, there could be a reemergence of the outbreak while enterprises sourcing from Europe and the US might soon face supply chain disruptions. A clear understanding of your supply chain will help to expose any potential vulnerabilities. This means beginning with the most critical products and looking beyond first- and second-tier suppliers. Diversifying your suppliers can help you to spread the risk of running out of input materials.
TIP 3. REVISIT YOUR CRISIS AND CONTINUITY PLANS
Every well-run business has a crisis or continuity plan. You might already be using it, though now it is important to constantly adjust it and prepare for a potential further escalation of the situation. Scenario-planning can help with thinking through different developments and the actions enterprises can take to address them. Having a plan on how information should flow in emergencies should be part of the business continuity plan. Be clear about who will communicate what and how to whom during the crisis.
TIP 4. AGILE IN THE NEW NORMAL
In the current context, import-export enterprises are urgently in need of flexible actions to adapt to the new changes. They should maintain the connection as well as share information with customers or partners, strengthen industry networks, propose solutions for late delivery, suggest discounts for the follow-up orders.
In addition, in order to minimise the dependence on input materials from foreign suppliers, import and export enterprises can focus more on the search for domestic raw material distribution partners, promoting industry networks, negotiating prices based on criteria that are beneficial to both in such difficult times, developing e-commerce and online sales channels to reduce dependence on traditional markets / forms of business, along with saving, cutting costs, delaying investment in non-essential items.
Established in 2011, CREATIO has proven its position and expertise in the industry of creative communications solutions consultancy. With a broad range of services from event management, branding design and production, to content marketing and PR distribution, CREATIO has the privilege to serve more than 120 clients worldwide, from a singular design concept to year-long integrated communications campaigns.
In fact, when the Government’s Decree No.116/2017, concerning some changes in the conditions of automobile production and assembly in Vietnam, came into effect on 01/01/2018, CREATIO had been developing rich content and publishing multiple news articles on a wide range of media outlets to inform the Government and the public about the obstacles that this decision had accidentally posed to import businesses as well as the citizens since 2017. That same year, CREATIO also had the opportunity to work with and developed a communication campaign for BETRIMEX, a company specialised in coconut beverage products. Despite a saturated food and beverage market with abundant foreign and local brands, the campaign helped introduce a new trend of enjoying coconut products towards a healthy life, promoting the demand in BETRIMEX’s products, and hence increasing the whole brand’s revenue through press releases.