In high inflation, Vietnamese consumer prefer cheap goods

Electricity, petroleum and goods price increases have forced people to fasten their belt. Experts say it is difficult to ask Vietnamese to love Vietnamese goods in these circumstances, especially when the domestic products remain expensive.

Besides domestically made products, the fashion shop Cam999 on Vinh Ho street in Hanoi also sells the clothes imported from Thailand or Guang Xi-China. Thu Giang, the shop’s manager, said that “made in Vietnam” clothes have always been selling the slowest.

“We import products from Thailand and Guang Xi once a month, because the sale goes well, while 30 percent of domestic products have been left unsold since April because of the high prices,” Giang said.

She affirmed that Vietnamese products have high quality and they are well designed, but the prices are always 30-50 percent higher than Thai or Chinese goods. A dress sourced from Thailand or Guang Xi is priced at 80-200,000 dong only, while a product made in Vietnam has the sale prices of between 220,000 and 500,000 dong. Foreign made products have diversified designs with bright colors, while domestic products are mainly made of cotton and have classic style.

“It is clear that Vietnamese goods are better, but in the context of high inflation, consumers would prefer cheap products,” she said.

Lan Anh, a buyer, said that she also does not choose Vietnamese clothes, because of the high prices. “With 500,000 dong, I would be able to buy many things, from dresses, shirts to belts. Meanwhile, with the sum of money, I can buy one or two made-in-Vietnam products,” she said.

In fact, the story about the inferiority of Vietnamese goods on the home market has been repeated many times, but to date, no proper solution has been found to improve the situation. Nong Thi Lam, Head of the Lang Song province’s Steering Committee on implementing the “Buy Vietnamese” campaign, said that the biggest obstacle the province is facing is to compete with Chinese goods.

Lang Son borders Guang Xi province in China. It has two international border gates, two national border gates and seven market areas, which are the advantages to facilitate the trade. However, these are also the advantages for Chinese goods to flow into Vietnam.

“Chinese goods with low prices and diversified designs are flooding Lang Son and crowding out domestic products,” Lam said.

An official from the Retailers’ Association has admitted that it is difficult to ask Vietnamese people to choose Vietnamese goods at this moment, when the prices of domestic products remain relatively high.

He said that Vietnamese consumers would prioritize purchasing cheap products because they need to cut down spending. Meanwhile, Vietnamese goods are always expensive. Even pork, which is an advantageous product of Vietnam, is still 30-40 percent more expensive than imports.

“Vietnamese people will not love Vietnamese goods, if the goods remain more expensive than import products,” he said.

In May 2011, the consumer price index (CPI) increased by 2.21 percent, a lower increase in comparison with that in previous months. However, the figure was still high enough to push the CPI increase so far this year to the two-digit level. The Government has decided to raise the inflation rate target to 15 percent instead of the previously set level of 7-8 percent.

Le Dang Doanh, a well-known economist in Vietnam, also said that it is not easy to call on Vietnamese people to use Vietnamese goods in the context of price increases.

Doanh said he was told by the businesses in light industries that businesses have been falling in big difficulties. Electronics manufacturers said, since the import tariffs on electronic parts are as high as 15-20 percent, they would rather import Chinese goods to sell domestically, rather than importing parts to assemble in Vietnam. As such, the manufacturers have become distributors. Meanwhile, many paper companies have to sell stakes to foreigners, and dare not to borrow money from banks because of the overly high interest rates.- VnExpress

Tags: Vietnam consumers