Pham Xuan Hong, president of Ho Chi Minh City’s textile association, recently urged Vietnam’s textile industry to source raw materials from Malaysia and India while the coronavirus storm gets over in China. Textile firms there may witness raw material shortage by the second quarter as there would be no outgoing shipments from China before the end of February.
This solution, however, is temporary as it will be extremely difficult to replace China as Vietnam’s main supplier of raw materials, Hong said.
As Vietnamese firms rely on China for 30-40 per cent of input materials, production would likely be hampered, according to a news agency report.
Experts have warned that though some firms may still have stocked up before the Lunar New Year holidays, the situation could get tricky soon.
The rubber and plastic industries too will face severe shortages as some 80 per cent of Vietnam’s raw materials are imported from China, said president of HCM City’s rubber and plastic association, Nguyen Quoc Anh.
If China’s industries cannot resume operations by the end of February, firms must start looking to alternative sources, possibly South Korea and the European Union.
Longer transport distances and higher prices, however, would likely result in higher costs and massive disruption to operations.