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Industry of Vietnam

VIEWS: 61 PAGES: 12

									 Industry of Vietnam
SOME MARKET INFORMATION


    MS. Busaba Butrat

    Thai Trade Center Hanoi
           May 2012
                        Industrial Production Index 2011
                          Items                        Dec. & Nov.    Dec. 211    2011 Versus 2010
                                                          2011       & Dec.2010

Whole Industry Sector                                    104.8        107.5           106.8
Mining and quarrying                                     99.5          99.7            99.9
Manufacturing                                            107.1        110.3           109.5
Beer                                                     111.9        133.1           116.4
Non- alcohol drinks                                      103.3         79.3            99.2
Tobacco                                                  108.2        111.4           109.3
Fiber and fabric                                         106.8        102.3           111.6
Clothes (excluding leather clothes)                      101.7        105.6           113.3

Shoes & sandals                                          104.5         96.1           108.3
Pharmaceutical products                                  101.2        114.7           101.3
Cosmetic, soap, detergent, polish, sanitary products     103.0         95.6            99.5
Other products from plastic                              96.5          90.2           107.0
Cement                                                   111.5        105.3           106.8
Steel                                                    97.6          88.2           101.8
Family appliances not classified else where              106.8         88.2           104.4
………………………………………………………………                                ……..         ………              ……..
Power, gas and water                                     105.1        112.5           110.0
Some industries with their market information

The focus will go to:
• Food & Foodstuff;
• Lifestyle products/ fast moving consumer
  products;
• Health & Beauty products;
• Textiles & Garments;
• Automobiles;
• Leather products;
• Service industry.
                                                                Challenges


     Food & Foodstuff                                           -

                                                                -
                                                                    Some non- tariff barriers are used with the food
                                                                     and foodstuff products imported;
                                                                     Vietnam has emerged as a strong importer of
                                                                     food products only over the last 10 years so
Potential Market                                                     retailers, importers and distributors still lack of
                                                                     skills in working with partners and improve the
                                                                     distribution;
•    Have good significant opportunities due to the strong
     growth in Vietnam food & foodstuff sector with increased   -    A fragmented and non- transparent supply chain
     trade liberalization;                                           with significant risk to exporters from outside;
•    Increasing in demand for imported foods and foodstuff      -    Food sector is dominated by a large number of
     especially in the large urban centers such as Hanoi,            small family business so it is hard to establish
     HCMC, Danang, Hai Phong, Can Tho;                               reputable contacts;
•    Favour destination for tourists;                           -    Currently the unrestrained growth with inflation
                                                                     has become a significant problem for the
•    Domestic food manufacturing increased;                          exporters in short term at least due to the import
•    Increasing demand for higher value chilled frozen and           un-encourage policy of the government.
     grocery products in Vietnam
•    The country processed food industry is growing rapidly     Suggested solutions for foreign exporters
     with the ingredients importing increased 10% year on
     year for the last 6 years.
                                                                -    Focusing on the processed food & foodstuff;
Market segmentation                                             -    Capturing new opportunities with new products
                                                                     appearing from the market;
                                                                -    Continue the development of relationships with
-    Supply chains are highly fragmented, inefficient &              the big food retailers who are interested in direct
     dominated by agents or middlemen;                               shipments of products from exporters.
-    Can work both direct or indirect with suppliers or         -    Coordinate inward buyer missions of key
     retailers;                                                      importers from Vietnam.
Food retail
-   Food retail sector is booming currently because of
    rapidly growing purchasing power of high income-
    consumers;
-   Modern retail outlets are increasing fast in number;
-   Half of 90 million population is below 30 years old;
-   New emerging class of higher income, younger and
    more westernized consumers is readily apparent;
-   Food distribution patterns are changing with the
    expanding into urban areas
 Lifestyle Products &   Consumer Trends:
Fast moving consumer    + The majority are spending less while a few are spending more
    goods (FMCG)        + The Young generation are the most powerful consumers
                        + Promotion of products made in Vietnam
                        + Hi-tech consumers
                        Distribution channels:
                        + Retailers (traditional channel) & distributors:
                        + Supermarket chains & convenience shops:
                        -   Modern supermarket and convenience stores include many
                            foreign stores: Family Mart, Malaysia – The garden; Big C
                            group, Metro hypermarket.
                        -   Local supermarket are regional and popular in HCMC &
                            Hanoi but their operations are instance such as Fivimart,
                            Intimex, Saigon co-op supermarket, etc..
                        -   There are only few major distributors of FMCG products in
                            Vietnam such as Unilever and Colgate – Palmolive. Most of
                            distributors are small and only strong in the regions that they
                            are based in and concentrate more on the channels of
                            wholesaling of media or above – the –line promotions.
                        Distribution margins
                        -   Foreign distribution companies entering Vietnam need to be
                            aware that the profit margins differ according to your
                            company’s relationship with the supermarkets. Product
                            margins for supermarkets range between 15- 25% across the
                            board.
                      Health & Beauty Products
Very potential market                        •   Regulations: all health & beauty
• Vietnam shares 5% of the beauty                products imported must be registered
   product market in ASEAN currently             with the Ministry of Health (MOH) for
• Vietnam is expected to be big as               quality insurance and identification
   Singapore (9%) in 2015                        purposes;
• The growth is fast recently with the       •   The foreign company should contract
   continuing growth of economy and              with a local company that can help the
   people ‘s income                              foreign company to change the
                                                 registration status of imported goods
• Sales mostly in big cities especially in       and deal with different local distributors
   Hanoi & HCMC with 5 times bigger              if any problem occur.
   from HCMC                                 •   The process of product registration is
• Demand for imported goods is                   quite complex and confused with
   increasing fastly.                            foreigners so the local company will
• Most favourable ones from Korea, EU,           help to make it easier and more
   Japan, Thailand, US, and some                 efficiently.
   others.

Problems & regulations
• There are too many fake products
• Have to find out the suitable way of
   distribution practices for products
   (Exclusive national distribution; non-
   competing regional distribution;
   nationally tiered distribution).
Situation 2011
-   Turnover was $14.5 billion accounted for 3% of world’s
    garment & textile turnover ($480 billion);                    Textile & Garments
-   Included in the list of the top five leading exporters globally;
-   In most big markets such as the US, EU, Japan, retailers           •   Turnover for the first 4
    accounted for 70%-90% of the market share; only 10-30%                 months of 2012 reached
    belonged to commercial businesses and producers;                       $4.4 billion, up 14.7%
Problems & Challenges for 2012                                             despite the shrinking
-   The industry is facing with problems of its structure and              demand in the US, Japan
    production method;                                                     and Europe;
-   The industry needs around 400,000 tones of cotton yearly
    but domestic production could meet a tiny of 0.75% of the          •   Target of 2012 is $18.5
    demand.                                                                billion for exporting
-   The industry continues to import 100% of its spare parts and           garment and textile;
    70% of the materials;                                              •   Focusing on boosting
-   Low production capacity of enterprises leading to less                 exports to countries
    competitive and other countries;
-   The industry do not have direct access to markets but have
                                                                           which signed bilateral or
    to operate through middlemen;                                          multirateral free trade
-   Lacking of capital and mainly dependent on bank loans.                 agreements with Vietnam
-   Slow in production expansion and technology upgrade due to             already such as Republic
    the high interest rates;                                               of Korea;
Solutions                                                              •   The government is now
-   Should be restructured as soon as possible;                            actively negotiation
-   Focusing on building and expanding the distribution system;            bilateral free trade
-   Focus on building Vietnamese trademarks especially in                  agreements with Japan,
    neighboring countries such as Laos, Cambodia, Myanma and               EU and on way to join
    increasing co-operation with foreigners.
                                                                           the Trans – Pacific
-   Call for more investment to improve the facilities and enrich          Partnership (TTP)
    the capital for production toward exporting.
                                                                           agreement
                                    Automobiles
2011 Situation
•   New vehicle sales in Vietnam fell by 2% year on
                                                                     Cars sales in march 2012
    year over 2011 to reach 110,020 completely built
    units;
•   December 2011, vehicle sales reached only 10,937                          North   Central   South   Total
    units, down 12% in the same period of 2010;
•   In term of manufacturers, the local manufacturer
                                                           PC                 1,205    301      720     2,226
    Truong Hai Auto Joint Stock Co (thaco) has
    displaced long time market leader Toyota Motor
    Vietnam in term of new vehicle sales in 2011;          Cross-over           -        -        -       -
•   Current outlook is mixed due to some factors: high
    inflation with 18.3% 2011; weak currency, heavily      MPV                 107      28      255     390
    taxed accounting for 60% of the value of a new car.
2012 situation                                             SUV                 285      87      427     799
-   Increase the car ownership registration tax rates
    with fewer 10 seats from 12%- 20% in Hanoi and         Minibus, Bus        211      29      140     380
    10%-15% in HCMC;
-   Vehicle sales in beginning of 2012 decreased a lot
    with all VAMA members;                                 Truck, pick up
                                                                              1,697    639      1,414   3,750
-   Estimated sales may fall 20% this year;                & Van
-   The industry is forecasted to be in a very difficult
    situation this year.                                   other                -        -        -       -
-   VAMA has asked for supports from multi –
    functioned local authorities to loosen the policies     Grand total (1)   3,565    1,096    3,071   7,732
    with automobiles instate of seeing them to withdraw
    from Vietnam market.
                                                           Bus chassis          -        -       36      36
Members of Vietnamese Automobile Manufacturers Association
                         (VAMA)
                                    There are 17 members of VAMA chaired
                                           by Toyota Motor Vietnam

                                    1.    Ford Vietnam Ltd.
                                    2.    GM Vietnam Company Ltd
                                    3.    Hino Motors Vietnam Ltd
                                    4.    Honda Vietnam Ltd
                                    5.    Isuzu Vietnam Ltd
                                    6.    Mekong Auto
                                    7.    Mercedes – Benz Vietnam Ltd
                                    8.    Saigon Transportation
                                          Mechanical Corp (SAMCO)
                                    9.    Sanyang Industry (SMV)
                                    10.   Toyota Motor Vietnam
                                    11.   Truong Hai Auto
                                    12.   Vietnam Motors
                                    13.   Vietnam Suzuki Corp.
                                    14.   Vina Star Motors Corp.
                                          (Mishubishi Motors)
                                    15.   VN Engine & Agricultural
                                          Machinery Corp (VEAM)
                                    16.   VN National Coal& Mineral
                                          Industries Group (VINACOMIN)
                                    17.   Xuan Kien Private Enterprise
                                          (VINAXUKI)
   Leather Products                            ENTEPRISES STATISTICS

                                       By Enterprise Models:
                                       •    State Owner 2
 VIETNAM LEATHER & FOOTWEAR INDUSTRY
              2011 STATISTIC           •   Private & Company Ltd. 195
                                       •   Joint Veture 54
                                       •   100% Foreign Capital 38
1. Export Value 2011:                  •   Joint Stock Company 56
                                       •   Limited 6
• Shoes and footwear products:
   6.549 billions USD                  •   By Industries:
                                       •   Shoes 231
• Bags & leather handbags: 1.289       •   Tanning 29
   billions USD                        •   Material 56
                                       •   Suitcases, handbages, bages 32
                                       •   Repairing equipment 3
2. Production Capability               •   By Locations:
• Shoes and footwear products:         •   Ho Chi Minh 207
                                       •   Binh Duong 39
   850 millions pairs                  •   Dong Nai 30
• Finishing leather                    •   Ha noi 26
                                       •   Hai Phong 18
   products:350 millions sqft          •   Hai Duong 5
• Bags & leather handbags:             •   Thua Thien Hue 4
                                       •   Da Nang 4
   200 millions units                  •   Can Tho 3
                                       •   Vinh Phuc 3
                                    Service Industry
Achievements
•  Has achieved outstanding results in terms of exports
   considering it is still in its infancy in Vietnam;
•  Tourism remains the main export item in service
   industry with a large and increasing number of
   tourist year by year;
•  Export of transport services, represented mainly by
   shipping;
•  Telecom services are the third major export with the
   going up revenues for the last ten years;

Promising market for foreigners
-  Demand for service industry especially in tourism
   such as hotels, resorts, as well as transport and
   telecom are increasing;
-  Service industry is seen as one of the targeted
   industry of Vietnam for economic development so
   receiving a number of promoted policies form the
   government and;
-  Private sector is put consideration to invest in this
   industry

Challenges
-  Limitations in term of policy/regulations
-  Service providers lacked size and inexperienced;
-  Lack of facilities and public infrastructure;
-  Has not been focusing on exporting services.
        Thank you !

Office of Commercial Affairs, Royal Thai Embassy Hanoi
            Suite 801, floor 8th HCO Building
          44 B Ly Thuong Kiet- Hanoi, Vietnam
      Tel: 84-4 3 9365226-7 Fax: 84-4- 39365228
            Email: thaitchanoi@depthai.go.th

								
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