VietNamNet Bridge – The production capacity of tile factories in Vietnam has far exceeded the demand. Meanwhile, domestic producers have to compete with contraband imports from China, which has made their situation even worse.

The flooding of Chinese tiles on the domestic market with a wide range of products and low sale prices has led to the domestic products leaving unsalable. Due to the big stocks, a lot of enterprises have to cut down the productivity, while many of them are on the verge of bankruptcy.

The problem is that Chinese tiles products are contraband goods, which do not pay tax; therefore, they have very competitive prices in comparison with domestic products, putting domestic producers into an unhealthy competition.

Therefore, the Building Ceramic Association of Vietnam (VIBCA) has sent a petition to the Prime Minister, asking to impose high import tariffs on ceramic products sourced from China. Prior to that, the association also sent a petition to the Ministry of Finance, requesting to apply necessary measures to fight against trade frauds committed by Chinese tile exporters.

Having the designed capacity of 4 million square meter per annum, Vicenza factory in the Le Mon industrial zone of Thanh Hoa province has been facing a lot of difficulties, because its products remain unsalable. In the first 10 months of the year, the factory churned out more than 3 million square meter of products, while the inventory volume has reached 800,000 square meter.

Do Duc Ty, Director of the factory, said that earning 3 billion dong to pay salaries to 1000 workers monthly and pay the interests for the bank loans worth more than 200 billion dong is really burdening the managers.

The productivity of tile factories has exceeded the demand. In 2010, the productivity was 410 million square meter, while the figure rose to 420 millon square meter in 2011. Meanwhile, only 330 million square meters of products, or 88 percent of the output, and 79 percent of the designed capacity, were consumed in 2010. It is expected that the consumption level would even be lower in 2011, about 290 million square meters.

While domestic producers struggle to boost sales, Chinese contraband imports have been flooding the domestic market. Therefore, VIBCA has proposed to add Chinese tiles into the list of products subject to the taxation on square meter.

The association has proposed to impose the tax of 5-13 dollars per square meter on the products with the code HS6907, depending on the sizes of products, and 5-12 dollars per square meter on HS6908 product.

At present, the sums of tax importers have to pay are calculated based on the prices written down in the invoices showed by importers. However, the association has pointed out that in fact, importers declare the import prices much lower than the actual prices in order to evade taxes.

“This has caused big losses to the domestic production,” said Dinh Quang Huy, Chair of VIBCA.

The representative from Viglacera Ha Long has admitted that products have been unsalable partially because of the lower demand resulted by the policy to cut down public investments. However, he said that the contraband imports from China is the main reason which has pushed domestic producers to the verge of bankruptcy.

Therefore, he also thinks that it is necessary to impose tax per square meter of imports, believing that this would help prevent contraband goods from flocking to the domestic market.

According to Tran Ngoc Anh, General Director of Viglacera, an infrastructure investment corporation, tile producers need to find the solutions to rescue themselves. For example, they need to restructure the market segments, restructure the capital sources and check the consumption of materials. Besides, they should also rearrange borrowings, seek capital from the bond market and investment funds.

Source: TBKTVN