Domestic Electronics to Face Fiercer Competition

Domestic Electronics to Face Fiercer Competition

Vietnamese electronic enterprises will face more challenges in the domestic market as taxes on complete imported electronic items are due to be reduced from zero to five next year in accordance with the country's ASEAN Free Trade Area (AFTA) integration.

The Vietnamese market currently buys about 1.4 million televisions a year, representing only 0.7 per cent of the global market's 200 million set capacity, said Le Van Chinh, director of the Vietnam Electronic Production Company (Vitek).

Vietnamese companies now hold a 10 per cent share of the domestic TV market, Chinh said.

This current modest market share could be overtaken by their foreign counterparts if Vietnamese electronic enterprises do not find ways to improve the competitiveness of their products, he said.

The local electronic firms’ current market share has fallen to half of what it was before the country joined AFTA in 2003, when their products were still protected from foreign competition by high import taxes imposed by the government.

Most domestic enterprises are currently involved in the assembly of simple electronic items so their products can hardly compete with intact lightly taxed imported products. Besides, they do not have the financial potential necessary to invest in manufacturing electronic components.

In last few years, the Ministry of Industry has been unable to create a new development strategy to replace its current one, which has made domestic electronic enterprises confused about finding proper ways to develop their business, experts said.

In response to the situation, many local firms may have to find their own ways to survive, such as to shift from assembling to distributing electronic items for foreign companies, they said.

Bui Thanh Chau, director of the Chau Electronics Company, said many foreign companies have come to Vietnam looking for partners to sell liquid crystal display (LCD) televisions that are increasingly in favor with customers.

"New asking prices for LCD televisions are very cheap, much lower than those being applied on the domestic market. So, we hope that we can make bigger profits distributing LCD televisions than we can assemble electronic products," Chau said.

Chinh of Vitek agreed that LCD televisions would become popular in Vietnam market in coming years. "However, no domestic companies have plans to produce them or any other electronic items of their kind, which would help them survive the new competition.

VNS