Vietnam - Animal-feed firms in Vietnam face pressure

Domestic feed companies face bigger challenges as many foreign-invested companies plan to widen their investments in Vietnam, according to the Vietnam Feed Association (VFA).

Chairman of the VFA Le Ba Lich said that when the widening plan was implemented, market shares of domestic companies would surely be narrowed.

"Domestic companies risk suffering the increased burdens of capital shortage and high interest rates. Additionally, many small companies may face bankruptcy," Lich said.

Meanwhile, he added, big foreign companies were financially strong with the advanced technology to easily expand in Vietnam.

The association's worry is reasonable, as the country has 233 feed companies. Of that figure, 46 are foreign-invested companies, 176 domestic and 11 are joint-ventures.

In 2011, the association reported, products of domestic companies accounted for 60-65 per cent of the total market share. The other portion was occupied by foreign-invested and joint-venture companies.

Recently, many companies announced their openings in Vietnam. Particularly, a company from Japan plans to invest US$426 million to build a new feed plant with a capacity of 200,000 tonnes per year in the country.

While the association expressed its concern, many businesses saw the foreign company expansion as a bright signal.

Talking to the Vietnam Economic Times, Tran Vinh Du, director of the TNK Capital Investment and Consultant Company, said foreign companies would bring many lessons to domestic companies.

This was a very good thing, he said.

Du used the pharmaceutical sector as an example.

He said that in the past, domestic companies encountered a tough time when foreign pharmaceutical companies came to Viet Nam. In the short term, however, they got lessons and caught up with foreign companies

To avoid the case of losing market shares, experts affirmed that weakness in Vietnamese companies must be absolutely improved.

The chairman of one feed company said that in Vietnam, companies often operated in different fields with out-of-date technologies, thereby making it difficult to merge.

If they wanted to merge, they had to re-structure and re-build. Meanwhile, foreign companies did not buy small domestic companies, he said.

To limit expansion, he suggested the Government permit foreign companies to manufacture only products that Vietnam cannot make.

Vietnam News

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