Domestic pepper prices are showing unusual ups and downs from the end of July until now. Specifically, on July 28, 2017, the price of 500g/l bucket of pepper in the morning was from 80,000 VND/kg, skyrocketing to 86,000 VND/kg, then suddenly dropped to 82,000 VND/kg in the early afternoon. Currently, the price is still in a state of abnormal fluctuations.
As reflected by some VPA member enterprises, there is evidence that a group of Chinese enterprises are controlling Vietnam’s pepper market these days. Specifically, at some HT export companies, there is a phenomenon that groups of Chinese enterprises come to Vietnam’s HT export enterprises to order pepper. It is unusual for Vietnamese enterprises to set a price they agree to buy and ask to do a sales contract with them. After that, they rented a hotel near the headquarters of the export company and went to this company every day to urge the implementation of the contract. Normally, after 3 days after signing the contract, they will transfer the deposit, but after 3 days they do not transfer and always insist that they will buy and explain the reason for the delay in money transfer is because the bank is in the process of transferring money. check records etc. to delay the performance of the contract. This they do with many export companies to signal that the market is in need of buying in large quantities.
At the same time, because they knew that export enterprises would have to rush to buy from suppliers to perform the contracts signed with them, this same group of Chinese enterprises immediately spread out to other localities to deal with collection agents. buy pepper locally in the pepper growing areas and promise to sell it to agents (at a price lower than the market price at that time). These agents see a good profit, so they will agree to buy immediately to resell to exporters. However, Chinese enterprises only sell a very small part at a low price in a very short time, then they say they have no stock and then push the market price up and sell it to commercial agents at their high price. At that time, because of the pressing pressure of the signed transactions between the purchasing agent and the exporter and the exporter with them, they will sell their pepper to the agents at a hot price set by them.
Currently, some export enterprises when they call back, all of them are “uncontactable”. This method is not new, but it is coming back recently, causing many consequences for export enterprises:
– Firstly: Vietnamese export enterprises are busy performing contracts (usually they sign a fairly large quantity, making businesses see good profits) with Chinese enterprises, so they cannot export to other markets, but then Chinese enterprises do not perform the contract. causing export enterprises both loss of sales and loss of reputation, business relationships with importers in other traditional markets;
– Second: Chinese enterprises cause market manipulation, causing prices to fluctuate continuously, making domestic pepper producers afraid to buy and sell, affecting transactions between suppliers and exporters;
– Third: Chinese enterprises make great profits from price manipulation according to their intentions, causing damage to farmers and Vietnam’s pepper industry because the sale and purchase did not follow market rules.
It is recommended that businesses be cautious when conducting transactions with Chinese pepper trading enterprises.
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