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Local electronics industry expecting crunch
Local businesses in the electronics industry anticipate fiercer competition next year as more imported products flood the domestic market and restrictions on foreign distributors and retailers are lifted.
Many managers of electronics supermarkets in Ho Chi Minh City said sales representatives had shown them many new US and European-made electrical products over the past few weeks, some of which had never been sold in Vietnam before.
They also said several foreign retailers had recently been active in the domestic market, preparing for their official appearance at the beginning of next year – right before the pre-Lunar New Year shopping season.
Under Vietnam’s commitments to the World Trade Organization (WTO), 100 percent foreign-invested firms will be allowed to join the local distribution and retail markets from January 1, 2009.
Local importers said they had increased their purchases by 20-30 percent because they want to be prepared for the increased competition from foreign distributors.
Tran Huu Tai, an importer of electronics goods, said most of the products imported by his company came from other Southeast Asian countries, such as Thailand, Singapore, Malaysia and Indonesia.
Lien An Thach, sales and promotion manager of Cho Lon Electronics supermarket chain, said prices of electrical appliances had dropped by up to 30 percent since the beginning of this year.
All distributors and retailers want to clear their existing stockpiles as soon as possible, worried that more imported electronic products will penetrate the local market in the future, Thach said.
Producers worry too
Domestic firms said they have cut production of electronics products such as television sets and DVD players because the foreign-produced models were retailing for less.
Instead, local firms are focusing on manufacturing low-priced domestic appliances, such as fans and kitchen appliances.
Managers of some foreign-invested companies said they were reviewing their business plans in light of the changing market.
Vu Hoang Chuong, deputy general director of JVC Vietnam, said the company would increase its production in Vietnam by the end of 2010.
But adjustments to the company’s business plan will be made when giant foreign retailers come to Vietnam, he said.
Nguyen Van Dao, deputy general director of Samsung Vietnam, said the company had spent US$36 million on its Vietnamese production lines and it will continue manufacturing electronics products here until at least 2015.
However, the company will begin importing products that it does not produce locally in order to diversify its product ranges.
But what worries local electronics firms most is the opening up of the domestic market from next year, when foreign-invested businesses will be able to import products to sell locally.
Under current regulations, only Vietnamese businesses are authorized to distribute foreign products.
With lower import taxes – another WTO commitment – foreign-invested companies are expected to switch to importing goods instead of manufacturing them locally.
The current taxes on most imported products range from 0 to 5 percent.
Thanhnien
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