Despite being one month ahead of the completion tariff cut for the ASEAN Free Trade Area (AFTA), goods made in ASEAN countries have flooded the Ho Chi Minh City market and have attracted a lot of attention from local people.
Processed food, drinks, cosmetic, and consumer goods made in ASEAN countries, mainly in Thailand and Singapore, have recently made an appearance at supermarkets in Ho Chi Minh City. At electronic trading centres, consumers have begun to see washing machines, refrigerators, microwave ovens, televisions and fruit grinders originated from Singapore, Malaysia and Thailand. Also, garments from ASEAN countries are being sold more often at fashion shops and markets in the city. Local markets have ‘heated’ up with the appearance of various goods, including needles, threads, watches, kitchen wares, cosmetics, children’s toys and music players, imported from Thailand, Singapore, Indonesia and Malaysia. Retail prices of processed food and drink imported from regional countries remain higher than prices of locally-made products of the same kind. However, many items have prices equal to those of locally-made products. There is little difference in prices of electronic appliances, despite a high import tax rate. The difference will be narrowed when Vietnam completes its tariff cut to between 0 and five per cent.
Tariff cuts for the formation of a free trade area has created favourable conditions for goods made in ASEAN countries to enter markets within the bloc. To compete against imported goods from ASEAN countries, some famous enterprises have made good preparations. Cho Lon Plastic, for example, has found its own development path by promoting investment in modern equipment and technology to manufacture high quality goods, and changing its samples and designs for products. As a result, several products by Cho Lon Plastic have beaten products of the same kind imported from other countries. Apart from various samples and designs, the company’s products, such as electrical toys for children are priced 30 per cent lower than products of the same kind from China and ASEAN, and 45 per cent lower than similar products from Taiwan and Japan. The company’s products have been exported to many countries.
Many other enterprises are ready to compete against imported goods after tariff barriers are removed. Electronic manufacturers, who were once thought to face many risks when protectionism is repealed, seem very confident, saying that they would be able to compete against their rivals with favourable conditions for fair competition given by the Government. In fact, most goods imported from ASEAN countries are goods Vietnam has not been able to manufacture or meet the local demand for yet. Exemplary goods including petrol and oil, plastic materials, fertiliser, materials for textile and garment industries, machines and equipment, electronic and motorbike accessories and parts. The import of goods which can be manufactured by local enterprises such as motorbikes, fertiliser and medicines has fallen.
However, many surprises remain ahead. This means that despite being ready for the process, local enterprises still have many worries and concerns because they will have to compete with their opponents not only in price and quality but also in advertisement and promotions, which produce a direct effect on consumption volume. Import sources, official and unofficial, also impact on the price of goods.
While enterprises from other countries in the region have taken the opportunity to occupy the market, how have Vietnamese enterprises promoted their entry to other markets? Vietnam export turnover to the Philippines was put at US$534 million in seven months, up by 118 per cent against the same period of 2004. Of this figure, a third went to industrial products, which saw an increase of 36 per cent. Vietnam’s export value to Thailand increased by 109 per cent in nine months. Positive signs were also seen in other markets. However, Vietnam’s main exports to the markets remain as rice and crude oil. Industrial products occupy a low proportion. Textiles and garments and footwear products, despite being second largest among the industrial products exported to ASEAN, have found it difficult to compete in other markets. Vietnamese handicrafts, woodwork, plastic and leather products, and processed food have good prospects. The experiences of some enterprises, including Kinh Do, Casumina and Biti’s, which have exported products to ASEAN countries, show that Vietnamese-made goods can compete in these markets. It is important for enterprises to identify their market shares and customers’ taste, as well as evaluating their competitors. They also need to develop more professional distribution networks.
Thuy Tien
Vietnamese
