VietNamNet Bridge – Domestic manufacturers have accused foreign brands of dumping toothpaste products in the market in a long term plan to kill domestic brands.

A Vietnamese businessman said foreign manufacturers now have great advantage over domestic ones, because they control ¾ of the distribution channels.

He said foreign manufacturers have been following a long term strategy, under which they sell products at very low prices to make the products more competitive, which allows lodging their rivals out of the market.

The selling price of Colgate Vietnam, for example, is just equal to 1/3 or ½ of the selling price in other South East Asian countries.

This means that the manufacturer could make the modest profit of 2 percent from every product sold in Vietnam, while it could pocket the high profit of 25 percent in other countries.

“Once big brands deliberately lower their selling prices, or sell products at below the production costs, domestic brands will not be able to exist,” the businessman said.

“You just can drag your miserable existence or break even,” he added.

Ngo Trung Quan, General Director of Dai Viet Huong Company, said if the dumping occurs, foreigners will not only prevent domestic manufacturers from joining the market, but also control the fast moving consumer goods.

“Domestic enterprises need to obtain 30 percent of the market share if they wan to have 2 percent of profit. Meanwhile, P/S and Colgate alone hold 90 percent of the market share already,” he explained.

“It is clear that no one can exist in a market where products are sold at below the standard prices,” he continued.

The previous owner of P/S, Nguyen Hung Viet, after selling the P/S brand, decided to set up a new joint stock company and make Hynos toothpaste, a once well-known product in 1960s and 1970s in the south.

However, despite his great efforts in branding and product quality improving, Hynos still remains unfamiliar to the majority of consumers. The company has been living mostly on doing the outsourcing for other enterprises’ private brands.

Dacco brand toothpaste of Daso Company has also disappeared from the domestic market. To date, only two Vietnamese brands still can exist, namely Da Lan of ICC and Doreen of Dai Viet Huong.

According to Quan, Dai Viet Huong can sell some 300,000 products a month, but the turnover is still not enough for it to make profit. Before Dai Viet Huong can break even, it incurred the loss for two years.

Dai Viet Huong has been focusing on developing the distribution network in provinces and cities, while supermarkets can only bring 10-15 percent of the total turnover. Contrary to all predictions, Doreen has been positioned as high grade product, not low cost product.

Meanwhile, ICC has been trying to boost sales through supermarkets after it launched a lot of program, under which products were sold directly to consumers.

However, Nhon admitted that the sales in the domestic market remain modest, while ICC has been living on exports. The company exports 4 containers of products to Cuba and a small amount to Cambodia.

Nhon noted that the toothpaste market is a special market, where consumers are very conservative. They may use the toothpaste products of the same brands for many years. ICC once ran the program “buy one and get one free,” but consumers still chose the products with foreign brands.

Chi Mai