Foreign firms partner with local plastic counterparts to enter Vietnam's market
Updated at Wednesday, 04 Jul 2018, 09:13
The Hanoitimes - The fierce competition in the domestic market has forced Vietnamese plastic manufacturers to join hands with their foreign counterparts to get the latter’s supports.
Rang Dong Plastics JSC (RDP), in cooperation with Japan’s Sojitz Pla-Net, has recent inaugurated a US$32 million plant in the southern province of Long An.
According to Ho Duc Lam, RDP chairman, with the new investment and co-operation, RDP aims to become a leading plastic supplier in Vietnam and one of the top 10 manufacturers in the Asia-Pacific by 2020.
Rang Dong Plastics and Japan’s Sojitz Pla-Net inaugurated a plant in Long An
Under the strategic partnership agreement, Sojitz will contribute to the business development of RDP’s high functional materials as it has the distribution right of plant-delivered poly ethylene called Green PE in the Asia and Oceania region.
In the domestic market, Sojitz Planet has been collaborating with over 20 Sojitz Group companies. Taking advantage of this network, the firm will supply RDP products to Ministop Vietnam operated by Sojitz Retail Sections. In overseas markets, Sojitz Planet has already started supplying Rang Dong products in Cambodia, Myanmar, and the Philippines.
In addition, Sojitz Planet will support research and development, factory environment improvement, as well as human resources training by the professional supervisors from Sojitz and Japanese partners.
Many other local plastic companies such as Binh Minh (BMP), Tan Tien, Minh Viet have also decided to open their doors widely, receiving more foreign shareholders amid increasingly fierce competition in the market.
BMP, for example, is now 51.10% owned by Thailand’s Siam Cement Group (SCG), which also possesses stake in many other companies in Vietnam’s plastic industry such as Viet-Thai Plastchem (production of Plastics and Packaging TPC with 72.49% stake) and TPC Vina Plastic and Chemicals (production of PVC-TPC with 70% stake).
The competition in the Vietnamese plastic market has heated up with the rising participation of both foreign and domestic newcomers, who have seen the high potential of the local market.
According to the Vietcombank Securities Company, the average plastic consumption in Vietnam is currently 41kg/person/year, lower than the Asian region’s average of 48kg/person/year and the global average of 70kg/person/year.
BMI Research also reported that the food industry will grow 10.9% in 2015-2019, and the bottled beverage sector will grow 17-25%.
In the plastic tube manufacturing sector alone, there are 200 enterprises. A lot of newcomers have turned up, including Hoa Sen and Tan A Dai Thanh, while more and more Chinese, Thai and Japanese enterprises have flocked to Vietnam.
In its annual finance report, the management board of Binh Minh Plastics warned that in the context of stiff competition, maintaining revenue and the leading position in the plastic tube manufacturing sector would be a big challenge.
Binh Minh CEO Nguyen Hoang Ngan admitted that the company had a tough year 2017.
Binh Minh Plastics has to keep the selling prices unchanged despite the sharp increase in input material price increases, while it has offered a 4% increase in discount for sale agents.
Vietnamese plastics manufacturers therefore tend to open their doors to foreign investors because they need foreign support to survive in the stiff competition.
Meanwhile, besides the local market, foreign companies also want to capitalize on the cooperation with local firms to prepare for exploring the export opportunities in the coming time when the Vietnam-EU Free Trade Agreement (VEFTA) is signed.
According to experts, export market of Vietnamese plastic products to Europe will be strengthened next time as under the VEFTA, Vietnam’s plastic products are not subject to anti-dumping tax like other Asian countries, which are suffering an average tax of 8-30%.