Spearhead Products of Ho Chi Minh City

1:55:47 PM | 27/3/2007

After three years, Ho Chi Minh City has selected 39 spearhead projects of 37 locally and centrally-run enterprises, capable of competing in the local and foreign markets.
In early 2007, the selected enterprises faced three selection rounds based on five standards of design, quality, production cost, compliance with the Environment and Labour Code, and high competitiveness in Ho Chi Minh City and the country while maintaining high revenues, export turnover and profits. The enterprises have diversified their business activities and products, expressing their desire to becoming strong groups capable of dominating the local market and joining distribution channels of foreign groups.
At a recent seminar answering the question "Why have spearhead enterprises been able to maintain high growth rates and compete against foreign enterprises, manufacturing the same products?” 80 per cent of enterprises said it was necessary to know their own strengths and the strengths of opponents. Vietnamese enterprises can compete against foreign-owned enterprises because Vietnamese enterprises have a better understanding of the tastes and demand of Vietnamese consumers, allowing them change their business practices and production activities quickly. In foreign markets, Vietnamese enterprises should gain a better knowledge about their customers, for example in the Middle East, Japan and the US. Also, they should attach importance to building reputation by offering high quality products and services. That is why enterprises like Thai Tuan, Miss Saigon, Kinh Do, Phong Phu, Vinamilk, Dien Quang and Imexco developed a foothold and have stood firm for years in foreign markets.
According to the Dien Quang Bulb Joint stock Company, after Vietnam joined the World Trade Organisation (WTO), the company has to compete with Vietnamese and foreign opponents even in wages to keep their workers from moving to other enterprises. Having invested more than VNd 300 billion in new technologies, so far the Dien Quang Company has been able to manufacture 150 lighting and electrical equipment products of high competitiveness, such as energy saving bulbs and compact bulbs. In 2007, the company is striving to increase revenues by 40 per cent and double export turnover from 2006. Dien Quang products have become favourites not only in Vietnam with the slogan "Dien Quang products are available wherever electricity is available” but also in Africa, South America and the Middle East, witnessed high year-on-year increases in export turnover. 
Other companies, including Phong Phu Textile Company, Viet Tien Garment Company, Thai Tuan Textile and Garment Company, Kinh Do Bakery Company, Casumina, Vinamilk, and the Thanh Cong Textile Company, state that after being selected enterprises will have to calculate business and production effectiveness. The key to overcoming difficulties, according to enterprise leaders, is ‘global thought and on-the-spot action,’ which means Vietnamese enterprises should closely follow developments in the world and expand co-operation with both local and foreign partners, relying on their strengths.
The Phong Phu Textile Company is an example. Phong Phu modernised its factories and as a result, the company contributes the highest revenue to the State budget and pays the highest wages to workers in the local textile industry. In 2007, the company co-operated with the biggest US textile group, ITG, to modernise its fabric factory and invest in other local textile factories. It has co-operated with other companies to build hotels and resorts in some coastal provinces.
The Thai Tuan Company has a target of producing specific products, unlike other products in the market. In early 2006, Thai Tuan found it impossible to cope with heavy pressure from imported products. After a three month market study, the company determined to renew its export products. In late 2006, it earned VND 358 billion in revenues, 12.5 per cent over its yearly plan. Its profits increased by 42 per cent and export turnover accounted for 51 per cent of revenues. Its products were exported to the Middle East, the US, Australia, Malaysia and Singapore.
The food processing industry accounts for a significant contribution to the city’s total production value. However, the industry is expected to face many difficulties due to fierce competition from ASEAN, European and American countries, after Vietnam cuts import tax for the ASEAN Free Trade Agreement (AFTA) and WTO accession. In fact, the industry gained a high growth rate. Vinamilk earned VND 6,400 billion in revenues in 2006 and VND 733 in profits. In 2007, Vinamilk aims to earn VND 7,300 billion in revenues and VND 900 billion in profits, as well as to reach export turnover of US$85 million. In the first two months of 2007, the company earned VND 900 billion in revenues. Apart from existing exports of powder milk, condensed milk and yoghurt, in 2007 Vinamilk has already introduced and won contracts to export instant Cappuccino and chocolate to Europe, the Middle East and Australia.
Alongside Vinamilk, Vissan provides processed pork, beef, vegetables and fruit for the city’s customers, and joins social and community activities, contributing VND 1.5 billion each year for poverty reduction activities.
Some other rubber, plastic, footwear, textile and garment, electrical and electronic, bicycle enterprises have also witnessed a high growth rate. New enterprises, operating in woodwork making, shipbuilding, telecommunication accessories manufacturing, ceramic and pottery, children’s toy, handicrafts and seafood process, have added variety to the city’s export picture.
Hong Hanh