New Year and Tet are normally the best season for shopping, especially for electronic products. However, it is in bad condition this year. VIB Forum reporter Kim Phuong had an interview with Mr Tran Quang Hung, Secretary General, Vietnam Electronics Association.
Could you explain the current recession in the electronic market?
Enterprises have slowed down their production waiting for the impact of the tariff reduction to develop their business planning. While foreign invested enterprises are waiting for both AFTA and WTO accession. AFTA tariff reduction was begun on July 1, 2004 but the export value continues to increase expectedly some US$1.5 billion in 2005 and the domestic trade value is expected at US$1.6 billion instead of US$1.4 in last year, partly due to the high consumption of digital cameras and electronic equipment.
The tariff reduction from 10-15 per cent in 2005 to 0-5 per cent in 2006 will pose a strong pressure on importers, especially hi-tech TV reducing from 40-50 per cent to 0-5 per cent.
Though AFTA tariff reduction was in three phases starting on July 1, 2004, from 40-50 per cent down to 30 per cent, then 30 per cent to 15 per cent and finally to 0-5 per cent on January 1, 2006, no one can sell the products below the floor prices.
How do you see the market and competitiveness of Vietnamese enterprises ?
The price reduction on ordinary products is VND100,000-200,000 and 30-40 per cent on hi-tech products, therefore the consumption will increase. Fortunately, the sharp reduction is on products that are not yet produced in Vietnam.
The tariff reduction causes big difficulties for Vietnamese enterprises. Without protection, they are confronted with harder competition. However, those survive from this period will stand firm in the market. In early 1990s, Vietnam had 400 enterprises assembling TV sets, the figure is now less than 10. Those without high technology and comparative edge cannot survive.
What is the state of Vietnamese enterprises at present ?
Most of large enterprises are foreign invested, small and medium ones are Vietnamese enterprises. The Association has 114 members, including 15-18 foreign invested companies such as Sony, JVC, Toshiba, Panasonic, Samsung, LG, Daewoo, Sanyo, Canon. Canon is building the world biggest laser printer factory in Bac Ninh province.
Concerning added-value in export, the Association has recommended the Ministry of Post and Telecommunication on development strategy, especially increasing intellectual-intensive products. The current contractual production can produce only 10-15 per cent of added value. I think that Vietnam must design new and better products and produce electronic parts for export. What is needed is a product strategy approved by the State.
What is the development strategy of the Association?
With AFTA tariff reduction and WTO accession, the competition will be much harder. Vietnamese electronic sector must remould itself and increase the export. The association will organise more training courses and seminars on AFTA, WTO and introduce high technology, especially from Japan, the investor N.1 in Vietnam.
How are Vietnamese enterprises preparing for AFTA ?
They do have certain preparations in place, for example Vitek has developed its own network with maintenance and after-sale service even better than foreign companies. There will be three more giants, including Fujisu investing some billion US dollars in electronic parts. The technology transfer is moving from China and Japan to Vietnam and focusing on electronic parts for export. Therefore, the competition will be extremely hard.
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