High inventory levels

The industrial sector holds a significant share in the province’s economic structure. Over the past few years, the provincial government has introduced various policies to encourage investment in this sector. Notably, the Action Program for Industrial and Commercial Development 2021-2030, with a vision toward 2045, prioritizes energy, processing, and building materials industries.

Thanks to these favorable policies, Điện Biên’s industrial sector has made rapid progress in both quantity and quality. Currently, the province hosts over 2,600 rural industrial establishments. In Q1 of 2025 alone, the industrial production index rose by 8.39% year-on-year. Mining increased by 17.42%, processing and manufacturing by 7.04%, electricity production and distribution by 13.05%, and water supply and waste treatment by 2.31%.

However, despite value increases, the sector faces a paradox of rising inventory, particularly in manufacturing. For example, in 2024, although the industrial sector’s value-added grew by 22.43%, inventory in the processing and manufacturing sector surged by 162.55% year-on-year (compared to a 23.22-fold increase the previous year). In Q1 of 2025, inventory decreased by 10.26% compared to the previous month but still rose by 155.34% year-on-year.

High inventories mean producers face increasing difficulties. Unsold products restrict cash flow, hampering reinvestment in production and procurement of raw materials for future operations. As a result, many industrial businesses in the province are struggling, with some forced to cut labor and scale back production while waiting for better market conditions.

This reality is reflected in the consumption index. In 2024, the consumption index for the processing and manufacturing sector dropped by 7.81%, with printing down 6.37% and cement production down 8.36%, a key product that significantly influences the overall sector index. In Q1 of 2025, the consumption index fell another 1.46% compared to the previous period.

Cement, particularly from Điện Biên, represents a large share of the industrial sector. However, over the past two years, production, sales, and consumption have encountered mounting challenges. In 2023, Điện Biên Cement Plant produced 300,000 tons but only sold over 250,000 tons, leaving the rest in storage. In Q1 of 2024, only 83,650 tons of 179,000 tons produced were sold. In Q1 of 2025, sales declined by another 1.06%.

According to Nguyễn Hữu Sơn, Deputy Director of Điện Biên Cement JSC, 93% of their output is consumed within the province, yet fierce competition persists. Out-of-province sales and exports, particularly to Laos, remain limited. Rising input costs and declining demand are further squeezing businesses, forcing them to cut production and adjust pricing strategies.

Rising inventory levels signal a broader economic challenge in consumption. Without timely and effective solutions, achieving the province’s 2025 growth target of over 10.5% will be difficult.

Flexible response strategies

Amid projected industrial production challenges, the province is implementing measures to support businesses, especially small and medium enterprises, in maintaining and recovering production. However, industrial promotion funding remains limited. In 2023, only three projects received local support and three others received national support totaling VND 700 million. In 2024, just VND 580 million was allocated. Most of this support focuses on machinery and equipment, lacking innovation, product development, or trade promotion, key to reducing inventories.

To address the inventory bottleneck, businesses are calling for the province to enhance trade promotion domestically and abroad and facilitate supply-demand connections to stimulate purchasing and secure new orders. Suitable credit policies, such as lower interest rates and debt rescheduling, are needed to boost liquidity. Further suggestions include infrastructure investment in industrial parks, support for processing and supporting industries, and organizing trade fairs, sales weeks, and promotions to expand markets. Simplifying administrative procedures and reducing clearance times are also essential.

During 2021-2025, the province targets industrial and handicraft production to grow by 10-12% annually, reaching VND 5,000 billion in 2025, about a 14% yearly increase. To achieve this, the Department of Industry and Trade is implementing promotion activities with over VND 23 billion in funding to support business formation, machinery investment, industrial cluster development, and model establishment. Concurrently, it is reviewing policies for timely adjustment and focusing on administrative reform to ease business challenges.

One notable achievement is the province’s effective implementation of Free Trade Agreements (FTAs), contributing to import-export growth, especially border trade. In Q1 of 2025, the province’s total trade in goods and services reached nearly USD 33 million, up over 11% year-on-year, with exports accounting for more than USD 24 million (up 11.85%), primarily from goods exported to northern Laos.

With a strong commitment to aiding businesses, the province’s industrial sector is focusing on practical solutions to reduce inventory: strengthening supply-demand connections, expanding markets, supporting technological innovation, and improving production capacity. These efforts not only help clear inventories and unblock capital flows but also stabilize production, sustain growth momentum, and enhance competitiveness. However, alongside provincial efforts, businesses must also critically reassess their business models and product quality to better understand why their products have yet to win over consumers, whether due to foreign competition or unmet market standards.