General

Due to the tight power supply, a large area of power failure occurred in northern Northern Vietnam since May. Some areas have introduced temporary power distribution measures, giving priority to power consumption in daytime production and in nighttime life. For factories with urgent foreign trade orders that need to be completed, they need to apply for production during a specific time period in the early morning.

In Vietnam, a large number of Chinese enterprises have invested in building factories, including cross-border e-commerce sales such as Lego Holdings, Giant Star Technology, and Huabao Xinneng. Power outages have a direct impact on factory production, and as the mid year rush approaches, they are extremely concerned about the issue of large-scale power outages in Vietnam, as this may affect its ability to smoothly produce, deliver, and stock up. However, due to widespread power outages in Vietnam, there are signs of some foreign trade orders returning to the domestic market, and some factories are starting to get busy.

Tens of thousands of enterprises in Vietnam are forced to reduce electricity consumption

According to Vietnamese media reports, from the beginning of June, some industrial parks in northern Northern Vietnam began to experience alternating power outages, forcing factory production to be interrupted. The reason for the power rationing in Vietnam is that on the one hand, the weather is abnormal, with rare high temperatures in the central and northern regions of Vietnam. In many places, the noon temperature has risen to between 37 and 43 degrees Celsius, and people have turned on air conditioning to cool down, causing a rapid surge in electricity consumption. On the other hand, there is less rainfall. In the first half of the year, the total rainfall in Vietnam was lower than the average level in previous years, and multiple hydropower stations were forced to shut down due to low river water levels, resulting in insufficient power supply.

It is reported that 55 out of 63 provinces and cities in Vietnam have issued energy-saving guidance without a set time limit.

At the beginning of June, some production bases of Apple suppliers such as Foxconn and Luxshare, as well as Samsung Electronics' bases in Northern Vietnam, received a notice from the local power company, asking them to consider power cuts in turn, or at least reduce power consumption during peak hours. The local power supply began to be tight in mid May, and the local government stated that the power shortage is expected to continue until at least late June, requiring factories to be prepared for this.

As early as May, Vietnam Electric Power warned that the available electricity during peak periods in May, June, and July could decrease by 1.6-4.9 million kilowatts. According to the Vietnam Electricity Regulatory Authority, more than 11000 enterprises in Vietnam are currently forced to reduce their electricity consumption as much as possible.

Vietnam's Deputy Minister of Trade, DoThangHai, revealed at a briefing that efforts are being made to address power shortages, and the Vietnamese Ministry of Trade has requested government agencies to increase coal and natural gas production. In addition, most cities and provinces have issued instructions to save electricity, reducing daily electricity consumption by approximately 2.5%.

02 Cross border sales emergency personnel response

The power outage crisis in Vietnam is becoming increasingly severe, and in addition to large factories such as Foxconn, Samsung, and Canon, more and more Chinese companies building factories in Vietnam are also affected.

In the case of unstable power supply, the demand for portable energy storage products will increase. Due to its advantages of large capacity and wide adaptability, portable energy storage products can meet emergency needs such as post disaster emergency electricity, rescue electricity, and intermittent power outages. Therefore, some investors put forward the idea that "the company should actively promote electricity waiter in Northern Vietnam due to large-scale power failure". Regarding this, Huabao Xinneng stated that relevant business colleagues have rushed to Vietnam as soon as possible to understand the local market situation.

According to Hugo's cross-border understanding, Huabao Xinneng has two major brands under its umbrella: "Jackery Electric Second" outdoor light charging power supply and "Geneverse" home photovoltaic energy storage. Last year, due to Russia's sharp reduction in natural gas exports to Europe, Europe faced a relatively serious Energy crisis, which prompted new users' demand for electricity. Last year, Huabao Xinneng's operating revenue in Europe reached 691 million yuan, a year-on-year increase of 417.00%. Therefore, the power outage crisis in Vietnam has had a negative impact on Huabao New Energy's production, as well as a favorable impact on its development of new markets.

Vietnam is also an extremely important market for another cross-border blockbuster music stock. In order to hedge against the impact of trade frictions between China and the United States on performance, LEGO invested in the construction of a Vietnamese factory as early as 2015, which was put into operation at the end of 2016. According to Le Ge, Vietnamese factories provide over 80% of the manufacturing share for the US market and have achieved zero tariffs. In 2020, Lego Holdings raised 4.3645 million yuan for the expansion project of its production base in Vietnam, and in 2021, it raised 18.1648 million yuan to expand its production base in Vietnam. Lego Holdings stated to Hugo Cross border that the current power outage in Vietnam is mainly in the northern region, while Lego's Vietnamese factory is in the south and has not been affected.

Cotton socks and clothing manufacturer Jiansheng Group has multiple subsidiaries in Vietnam and has production bases in coastal areas such as Haiphong, Xing'an, and Qinghua. Among them, the Coastal Defense Base was established in 2014 and is the earliest and currently the largest overseas cotton socks production base established by Jiansheng Group in Vietnam. It covers an area of 10 hectares and has an annual production capacity of 180 million pairs of high-end knitted socks. Jiansheng Group replied to investors on the interactive platform that recently, there have been industrial power rationing in some regions of Vietnam. Its main production base in Vietnam, Haiphong Base, has temporarily suspended power and movie noise, and other affected factories have taken measures such as self configuring generators to respond, which has less impact on the company's operations.

Vietnam's exports have significantly decreased, and continued high temperatures and power shortages may add further pressure to its economy. According to the data released by Vietnam's National Bureau of Statistics, Vietnam's exports fell 5.9% year-on-year in May, the fourth consecutive month of decline. At the same time, after a large-scale power outage in Vietnam, there are signs of foreign trade orders returning to China, and some factories have seen an increase in foreign trade orders. There is a big factory owner next to me who is making Apple orders. Previously, the night shift line was completely removed, and there was a two-week and 8-hour shift, with three days and four days off. Some of them took half a month off, but last month they started getting busy. The night shift line was fully opened, let alone a shift, and there were no holidays on Sundays, and they started hiring. Some of the foreign trade orders have returned, and I am their supplier and I am also busy, "said a supplier at a foreign trade factory.

Some people also have a sudden idea, Vietnam's power restrictions, in addition to energy storage products, will generator products also be a business opportunity? According to reports, a chicken farm in Vietnam experienced a sudden power outage, causing the generator in the chicken house to be unable to start in time to supply power to the ventilation fan. More than 1000 broiler chickens that were about to go public died from heat shock. Due to the continuous high temperature heat wave and the planned power outage measures implemented by the government, the generator rental market in Hanoi City and nearby provinces and cities is booming. But some sellers pointed out that generators have already been made, making it difficult to temporarily enter this category. (Translated from: Call me Trend Bacteria)