Year-end worries as businesses seek to balance production and business costs

Year-end is the time when enterprises, production, and business establishments race to fulfill their targets and plans, meeting demand in both domestic and export markets.

Prouction at a mechanical engineering enterprise in the Ho Nai Industrial Park. Photo: Vuong

Amid global economic fluctuations and the recent unusual patterns of natural disasters and climate events in Vietnam, businesses are facing significant pressure in balancing financial operations and maintaining production and business capacity.

Businesses under mounting pressure

Amid global economic fluctuations and increasingly unpredictable natural disasters and climate conditions in Vietnam, many enterprises are facing mounting pressure in managing financial operations and maintaining production and business capacity.

For manufacturing enterprises, raw materials account for 60-75% of total production costs in the processing and manufacturing sectors. A 5-10% increase in input prices can significantly compress profit margins. The owner of a mechanical and fabrication business reported that during the first half of the year, domestic steel prices surged by up to 15% within just a few weeks, creating intense pressure on production. As a result, businesses have struggled to regulate their operations effectively.

In the packaging industry, raw materials are heavily dependent on imports, including those used in both plastic and paper/cardboard packaging. For paper packaging, key materials include virgin pulp and recycled wastepaper. Vietnam currently lacks sufficient forest resources to meet domestic production needs. Moreover, enterprises must import high-quality materials to manufacture products that meet the export standards of markets such as the US and the EU.

According to Nguyen Huyen Trang, Director of Nhat Tin An Packaging Co., Ltd. (Bien Hoa 2 Industrial Park), the company is currently focusing on production to meet its partners’ year-end export demands, particularly in packaging for wood products. Therefore, managing production costs while ensuring customer satisfaction and maintaining resources for reinvesting in materials and machinery is crucial.

The service sector faces similar challenges. Cao Thi Huong Trang, owner of a chain of eateries and beverage shops in Dong Nai, shared that pressure in the service industry is extremely high. At her establishments, she must adjust prices daily to stay competitive, as setting them too high will deter customers. But behind the issue of pricing lie many other difficulties. Prices of various input goods continue to rise, while restaurants are required to source fresh, high-quality ingredients for their dishes, placing a heavy burden on service providers.

Not only are production and consumer-oriented enterprises experiencing significant fluctuations, but the transportation sector is also undergoing substantial changes.

According to Chu The Thanh, Director of Thanh Phat Transport Service Cooperative (Trang Dai Ward, Dong Nai Province), although transport rates this year are not as volatile as last year, cost pressures remain considerable. In particular, during the final months of the year, demand for both goods and passenger transport rises sharply, intensifying competition within the sector.

Self-sufficient production is a long-term development strategy for Vietnam’s industrial sectors. To achieve this, businesses are increasing research on substitute materials or raising localization rates to reduce dependence on imported inputs, which is an important solution to optimize production and operating costs

Seeking ways to overcome challenges

Each enterprise has its own advantages and difficulties, but overall, although they are demonstrating adaptability, the real financial health of many businesses remains concerning. According to the latest Global Trade Pulse report by HSBC Vietnam, up to 66% of global enterprises expect costs to continue rising over the next six months. For Vietnamese businesses, the report is notable as 21% admit they have faced severe liquidity or cash-flow pressure over the past two years. This challenge forces business owners to find every possible way to adapt.

The successful operation of a business relies on three pillars: ensuring supply, controlling costs, and expanding markets. Accordingly, enterprises are becoming more flexible in responding to market fluctuations. Collaborating with raw material suppliers, connecting and sharing markets with businesses in the same sector, and diversifying business models, especially applying digital technology to find customers and export cross-border, are among the solutions being implemented.

According to Le Bach Long, Director of Nam Long Co., Ltd. (Long Thanh Commune, Dong Nai Province), the company has been proactive in participating in domestic and international trade promotion programs and has also engaged in exporting through e-commerce platforms, resulting in relatively positive production and business growth this year.

Alongside business efforts, since early 2025, the Government, ministries, sectors, and localities have implemented a range of measures to stabilize the market, ensure supply, and control inflation. These measures include releasing national reserves to support disaster-affected areas, strengthening price management during holidays and Tet, adopting flexible monetary policies, and reducing taxes and fees for both businesses and citizens.

Toward the end of 2025, in light of recent natural disasters and rising production demands from enterprises, proactive market stabilization has become even more urgent to ease inflationary pressure on the national economy.

By Vuong The - Translated by Trieu Ngan, Minho