[Vnbiz] Vietnam: Cashew exporters dying of ignorance

Wed Jun 11 21:04:51 PDT 2008

Of course, brother Phong :-)   There are always some business people who
don't know what they are doing.  But as a whole they know what they're
doing.  Say, some people may pay more than the equilibirum price, some pay
less, but as a whole the price of the economy will be at the equilibirum of
supply and demand.  Some private businesses are smart, some private business
are stupid, but as a whole, private businesses are presumed to be best for
the economy.  That is the fundamental premise of the market economy.

So it depends on what we are talking about.  Are we talking about some
specific businesses or even some specific groups of businesses, or are we
talking about business as a whole?

Have a great day!

Hoanh

On Wed, Jun 11, 2008 at 11:50 PM, <Hong-Phong_Pho at ita.doc.gov> wrote:

> [ Vietnam Business Forum ]
>
>
> Dear Anh Hoanh:
> A clear example that business people don't always know what they are
> doing.  HPP
> -----vnbiz-bounces at mail.saigon.com wrote: -----
>
> To: vnbiz at vietlinks.net
> From: "Tai Phan" <k.phan007 at gmail.com>
> Sent by: vnbiz-bounces at mail.saigon.com
> Date: 06/11/2008 01:06PM
> Subject: [Vnbiz] Vietnam: Cashew exporters dying of ignorance
>
> [ Vietnam Business Forum ]
>
> Vietnam: Cashew exporters dying of ignorance
>
> The news about the possible lawsuit against Vietnamese cashew exporters and
> the fate of the cashew processing industry remain hot topics these days. The
> Vietnam Cashew Association (Vinacas) on June 6 held a press conference to
> provide more information about the cashew exports Vietnamese companies are
> owing.
>
> According to Vinacas, the ignorance of small and newly established
> companies has caused the problems. These companies do not well understand
> laws and were foolish enough to sign contracts they could not fulfill.
>
> Owing exports because of ignorance
>
> Nguyen Duc Thanh, acting Chairman of Vinacas, said that small companies,
> though having limited capacities, still signed big export contracts.
> Meanwhile, brokers lent a hand in the contract signing. As they could get
> the commission of 1% of the contracts' value, they tried to urge the two
> sides to sign as many contracts as possible.
>
> Ho Ngoc Cam, former Chairman of Vinacas, said that some companies which had
> the production capacity of 5 containers a year signed contracts to export 40
> containers. As a result, they could not collect enough material cashews to
> fulfill contracts, especially as prices began skyrocketing.
>
> In 2007, some companies signed contracts with the export price of $4.9/kg
> with deliveries in early 2008. Meanwhile, the cashew nut price has soared to
> $6.6/kg.
>
> The biggest problem now for cashew companies is lack of capital. In 2005,
> cashew companies suffered the loss of VND1tril; therefore, they could not
> borrow money from banks in 2006 and 2007. As a result, companies had to
> venture to sign big contracts with partners first, and then show the
> contracts to banks to get bank loans. Meanwhile the companies really did not
> have the capability to fulfill such big orders.
>
> Bigger companies owe more
>
> According to Vinacas, UK-based Clyde & Co law firm, the representative of
> the plaintiff, listed 38 Vietnamese companies that owe export products.
> However, the list VietNamNet now has names 52 companies, including big
> companies.
>
> Lafooco is one example. The financial report of the company showed that by
> January 1, 2007, the total assets of the company had reached VND142bil.
> According to Clyde & Co, Lafooco owes 16 containers, worth $310,450
> (VND5.1bil).
>
> Ten companies on the list are ranked among big companies, and account for
> 2/3 of the owed exports (470 containers, or 7,400 tonnes, out of 700
> containers or 11,113 tonnes).
>
> What to do?
>
> Thanh said that cashew companies have been trying to deliver the products
> they owe. 400 containers, or 6,300 tonnes of cashew nuts, have been
> delivered, while the remaining volume will be delivered between now and
> September.
>
> However, in fact, the number of companies that can deliver owed exports
> proves to be very modest. The document provided by Vinacas on May 13 showed
> that 14 of the 38 companies are members of Vinacas. However, by June 6, only
> two companies reportedly had delivered 2 containers. Some members of the
> association still owe several tens of containers. It is very difficult to
> reckon the volume owed by non-Vinacas members.
>
> According to Vinacas, the possibility of a lawsuit has become greater.
>
> Re-negotiating with partners and speeding up deliveries are clearly the
> things cashew exporters need to do now. However, in addition to that,
> Vinacas and enterprises should sit together to think of the best ways to
> minimise losses if clients do initiate a lawsuit, as they have threatened
> they might do.
>
>
> Source: english.vietnamnet.vn<http://english.vietnamnet.vn/biz/2008/06/787734/>
>
>
> Publication date: 6/11/2008
>
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-- 
Tran Dinh Hoanh, Esq., LLB, JD
Washington DC
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