Bottlenecks in Supply Chain Hinders German Companies in Vietnam

The current survey of 3,000 German companies in Germany and abroad, including Vietnam, across all sectors, showed that material shortages and higher costs are creating headwinds for the majority of German companies in Vietnam, potentially complicating their recovery from the coronavirus crisis.

The survey found 60% of companies were complaining about price increases or supply chain bottlenecks for raw materials, intermediate products, and goods.

Shortages of raw materials and supply chain problems are hitting German businesses in Vietnam. The current development may noticeably complicate the economic recovery process after the crisis and the pre-crisis level of the gross domestic product might not be reached before mid-2022 (58%).

The main reasons for raw material shortages as claimed are: increased demand (67%); production capacity (58%) - due to the diversified situations (and escalations) of the COVID-19 pandemic around the world-, and transport problems (83%).

The bottlenecks in the supply chain are causing numerous difficulties in terms of production activities for the surveyed companies such as higher input prices, longer waiting time, and even production interruption.

Besides, 90% of German companies in Vietnam confirmed that seeking new or additional suppliers in Asia Pacific as well as putting higher inventory levels are also relevant solutions at the time.

50% of the companies have no choice but to increase the manufacturing prices of their products, and they intend to do so.

By Thu Ha (Vietnam Business Forum)