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Vietnamese get bankrupted because of the wood chip sales to Chinese   2012-07-13 - Dat Viet

After Vietnamese farmers tasted the bitterness from selling farm produce to Chinese merchants, it’s now Vietnamese wood chip exporters to suffer from the deals with Chinese, who have suddenly stopped collecting products.

Getting bankrupted in masses

The wood chip producers in the Tra Noc 2 Industrial Zone in O Mon district in Can Tho City, have stopped operation for the last many years. The equipment and workshops the businesses bought before have been left idle.

Mekong Delta has shut down four mincing lines, while four cranes and a lot of equipment shave been left untouched for a long time, which have now become rust.

Nguyen Van Hoa, a security guard of the company, said the company has stopped operation for the last two years. Pointing to the equipment and the piles of wood chips lying under the sun and rain, Hoa said the wood chip was chopped from cajuput wood. Since the products have been left unsold, they are getting decayed.

“The wood chips weigh some 1000 tons, worth 2 billion dong,” Hoa said.

The Hung Phu Forestry Product Processing Company in the same industrial zone has also stopped operation. A security guard here said no one has been working there for the last many months. Four eucalyptus and cajuput grinding lines have been left idle, while the company still has 2000 tons of unsold wood chips.

Tran Thanh Tam, a transport service provider in the industrial zone, said Hung Phu was one of the first companies in Can Tho City which began collecting, processing and exporting wood chips to China.

At first, Chinese merchants collected wood chips at high prices, which brought fat profits to Vietnamese companies. However, later, they unexpectedly stopped collecting wood chips, leaving thousands of tons of wood chips unsalable.

Nam Can, Deputy Director of Thien Phat Company in Can Tho City, said that he decided to shut down the business before Tet (February 2012) after the loss became unbearable. It was estimated that the company incurred a loss of hundreds of millions of dong a month.

The wood chip price has been plummeting continuously to 85 dollars per ton. However, there has been no buyer at this moment. In the golden age, eucalyptus wood chip could be sold at 120 dollars per ton, while cajuput at 105 dollars.

Tu Buol, the owner of Thuy Son Enterprise, said Thuy Son is one of the very few enterprises which still export wood chips to China, said that in the past, Chinese usually placed big orders, while orders now come in dribs and drabs, therefore, the enterprise is facing big difficulties and it just keeps the production at a moderate level.

Bargaining workshops, equipment away

Tam said that he had to sell equipment and production lines at a loss to escape from the wood chip production two years ago.

In the golden age, when wood chip exports could bring big money, he spent 2 billion dong to buy vehicles, equipment, cranes. At that time, he could earn tens of millions of dong a month. However, things have become quite different.

A friend of Tam’s, who also exported wood chips to China, spent 20 billion dong to buy production lines, which he had to bargain away later at 10 billion dong only. The buyer also could not find the outlet for the wood chip products, has also left the production lines idle.

Six companies have reportedly got bankrupted or halted operation in Can Tho City. Only a few companies still keep production, because they fear commercial banks, which demand debt payment, would come and distrain assets.

The companies in the same business field in Tien Giang, Long An and Ca Mau provinces are also dragging out their miserable existence.

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