While a number of Vietnamese businesses have had to dissolve or declare
bankruptcy after failing to withstand the economic turbulence, many
foreign-invested companies have expanded operations and increasingly taken more
market share in the staple export commodities of the country.
FDI businesses account for some
60 percent of the US$12 billion worth of export turnovers of textile and
garment in the year to October, said Dang Thi Phuong Dung, deputy chairwoman of
the Vietnam Textile & Apparel Association (Vitas).
South Korea now tops the list of
foreign countries with the highest investment in the Vietnamese textile and
garment sectors, according to Vitas.
Diep Thanh Kiet, deputy chairman
of the Vietnam Leather and Footwear Association (Lefaso), said it is no
surprise that FDI manufacturers hold a large proportion of the exporting
market.
“They have a well-developed
strategic vision, strong financial muscles, and flexible production
management,” he explained.
While local leather and footwear
companies have only posted annual growth of 10 to 12 percent in the last five
years, the figures of the foreign firms are as high as 16 to 18 percent,
according to statistics from Lefaso.
Expanding operation
In the first ten months of this
year, 359 FDI projects have registered for additional capital for their
investment in the country, with a combined registered capital of $3.8 billion,
a 12.3 percent increase year-on-year. Most of the enlarged investments are from
businesses operating in the textile and garment and precision mechanics
sectors.
The 100 percent Japanese-invested
Saigon Precision, for instance, has increased its registered capital by $25
million in order to set up a new manufacturing plant.
South Korea’s Nobland Vietnam Co
Ltd has also hiked its capital by $17 million, and expanded its operation to an
11,000 hectare land plot in the Tan Thoi Hiep Industrial Park.
Taiwan’s Formosa textile company
announced in late October a capital addition of $30 million, while Chinese firm
Texhong said it has increased capacity from 30,000 tons of textile products a
year to 150,000 tons, and hiked registered capital from $80 million to $150
million.
Competition and acquisition
Local steel manufacturers have
suffered from harsh pricing competition since the South Korean Posco Steel
Corporation inaugurated its $528 million cold rolled steel plant in Ba Ria –
Vung Tau.
With Posco Vietnam currently
accounting for nearly 50 percent of the domestic cold rolled steel market, the
plant has put pressure on the country’s two largest manufacturers, VNSteel, and
Thong Nhat Steel, said Nguyen Tien Nghi, deputy chairman of the Vietnam Steel
Association.
“Products of the FDI companies
can be reasonably priced thanks to their modern and material-saving
technologies, enabling them to remain more competitive than local businesses,”
he added.
In a different approach, the
Nawaplastic Industry Co Ltd (Saraburi), a plastic pipe manufacturer in which a
100 percent stake is held by Thailand’s Thai Plastic and Chemicals PCL (TPC),
has gradually acquired shares from Binh Minh Plastic (BMP) and Tien Phong
Plastic (NTP), the country’s two largest plastic manufacturers.
Saraburi currently holds more
than 7 million BMP shares, or a 20.5 percent stake, and 9.8 million NTP shares,
or a 9.86 percent stake, according to publicized statistics.
The Thai company has thus become
the second largest shareholder at the said businesses.
With Tien Phong accounting for 70
percent of the northern plastic market, and Binh Minh 50 percent in the south,
it is likely that the domestic plastic market will be dominated by the foreign
company if they continue to increase their shares at the two local firms.
TUOI TRE
Business & Investment Opportunities
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