Vietnamese businesses grapple with Brexit

UK Prime Minister Theresa May said in a speech on January 17 that Britain will not attempt to remain in the EU single market but will start negotiations with the EU in March over its exit, and will be out in two years.

The impact of the Brexit vote has been felt most sharply on Vietnam in terms of lowering the country’s exports.

The pound has plummeted, at one point reaching 31-year lows, which has had the effect of making imports from Vietnam more expensive for British consumers and is causing a slowdown in imports of a wide range of goods.

Visa UK and Ireland managing director Kevin Jenkins told reporters recently that clothing and household goods retailers in Britain experienced a particularly difficult January.

Jenkins noted that sales in Britain for the first month of 2017 saw the biggest drop in nearly five years.

Le Tien Truong, general director of the Vietnam National Textile and Garment Group noted Brexit is having a significant impact on clothing exports and that orders dropped sharply in January.

It’s difficult to quantify the impact but he fully expects sales to Britain to drop to record lows for 2017.

The UK has been the largest export market for clothing and textile exports over the past few years, accounting for one-fifth of the total consignments to the EU, said Truong.

Traders at one of the largest wholesale markets in Britain have said the prices for imports of fish are up by as much as 40% owing to the drop in the value of the pound, which has led to sluggish imports.

It means fresh fruit, vegetables, fish, meat and poultry are all much more expensive for traders to buy.

One trader in Britain reported that all our prices, for anything from outside of this country, have gone up. Our average profits have fallen by up to 15%. We cannot pass that on.

The cost of fish, meat and poultry in Britain has soared by up to 44% since the Brexit vote, according to the British newspaper the Mirror.

Matt Southam, of the UK Agriculture and Horticulture Development Board, warned of further currency- driven increases in meat prices.

Retailers have held off until Christmas was out of the way— but now we are seeing the first of maybe two or three price hikes of fish, meat and poultry price increases expected for 2017, he added.

In the short-term at least, it looks like Vietnamese exporters are in for a wild ride full of twists and turns over the next couple of years as Britain makes its hard Brexit from the EU.