Vietnamese manufacturers contrive to compete with Chinese goods

Competing with Chinese goods in terms of prices is really unthinkable for Vietnamese small and medium enterprises. They have to use their own advantages to expand the distribution network and dominate the domestic market.

Having both feet on the ground

Considering Chinese manufacturers as redoubtable rivals, Vietnamese enterprises admit that Chinese understand consumers well, which help them sell products well.

Ten years ago, Trinh Sy Minh, Director of a small business in HCM City, came to China, where he purchased blenders, electric cookers and MP3 players to sell on the domestic market.

Minh said that Chinese are always very professional: every enterprise makes one or some parts of products in big quantities. Meanwhile, assemblers buy different parts of products from different enterprises to make finished products and launch the products into the market. Chinese enterprises try to save money in all phases of the production chain, from the input material collection, transportation, storage time to office expenses and staff uniform, which allow them to cut down the production costs.

Big Chinese enterprises also provide big support to retailers to boost sales. The clients who place big orders just need to pay deposit money, while they can get deliveries just within one or two days.

While Vietnamese businesses have to bear the sky high bank interest rates of 20-24 percent per annum so far this year, Chinese businesses can borrow at 6-8 percent per annum.

According to Minh, in Vietnam, the input costs of enterprises are overly high, but enterprises do not want to cooperate and join forces with each other to become stronger. This explains why Vietnam’s supporting industries remain at the first stage of development. The policies on supporting enterprises remain unclear, while manufacturers have to struggle to survive.

Vo Quang Uyen, Director of Phuong Dong private enterprise in Long An province, who has four year experiences of importing Chinese porcelain to sell in Vietnam with the turnover of one million dollars a year, said that the “know-how” of Chinese enterprises is that they well understand customers. Therefore, they can satisfy all the demands from partners by providing products at different classes and different price levels, especially low cost products.

Difficulties should be seen as opportunities

On a mini survey conducted by Thoi bao Kinh te Saigon in late June 2011, all manufacturers in the fields of garment, porcelain, handbags, craft products and jewelry all admit that Chinese low cost products have been available everywhere in Vietnam.

Doan Dinh Quoc, Chair of Dinh Quoc Company, said that decorative glass sourced from China is cheaper by 20-30 percent than Dinh Quoc’s products. Understanding that Dinh Quoc cannot compete with Chinese products in terms of prices, the company has to change its business strategy, focusing on the products with high levels of arts and good designs which aim to medium and high class customers.

According to Quoc, the vitality of enterprises relies on three factors. First, the optimization of the input costs. Second, the difference in products and the reasonable prices. And third, the support from the State and banks.

Nguyen Tri Kien, Director of Minh Tien Company, believes that Vietnamese products absolutely can compete with Chinese ones. Chinese manufacturers are also facing big difficulties, including the increasingly high input costs, the lack of workers, the lack of diversified designs. Especially, global consumers are looking into Chinese products with cautious eyes with fear about the low quality and toxic substances.

“These are the big opportunities for Vietnamese enterprises. Focusing on designing diversified products, increasing the added values of products and expanding distribution networks will bring “good fruits” to Vietnamese manufacturers,” he said. – TBKTSG

Tags: Chinese goods, Vietnamese manufacturers