Poultry egg production at Vinh Thanh Dat Company. (Photo: SGGP)
In the food production and supply sector, the situation is not very positive either. Mr. Truong Chi Thien, Director of Vinh Thanh Dat Co., Ltd, one of the key enterprises providing all kinds of poultry eggs for the market in Ho Chi Minh City, said that due to social distancing, the company almost lost the wholesale revenue from collective kitchens, restaurants, and hotels, whereas the traditional retail channel achieved good growth. However, it cannot bear the slump in the revenue of the collective kitchen segment.
According to Mr. Thien's calculations, if the pandemic is well controlled from now to the end of this year, the company will step up other distribution channels to ensure an increase of about 10 percent in revenue, instead of 20 percent like the original plan. Increased revenue does not mean increased profits, because at this point, to stabilize revenues, enterprises must sacrifice profits. For Vinh Thanh Dat, the revenue increase of only about 10 percent will be the lowest in many years.
According to the survey results carried out in August this year by the Vietnam Report Joint Stock Company on the top 500 most profitable enterprises in Vietnam in 2020, up to 60 percent of enterprises said their revenues in the first six months of this year decreased compared to the same period last year, of which, nearly 15 percent of them had a sharp decline in revenue. Similarly, the profit situation is not very optimistic either when 54 percent of enterprises said that their pre-tax profits in the first six months of this year dropped compared to the same period last year, of which 31 percent of them saw profits falling sharply, and even suffered huge losses.
Mr. Dinh Quang Khoi, Head of Marketing Department of MM Mega Market Vietnam Co., Ltd., shared that 2020 is a particularly difficult year for the retail industry. In the first eight months of this year, the company has adjusted its revenue plan twice and brought it back to the same level as last year. Since the outbreak of the pandemic, all revenues from the wholesale segment to restaurants, hotels, and schools saw losses, even no revenues for several months. To ensure revenue equal to that in 2019, it also put forward many solutions, which focus on cutting all unnecessary costs, even marketing expenses, at the same time, organize promotions and discounts to stimulate consumption. Currently, many items sold in this supermarket network are having a discount of up to 50 percent, such as products of Minh Long Fine Porcelain.
Many other enterprises are also implementing the strategy of focusing on existing resources, especially efforts to keep loyal customers by improving customer services and launching many discounts and promotions to boost purchasing power and consumption in the context that people have gradually tightened and cut spending.
Since the outbreak of Covid-19, the habits and behavior of consumers have changed dramatically. Instead of going out shopping, consumers can shop at home through an online sales system. This fact has forced enterprises to transform to catch up with the market trend. Therefore, the priority strategy of enterprises this year is to seek and expand markets, research, and develop new product lines, and continue to adopt cost-cutting measures.
Besides, enterprises direly need support from the Government to overcome difficulties. For instance, they need the Government to continue extending tax payments, provide more support packages for affected enterprises, and expand the scope of groups of favored industries, combined with the rapid and synchronous deployment of support packages for enterprises. It is important to stabilize the macro-economy and continue to control the pandemic well so that enterprises can confidently invest and expand production and business to fully meet the supply of goods for the peak shopping season at the end of the year and the next Lunar New Year.
By Thuy Hai – Translated by Thuy Doan