Export of Machinery Lines: New Development of Vietnam's Mechanics Sector

Nearly one year has passed since Vientiane Industrial Gas (Laos) and P.K Metal Sheet (Thailand) signed the contract to buy 8 types of equipment from the Application Mechanics Institute, and the volume of the institute's exported machines has tripled. This is an encouraging result of the "Equipment Manufacture at Low Cost" program (CT04 for short) initiated by the Ho Chi Minh City People's Committee.

Encouraging sign

Two years ago, the Precise Mechanical Factory (PMF) of the Application Mechanics Institute sold and installed the first super-speed mixer that is used for producing Knorr products in Vietnam to Unilever Fastfood for VND550 million. Seeing that this machine works well, Unilever bought one more mixer at VND615 million to be installed in Malaysia. In 2003, Medical Supply Company bought three machines from PMF for tablet production at VND640 million. After a short period, this company purchased 20 more machines with the total amount of US$140,000, seeing that Medical Supply has put its trust in the quality and technological level of the equipment manufactured by PMF.

Apart from PMF, the Machinery Materials and Technology Workshop (MMTW) of the Application Mechanics Institute has also exported a number of machinery lines. In 2003, MMTW sold two metal sheet production lines at US$200,000 to Vientiane Industrial Gas (Laos) and P.K Metal Sheet (Thailand). Since early 2004, MMTW has exported eight more machineries with the total amount of more than US$200,000. MMTV engineers who have participated in a fact tour in Taiwan said that the price of domestic equipment is cheaper than Taiwan’s by 30-40 per cent. Together with proper after-sales service, this reasonable price will bring about heavy competitive advantages for Vietnamese machinery over foreign products.

After participating in Techmart 2003 organized by CT04, the Technical Investment and Development Joint Stock Company also procured contracts for sheet rollers and beam rollers with many enterprises from Thailand, Laos and Cambodia. In 2004, the company has manufactured 36 machines of different categories for export, and also made a contract with an Australian company for machinery delivery in 2005. The growth rate of the company as compared with 2003 has amounted to 100 per cent.

Actively developing markets

After four years of CT04 implementation, 27 projects have been put into productive operation, and 19 equipment categories with 169 machines transferred. The total investment for these projects has reached VND17.3 billion. The price of domestic equipment makes up only 50-70 per cent of the imported equipment’s price. According to statistics, each year Vietnam’s enterprises, mostly small and medium-sized enterprises, spend at least US$3 billion importing machinery from the main supply countries of Taiwan, China, South Korea, Singapore and Japan.

According to a manager of the Application Mechanics Institute, these above-mentioned countries became the main equipment suppliers thanks to their effective and professional strategy of marketing and promotion, such as offering relevant literature expressed in English, detailed presentation papers, and even websites to introduce their products. Meanwhile, domestic machinery makers haven't carried out these useful practices. Moreover, their export potential is greatly undermined by capital and land shortage as well as the lack of opportunity of access to foreign markets.

According to Dr. Phan Hoai Chieu from the Management Board of the New Equipment Design and Manufacture Centre Project (Ho Chi Minh City's Science and Technology Department), most of Vietnamese factories mainly focus on manufacture and lack professionalism in export marketing and trade promotion. Besides, they should ensure machinery quality and satisfactory after-sales service. Only by doing so can they maintain and further develop their export markets for machinery.

• Hoa Binh