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Manufacturers rush to pay debts in goods and sell off inventories   2012-05-19 - SGTT

Businesses have been trying every way to turn the inventories into cash to get money for re-investment.


In recent days, the head office of MM, a media company in district 2 in HCM City, has been full of sweets. The company’s officers have been busy all the day to sell the goods. People thought that MM has received an order of organizing a big event. However, Le Thi Thuy, Director of MM, denied this.

As MM failed to ask the partner to pay for the event services, despite a lot of efforts, it decided to receive three trucks of sweets and snacks worth 120 million dong from the partner – a big group, instead of 100 million dong in cash as agreed by the two sides before.

“I could not imagine before that such a big group could not arrange 100 million dong to pay debts,” Thuy said.

Finally, Thuy decided to accept sweets instead of cash, because she was not sure when the company would have money to make payment, while MM needed money to pay its staff and pay other service providers.

After carrying sweets to the head office of the company, Thuy asked her officers to try to sell the products, wholesaling and retailing, advertise the sale on mass media, bring goods to groceries or offer to sell on Internet.

According to Thuy, the company could take back 65 million dong instead of 100 million dong as it previously expected. However, 65 million dong would be better than nothing.

The high inventories have pushed the sweets big group into big difficulties and forced it to pay debts in goods instead of money. Of course, both the sides suffered loss in the transaction. The client had to pay the volume of goods with the value higher than the value of the contract. Meanwhile, the service provider could not get the whole sum of money it expected.

However, enterprises have no other choice than… suffering loss. They have been trying to bargain away goods to clear stocks and get money to maintain production.

The noisy streets Nguyen Trai, Le Van Sy, Cach Mang Thang Tam in the commercial hub of HCM City have become the places for manufacturers to display and sell off inventory goods. The banderoles hung over the pavement shops show the big discounts of 50-70 percent, which means that customers can buy the goods at surprisingly low prices. All the supermarkets have offered price discounts for 2000-3000 product items, or offered gifts to buyers.

Inventories big enough to sell until the end of the year

Dang Quynh Doan, General Director of Viet Thy Fashion Company, has said that the demand for ready made clothes has decreased by 20-30 percent in comparison with the same period of the last year. It is estimated that the inventories amount to 50-70 percent of the sold volumes.

Other garment companies have agreed with Doan, saying that the volumes of goods at the shops are now big enough for the sale until the end of the year. Some analysts have warned that if the low weak demand cannot be improved, the products would be enough for sale until the next year.

Producers understand that it’s difficult to sell old products. Therefore, they still have to make new products, but at moderate levels, while still trying to boost sales to clear stocks and get back the investment capital.

The cosmetics and processing food inventories are also very high. Deputy General Director of a supermarket chain said he has never seen such a big inventory volume before.

The retailer planned to sell a volume of goods within three months. However, only 60-70 percent of the volume has been sold after four months.

Nguyen Thi Anh Hoa, the owner of Citimart chain, has estimated that the volume of drinks, processing food and cosmetics kept in stocks has reached tens of billions of dong.

“A lot of manufacturers have said they would join any sale promotion programs to be launched by our supermarket chain in order to boost sales,” she said.

Nguyen Phuong Thao, Director of Maximark supermarket chain, said that some cosmetics manufacturers now offer big preferences: customers, who buy one product, would get one more product free of charge. This means that when selling a container of new goods, the manufacturers would be able to clear one container of inventories.

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