Design key to lifting garment exports

Quality and designs will be the determining factors in selling Vietnamese textile and garment products to Japan, a senior trade official has said.

Japanese standards for quality and design required Vietnamese businesses to modernise technologies and guarantee the safety of their products, Dao Quang Loi, former trade attache at the Vietnamese embassy in Tokyo, further said.

Speaking at a seminar on exporting apparel to Japan held in Ha Noi on Tuesday, Loi said Japanese had rigorous standards, especially with regard to safety and sanitation of children's wear.

Unlike the US and European markets which often placed big orders, the sophisticated Japanese market bought small quantities of products in a range of designs and colours, he said.

This was because Japanese women prefer unique products while the market undergoes major seasonal changes, particularly in March-April during the Golden Week – comprising four holidays — and during Christmas and New Year.

Le Xuan Duong, director of the Export Supporting Centre, said Japan was one of Viet Nam's biggest textile and garment importers, accounting for nearly 11 per cent of export revenues.

Last year there was a 20 per cent rise in exports to US$1.2 billion.

Duong said though the Viet Nam-Japan Economic Partnership Agreement, which exempts Vietnamese apparel from taxes, took effect in 2009, many exporters had yet to understand its benefits.

Vietnamese businesses had also yet to meet the high standards Japan sets due to their lack of information and experience, he added.

A senior expert at the Japan International Co-operation Agency, Fumio Koyama, said Japan's garment imports last year were worth $3.7 billion, with more than 90 per cent coming from China. The rest were from the EU, the US and some other countries.

Japanese garment importers had forged close ties with China over the last decade since China had an abundant supply of raw materials, was geographically close to Japan, had cheap labour costs, and many factory workers could speak Japanese, he said.

But labour costs had doubled in the last eight years to 960 yuan ($125) a month, he said, adding that a large Japanese producer was set to move all of its factories out of China in the next five years.

Japan has yet to decide on the replacement country but considers Viet Nam as the best due to its reasonable labour costs and similar working mindset to Japanese.

Labour costs in Viet Nam are less than half of those in China but slightly higher than those in Cambodia and Bangladesh, though the three countries face a shortage of raw materials.

The Janpanese experts said the big difference between China and Viet Nam was in the ability to source raw materials. While synthetic materials, cotton, yarn, fabric and other inputs were available all over China, it was only available in some parts of Viet Nam.

Japanese and Vietnamese experts said Viet Nam was yet to set up an agency responsible for monitoring product quality before being sold in the market, adding that checks were only made in factories.

Vietnamese businesses needed to focus on checking products carefully before delivery and improve foreign language skills, design and production technologies to compete with Chinese companies, they said.

If two companies make the same products in similar conditions, Japanese importers would prefer the one whose employees speak their language, they warned.

E-commerce pushed for small, medium hotels

Thien Minh Travel Joint Stock Co announced on Tuesday a joint venture with Australia-based Wotif Group that will introduce Properties Management System (PMS) – an automation software for hotels – into the local market.

Thien Minh-Wotif would offer PMS, which is used to automate the operations of small and medium hotels, for free to a range of establishments – from guest houses to 3-star hotels - throughout Viet Nam, the company said.

Robbie Cooke, managing director of Wotif Group which manages leading online travel brands in the Asia-Pacific region, said although e-commerce (online booking, online payment, etc.) was not very popular in Viet Nam now, "we are still confident about bringing the service to this market."

He said e-commerce solutions that can be undertaken interactively between the customer and the supplier were very necessary for a young and developing market like Viet Nam.

He said that there was plenty of potential in the local market. While online bookings and payments accounted for nearly 35 per cent of transactions in the US, it was below 5 per cent in Viet Nam.

Supermarkets baulk at high supplier prices

Several supermarkets in HCM City have refused to accept the price of various suppliers, leaving market stalls temporarily empty.

Customers shopping at the Big C Supermarket Mien Dong in District 10 on Tuesday could see signs that read "Big C out of products because of supplier prices" at several stalls selling cookies.

Similarly, some stalls selling milk, confectionary and cosmetic products were also empty.

A notice board saying that Big C was trying to negotiate stable prices with suppliers was placed at the supermarket entrance.

Duong Thi Quynh Trang, director of public relations for the French-owned supermarket chain, said producers and suppliers, and not the supermarket, could decide to increase or decrease the price.

"Big C plays a role as a distributor in negotiating with suppliers so we can have reasonable prices for customers," Trang added.

The supermarket said it had to carefully consider requests to hike prices and would stop selling several goods if it could not reach agreements with suppliers.

"The supermarket hopes customers can find substitutes for the 50,000 kinds of available goods," Trang said.

An employee at the supermarket's food counter said prices for food had risen more than those for other products.

Suppliers had repeatedly asked the supermarket to hike prices, causing the supermarket to consider changing prices, he said, adding that the supermarket had 360 suppliers for food. The Citimart supermarket chain owned by HCM City–based Dong Hung Co has also said it faced a similar situation.

Ngo Van Hai, deputy director of Citimart, said several suppliers had asked for additional money on previously supplied goods.

They have even asked to take back goods so that they could return them and sell them at a higher prices.

"All these unreasonable requests of suppliers will be rejected," Hai said. "Citimart sells goods that are acceptable in price and quality."

"It has tie-in agreements with suppliers. If the prices are too high and the goods cannot be sold, the supermarket will return the goods to suppliers."

Indian investors keen on Vietnam

Vietnam is emerging as a major destination for Indian investors and a number of businesses are expected to start or expand operations here in the near future.

Nikhilesh Deshpande, general manager in Mega Lifesciences (Vietnam) Limited, said at a meeting recently held in HCMC by the Indian Business Chamber in Vietnam (Incham) that the Thailand-based company is an example of India’s indirect investment in Vietnam. The company has invested US$2 million in storage facilities in Vietnam to provide services for pharmaceutical companies. 

“We are considering direct investment in Vietnam or via joint-ventures,” said Nikhilesh.

Gopalakrishnan Sundararaman at Sudima International Pte. Ltd. said Sudima was keen to plough money into producing wood and clothing and expanding its business operations in Vietnam.

According to the Consulate General of India in HCMC, sugar firm KCP is expanding its operations in the central province of Phu Yen and CCL instant coffee factory is due to open in September in the Central Highlands province of Daklak, the country’s key coffee growing area. It also stated that a black carbon plant of Phillips Carbon Black in Vung Tau is expected to be operational this year. The black carbon is used to manufacture automobile tires.

Marico, an Indian group, earlier this year entered the Vietnamese market by acquiring an 85% stake in International Consumer Products Corporation (ICP).

“Vietnam is growing as a major destination for Indian investment,” said Abhay Thakur, consul general of India in HCMC.

According to the diplomat, Indian petroleum energy companies ONGC, Reliance and Essar have tremendous interest and expertise in the upstream, mid-stream and downstream and are ready to invest more when opportunities arise.

In addition, there is interest among Indian two-wheeler manufacturers to start operations in Vietnam, as well as Indian companies in the agricultural, health and pharmaceuticals sectors.

“Even in the field of IT, several global companies concede Vietnam is nearly 40% cheaper than India in some areas of software development. I look forward to early realization of some specific projects in these areas,” Thakur said.

“However, to further boost Indian investment, we need to inform and provide specific opportunities to attract potential investors.”

According to the Foreign Investment Agency (FIA) of the Ministry of Planning and Investment, by January 2011, India had injected a total of US$212 million into Vietnam, ranking 28th among 92 nations and territories that had invested in the country. However, the total investment, including initiatives by Indian companies through third parties, reached nearly US$500 million, said the Indian consul general.

In the first three months of the year, three projects with Indian involvement got approval, with total registered capital of US$6.78 million, according to FIA.

Trade between the two countries has surged, with Vietnam’s first-quarter exports to India estimated to be US$295 million, up 90% year-on-year. Meanwhile, India’s exports to Vietnam grew more than 45% to US$748 million.

Cement consumption continues to grow

Domestic steel makers are facing many difficulties in selling their products because of an influx of Chinese boron-coated construction steel which enjoys a 0% import tariff, said an executive of Thep Viet Corporation.

Do Duy Thai, general director of Thep Viet, told the Daily on Tuesday that the increasing amount of boron construction steel imported from China into Vietnam has recently pushed back local enterprises’ steel sales.

Thai, who also serves as vice chairman of the Vietnam Steel Association, said while local producers are enduring higher production costs due to more expensive input materials and high interest rates, tax-free boron steels from China enjoy a sharper competitive edge.

“If we have no solutions, the risk is that local steel enterprises will give up their market shares to the cheap imported steel,” he said.

Thai said that while local producers are selling construction steel at a factory price of around VND17 million per ton, exclusive of value-added tax, the selling price of the imported steel was around VND300,000 per ton lower.  

Nguyen Tien Nghi, another vice chairman of the association, told the Daily on Tuesday that construction steels from China coated with boron has caused the market share of local steel makers to shrink by 14% in the year to date.

The association estimated that the total consumption of construction steel in the second quarter will decrease by around 20% compared to the first quarter of the year, when domestic steel makers sold a total amount of some 1.2 million tons.

Nghi said the association has already sent petitions to the Ministry of Finance, the Ministry of Industry and Trade, and Vietnam Customs to ask for proper measures to control the cheap steel import.

In related news in the construction materials market, the Vietnam Cement Association this week predicted the consumption of cement in the second quarter this year would continue increasing by between 8-10% against the first quarter.

Nguyen Van Thien, chairman of the cement association, said the country consumed a total cement amount of some 16 million tons in the first four months.

“Production and consumption of cement products at most cement enterprises in the country have been very good,” Thien told the Daily on Monday.

Vietravel, Cambodian airline jointly offer budget tour

Local tour operator Vietravel has struck a deal with Cambodia Angkor Air to arrange a three-day Cambodia tour at around VND5 million (about US$240), just half the price quoted by Vietravel last year.

Starting from Vietnam’s Reunification Day, April 30, the tour will depart on Tuesday, Thursday and Saturday.

“We’re pinning high hopes on the new tour as it takes less time than the road tour but costs nearly the same,” said Nguyen Minh Man, media manager of Vietravel, which won an Outstanding Tour Operator 2010 award granted by Cambodia’s Ministry of Tourism.

The company served about 10,000 Vietnamese visitors to Cambodia last year, just behind the number of local tourists to Thailand, at about 25,000, said Man.

The forthcoming Cambodia tour will take in Angkor Thom, Ta Prolm, Bayon, Baplmon and Phimean Akas temples, elephant fighting terrace, and Angkor Wat, as well as other places of interest such as the Royal Palace, Independence Monument, Wat Phnom Pagoda and Tonle Sap River.

Vietravel, the only local provider of Cambodia tours by air, also offers a four-day tour of Cambodia by bus at a price of VND4.5 million per person. The price charged by other travel agencies on Cambodia tours by road is lower, at around VND4 million per person.

Hapag-Lloyd brings Bremen cruise ship to Vietnam

Hapag-Lloyd Cruises will start on May 17 to bring the Bremen cruise ship for a seven-day nationwide tour taking in HCMC then Danang, Haiphong and Halong.

This will be the first time for the Bremen, which has 750 crew members and cruise passengers, to visit Vietnam. The vessel will return to Vietnam later this year, according to Saigontourist Travel Services Co., which serves the cruise ship.

Hapag-Lloyd Cruises has brought three other cruise ships, the Columbus, Hanseatic and Europa, to the country previously.

Saigontourist has said the company has already taken care of around 25,000 foreign cruise passengers, mostly from Europe, China, and Australia this year.

It said those are the same figures as this time last year but the company are confident that many more cruise passengers will come to Vietnam in the future.

The company welcomed around 2,000 cruise passengers and crew members on the Italian Costa Classica cruise ship on Tuesday for a five-day trip through HCMC, Danang and Halong.

Another large ship, the SuperStar Virgo, will make three trips to HCMC in June with over 2,000 passengers per journey.

In related news, local travel companies serving international cruise ships have reported an increasing number of vessels visiting the country after a strong decline since 2008. They are expecting 2012 to be a big year for cruise ships in Vietnam.

However, problems which relate to the poor infrastructure in the cruise industry will hamper their efforts to attract even more tourists to the country.

The lack of facilities at cruise passenger terminals and services, poor tourism products and higher prices may make Vietnam tours less attractive to foreign travelers.

Phan Xuan Anh, chairman of Viet Excursions, said transportation fees in the country are double those in neighboring Cambodia.

The price of tourism services for cruise passengers in Vietnam is also 20% higher than in other regional countries. And on top of that cruise prices are heading upwards which will it make it even more difficult for tour operators to sell cruises to foreign visitors.

“We cannot compete with other cruises. Overseas travel service providers are lowering prices to woo tourists to try and help the industry recover some ground,” he said.

More condos for sale despite low demand

The number of apartments to be launched on the market will increase in the near future as some property developers are continuing to market their condo projects in spite of slackened demand.

Among those developers is PetroVietnam Power Land Joint Stock Company which started marketing its Petrovietnam Landmark condo project last Thursday, offering 66 apartments with prices starting from VND19.9 million per square meter.

The project is being developed on a 19,000-square-meter location in An Phu Ward in HCMC’s District 2, with four 19-23 storey blocks having 413 apartments and a 25-storey office building.

Pham Trung Tin, deputy director of Hung Thinh Phat Company, one of the five property trading centers to distribute apartments of the project, said the distribution companies were seeing market challenges, so they asked the project developer to make their prices competitive and apply a flexible payment method to attract buyers.

The developer says the condo project’s basic construction is being finished, and it plans to hand over apartments to buyers by the fourth quarter of this year.

In another development, Viet Thuan Thanh Company has stirred up the residential market in Dong Nai Province by launching a multipurpose project named V_Citilight on Hanoi Highway in Ho Nai Ward in Dong Nai Province’s Bien Hoa City.

The project covers a 29,000-square-meter site and has three sections with seven blocks covering from 24 to 29 floors, in which some 37,000 square meters will be used for commercial services and other serviced facilities such as a swimming pool, fitness center, tennis court and helicopter deck.

When in place by 2013, the V_Citilight project will provide the market with 1,236 apartments from two to three bedrooms. However, the developer has yet to announce selling prices.

Meanwhile, in the central seaside resort city of Nha Trang, Hoan Cau Khanh Hoa Company Limited last week began offering apartments in its Nha Trang Center project on Tran Phu Street in the city.

The company has spent some VND1,200 billion developing the multipurpose property, which will comprise of a four-star hotel with 266 rooms, an apartment building with 143 units of 35 to 240 square meters and a commercial area.

The developer said those apartments would be sold at VND35.7 million (US$1,700) per meter or higher, and it is scheduled to hand over those apartments to buyers by the fourth quarter of this year.

In reviewing the apartment market trends in HCMC, Savills Vietnam reported 14 new projects supplying some 5,000 apartments entered the market in the first quarter of this year, an increase of 25% from the last quarter.

The market observer recorded that some 3,500 units were absorbed in the first quarter, a 16% increase from the previous quarter. Following the market trend, the low-cost condo segment continued to dominate the market with 70% of total units sold.

The company, however, said the significant increase in the number of units sold did not reflect the market’s reality as a large number of units were sold to wholesale investors, instead of individual investors or end-users as usual.

Prices offered in wholesale transactions might be 10% to 20% lower than asking prices. Most of the wholesale transactions occurred in the Grade C segment.

Savills projected that in the next two quarters, 23 projects were expected to launch with more than 14,500 apartments. When being combined with the 15,000 units from existing projects, it will create a substantial supply, making the market fiercely competitive.

The company foresaw that the residential market in HCMC would see 42 new apartment projects with some 24,000 units to be completed from 2012 to 2014.

Malaysia Air services to city up

Malaysia Airlines will add one service to its Kuala Lumpur-HCMC schedule this summer to bring the number of weekly flights to 21.

Zuraidi Saisi, area manager of Malaysia Airlines in Vietnam, told the Daily that the airline now flew thrice between Kuala Lumpur and HCMC every day except Sundays when it had two. There will be three flights a day on Sunday from July.

With the additional flight to HCMC and the existing daily service to Hanoi, Malaysia Airlines will conduct 28 weekly flights between Kuala Lumpur and Vietnam. This number equals the weekly flights of Thai Airways International for the Vietnamese market.

Thai Airways is now regarded as the biggest foreign full-serviced airline active in Vietnam in terms of flight frequencies as the carrier operates four daily services between Bangkok and Vietnam’s two largest cities – HCMC and Hanoi.

Saisi said Malaysia Airlines’ seating occupancy of the flights to HCMC averaged 75% and that Vietnam’s aviation market was growing significantly.

Last week Malaysia Airlines started its “Global Deals, Dream Getaway” campaign for passengers to book discount air tickets until May 24 for travel to various destinations within its network, including ASEAN, Europe, Australia and New Zealand until March 31, 2012.

“We’re offering discounts up to 60% off normal market fares during this promotion and it covers all travel segments ranging from business to economy passengers,” he said.

Passengers from HCMC can purchase all-inclusive return fares to Kuala Lumpur from some VND11.32 million for Business-class travel and some VND3.15 million for Economy-class travel.

For passengers traveling from Hanoi, the all-inclusive return fare for the Business-class travel starts from VND12.24 million to Kuala Lumpur, VND40.87 million to Melbourne, VND47.53 million to Paris and VND47.32 million to Frankfurt.

The Economy-class fare costs from VND5.42 million for the flight from Hanoi to Kuala Lumpur, VND10.38 million to Jakarta, VND19.77 million to Melbourne, and VND25.24 million to Amsterdam among others.

Bullion lingers around VND37.6 million   

The price of gold in Vietnam hovered around VND37.6 million a tael (1.2 ounces) on April 29 although global price jumped to above US$1,530 an ounce.

Sacombank Jewelry Company bought the metal at VND37.56 million and sold at VND37.69 million as of 7:40 am local time.

Saigon Jewelry Company, the biggest gold shop in Vietnam, purchased gold at VND37.55 million and sold at VND37.7 million at the same time.

Meanwhile, Hanoi-based Phu Quy Jewelry bought SJC-brand gold at VND37.49 million and sold at VND37.63 million as of 10:20 am local time.

At Bao Tin Minh Chau, the metal was bought at VND37.5 million and sold at VND37.65 million.

Internationally, gold strongly rose, making a new record as a weaker US dollar boosted the demand for the precious as a store of value after data showed that weekly unemployment rate shot up and the US economy slowed more than forecast in the first quarter.

Gold futures for June delivery rose as much as $14.1 an ounce, or 0.9 percent, to close at $1,531.2 an ounce on the Comex in New York. Earlier, the metal mounted to $1,538.8 an ounce, the highest level in the history.

In Asia, the precious metal continued escalating, sometime traded at nearly $1,540 an ounce. Spot gold stood at $1,534.8 an ounce as of 10:26 am Vietnamese time.

The US economic growth reached 1.8 percent in the first quarter, much slower than a pace of 3.1 percent in the last quarter last year.

Meanwhile, the US Labor Department reported that initial jobless claims for the week ended on April 22 unexpectedly climbed to the highest level in the past three month.

The US Dollar Index, which tracks the greenback’s strength against a basket of six major currencies, sank to 73.114 from 73.284 in the previous trading session.

Crude oil also surged to the highest level since September 2008. Light sweet crude oil futures for June settlement rose $0.1 a barrel, or 0.1 percent, to close at $112.86 a barrel on the New York Mercantile Exchange. The highest intraday price was at $113.97 a barrel.

Domestically, the interbank US exchange rate advanced the first time since the beginning of this week, gaining VND5 per dollar to VND20,698. The highest price applied at commercial bank was VND20,905. However, commercial banks continued to quote the rate down to around VND20,500.