VietNamNet Bridge - The majority of Vietnamese are fond of foreign-made products, causing obstacles for Vietnamese household goods manufacturers. 

“Household articles prove to be an extremely promising sector in the next three years. However, I’m afraid Vietnamese manufacturers are losing the home market to foreigners,” said Nguyen Xuan Phu, deputy chair of the Hanoi Young Entrepreneurs’ Association.

There are two reasons for Phu to come to a conclusion that this business field in the next 3 years has high potential. 

First, this is the field which uses, not trades basic materials. The retail prices of finished products nearly remain unchanged, while the prices of basic materials are on the decrease. Observers all predicted that the basic material prices would continue decreasing in the next three years.

The majority of Vietnamese are fond of foreign-made products, causing obstacles for Vietnamese household goods manufacturers.

Second, this is the manufacturing sector which does not require high technology and many workers.

Household article manufacturing has, for a long time, been the strength of China. However, as Chinese income has been increasing, the production costs in China have also been increasing, thus making it impossible for China to create low-cost products. It is highly possible that Vietnam would replace China to hold the strength.

However, though the potential is great, this does not mean that Vietnamese manufacturers would be able to get ‘the pieces of the delicious cake’.

Dang Tran Hai Dang, deputy director of VietinBank’s research center, commented that Vietnamese manufacturers still have many weak points, while Vietnamese products are not special which can be easily copied.

Meanwhile, stainless steel materials imported from China, Indonesia and Malaysia now bear the anti-dumping duties of 3-37 percent. The high tax means that the production costs of Vietnamese manufacturers are higher than foreign ones, and therefore, Vietnamese products have become less competitive.

A senior executive of a household appliance distribution chain noted that high income earners would prefer Elimich and Bosch products, while low income earners would choose Chinese, and middle-class consumers imports from South Korea and Thailand.

“There are strong rivals to Vietnamese manufacturers in all market segments,” he commented.

The distributor warned that the challenge would be even bigger in the future, when Thai and South Korean rivals would be able to enjoy zero percent tariff when exporting products to Vietnam.

“This would bring advantages to trade companies and disadvantages to domestic manufacturers,” he commented.

Phu warned that 100 percent Vietnamese owned enterprises would meet big difficulties in three or five years.

“There is a high possibility of Vietnamese enterprises losing the home market,” he said.

“Consumers always require diversification of products. But this is not what Vietnamese enterprises can offer,” he added.

A report showed that the domestic market is valued at $13 billion.

Tri Thuc Tre