Industry hurt by glut of Chinese cheap equipment

Despite their bad quality, the number of machinery and equipment imported from China is increasing. Faced with no tax, these cheap products are flooding the market and crippling the domestic industry in Vietnam,

Despite their bad quality, the number of machinery and equipment imported from China is increasing. Faced with no tax, these cheap products are flooding the market and crippling the domestic industry in Vietnam, which has to pay high taxes for its imported components.

Tran Tien Dung, an employee of a Ho Chi Minh City-based logistic firm, said the orders his firm has received to transport machinery and equipment from China this year have doubled over last year.

“Cheap price is the main reason why Vietnamese firms prefer Chinese machinery to domestic ones or those from the US, EU and Japan markets,” he explained.

Import turnover of Chinese machinery in the first quarter this year has climbed from US$1.074 billion in 2009 to $1.595 billion, according to statistics released by the General Department of Vietnam Customs.

T.H., who runs a machinery store in Nguyen Thai Binh Street, Tan Binh District, said a complete set of Japanese machinery that employs 10 garment workers would cost VND100 million ($5,000), compared to just VND54 million ($2,700) for a Chinese counterpart system.

“You get what you pay for. The Japanese machines cost twice as much but they can last 10 years. The Chinese machinery may start having problems after just 3 years,” he said.
According to some machinery stores, the Chinese manufacturers are willing to produce machines and equipment at any price that suits the Vietnamese firms’ demand.

These cheap machines are neither durable nor environment-friendly. Worse, they consume a lot of power, they added.

Do Phuoc Tong, head of the Association of Mechanical Industry of Tan Phu District, said Vietnam’s domestic mechanical firms could manufacture the same machinery and equipment currently imported from China, but the unreasonably high tariffs have made them less competitive in the market.

At present, many imported machinery and equipment enjoy a zero percent tax rate, while the imported components necessary for the manufacture of such machinery are taxed 15 to 20 percent.

“This tax policy has caused great difficulty to the domestic manufacturers,” he said. – Tuoitre

Tags: Vietnam industries, Vietnam industry