The General Department of Customs reports that from earlier this year to mid-July, the industry only made US$352.6 million from exports.—Photo daibieunhandan

HA NOI (Biz Hub)— Handicraft enterprises have faced a host of challenges in production and the problematic business climate this year, making it difficult for them to reach their export targets, say industry insiders.

The Viet Nam Handicrafts Association (Vietcraft) says that almost every enterprise in the handicrafts industry is either a small or medium sized operation. Subsequently, they have suffered a lot from recent changes in the market and macro-economy, that have seen many of them fall into crisis.

Meanwhile, high input costs, high interest rates on loans and difficulties in accessing banking loans have had a detrimental effect on their production and commercial activities.

According to Vietcraft's statistics, 30 per cent of the industry's enterprises recorded losses in production in the last two years, so they had to cut production back or even stop production temporarily.

Dang Quoc Hung, deputy chairman of the HCM City Handicrafts Association, said the handicraft industry faced high production costs and serious pressure from importers to reduce export prices.

Almost every enterprise has received reduced orders and only a few larger enterprises will get large export orders by the end of the year, said Hung.

In addition, importers also asked enterprises for price cuts of 20 per cent due to their economic difficulties, when in fact they only make a profit of 10 per cent in the first place.

The General Department of Customs reports that from earlier this year to mid-July, the industry only made US$352.6 million from exports, so it does not expect to achieve its export target of $1.5 billion for this year.

The major export markets for traditional Vietnamese handicrafts include the US, Japan, Germany, South Korea, Poland, Belgium and Denmark.

Vietcraft says that importers have increased their orders for Vietnamese handicrafts due to their good design, quality and competitive prices, but the global economic downturn has affected the industry's export value. — VNS