import study metalworking vietnam 2014

CBI Import

Intelligence:

Market analysis

for metalworking

in Vietnam

(15 January 2014)

Metalworking Market Analysis – 15 January 2014

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer 2

Table of contents

Executive summary .......................................................................................................... 7

1 Background and introduction to the market analysis ..................................................... 14

1.1 Background ..................................................................................................... 14

1.2 Objectives ....................................................................................................... 15

1.3 Approach and Methodology ................................................................................ 15

2 Vietnamese economy overview .................................................................................. 16

2.1 Historical overview: .......................................................................................... 16

2.2 Vietnamese country data and economy overview: ................................................ 17

2.3 Overview of industry per region ......................................................................... 21

A. Promising sectors for import from and outsourcing services from Netherlands ................. 24

3 Electronic manufacturing/assembly sector ................................................................... 27

3.1 Overview of Vietnam’s electronics manufacturing sector ........................................ 27

3.1.1 Government policies ................................................................................. 28

3.1.2 Manufacturing, Export, Domestic market, and Foreign Direct Investment in

the electronic sector .................................................................................. 29

3.2 Value chain...................................................................................................... 33

3.3 Internal/external factors affecting the Vietnamese electronics manufacturing

sector 36

3.3.1 Internal factors ........................................................................................ 36

3.3.2 External factors ........................................................................................ 38

3.4 SWOT Analysis of Vietnamese electronic manufacturing sector ............................... 39

3.5 Opportunities for Dutch companies in the electronic manufacturing sector in

Vietnam ...................................................................................................................... 40

3.6 Next step recommendations .............................................................................. 42

4 Electrical equipment manufacturing sector .................................................................. 43

4.1 Overview of the Vietnamese electrical equipment manufacturing sector .................. 43

4.1.1 Government Policies .................................................................................. 44

4.1.2 Manufacturing, the Domestic market, Export, and FDI ................................... 45

4.2 Value chain...................................................................................................... 51

4.2.1 Input: ..................................................................................................... 51

4.2.2 Manufacturing: ......................................................................................... 51

4.2.3 Sales/Export and installation: ..................................................................... 51

4.2.4 Customers: .............................................................................................. 51

4.3 Internal/external factors for electrical equipment manufacturing companies ............ 52

4.3.1 Internal factors: ....................................................................................... 52

4.3.2 External factors: ....................................................................................... 53

4.4 SWOT Analysis of the electrical equipment manufacturing sector ............................ 53

4.5 Conclusion - Opportunities for Dutch companies in the electrical equipment

manufacturing sector ........................................................................................ 54


5 Moulding manufacturing sector .................................................................................. 56

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5.1 Overview of the moulding manufacturing sector ................................................... 57

5.1.1 Government policies ................................................................................. 58

5.1.2 Manufacturing/export: ............................................................................... 58

5.2 Value chain...................................................................................................... 60

5.3 Internal/external factors on moulding manufacturing sector .................................. 61

5.3.1 Internal factors: ....................................................................................... 61

5.3.2 External factors: ....................................................................................... 62

5.4 SWOT Analysis: ............................................................................................... 62

5.5 Comparison with two key competitors ................................................................. 62

5.5.1 Malaysia .................................................................................................. 63

5.5.2 Thailand .................................................................................................. 63

5.6 Opportunities for Dutch companies in the moulding sector ..................................... 63


B. Promising sectors for exports from the Netherlands ...................................................... 66

6 Agricultural industry ................................................................................................. 66

6.1 Background study: ........................................................................................... 67

6.1.1 Rice production: ....................................................................................... 67

6.1.2 Fruit and vegetables: ................................................................................ 68

6.1.3 Fisheries: ................................................................................................ 70

6.1.4 Livestock: ................................................................................................ 70

6.2 Vietnamese agricultural equipment sector: .......................................................... 71

6.2.1 Overview of agricultural equipment sector: .................................................. 71

6.2.2 SWOT analysis for Dutch agricultural equipment in Vietnam ........................... 72

6.3 Agro processing and packaging market ............................................................... 73

6.3.1 Overview of the agro processing and packaging sector .................................. 73

6.3.2 SWOT analysis for Dutch FPP technologies and equipment in the Vietnamese

market: ................................................................................................... 74

6.4 Horticultural equipment ..................................................................................... 75

6.4.1 Overview of horticultural equipment ............................................................ 75

6.4.2 SWOT analysis of Dutch horticultural equipment in Vietnam:.......................... 76

6.5 Distribution Channels for agricultural/horticultural/agro processing and packaging

equipment to Vietnam....................................................................................... 77

6.6 Market Entry Strategies for agricultural/horticultural/agro processing and

packaging equipment to Vietnam ....................................................................... 78


7 Oil and gas .............................................................................................................. 80

7.1 Upstream and Midstream .................................................................................. 80

7.1.1 Reserve potentials .................................................................................... 80

7.1.2 Exploration and production ........................................................................ 82

7.2 Downstream .................................................................................................... 85

7.3 Sector organisation .......................................................................................... 86

7.4 Regulatory environment .................................................................................... 87

7.5 SWOT analysis ................................................................................................. 87

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7.6 Market entry .................................................................................................... 88

7.7 Opportunities for Dutch companies in the Oil and gas sector .................................. 89


8 Equipment and machinery for the autonomous manufacture of means of transport such

as bicycles, mopeds, baby carriages etc. ..................................................................... 92

Annex 1 - List of Vietnamese tradefair in promising sectors .................................................. 94

Annex 2 - List of supporting organisations in promising sectors ............................................. 98

Annex 3a - interview results – electronic manufacturing companies ..................................... 100

Annex 3b - List of interviewed companies - Electronics ................................................... 110

Annex 4a – interview results electrical equipment manufacturing companies ......................... 117

Annex 4b - List of interviewed companies - Electrical equipment ...................................... 126

Annex 5a – interview results – moulding companies ........................................................... 131

Annex 5b - List of interviewed companies - Molding ....................................................... 138

Annex 6 – interview results – agricultural equipment trading companies ............................... 143

Annex 7a - Interviewed results - Dutch companies ............................................................ 152

Annex 7b - List of interviewed companies - Dutch companies .......................................... 156

Annex 8 – key contacts in the vietnamese oil & gas sector .................................................. 158

Annex 9 – analysis 1 ...................................................................................................... 159

Appendix 1: Useful contacts ........................................................................................ 182

Appendix 2: Dutch companies active in Vietnam ............................................................ 183

Annex 10: methodologies ............................................................................................... 185

Annex 11 – regulations governing promising sectors .......................................................... 187

Annex 12 - trading between the netherlands and vietnam - first 6 months of 2013 ................ 190

Annex 13 - Action plan and further proposals to CBI .......................................................... 192

Annex 14 - doing business in vietnam .............................................................................. 200

Annex 15 – guidance for dutch companies for obtaining support in the vietnamese market ..... 204

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List of Figures, Tables, Diagrams and Maps

Figure 1: Vietnam Gross Domestic Product from 1996-2012, 2013 estimates .......................... 18

Figure 2: Vietnam import-export total value and trade balance, 2001-2012 ............................ 19

Figure 3: Vietnam Foreign Direct Investment 1993-2012 ...................................................... 19

Figure 4: Manufacture of computer, electronic and optical products in Vietnam (2005-2012) .... 29

Figure 5: Vietnamese Electronic Export Turnover (2009 – 2012) ........................................... 31

Figure 6: Trading in the E&E industry between the Netherlands and Vietnam (US$) from

2010- 2012 .................................................................................................. 32

Figure 7: Vietnam manufacture of electrical equipment (2005-2012) ..................................... 46

Figure 8: Vietnamese electrical products, spare parts and components Export Turnover (2009

– 2012) ........................................................................................................... 47

Figure 9: Vietnamese electrical Cables and Wires Export (2004 – 2012) ................................. 49

Figure 10: Vietnam Rice Export Import (1962 – 2010) ......................................................... 67

Figure 11: Vietnam proved oil reserve (1992 – 2013) .......................................................... 80

Figure 12: Vietnam proved natural gas reserve (1991 – 2013) .............................................. 81

Figure 13: Vietnam Oil Production and Consumption (1990 – 2012) ....................................... 83

Figure 14: Vietnam Gas Production and Consumption (1990 – 2012) ..................................... 84

Table 1: Minimum wages 2013 .......................................................................................... 20

Table 2: Regional industrial competitiveness in East Asia and the Pacific and world ranking

Comparison 2012-2013 ........................................................................................ 20

Table 3: Electricity output to 2030 ..................................................................................... 49

Table 4: The volume of transmission lines substations that are expected to be built in the

period 2010-2030................................................................................................ 50

Table 5: Capital investment in electricity development ......................................................... 50

Table 6: Mechanisation rate in the agricultural sector (2010) ................................................ 71

Diagram 1: Electronic manufacturing sector value chain ....................................................... 35

Diagram 2: Value chain for the electrical equipment manufacturing sector .............................. 52

Diagram 3: Value chain of mould manufacturing ................................................................. 61

Diagram 4: Position of Vietnam’s moulding manufacturing sector ......................................... 63

Diagram 5: Equipment Distribution Channels ...................................................................... 77

Map 1: Sector – regional map ........................................................................................... 23

Map 2: Major Oil and gas Basins in Vietnam ........................................................................ 82

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List of References

Trading Economy Statistic, World Bank

General Department of Vietnam Custom (Vietnam Custom) Statistic

Ministry of Planning and Investment

General Statistic Office, Vietnam (GSO)

Vietnam Official Gazette

Vietnam Electronic Industry Association (VEIA)

Global value chain, Timothy J. Sturgeon, Momoko Kawakami

Regional industrial competitiveness in East Asia and the Pacific and world

ranking Comparison 2012 – 2013 carried out by UNIDO

World Electronics Forum

Labor Ministries of Vietnam and regional countries (Singapore, Malaysia,

Indonesia, Thailand, Philippines)

Industrial Areas Plan to 2020

Kaname Akamatsu research on industry development - Flying geese

paradigm

Singapore Economic Development Board (www.edb.gov.sg)

Thailand Board of Investment (www.boi.go.th)

Malaysia External Trade Development Corporation

(http://www.matrade.gov.my)

Malaysian Investment Development Authority (http://www.mida.gov.my)

The Phillippines Export Confederation

Indonesia (Ministry of Industry)

Hochiminh City Electrical Cables Association(HECA)

Viet Nam Electrotechnical Industry Association (Velina)

Saigon Hi-tech Park (SHTP)

Food and Agricultural Association of UN (FAO)

Vietnam Food Association (VFA)

Ministry of Agriculture report.

Vietnam Institute of Agriculture Engineering and Post Harvest Technology

(VIAEP)

Vietnam Fruit Association

Vietnam Plastic and Packaging Association

US Energy Information Administration statistics

Petro Vietnam Corporation

MARD in collaboration with the National Assembly Economic Committee

and the Vietnam Farmers' Association.

Eurostat

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http://www.boi.go.th/

http://www.matrade.gov.my/

http://www.mida.gov.my/



Executive summary

This market analysis provides an in-depth understanding of the current

development of promising sectors in Vietnam and an analysis of the

prospects for cooperation with Dutch industries. Methods of analysis

include desk research, quantitative and qualitative analyses. All

quantitative analysis can be found in the annexes.

The analysis identifies potential opportunities for Dutch companies to

cooperate with Vietnamese companies in the sectors below:

A. Import direction from the Netherlands

Electronic manufacturing/assembly: Importing opportunities in low

technology value but highly skilled and labour intensive products

such as electronic circuits, cell phones, automotive electronic parts,

chips, semiconductors, resistors and sensors.

There are also opportunities for Dutch companies to invest in

manufacturing companies in electronic parts or components or

consumer electronic products in Vietnam. There are very good

incentives from government for companies with foreign investment

in Vietnam, and there is also a large domestic consumer market for

electronic products.

There are also opportunities for Dutch companies to supply

technologies and material supporting the electronic manufacturing

sector as electronic manufacturing is a priority sector and there will

be substantial development of the electronic manufacturing sector

in the Vietnamese economy in the coming years.

One further opportunity is for Dutch companies to export high

technology consumer electronic products such as smartphones and

laptops to the Vietnamese market as this constitutes a large

consumer market for electronic products.

Electrical wires and cables, electrical equipment: Importing

opportunities in relation to wires and cables (low to high voltage,

wire harness), electrical panels and boxes, transformers, low/high

voltage panels, wire harnesses etc.

Dutch companies can also find opportunities to supply equipment

and technologies in renewable energy and clean power production

to Vietnam due to increasing demand and expanding

manufacturing. Vietnam is a potential market for manufacturers of

electrical equipment, renewable energy equipment and clean power

production equipment.

Mould manufacturing: Importing opportunities in different kinds of

moulding, such as plastic injection moulds, press dies, stamping,

die casting moulds, rubber moulds, metal moulds, jigs and fixtures.

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B. Export direction to Netherlands

Agricultural equipment/machinery: Exporting opportunities in

Vietnam concern small agricultural equipment/machinery and,

post-harvest equipment

Agro food processing machinery and packaging machinery:

Exporting opportunities in small volume equipment targeting the

large SME population, specifically packaging equipment to produce

plastic packages, storage technologies to store fresh fruit,

specialised fruit transport vehicles to reduce post-harvest loss,

seafood processing equipment, equipment suitable for soft drink

production.

Horticulture: Exporting opportunities in irrigation systems, fertiliser

dosing systems, specialised tools for fruit harvest

Oil and gas equipment : Exporting opportunities in oil and gas

equipment (not only turbines), accessories, chemical and services

for the upstream, midstream and downstream segments

Equipment and machinery for the manufacture of means of

transport: There is no direct opportunity for Dutch companies to

supply equipment and machinery to the industry manufacturing

means of transport. However, there are opportunities for Dutch

companies to supply equipment, technologies and materials to

industries supporting the means of transport manufacturing sector.

From the findings, there are recommendations for the next steps for CBI,

FME, Metaalunie, Agentschap NL and the Dutch Embassy in Vietnam in

terms of supporting Dutch companies. In each promising sector, the next

step recommendation may vary, as each sector has different, suitable,

effective activities. Next step is as follows:

Promising sectors Next step recommendation for

support organisations

A. Import direction to the

Netherlands

Electronic

manufacturing/assembly:

Mission of Dutch importing

companies to visit Nepcon

Vietnam 2014 -

Exhibition on

Manufacturing & Testing

Technologies and

Supporting Industries for

Electronics Manufacturing

– 7th Edition organised

from 9-11 October 2014 in

Ho Chi Minh City.

Mission to visit electronic

manufacturing/assembling

companies, hi-tech parks

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in Vietnam.

Electrical wires and cables,

electrical equipment

Mission of Dutch importing

companies to attend The

7th International

Electrical Technology &

Equipment Exhibition -

Vietnam ETE 2014 from

16-19 Jul 2014 in Ho Chi

Minh City. The exhibition

showcases Vietnamese

companies which

manufacture Electrical

Technologies & Equipment,

Lights & Lighting Systems

and Complete Equipment

Contractors

The mission also includes

business tours, meetings

and working programmes

at electrical equipment

manufacturing factories,

projects and power plants

in southern Vietnam

Mould manufacturing Mission of Dutch

companies to attend

Vietnam Manufacturing

Expo 2014 – the most

comprehensive Machinery

and Technology event in

manufacturing and

supporting industry from

27-29 August 2014 in

Hanoi. The exhibition

gathers together a large

number of Vietnamese

companies in the

supporting industries in

order to showcase their

manufacturing capacity

and look for customers.

Dutch commercial

buyers/sellers’ mission:

The mission programme is

for each Dutch company to

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meet with moulding

companies which match

their technological

requirement

Seminars/training for

Vietnamese companies on

new technologies

In a long term view, in

order to help Dutch

companies cooperate with

appropriate companies

with strong labour

resources, CBI and

partnering associations

can provide supporting

programmes for

Vietnamese companies,

such as cooperation

programmes between

Dutch industries with some

key vocational schools or

universities to give short

courses on basic

techniques on machinery

application for graduates

before they get a job in

the moulding or

metalworking sectors.

B. Export direction from the

Netherlands

Small agricultural machinery/

Agro food processing

machinery and packaging

machinery/ Horticultural

equipment

Seminars on Dutch

technologies in each sub-

sector of equipment and

technology. Seminars are

for Vietnamese distributors

and customers to

familiarise themselves with

Dutch equipment brand

names and identify

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suitable technologies for

Vietnamese markets.

Seminars to be organised

together with meeting

programmes with potential

Vietnamese distributors

Mission for Dutch

companies providing agro

processing and packaging

equipment/technologies to

exhibit in Propak

Vietnam from 4-6 March

2014– Trade fairs on

post-harvest and food

technology, processing

and packaging

industries or FoodPack

Vietnam 2014 from 26-

28 June 2014 in Ho Chi

Minh City. The focus of

these trade fairs also

extends to all related

processing, handling and

packaging industries for

food and other sectors,

from pharmaceutical and

healthcare to chemical and

cement. Dutch companies

can exhibit and organise a

Holland Pavilion in the

trade fairs.

Oil and gas equipment

Mission of Dutch

equipment suppliers to

exhibit at Oil & Gas

Vietnam (OGAV) 2014 -

oil and gas event in

Vietnam for both upstream

and downstream oil and

gas companies and also its

supporting industries 21 –

23 Oct 2014 in Vung Tau

Mission of Dutch

equipment suppliers to

visit governmental officials

and key players in Oil and

gas sector.

Mission to visit potential

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distributors in Vung Tau

(oil and gas industry

areas) and Ho Chi Minh

City.

Equipment and machinery for

the autonomous manufacture

of means of transport such

bicycles, mopeds, baby

carriages etc

Mission for Dutch

companies to attend MTA

Vietnam from 8 – 11

July 2014 in Ho Chi Minh

City. This is the 12th

International Precision

Engineering, Machine

Tools and Metalworking

Exhibition and Conference

In case of individual

enquiries from Dutch

companies, a tailored

meeting programme for

them with some end-users

should be effective

enough.

Next step recommendation for Dutch companies entering Vietnam:

Dutch companies wishing to have further market information on the

Metalworking industry in particular or Vietnamese market in general can

obtain support from many channels such as:

CBI, FME, Metaalunie, NL Agency and join in their trade missions to

Vietnam

Vietnam trade office under Vietnam Embassy located in The Hague,

in the Netherlands

Dutch Embassy in Hanoi and Dutch Consulate in Ho Chi Minh City,

Vietnam

Vietnam trade promotion organisations based in Vietnam, such as

the Vietnam Chamber of Commerce and Industry (VCCI),

Investment and Trade Promotion Center of Ho Chi Minh City

(ITPC), Vietnam Trade Promotion Agency (Vietrade)

Trade services and consulting companies

Trade directories and websites

Please see Annex 15 – Guidance for Dutch companies for obtaining

support on the Vietnamese market, and also Annex 2 – List of supporting

organisations in promising sectors.

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Dutch companies can also refer to Annexes 3, 4, 5, 6, 8 – Lists of

interviewed companies in promising sectors to look for possible

appropriate useful contacts for their business expansion to the Vietnamese

market.

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1 Background and introduction to the

market analysis

1.1 Background

The metalworking industry is the biggest industry in Vietnam and

produces a large variety of goods from car to electronic parts, for all

sectors, from shipbuilding to the aviation industry. Metalworking

generates a significant proportion of the annual revenue in Europe. The

international trade in the metalworking industry is substantial because of

the high value of the products. The global trends of international trade in

the metalworking industry have strongly increased in the last 10 years

and are not limited to territories or geographical locations. Besides, many

European companies in the metalworking industry also invest overseas

and explore the comparative advantages of other markets in other

regions.

The Dutch economy plays a significant role in the European economies

and is the fifth largest in the area. Key industries in the Netherlands

include metal and engineering products, electrical machinery and

equipment, chemicals, petroleum, construction, microelectronics and

fishing. The metalworking industry is considered to be an industry with

intensive research capacity. The Dutch metalworking industry is very

strong in terms of making machinery with advanced electronic control

systems. It makes the Netherlands a world leader in the manufacture of

vehicles, food processing equipment and machinery for the chemical

industry; the country also has a substantial electronics industry.

Vietnam is situated in Southeast Asia, a high growth engine in the world

economy. The region encompasses booming economies and there is

sustainable and integrated development of all countries in the area.

Vietnam, with its strong economic growth and openness to the global

economy, has revealed much potential for development and cooperation

with international markets in terms of trading, outsourcing and

investment. This will provide benefits for all of the parties concerned.

Growth industries include oil and gas, agriculture, tourism, mechanics,

textiles, etc.

The CBI is the Centre for Promotion of Imports from developing countries.

Following a CBI mission, CBI Market Intelligence is cooperating with FME,

Metaalunie, Agentschap NL and the Dutch Embassy in Vietnam to perform

a Market Analysis on Metalworking/Metal parts and components in

Vietnam.

The interest from Dutch companies in the Vietnamese market is diversified

hence the market analysis should take the different perspectives of the

involved organisations into consideration:

Imports from Vietnam to the European market

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Exports to the Netherlands (Dutch SMEs) to the Vietnamese market

Vietnam as a potential outsourcing market for Dutch companies

Vietnam with potential opportunities for collaboration or investment

The first step of this market analysis has been carried out. The analysis in

the first step was to identify the most promising sectors for import/export

from/to Netherlands and for outsourcing/investment from Netherlands

(see Annex 9 – Analysis 1). The result achieved from the first step is to

specify the focus of the market analysis in this step. The focus areas for

this analysis include the following promising sectors:

A. Import direction from the Netherlands

Electronic manufacturing/assembly.

Electrical wires and cables, electrical equipment such as low/high

voltage panels, transformers, etc.

Mould manufacturing, moulding products.

B. Export direction from the Netherlands

Small agricultural machinery (agro sector, food processing

machinery, packaging machinery, and horticulture)

Turbines for wind energy (but only offshore oil, gas, wind etc.)

Equipment and machinery for the autonomous manufacture of

means of transport such as bicycles, mopeds, baby carriages etc.

1.2 Objectives

The target group for this market analysis is CBI, FME, Metaalunie,

Agentschap NL and the Dutch Embassy in Vietnam.

The market analysis provides an in-depth understanding of the promising

sectors for Dutch industries in order to identify potential areas for

partnering with Vietnamese industries in importing, exporting and

outsourcing. Through studies in different methodologies and from different

views, Dutch companies can set appropriate strategies for optimised

cooperation results and position Vietnam in relation to other regional

countries. Dutch companies are well equipped with insights into the

markets, potential partners and tips for ensuring success when doing

business within the Vietnamese market.

This analysis will give a full understanding about Vietnamese and Dutch

companies on their expansion plans to new markets and indicate what

support they need. It will help set the direction for the CBI and partners in

terms of providing the best services to these targeted sectors and

companies.

1.3 Approach and Methodology

Research methodology is a mix of 5 analyses and different methods (see

Annex 10 – Methodologies). A diversified methodology can help verify the

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results from different analyses and provide customers with the most

accurate results.

Analysis 1: Analysis to identify the most promising sectors for

trading from Vietnam to the Netherlands and for outsourcing

partnering/investment from Netherlands

Analysis 2: Analysis of the expansion plans of Dutch SMEs in the

metalworking industry in the next 3-5 years,, the significant factors

they consider when expanding and what support they need

Analysis 3: Analysis of Vietnamese trading/manufacturing

companies in the metalworking industry on their expansion plans

for overseas markets/European markets in next 3-5 years, the

significant factors they consider when expanding and what support

they need

Analysis 4: General study of legal regime which regulates

Metalworking Industry and industry overviews in relation to export

and outsourcing in those markets including Singapore, Malaysia,

Thailand, Indonesia, Philippines

Analysis 5: Market Analysis Metalworking/Metal parts and

components in Vietnam

2 Vietnamese economy overview

2.1 Historical overview:

Vietnam is a developing country and is considered to be an agricultural

country, with 70% of the population living in rural areas and earning their

living from the agriculture industry. After the reunification of the country

after the wars in 1975, Vietnam started to move towards the

industrialisation of the country with a focus on heavy industry. This

direction was very focused during the 1980s but was not very effective

because the foundation of agriculture, light industry and the service

sectors were not well established. This led to imbalances in the economy.

During a long period from 1975-1994, Vietnam had a closed economy with

very limited trade and communication with the world economy. It meant

Vietnam did not have the opportunity to access global technologies and

develop further.

In 1994, the US lifted its embargo; this is considered to be a turning point

for Vietnam in terms of joining in the world economy. Vietnam started to

actively carry out gradual domestic reforms and facilitate international

economic integration. Vietnam signed bilateral trade agreements with

some international trade organisations, joining ASEAN in 1995, WTO in

2007 and opening up to the global economy.

The 8th Party Congress in 1996 defined the goals of industrialisation and

modernisation for Vietnam until 2020, including selecting and focusing on

the key industries which require advanced skills and technology but not

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much capital. Some of the industries are agriculture, food processing,

consumer goods, the electronics industry, information technology,

tourism, extraction and production of oil and gas. All the sectors are

encouraged to develop the capacity for exporting.

The legal system governing economic development and international

economic integration has been highly reformed and improved since 1986;

the Law on Foreign Investment was introduced in 1988. After the

implementation of the new Constitution (1992), a number of important

legal documents were enacted including the Labour Code (1995), Civil Law

(1996), Cooperative Law (1996), State Budget Law (1996), State Bank

Law (1997), Credits Organisation Law (1997), Trade Law (2005),

Enterprise Law (2005), and Investment Law (2005). In recent years,

many legal guidelines from government have been revised; this has made

the business environment more favourable to local businesses and foreign

investors or trading partners.

2.2 Vietnamese country data and economy

overview:

Over the last 20 years Vietnam has achieved significant development.

Together with other countries in Southeast Asia, the high growth engine of

the world economy, Vietnam has strong growth in different aspects of the

economy and has promising prospects in terms of sustainable and

integrated development within the global economy.

GDP growth: Vietnam became one of the fastest growing economies in

the world with a high and stable annual GDP growth rate.

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Figure 1: Vietnam Gross Domestic Product from 1996-2012, 2013

estimates

Source: Trading Economy Statistic, World Bank

The total export turnover of Vietnam has been undergoing rapid growth

in recent years. The export turnover of goods increased from EUR 10.95

billion in 2001 to over EUR 83.22 billion in 2012, included in the top five

largest exporters in ASEAN region in 2012. Vietnam's main exports

include: crude oil, textiles and garments, rice, coffee, rubber, coal,

aquaculture, processed forest products, agriculture, forestry and fisheries.

The number of countries and territories that import Vietnamese goods has

increased rapidly in the last ten years and includes more than 100

territories so far.

Total import turnover was EUR 11.83 billion in 2001, this increased

gradually to EUR 83.07 billion in 2012. Vietnam’s key import commodities

include: petroleum products, iron and steel, fertiliser and chemicals,

electronics, cars, medicine, machinery and equipment.

Vietnamese balance of trade returned to a surplus of EUR 569.40

million in 2012, the first time after 19 years of trade deficit. The country

forecasts that a trade deficit will likely re-emerge as the economy recovers

and in the investment period for growth so imports (in support of

production) will increase. But the magnitude of this gap will not be

sufficient to cause a disturbance in exchange rates. See more Annex 12 –

Trading between the Netherlands and Vietnam - first 6 months of 2013.

0

20

40

60

80

100

120

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 (

est)

Vietnam GDP (billion EUR)

Vietnam GDP (billion EUR)

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Figure 2: Vietnam import-export total value and trade balance, 2001-2012

Source: Vietnam Customs Statistics

Foreign direct investment has drastically increased. These capital

sources have made a huge contribution to the development of the

economy, the improvement of living standards and increased investment

among citizens. Some of the key investors include Singapore, Taiwan,

Korea, Japan, the US, and British Virgin Islands. The phenomenal increase

of FDI in 2008 was apparently a reflection of Vietnam’s accession to WTO.

Figure 3: Vietnam Foreign Direct Investment 1993-2012

Source: Ministry of Planning and Investment

See Annex 14 – Doing business in Vietnam for more information on how to

invest/open representative offices/expand into to the Vietnamese market,

legal entities, basic tax system, business tips

-20

0

20

40

60

80

100

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Vietnam import-export total value

and trade balance, 2001 - 2012

Vietnam Import Revenue (billion EUR)

Vietnam Export Revenue (billion EUR)

Vietnam Trade Balance (billion EUR)

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Vietnam Foreign Direct Investment

Total registered capital (million EUR) Implementation capital (million EUR)

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Labour force: Vietnam possesses a strong labour force as Vietnam has a

growing and young population. It has a so-called “golden labour structure”

where the percentage of the population at working age is higher than the

percentage of dependents and more than 50% of population is aged

between 15 and 35 years old.

One big comparative advantage of Vietnam is its cheap labour force.

Compared to the minimum wages of manufacturing industries in other

regional countries, Vietnam has very low labour costs.

Table 1: Minimum wages 2013

Country Indonesia Malaysia Philippines Thailand Vietnam

Minimum

wages

2013 (EUR

monthly)

151.84 192.72 167.90 160.60 91.25

Sources: Labour Ministries of each country in the graph

Vietnamese industrial competitiveness: According to Regional

industrial competitiveness in East Asia and the Pacific and world ranking

Comparison 2012-2013 carried out by UNIDO, Vietnam is positioned 54th

on the world and 12th in the region in term of industrial manufacturing

development. The rankings are based on different factors: industrial

manufacturing technologies, capital and industrial export.

Table 2: Regional industrial competitiveness in East Asia and the Pacific

and world ranking Comparison 2012-2013

CIP

Regional

World

ranking

Country CIP

Regional

World

ranking

Country

1 1 Japan 10 44 Philippines

2 4 Republic of

Korea

11 48 New

Zealand

3 5 China,

Taiwan

Province

12 54 Vietnam

4 6 Singapore 13 67 China,

Hong Kong

SAR

5 7 China 14 90 Cambodia

6 21 Malaysia 15 105 Fiji

7 23 Thailand 16 109 Mongolia

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Source: Regional industrial competitiveness in East Asia and the Pacific and world

ranking Comparison 2012-2013 carried out by UNIDO

Vietnamese infrastructure: Vietnam's infrastructure development is in

the lowest group compared with other countries like China, Malaysia, the

Philippines, Thailand and Singapore. All of the infrastructure sectors in

Vietnam such as roads, railways, telecommunications, water, and

electricity supply are monopolised by the government. The government’s

subsidies and lack of competitive pressure have slowed down the

development of the infrastructure.

In recent years, the government has put a great deal of effort into

developing infrastructure. This has included building industrial parks and

industrial zones in Vietnam to push manufacturing and draw foreign

investment. The government has also invested heavily in upgrading

physical infrastructure. Many world-class industrial zones have been built

up, however the infrastructure outside the Industrial Zones (IZs) remains

far from adequate.

Vietnamese supporting industries: In general, among Asian countries

such as China, Malaysia, the Philippines, Thailand, Indonesia and Vietnam,

supporting industries are rather young. Recently, some FDI enterprises

have emerged within the supporting sector; these are expected to change

the situation however, the effects are still limited.

Vietnamese geography: Vietnam is located in the south east of the

Indochina peninsula, belonging to South East Asia. It lies on the boundary

of two continents Europe-Asia and Oceania, and between the Pacific Ocean

and Indian Ocean. Vietnam is on the bustling West-East road and in the

middle of the sea-line connecting Hong Kong and Singapore, enabling the

construction of world-class deep-water ports and a centre for transaction

with national and international stature. The favourable location enables

Vietnam to reach trade centres more easily and is convenient in terms of

almost all ASEAN capitals such as Singapore, Kuala Lumpur, Bangkok,

Manila as well as Hong Kong and Taiwan. This is a big advantage for

Vietnam as a bridge to other nations in the region in transportation and

trading.

2.3 Overview of industry per region

Based on the Industrial Plan to 2020, the Vietnamese government is

aiming to map 6 industrial regions as follows:

Region I – Northern Midlands and mountainous region:

hydropower, agro-processing, mineral processing, chemical,

8 28 Australia 17 112 China,

Macao SAR

9 38 Indonesia

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fertilisers, metallurgy, construction materials, mechanical

engineering for agro-industry.

Region II – Red river delta regions and Northern key

economic region: mechanical engineering (ship building,

electric equipment, transport equipment), thermal-power,

electronics and ICT, chemical, metallurgy, mineral processing,

construction materials, apparel, leather and footwear, agro-

processing.

Region III – Central Coastal regions and Central key

economic region: agro-processing, petrochemical, ship

building, mechanical engineering industry, machine tool,

construction materials, apparel, leather and footwear, electronics

and ICT industries

Region IV – Central highlands region: hydropower, agro-

processing, mineral processing industries.

Region V – Southern region and Southern key economic

region: petrochemical, power, agro processing, mechanical

engineering, electronics, software, chemical and

pharmaceutical, apparel, leather and footwear industries

Region VI – Mekong river delta region: agro-processing,

natural gas utilised, engineering for agro-industry, ship building

industries

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Map 1: Sector – regional map

Source: Industrial Areas Plan to 2020

Although there is an Industrial Plan that runs until 2020 and which maps

the sectors with regions, each provincial government may have their own

strategies and incentives to draw investment to their provinces. So in

some sectors, manufacturing companies may not locate in line with the

Industrial Plan to 2020.

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A. Promising sectors for import from and

outsourcing services from Netherlands

Government policies: The metalworking industry includes sectors within

which primary manufacturing operations involve fabricating or assembling

metal parts; this is generally known as the “Mechanical industry” in

Vietnam. The Vietnamese government realised the importance of the

mechanical industry in terms of the industrialisation and modernisation of

the country soon after reunification. Until the mid-1990s, in the first stage

of openness to the global economy and in the light of reform and

integration, the government announced many open policies, setting a

strong direction and stimulating the development of Vietnamese

industries. The two most important decisions were Decree No. 186 in

2002 – Approving the Strategy on Development of Vietnam Mechanical

Engineering Industry until 2010, with a vision to 2020, and Decree 10 in

2009 - Providing for the mechanism of support for the manufacture of key

mechanical products and the list of investment projects to manufacture

key mechanical products during 2009 and2015. The two Decrees

correspond to incentives and support from the government for the

Vietnamese mechanical industry, including many sub-sectors.

The government encourages the development of mechanical engineering

supporting agriculture, forestry, fishery and processing, ship-building

industries, automobile engineering - communications and transport

engineering, manufacturing machine tools, complete equipment, metal

structures for big construction and industrial projects, etc. Specifically, in

the sectors below:

Supporting industries: The government realised the importance

and started to prioritise the development of supporting industries in

general and moulding, forging and creation of large casts in

particular, in order to synchronise equipment and technologies and

meet the demand for manufacture of large and sophisticated work

pieces and assemblies.

Electric-electronic technical equipment: The government

encourages building a modern electric equipment manufacturing

industry reaching the advanced level in the region in electric

equipment and materials by 2020. The sector should meet the

domestic demand, reduce imported equipment and export to

regional and world markets.

Some of the focused sectors above, such as shipbuilding, automobile and

transport engineering, electric equipment, electronic outsourcing,

moulding, casting and forging manufacturing, have achieved relatively

good development.

Comparison to regional countries

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The overview of the world electronics industry shows that Asian countries

(especially South East Asian countries) have great potential in the

development of the electronics industry. They are the biggest producers.

Their strengths are producing electronics components and consumer

products. The rapid development of these nations in consumer electronics

and semiconductor electronics is a good example for the future of the

Vietnamese electronics industry.

Singapore: Singapore has the most developed E&E industry in ASEAN. In

2012, manufacturing output in the electronics sector reached EUR 57.01

billion, contributing 25% to Singapore’s manufacturing. Singapore’s

electronics industry has 14 silicon wafer fabrication plants, 20 assembly

and test operations, 15 of the world's top 25 fabless semiconductor

companies and 40 IC design centres in Singapore. This includes four 12-

inch fabrication plants, the world’s top three wafer foundry

companies, three of the world’s top five assemblies and test subcontractor

companies, and nine of the world’s top 10 fabless IC design companies.

The current position of Singapore in the world E&E industry is undeniable.

It is because Singapore provides a perfect business environment with

clear intellectual property rights laws and a full suite of activities to meet

business requirements from R&D to development, manufacturing, supply

chain and logistics management, human resources development, etc.

Thailand: The electric and electronics industry in Thailand started in the

1960s and developed rather fast. Electronics is also one of Thailand’s key

manufacturing sectors. Now, Thailand is the biggest ICT and consumer

electronics manufacturing country in ASEAN and is now the leader in air

conditioners, refrigerators, printers and PC manufacturing in South East

Asia. Thailand is the No. 1 HDD and components manufacturing base,

producing 1.4million units annually, accounting for a 40%-45% share of

worldwide HDD production with an export value of EUR 14.60 billion.

The key factors which have led to Thailand’s development in these sectors

include excellent supporting industries and effective support from

government policies.

Malaysia: Malaysia has transformed itself since the 1970s from a producer

of raw materials into an emerging high technology, knowledge-based and

capital intensive manufacturing industry. The Malaysian manufacturing

industry now considers the electrical & electronic (E&E) to be the

industry’s leading sector. Malaysia is currently the world‘s leading

location for semi-conductor assembly and test operations.

Malaysia‘s success can be attributed to a successful combination of

factors: a stable government, good economic policies, good infrastructure

and a skilled workforce.

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The Philippines: The Philippine electric & electronics (E&E) industry began

in the mid-seventies. After nearly 40 years of development, the E&E

industry in the Philippines expanded its production in key segments such

as: semiconductors and integrated circuits, electronic data processing

equipment, office equipment, telecommunications equipment,

communications and radar, control and instrumentation, medical and

industrial, consumer electronics, solar/photovoltaic. In the semi-conductor

segment, the Philippines supplies 50% of the world’s demand for 2.5”

HDD and 10% of world demand for 3.5” HDD.

The Philippines possesses competitive advantages to develop the E&E

industry: relatively competitive labour costs and the availability of

technical labour. The government provides very active support through

relevant investment policies with the Investment Priorities Plan.

Indonesia: The Indonesian electric and electronics industry started in the

early 1980s and significant foreign direct investment in the electronics

industry has been accepted by Indonesia since the 1990s. Indonesia's

export opportunities in electronic products were strongly influenced by the

rapid growth and trends of component outsourcing in the world E&E

industry especially in the segment of labour-intensive manufacturing.

Indonesia is currently facing some obstacles in their electronic

manufacturing sector development in government policies.

In Part A of this market analysis, the study will be focusing on the

promising sectors identified in the first stage:

Electronics manufacturing

Electrical equipment

Supporting industry (focusing on moulding)

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3 Electronic manufacturing/assembly

sector

3.1 Overview of Vietnam’s electronics

manufacturing sector

The electronics industry today plays a vital and dynamic role in the

Vietnamese economy. The electronics industry has grown substantially

over the past decades with increased access to innovative technologies,

opportunities to function as outsourcing partners to hi-technology

corporations and rising customer demand for electronic goods and

services.

The sector includes many sub-sectors such as manufacturing of electronic

and mechanical electronic materials, components and parts, and

equipment. The manufacturing process consists of designing overall

equipment, designing electronic circuits, manufacturing components and

the assembly process (which plays a very important part of the whole

process). There are three types of assembly line: manual, semi-automatic

and fully-automated and three main levels of kit to assemble products

(knock down kit):

Semi knock down (SKD)

Complex knock down (CKD)

In-complex knock down (IKD)

This is also an extremely diversified sector with the participation of

manufacturers, suppliers, dealers, retailers, electrical engineers,

electricians, electronic equipment manufacturers, and trade unions.

The electronics industry is highly fragmented, comprising of key

segments:

Consumer electronics appliances: main products are audio

equipment, television sets, MP3 players, video recorders, DVD

players, digital cameras, camcorders, personal computers, video

game consoles, telephones and mobile phones.

Industrial electronics:

Information technology equipment (computer and office

equipment)

Telecommunications equipment

Electronic components

Although the electronics industry has emerged very recently compared to

other traditional industries in Vietnam, it has achieved vigorous

development, especially in the past 20 years. The growth of the

electronics industry has been governed by some key descriptions and

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trends:

Under pressure to develop new and innovative products in shorter

cycles, at lower costs, and with higher quality, big corporations in

the electronics industry are tending to move their manufacturing

bases and outsource/off-shore or transfer lower level assembling

technology to low-cost destinations, such as the Asia Pacific

countries in general and Vietnam in particular as it has a cheap,

abundant and skilled labour force.

The Asia Pacific region is emerging as one of the most attractive

areas for the development of such manufacturing bases. This is

also a very large consumer market for this industry.

This industry is therefore highly fragmented, comprising large

international companies and many small and medium-sized

enterprises.

The rapid pace of innovation in electronics technology and rising

incomes/living standards are resulting in a consistent demand from

Vietnamese consumers for newer and faster products and

applications.

As the technology and products are changed and updated very

quickly so their life cycles are short.

3.1.1 Government policies

See more in Annex 11- Regulations governing promising sectors

Besides the two Decrees 186 and 10, specifically for the electronics

industry, the government was also focusing on the development of

electronics industry with the Decree 75 in 2007 – Approving the master

plan on development of Vietnam’s electronics industry up to 2012, with a

vision towards 2020. The objectives of the master plan include increasing

production turnover of EUR 2.92-4.38 billion and an export turnover of

EUR 2.19-3.65 billion, creating 300,000 jobs, and growing at an annual

rate of between 20% and 30%. The Decree has highlighted several

important areas in relation to implementing the Decree, such as

investment into research and development for the industry, calls for

foreign investment with technology transfer into the industry, human

resources development, tax regimes and the creation of IT and electronics

parks.

In 2010, the government also passed Decree 1755 – Approving the

scheme to make Vietnam a country strong in Information and

Communication Technology. The Decree’s objectives include the

development of Vietnamese ICT to supply the local market with integrated

circuits, software and digital content processing services, etc. The

important areas for implementing the Decree objectives include: taxation,

land policy for ICT projects and capital sources allocation.

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In addition, there was Decree 698 in 2009 – Approving the overall plan

on development of information technology human resources up to 2015

and orientation towards 2020. There are many plans to develop human

resources, including initiatives on research centres, high-tech parks and

human resources development joint programmes with developed

countries.

Many decisions and policies from the government have indicated that the

government understands the importance of the electronics industry in

economic development. The electronics industry has since undergone

restructuring and witnessed rapid development rates.

3.1.2 Manufacturing, Export, Domestic market, and

Foreign Direct Investment in the electronic sector

Manufacturing: In the 1990s, the number of electronic companies was

under 100 but this number increased to more than 500 enterprises by the

end of 2012, employing 200,000 people and generating 15-20% average

growth rate annually. Electronic manufacturing has increased steadily over

the years and is forecast to achieve strong growth in the future.

Figure 4: Manufacture of computer, electronic and optical products in

Vietnam (2005-2012)

Sources: Vietnam Electronic Industry Association (VEIA)

Although there is stable development of electronic manufacturing, the

number of assembling companies supplying to international EMS’s

(Electronic manufacturing services) or ODM’s (Original Design

Manufacturers) accounts for nearly 90%, leaving a very small proportion

of companies which are local ODM’s, designing and manufacturing their

own products for their brand names. Many ODM companies involve foreign

investments or are joint ventures (around 80%), indicating that Vietnam’s

capacity to design and market its own electronics products is quite limited.

There are only a few Vietnamese brand names (mainly in consumer or ICT

electronics) such as Hanel (brand name for TV), BTV, DENCO, CMS

2.39 2.96 4.12

4.80 5.78

7.12

11.33

15.28

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

2005 2006 2007 2008 2009 2010 2011 2012

Bil

lio

ns

Manufacture of computer, electronic and optical

products (EUR)

Manufacture of computer, electronic and optical products (EUR)

Linear (Manufacture of computer, electronic and optical products (EUR))

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Computers, FPT, Tien Dat amplifiers, recorders and karaoke machines,

with very limited market shares. Meanwhile many big consumer

electronics OEM brand names such as Sanyo, Toshiba, Hitachi, Sony, JVC,

LG, etc have entered and dominated the Vietnamese domestic market.

Among the large domestic electronics firms, many are still (partially)

state-owned (e.g. Hanel), however many of the companies, e.g. the FPT

Corporation, are moving towards privatisation.

Of the companies in the electronics industry which are involved in

assembling and supplying to EMS’s or ODM’s, 90% are Vietnamese or

companies with foreign investment. The starting point of the Vietnamese

electronics industry was the assembly process for the consumer

electronics sector, mainly in SKD, CKD and IKD. Over many years,

Vietnam has been expanding to the assembly process in industrial

electronics, information technology equipment and electronics components

for export.

Foreign direct investment: One-third of total electronic companies

involve foreign investments. Investment capital attracted in this industry

ranges from hundreds of millions to billions of US$. The strong foreign

investment in electronics is partially due to the reduction of the electronics

tariffs plan to 0-5% from 15-20%, following the commitment with the

ASEAN Free Trade Area (AFTA). This is evidenced in Vietnam’s

accelerating trade liberalisation and integration into the world economy.

This is one advantage for foreign companies and also for Dutch

companies when planning to invest in electronic manufacturing in

the Vietnamese market.

Although foreign invested companies account for only one-third of the

total number of companies in the industry, they possess a wealth of high

technologies and are the growth driver of the Vietnamese electronics

industry, making up 90% of the domestic shares and over 90% of the

export turnover of the industry.

Vietnamese electronics companies have exported complete products and

parts/components to more than 50 countries and territories. The export

turnover has rocketed by 20 times within the past 10 years. In 1996, it

was valued at EUR 65.70 million. In 2006, the turnover was EUR 1.29

billion. Since 2005, electronics has always been in top 10 industries in

export value from Vietnam with over 1 billion in export turnover. In the

past 4 years, export turnover has shown a continual increase with EUR

14.97 billion in 2012. Major export items are electronic and computer

components, printing machines, cell phones and integrated circuits. The

government has set a target to earn EUR 29.20 billion from electronics

exports by 2017 and this objective is considered achievable due to current

investment in the industry.

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Figure 5: Vietnamese Electronic Export Turnover (2009 – 2012)

Source: General Department of Vietnam Custom (Vietnam Custom)

Although manufacturing and export figures have been very positive in

recent years and strong growth is forecast for coming years, Vietnam's

electronics industry is facing a big challenge to its development. The

sector's export value is high, however 90% is generated by the foreign

direct investment (FDI) sector and only the remaining 10% by domestic

companies. For example: Samsung’s Vietnamese export value in 2012

doubled to EUR 9.27 billion, Intel exports amount to EUR 0.73 billion

yearly. Vietnamese local electronic companies play a negligible role and

there is a big technology hiatus between local and FDI firms. Local firms

work mainly in the assembly process of low-technology products, they are

weak in terms of technology, and research and development, have limited

capital and receive very little support from the government. To increase

the competitiveness of local electronic companies, Vietnam requires efforts

to be made by the industry itself. It needs assistance in the form of

government policies; international support in market expansion, human

resource training and increasing competitiveness; and cooperation in

terms of developing the support industries and participating in the global

value chain.

The Vietnamese electronics industry is facing a very imbalanced product

structure between consumer electronics (70%) and specialised electronics

(30%). Moreover, there is a big gap between assembling and

manufacturing components, parts (80:20). Localisation only achieves 20-

30%.

Trading with the Netherlands in E&E (Electronic and Electrical

industry): The Netherlands mainly imports electronic and electrical parts

and components such as electronic printed circuits, electric

motors/generators. Imports from Vietnam into the Netherlands have

2.04 2.59

8.03

14.97

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

2009 2010 2011 2012

Bil

lio

ns

Vietnamese Electronic Export Turnover (EUR)

Vietnam Electronic Export Turnover (EUR)

Linear (Vietnam Electronic Export Turnover (EUR))

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increased significantly over the last 3 years. Meanwhile Dutch exports

mainly concern equipment or complete consumer electronic products.

Figure 6: Trading in the E&E industry between the Netherlands and

Vietnam (US$) from 2010-2012

Source: European Commission Export Help Desk

In terms of the domestic market demand, Vietnam's consumer

electronics industry has grown substantially and strongly over the past

few years. It accounts for a significant proportion and was worth about

EUR 3.80 billion in 2012. It is forecast to increase at an overall compound

annual growth rate (CAGR) of 14% through to 2016 and expected to

reach EUR 6.50 billion by 2016. Key products for this market are

computing devices, mobile handsets and video, audio and gaming

products, etc. Specific growth areas include smartphones and flat screen

TV sets (comprising more than two-thirds of TV set sales); these are

expected to provide the most dynamic development. Smartphone sales

were EUR 1.46 billion in 2012 and are expected to reach EUR 1.83 billion

by the end of 2013. Computer hardware sales were EUR 1.31 billion in

2012 and are expected to reach EUR 1.53 billion by the end of 2013.

Audio visual sales were EUR 1.02 billion in 2012 and are expected to reach

EUR 1.17 billion by the end of 2013. The high domestic demand

represents a huge opportunity for foreign companies in general

and Dutch companies in particular to invest in electronic

manufacturing in Vietnam as investors have a large domestic

market for their products. Dutch companies could also find export

opportunities to the Vietnamese market with high tech consumer

electronics. Moreover, Dutch companies can supply technologies

and materials to the Vietnamese electronics sector.

0.00

100,000.00

200,000.00

300,000.00

400,000.00

500,000.00

2010 2011 2012

Tho

usa

nd

s

Trading in Electrical and Electronic industry between the Netherlands and

Vietnam (EUR)

Import from Vietnam to Netherlands in Electronics and parts and components

Export from Netherlands to Vietnam in Electronics and Electrical equipment

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The country's vast, under penetrated rural market offers much growth

potential, with Hanoi and Ho Chi Minh City accounting for most

sales. However, the Vietnamese electronics industry is still in its infancy,

hence the dependence on imports and products of foreign firms in the

market. These firms account for a significant proportion of 80% of the

market.

According to the Industrial Areas Plan to 2020 (see Map 1, section 2.3),

the electronics industry is theoretically located in regions II, III and V in

which two evolving electronics clusters are located in three main growth

centres, the Ho Chi Minh City area in the South, the Hanoi area in the

North and Da Nang in Central. There are few connections between the

three geographic clusters. Ho Chi Minh City accounts for more than 50%

of electronics companies nationwide.

3.2 Value chain

In Vietnam, the electronics industry’s value chain basically has two kinds

of firm, further described below. Dutch companies can cooperate with

contract manufacturers (CMs) in relation to chips, semi-conductors,

resistors, sensors, electronic circuit assembling, cell phone assembling and

automotive electronic part assembling:

Original Equipment Manufacturers (OEMs) focus on product

development, marketing and distribution; they carry brands and

sell branded products and systems in final markets to end-users.

They are also named “lead firms”. These firms initiate, or “lead,”

value chain activities by placing orders with suppliers.

Some OEMs which already have a presence in Vietnam include:

Samsung (consumer electronics), Kodak, Fujitsu, etc.

Contract manufacturers (CMs) focus on providing many of the

value chain activities that OEMs have outsourced. These activities

include manufacturing design, assembly, critical component

manufacture (e.g. semi-conductors and printed circuit board

memory) and micro-component manufacture.

The largest contract manufacturers which are involved in

production services alone (comprising component purchasing,

circuit board assembly, final assembly and testing) are Electronics

Manufacturing Service companies (EMS’s).

The Contract manufacturers which handle both manufacturing and

product design services are Original Design Manufacturing (ODM’s).

However, due to the complexity of many finished products that

contain multiple components, there are also specialised and more

localised contract manufacturers and suppliers which manufacture

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or supply to CM’s or EMS’s or ODM’s on simpler parts or assembling

processes. It means that in a supply chain for an electronic

product, there can be a large number of suppliers and

manufacturers using a variety of processes. This is where

Vietnamese electronics manufacturers have an opportunity to join

in the world value chain. This is also where Vietnamese

manufacturers in some other supporting products can join in the

value chain, e.g. plastic injection moulding for electronics. Dutch

companies can source from these Vietnamese electronic

manufacturers.

The value chain looks like a wide network with many companies acting

both as suppliers and customers to one another, depending on the

component and end product. Value chain relationships are therefore often

reciprocal rather than hierarchical.

Some electronics components can be used for different final consumer

products and the same manufacturers/suppliers can be involved in the

supply chains of many products.

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Diagram 1: Electronic manufacturing sector value chain

Function Operations Companies

Desig

n

Inputs

M

anufa

ctu

ring

Assem

bly

Testing

Sale

s

Aft

er

Sale

s

Original equipment

Manufacturer (OEM)

EMS/ODM

Component

supply chain

Contract

manufacturer

(CMs).

Component

supplier

OEM

CMs EMS

EMS

CMs

OEM

EMS/ODM

R&D, design, marketing, brand management

Advertising, direct

sales, retail

Returns, repairs,

supply chain

management

Manufacturing of

Semi-conductors,

power supplies,

printed circuit

boards, hard disc

drives, optical

disc drives.

CMs from

emerging

outsourcing

Sub-assembly,

final assembly

Testing, logistics

Vietnamese

companies

join in value

chain as

CM’s in

Inputs,

Manufacturin

g, Assembly

Function

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3.3 Internal/external factors affecting the

Vietnamese electronics manufacturing sector

3.3.1 Internal factors

a. Technology levels

According to the World Electronic Forum, the technological level of a

nation is evaluated on the basis of many elements such as total

expenditure for R&D, creativity in science, and technology, and the system

of technological development. There are 3 stages of development, from

emerging to developing electronics industries, in the world:

1st stage: assembling electronics products from imported parts

2nd stage: investing in manufacturing parts and components

3rd stage: researching and developing products, investing in high

technology, and increasing export

Vietnam is considered to be in the 1st stage and beginning to reach the 2nd

stage; Malaysia, Thailand, the Philippines and Indonesia are in the 2nd

stage, and Singapore is in the 3rd stage. This means that technology and

equipment within the Vietnamese electronics industry is 10 to 20 years

behind the other countries mentioned.

This situation is obvious as before 2000, Vietnam's economy was nearly a

closed economy. The exchange of goods and technology was very limited.

Only in the last 10 years has the technology transfer from foreign markets

increased gradually. Their technologies and facilities are 10-15 years older

than technologies in other regional countries. According to findings from

interviews with electronic manufacturing/assembling factories, they don’t

purchase new technology due to limited capital, inexperience in

purchasing machines and lack of information on new technology or new

markets. They are also concerned about the return on investment and the

government’s support. Therefore, currently both Vietnamese and foreign

companies consider investing in an assembly line a perfect strategy for

both sides. Foreign companies can gain benefits from Vietnamese cheap

and skilled workers and also reduce expenditure when penetrating the

local market, and Vietnamese companies don’t have to invest much but

still can earn good profit from assembling activities.

There are only some names Vietnamese brand names such as Belco,

Hanel, Hoa Phat, and Tien Dat, FPT (which account for 6-8% market

shares) developing towards the direction of investing in R&D and

technology to move up to the stage of manufacturing electronic

components for exporting.

In recent years, there has been encouragement from the government

towards R&D activities in the electronics sector through many policies. The

first 3 IT high tech parks were established in the late 2000s. These include

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Hoa Lac Hi Tech Park (Hanoi), Danang Hi Tech Park (Da Nang), Saigon Hi

Tech Park (Hochiminh City); they draw big investment in high technology

and the supporting industries. These 3 hi tech parks develop attractive

investment packages for domestic and foreign companies which invest in

high technology. They also develop R&D centres and training centres to

provide labour resources for companies in the hi-tech parks. Besides, Ho

Chi Minh City and Hanoi will be investing in 2 more software parks in the

coming years.

b. Labour force

The employees in the electronics industry total 250,000 people. The

Vietnamese labour force is plentiful, young, skilled and with high work

ethics. The wages of Vietnamese workers in the sector is around 50-60%

of wages of some regional markets such as Indonesia and the Philippines,

which are rather strong in electronics manufacturing industry. For high

level labour, the salaries in Vietnam are one-third to two-thirds compared

with other markets. Vietnam’s labour moreover has some strengths such

as nimbleness and good capacity for acquiring knowledge. This is highly

evaluated in terms of professional skills.

Skilled workers account for 36% of the total labour force. However, the

university system, with its 30 universities and 100 technical vocational

schools, has emerged as a major constraint. The issue is the education

system which is considered lacking training in critical reasoning, and

practical skills and only emphasising theory. These institutions are able to

supply plentiful skilled workers and engineers for the labour market.

However, this has only satisfied the demand in quantity not quality of the

Vietnamese electronics industry. Due to the old educational system, the

professional capacity and English level of these engineers and skilled

workers are rather limited. This is a challenge that all electronic

companies are facing. They have to re-train new staff upon recruiting

them.

There is a remarkable difference between employees working for domestic

enterprises and those working for FDI enterprises in professional ability as

FDI enterprises have strong resources for training. Upon recognising this

issue, the Vietnamese government has launched many programmes and

policies to improve the situation.

However, like many other policies and strategies, the direction is

absolutely correct and following the right track; the implementation of all

these policies however deliver low results or are very slow in nature.

There is a big gap between the directions/strategies and actual

implementation. The government is still slow to introduce fundamental

reforms, leaving technology students with low practical technology

knowledge. The implication is, therefore, that the Vietnamese electronics

industry still lacks sufficient high level labour for stable development.

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c. Capital

According to the Vietnam Electronic Industry Association (VEIA), nearly

80% of domestic enterprises had investing capital under US$ one million

and although recognising their lack in technology, domestic enterprises

don’t have much capital for technology upgrading and for research and

development activities. The percentage of investment in new technology is

low, approximately 0.3-0.5% of revenue. Generally, the capital of the

Vietnamese electronics industry is very small, and it leads to low

technology investment, ineffective business, limited movement into higher

value exports etc. The Vietnamese electronic companies are essentially

facing a raft of very tricky challenges.

3.3.2 External factors

a. Vietnamese global integration:

Since becoming an official member of WTO in 2007, and actively

integrating into the global economy, the Vietnamese electronics industry

has expanded significantly in relation to the international electronics

industry. This is a big opportunity for the industry to approach sources of

capital, technology, and management experience from other developed

countries. This also accelerates competition between electronics

enterprises and this is the motivation for reform in Vietnamese electronics

enterprises. However, joining the WTO has also led to several challenges

for the Vietnamese electronics industry, such as the Vietnamese

electronics industry, and even the domestic market if its productivity is

not strong enough, losing its market share. Manipulating opportunities and

advantages can create leverage to overcome challenges and create new,

greater opportunities.

b. Policies:

Vietnamese policies are not perfect but relatively certain. Vietnamese

policies and the legal framework to support the manufacturing industry

are quite good with many decisions and strategies to support the

development of local companies. However, many SMEs think those

strategies still don’t offer much support for their companies. To most

companies, the supporting policies are beyond their reach and here is a

big gap between policies and actual implementation.

c. Infrastructure:

Infrastructure in Vietnam is still underdeveloped compared to the

infrastructure in other regional countries.

d. Supporting industries

The supporting industries in Vietnam are not well developed yet, the

sector is still very scattered and there is no collaboration among

supporting industry companies. This is a big weakness because in the

electronics industry, input mainly depends on supporting industries. If the

supporting industries are developed, it is a big advantage for the

electronics sector in terms of development as the manufacturing cost of

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electronics products will be lower and delivery times will be shorter if the

input for electronics manufacturing is always available in the country. In

Vietnam, many FDI companies and Vietnamese companies in electronic

manufacturing are really in need of domestic input materials to reduce

manufacturing costs however, domestic suppliers can’t satisfy the demand

of quality, price and delivery date. Vietnam can provide raw materials,

however they cannot be used in the electronic manufacturing industry as

the input materials for electronic manufacturing should be of a higher

quality and should be “semi-processed”. FDI companies therefore have to

buy supporting materials (semi processed materials) from Malaysia or

Thailand. This will increase their manufacturing costs in total.

3.4 SWOT Analysis of Vietnamese electronic


Strength

S1: Labour resource is plentiful

S2: Labour cost is cheap

S3: Most Vietnamese workers are

skilful in basic technology and have

good work ethics.

S4: The policy system is fairly

certain and government's

continuous efforts to improve the

policy system will create new

opportunities for the integration of

the Vietnamese electronics industry

into the global electronics industry.

S5: The private sector is developing

very fast in quantity

S6: Vietnam has opened up to the

global economy and actively

engaged in multilateral relationships

(WTO, AFTA)

Weakness

W1: The sector is in its infancy

and depends on imports

W2: Technology is hindered by a

lack of capital and R&D

development.

W3: Capital is small

W4: Vision strategy and

management level are weak

W5: High-tech labour is

insufficient because of the old

educational system

W6: Research and development

policies are weak due to the

Government's insufficient interest.

The idea that Vietnam should take

advantage of the R&D

achievements of newcomers is too

popular

W7: Supporting industries are

very young

W8: Infrastructure is not

developed especially outside IP,

IZs

W9: The policy implementation

from the government is slow and

not very effective.

W10: Unbalanced output structure

Opportunities

O1: There are more chances to

approach capital, new technology

and model management experience,

improved business environment,

Threats

T1: WTO accession increases the

pressure of competition

T2: Technology, service and

promotion policies determine the

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expanded market, enterprise

reformation in the future if there is

an increasing trend of FDI being

poured into the sector.

O2: There are more chances to

expand into the global market by

joining the international value chain

O3: Associated trends to utilise

advantages increase

O4: Big domestic market potential

of large, young and receptive

population

O5: The government prioritises the

development of the electronics

sector.

O6: The electronics sector has

considerable potential to develop

success of competition, but

Vietnam's technology, service and

promotional policies are all weak

T3: The market is dominated by

foreign brands. This trend will

increase in 2018 when Vietnam

fully opens the market

3.5 Opportunities for Dutch companies in the

electronic manufacturing sector in Vietnam

Generally, development within the Vietnamese electronics industry is still

lagging behind compared to neighbouring, newly industrialised economies

such as Malaysia, Singapore, Thailand and the Philippines. The industry,

however, still has many advantages with cheap and skilled labour, and the

right strategies from the government in terms of “catching-up” with

technologies and manufacturing capacities of the more advanced

manufacturing markets, in order to grasp the opportunities and join the

global value chain. Vietnam has some comparative advantages and

disadvantages in terms of exporting, outsourcing and manufacturing in the

above sectors:

Advantages:

Cheap labour cost.

The labour force has a good working attitude and good skills.

Vietnam’s direction towards industrialisation and manufacturing

has achieved positive results.

Vietnam currently has the comparative advantage in manufacturing

products of labour-intensive sectors when other countries are

trying to shift to more technology-intensive sectors.

The fact that China is gradually losing its position as a

manufacturing base for many big OEMs has been advantageous for

some other markets such as Indonesia and Vietnam. Foreign

manufacturers looking for outsourcing/Import partners in low cost

countries should diversify their selection options and start

considering Vietnam as a potential manufacturing base for their

products.

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Disadvantages:

The Vietnamese supporting industry is not well developed

compared to supporting industries in other regional countries such

as Malaysia, Thailand and Indonesia. This leads to high cost of

input (materials and parts) for manufacturers which look for

outsourcing partners in Vietnam, e.g. Japanese car manufacturers

can only outsource some parts of their cars to Vietnam, they still

have to import other parts from Malaysia with higher costs than if

they outsourced all parts and assembled in Malaysia.

Infrastructure in Vietnam is not well developed compared to

Malaysia, Singapore, Indonesia and Thailand.

Opportunities:

Although Vietnam has some disadvantages, the country still offers many

benefits to Dutch manufacturers which are looking for

importing/outsourcing partners in Vietnam in some niche markets which

are in high demand in the Netherlands. These include low technology

value but high skilled assembling, labour intensive products such as chips,

semi-conductors, resistors, sensors, electronic circuit assembling, cell

phone assembling and automotive electronic part assembling. From

Malaysia and Thailand, the Netherlands imports products of a higher

technology value such as semi-conductors, machines, electrical goods,

electronic high tech parts, and from Vietnam, the Netherlands can import

and outsource products of a slightly lower technology value. Vietnamese

electronic manufacturing/assembling companies would really like to build

cooperation with Dutch companies which require the standard level

technologies that they can offer (see Annex 3a – Interview result –

Electronic manufacturing companies).

Besides, Dutch companies also have opportunities to invest in the

electronic manufacturing sector as the Vietnamese government is

encouraging foreign companies to invest in high technology manufacturing

companies in Vietnam and providing incentives for investors in terms of

income taxes and equipment import taxes.

There is also an opportunity for Dutch companies to supply technologies

and material support to electronic manufacturing sector. The electronic

manufacturing is a priority sector and there will be substantial

development of electronics manufacturing in Vietnam economy in the

coming years.

One more opportunity is for Dutch companies to export high technology

consumer electronics, such as smartphones and laptops, to Vietnam as

there is a large consumer market for electronic products.

See Annex 14 – Doing business in Vietnam for more information on how to

invest/open representative offices/expand into the Vietnamese market,

legal entities, basic tax system, business tips

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3.6 Next step recommendations

Dutch companies can participate in a mission to Vietnam to meet with

electronic manufacturing/assembling companies, hi tech parks and

electronic manufacturing associations in Hanoi and Ho Chi Minh City. The

mission can be organised in one week for mission members to also visit

Nepcon Vietnam 2014 - Exhibition on Manufacturing & Testing

Technologies and Supporting Industries for Electronics Manufacturing –

7th edition organised from 9-11 October 2014 in Ho Chi Minh City. The full

activity programme and tailored programmes for each mission member

will help Dutch companies identify suitable opportunities for their

companies and potential business partners.

Dutch companies can also obtain further support from other organisations

as mentioned in the Executive Summary, Annex 15 – Guidance for Dutch

companies to get support on Vietnam market, and also Annex 2 – List of

supporting organisations in promising sectors.

Dutch companies can also refer to Annex 3 – Lists of interviewed

companies – Electronics to look for possible appropriate useful contacts for

their business expansion into the Vietnamese market.

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4 Electrical equipment manufacturing

sector

The promising electrical manufacturing sector in this market analysis is

the manufacture of products that generate, distribute and use electrical

power, including some sub-sectors such as electrical lighting equipment,

electric household appliances and other electrical equipment, and

components manufacturing.

4.1 Overview of the Vietnamese electrical

equipment manufacturing sector

The growth of electrical equipment sector is governed by some key

descriptions and trends:

The electrical equipment industry supplies products for a diverse

customer base in all industries and consumer markets.

Products include electrical motors, commercial and industrial

lighting fixtures, electrical power equipment.

Imported raw materials including copper, aluminium and steel, the

prices of which are influenced by the world market. Therefore,

fluctuations in world commodity prices have a big impact on local

industry's performance. Some companies with big manufacturing

capacity engage in hedging. Effective hedging strategies can bring

volatile commodity prices under control.

Business operations require high fixed costs invested in

technologies and operating capitals. Therefore many Vietnamese

companies are facing a lack of capital for their investment capital

and operating capital.

This sector is fragmented and there are a few members that lay

claim to a sizable portion of sales.

This is a global industry similar to the electronics industry.

Emerging nations have provided motivation for growth via low-cost

labour, production, operation facilities and land. Vietnam is one of

these markets.

In contrast to the electronics sector, the life cycles of electrical

equipment are long. The long lifecycles and durability are

considered to be key indicators of a good product. Therefore,

Vietnamese companies work to keep up with shrinking product life

cycles and attain standardisation to maintain cohesiveness and

save money.

Top and bottom-line trends in the industry often track the broad

economic cycle. When the economy is growing and developing, the

customers are comfortable expanding their capital budgets and

spending on electrical equipment. When the economy slowdowns,

product sales immediately decrease. Companies try to repair and

replace equipment during regular, seasonal or cyclical slack periods

or will select products with lower technologies and quality for a

lower price. The Vietnamese market is in a developing and growing

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period so the domestic market is considered to have great

potential.

Operating efficiency is crucial for these companies to succeed.

Vietnamese companies are beginning to focus on efficiency and

cost-reduction methods such as Six Sigma, 5S, Lean Manufacturing

and common production platforms.

4.1.1 Government Policies

See Annex 11- Regulations governing promising sectors

The Vietnamese government considers the industry a very promising

export sector and has launched master plans to develop the industry.

Decree No.186 in 2002 (see in Part A.), approving the strategy on

development of Vietnam’s mechanical engineering industry till 2010 with a

vision towards 2020, has set the direction for the mechanical industry in

general and the electrical equipment manufacturing sector in particular.

Besides this, and specifically to regulate the sector, the government has

also implemented a master plan to develop the sector in Decree 48 in

2008 – Approving the planning on Development of the Electric Equipment

Manufacturing Industry in the 2006-2015 period with a vision towards

2025 (see Annex 11- Regulations governing promising sectors).

To achieve the master plan objectives, the government is encouraging

foreign investors into the sector to develop high technology and focus on

research. Some of the key products that the Vietnamese government is

targeting for development are static electric machines, different kinds of

transformers, rotary electric machines, motors/generators for household

and industrial uses, electric wires and cables, electric instruments, electric

boxes and panels, measuring equipment, etc. The sector also has plans to

build up a system of centres for inspecting the quality of electric

equipment to national standards, ensuring conformity with international

standards. This will help the local sector meet the requirements of

international standards and expand to overseas markets.

The government is also offering many incentives to companies which

create energy-efficient products and equipment items that are used to tap

renewable energy resources as well as those which conduct research for

energy conservation purposes. Specifically, the State is creating

favourable conditions so that businesses can seek preferential loans from

development banks, the assistance fund for science and technology

development, the national fund for technological renovation, and the

national energy efficiency and conservation programme.

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4.1.2 Manufacturing, the Domestic market, Export, and

FDI

Manufacturing: Vietnam forecasts a bright future for electric equipment

sector. The industry has achieved significant success, with an increasing

number of companies capable of manufacturing electric motors, low and

medium-voltage instruments, and insulation porcelain and wire harnesses.

Manufacturing has steadily increased in the last 10 years with a wide

range of products supplied domestically and exported. The average growth

rate of the industry is around 15% in recent years and targeted to

accelerate to 18% in the next five years.

Research on product and technology improvement receives continuous

financial support from companies. For example the Power Engineering

Joint Stock Company (PEC) under the Electricity of Vietnam Group (EVN)

has built new factories and purchased modern equipment items such as a

distribution transformer assembly line and the CNC automatic corrugated

iron cutting machine; the Electrical Equipment Joint Stock Company

(THIBIDI) has successfully manufactured epoxy cast resin transformers

(this type of transformer is safer for buildings than other types of

transformer), THIBIDI also manufactures components and accessories of

epoxy cast resin transformers for export to Laos and Cambodia; the

Vietnam Electric Cable Corporation (CADIVI) has launched a new product -

fireproof medium-voltage underground cable which is suitable for

underground works. Moreover, there are some other products from the

company, which are of high technical standards, such as heatproof, oil-

resistant, fireproof cables. LS Vina Cable has launched hi-tech products

such as high-voltage electric cables (170KV), high-voltage underground

cables (230KV); this company is one of the first Vietnamese companies

that have successfully applied ERP (Enterprise Resource Planning)

software in production and business activities. The Wind Turbine

Generator Manufacturing Plant successfully manufactured the first wind

power generator in May 2010 (although there is much to be improved on

these wind power generators).

The quality certification draws a great deal of attention from companies.

Most of the companies involved in exporting have achieved TCVN, IEC,

VDE (European standards certification).

Electrical equipment manufacturing companies are concentrated in three

key economic regions II, III and V located in the North, the Central and

the South of Vietnam (see Map 1).

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Figure 7: Vietnam manufacture of electrical equipment (2005-2012)

Source: General Statistics Office, Vietnam

Export:

Besides supplying to the domestic market and accounting for 95% of local

market shares, Vietnamese electrical equipment is also becoming popular

in the international market. Transformers are being exported to the Middle

East, Japan, and Africa, insulation porcelain is going to the US and the

Middle East, compact fluorescent lamps and wires to Latin America, the

Middle East, Myanmar, and the Philippines and electrical cables find their

way to the US, Europe and most of the Asian countries. The main export

markets now include Japan, Korea, Hong Kong, ASEAN countries. Export

turnover has been growing and is forecast to continue growing well in the

coming years.

Currently, many Vietnamese companies are focusing on the two

neighbouring markets which are considered to have huge potential. These

are Laos and Cambodia. Laos has a population of 7.2 million; the potential

for hydropower production in Laos is 23,000MW but the installed capacity

of hydropower plants in Laos currently totals only 3,200MW and Laos has

set an objective to increase the number to 12,500MW in 2020 and

electrify 90% of its rural areas by 2020. The huge increase in power

production capacity relies on eight hydro plants and one lignite-fired

power plant becoming operational over the next seven years. Cambodia

has a population of 14 million however, only 22.47% of households in

Cambodia have access to the national power grid, of which 82.53% live in

urban areas and 9.31% in rural areas. The objective of Cambodia's

electricity development plan is that by 2030, 70% of rural households will

have access to the national power grid. Vietnamese companies are also

looking for expansion into other markets throughout the world.

According to the plan for the 2011-2015 period, export growth of the

electrical equipment industry will be 18% a year and 15% in the 2016-

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

2005 2006 2007 2008 2009 2010 2011 2012

Mil

lio

ns

Figuream manufacture of electrical equipment

(million EUR)

Vietnam manufacture of electrical equipment (million EUR)

Linear (Vietnam manufacture of electrical equipment (million EUR))

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2025 period. Particularly, exports of electrical wires and cables will rise

35% annually during these periods. This proves that the electrical

equipment industry in Vietnam is receiving substantial, central financial

support and is being developed with the support of government. This is a

very optimistic sign for the sector.

Figure 8: Vietnamese electrical products, spare parts and components

Export Turnover (2009 – 2012)

Source: Vietnam Custom Statistic

Wires and cables sub-sector/wire harnesses:

Among other electrical equipment products, the export of wires and cables

has very positive prospects with the increasing trend of export and

particularly the successful expansion of the product to the US market and

the Japanese market which are considered to be very demanding markets.

The manufacturing capacity is high however export turnover accounts for

less than 10% of manufacturing so far. There is much room to improve

exports. Vietnamese cable and wires are of a good quality.

According to HECA, there are more than 200 companies in Vietnam

involved in the manufacture of electrical wires and cables. More than 75%

is made up of small and medium-sized enterprises, the remaining 40

companies are companies with foreign investment from Japan, Taiwan,

Korea, etc. The number of FDI companies is small but they account for a

large proportion of export turnover.

There are 3 levels of technology in relation to wire and cable

manufacturing companies:

100% companies with foreign investments which specialise in car

cables (no Vietnamese companies are able to manufacture these

high level cables). These companies are mainly from the US, Japan

and Korea (the two biggest names being Furikawa, Sumitomo) and

2,017

2,621

3,403

5,722

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2009 2010 2011 2012

Mil

lio

ns

Vietnamese electrical products, spareparts and

components Export Turnover (million EUR)

Vietnam Electrical products, spareparts and components Export Turnover(million EUR)

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have set up manufacturing bases in Vietnam to enjoy the cheap

labour source. The products will then be re-exported to its car

industries.

Companies with foreign investment from Korea, Taiwan or

Singapore with high level technologies manufacture other electrical

equipment (not car cables). Their products are mainly to be

exported and account for around 27% export turnover in the

sector.

Vietnamese companies which are expanding in domestic and

foreign markets.

Wire harnesses in Vietnam are supplied for different product

manufacturing processes, including the manufacture of air

conditioners, telecom devices wiring harness, power cables,

motorbike wiring, generator/engine wiring, car wiring and UPS

wiring. Vietnamese companies supplied wire harnesses for almost

all demand. Vietnamese companies possess good technologies for

wire harnesses. This is an area where Dutch companies could

source from Vietnamese companies.

SME domestic electrical equipment manufacturers have tried to work out

strategies and many solutions to improve their competitiveness. They

have launched many kinds of products that meet market demands locally

and internationally.

One big problem is that wire and cable manufacturing companies are

facing import taxes for some of the key materials for their production that

have increased significantly in the last years. Some imported materials

that Vietnamese wire and cable companies totally rely on include

galvanised steels (import tax has increased from 0 to 5%, VAT from 5% to

10%), insulation varnish (import tax increased to 15%), XLPE (import tax

20%), etc.

In addition, slow VAT refund processes for enterprises have also caused

many difficulties for enterprises as the amounts are quite high and

companies have to borrow working capital with high interest rates when

their capital is held up in the VAT refund process.

See below Figure 9. Although there was a drop in 2012 exports due to

the fluctuations of the copper price on the world commodities market, the

sub-sector electrical wires and cables is still forecasting rapid growth in

next 5 years.

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Figure 9: Vietnamese electrical Cables and Wires Export (2004 – 2012)

Source: Ho Chi Minh City Electrical Cables Association(HECA)

Domestic market:

Vietnam’s electricity demand is highest in East and South Asia. The

development plan of national electricity for period 2011-2020 and toward

2030 (Electricity Plan VII) was approved by the Prime Minister. According

to that, the electricity output will be about 194-210 billion kWh in 2015

and about 330-362 billion kWh in 2020. Total estimated investment for

the whole electricity sector from now to 2020 is about EUR 35.62 billion,

the average annual need is about EUR 3.56 billion. The growth rate of

electricity demand in Vietnam is the highest in East and South Asia.

Table 3: Electricity output to 2030

Year 2010 2015 2020 2025 2030

Total electricity

output

100.9

TWh

194.3

TWh

329.4

TWh

489.6

TWh

695.1

TWh

Hydroelectricity 38.8% 33.0% 25.7% 19.7% 14.4%

Oil and gas

Thermoelectricity

38.6% 24.3% 17.3% 17.3% 11.9%

Coal

thermoelectricity

16.2% 35.3% 46.9% 44.5% 52.7%

Renewable

Electricity

2.6% 5.0% 6.1% 8.1% 9.3%

Nuclear Power 1.4% 5.9% 7.4%

From import 3.8% 2.4% 2.6% 4.5% 4.3%

Source: Electricity Plan VII

281.05

379.60

511.00

620.50

740.22

641.67

949.00

1,122.74

451.14

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

2004 2005 2006 2007 2008 2009 2010 2011 2012

Mil

lio

ns

Figuream Electrical Cables and Wires Export (Million

EUR)

Vietnam Electrical Cables and Wires Export (Million EUR)

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The volume of transmission lines and substations that are expected to be

built in the period 2010-2030 (Electricity Plan VII)

Table 4: The volume of transmission lines substations that are expected to

be built in the period 2010-2030

Item Unit 2011-

2015

2016-

2020

2021-

2025

2026-

2030

500kV Station MVA 17.1 26.75 24.4 20.4

220 kV Station MVA 35,863 39,063 42,775 53,25

500kV

Transmission

line

Km 3,833 4,539 2,234 2,724

220 kV

Transmission

line

Km 10,637 5,305 5,552 5.02


Capital investment in electricity development (Electricity Plan VII)

Table 5: Capital investment in electricity development

Period 2011-2015 2016-2020 2021-2030

Investment in power

plants (Billion EUR/1

year average)

2.30 2.44 3.58

Investment in power

grid (Billion EUR

/1year average)

0.96 1.41 1.89

Total investment

(Billion EUR /1 year

average)

3.26 3.85 5.48


Regarding the domestic market, the demand for electrical equipment

products is due to increasing demand and manufacturing. The demand for

equipment is particularly high in areas that still have no access to the

national power grid, including highland, remote areas and islands. In

these areas, electrical equipment manufacturers must take full advantage

of natural conditions and utilise the potential for new and renewable

energy development to generate power on site. These areas are a

potential market for manufacturers of electrical equipment, renewable

energy equipment and clean power production equipment. Dutch

companies can also find opportunities to supply equipment and

technologies in renewable energy and clean power production to Vietnam.

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4.2 Value chain

There are some key players in the electrical equipment manufacturing

value chain. Opportunities for Dutch companies in importing can be found

with manufacturing companies (in 4.2.2) which supply wires and cables,

wire harnesses, transformers, electric boxes and panels and electric

components.

4.2.1 Input:

a. Companies which supply materials (both imported and local) to

manufacturing companies. The material can be metal including

copper, aluminium, alloy and steel, plastic and/or insulated

porcelain.

b. Companies which supply machinery/technologies for the sector

c. Companies which supply parts for the manufacturing companies

(supporting industry)

4.2.2 Manufacturing:

The companies could be involved in manufacturing parts, equipment or

assembly devices. Companies with assembly business can then deliver the

assembled parts to their contractors.

In this process, together with manufacturing companies, there can be sub-

contractors for the manufacture of spare parts or for special technologies

such as plating or painting.

During this process, there are also testing centres or companies which

conduct quality testing for products. Some big manufacturers can carry

out testing themselves.

4.2.3 Sales/Export and installation:

a. Trading companies which supply the electrical equipment to

end-users (consumers) or to engineering companies.

b. Companies in this process can be engineering companies which

do the designing, supply solutions and carry out installation and

maintenance for customers (normally industrial factories, etc).

c. Manufacturing companies can do the distribution themselves to

foreign markets.

4.2.4 Customers:

Customers of products of this sector include electricity, construction

industries, or consumers (end users), or trading companies from foreign

markets, or contractors of assembly products.

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Diagram 2: Value chain for the electrical equipment manufacturing sector

4.3 Internal/external factors for electrical

equipment manufacturing companies

4.3.1 Internal factors:


Desig

n

Input

s

Manufa

ctu

ring/a

ssem

bling

Testing

Sale

s/E

xport

Aft

er

Sale

s

Electrical device

manufacturers

Electrical device

manufacturers

Machinery/

technologies

Electrical

devices parts

manufacturers

/assemblers

Material

suppliers

(porcelain,

Electrical

devices

manufacturers

Distributors

sell to

domestic

market

Foreign

markets

Testing

organisations

Electrical device

manufacturers

Electrical

device manufacturers

R&D, design

Advertising,

direct sales,

retail

Exporting to

foreign markets

Installation for

projects

Returns, repairs,

maintenance,

warranty

Purchasing or

importing

materials and

equipment/techn

ologies

Manufacturing

or outsourcing

the sub-

assembly, final

assembly

Testing, logistics

Contractors

for electrical

projects

Distributors

sell to

domestic

/foreign

markets

Contractors

for electrical

projects

Vietnamese

companies

join in all

aspects of

the value

chain from

design,

input,

manufactur

ing,

testing,

sales,

export and

after-sales

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a. Technology: Vietnamese electrical equipment manufacturing

technologies are relatively good and have received substantial

investment by government and business. Vietnamese

companies can manufacture a wide range of products for the

sector with high quality. Vietnamese products can meet the

quality requirement of demanding markets such as Japan, US

and Europe.

b. Labour force: Labour is abundant and cheap. This is what

foreign companies are looking for when they think of setting up

a manufacturing base in Vietnam.

c. Capital: Capital is always a challenging issue for Vietnamese

companies especially in sectors with high capital requirements.

d. Domestic market: The domestic market is quite large as

Vietnam is a developing country with a high demand for

electrical equipment. There is increasing demand in terms of

energy, not only electricity but also other energies such as oil

and gas, etc.

4.3.2 External factors:

a. Policies: The Vietnamese government has realised the great

potential for the development of the sector and set priority

strategies to develop it. However, there is still not much

support from the government as implementation is always far

behind the policies. There are also inconsistencies in terms of

control by the government of parallel departmental policies.

b. Tax: There are big challenges for companies due to tax policies.

Although the sector itself is encouraged to develop, the tax

enforcement on imported material conflicts with the

encouragement policies. Some vital, imported materials

correspond to high import tax rates which cause great

difficulties for enterprises.

c. Competition: There is huge competition between Vietnamese

companies and FDI companies in the local market. This is a

threat to local companies in the Vietnamese market.

d. Foreign markets: the competition on the export market is

considered high. However, Vietnamese products have tried to

gradually find the way to penetrate some niche markets of high

quality demand such as heatproof, oil-resistant, fireproof wires

and cables, transformers, electric panels and rotary electrical

equipment.

4.4 SWOT Analysis of the electrical equipment


Strength

S1: High quality (particularly the

wire and cable sub-sector has

Weakness

W1: Import dependence in some

input materials

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already built up a good reputation

on the world market). This is a

product that Dutch companies could

source from Vietnam.

S2: Reasonable prices.

S3: Production lines are relatively

adequate, meeting the sector’s

requirement

S4: Manufacture a wide range of

electrical products and widen the

product portfolio

S5: Large domestic market

S6: Electrical equipment

manufacturing in Vietnam currently

hold large market share in domestic

market

S7: The government places a high

priority on this sector with much

support

W2: High import tax rates

W3: This is a sector of high

working capital, and companies

have to borrow money from

banks. The total manufacturing

cost has to include the interest

which can push the product prices

up.

Opportunities

O1: Growing demand from

neighbouring countries

O2: Growing demand of other high

demand markets to which Vietnam

can supply, such as the US, Japan.

Threats

T1: Long VAT refund process

4.5 Conclusion - Opportunities for Dutch

companies in the electrical equipment


Generally, the Vietnamese electrical equipment manufacturing sector is

developing strongly with many achievements. The government has issued

many policies which are helping the sector develop in order to meet with

local market demand and expand to international markets. Vietnam has

some comparative advantages and disadvantages in exporting,

outsourcing and manufacturing the above sectors:

Advantages:

Vietnamese electrical products, especially wires and cables, panels

and high quality boxes, dominate the domestic market and are

expanding into foreign markets successfully.

Vietnam has a cheap labour force. This factor contributes to the

competitive prices of electrical products which help Vietnamese

companies compete on export markets, especially nearby markets

such as Laos or Cambodia.

The government is prioritising this sector with much support

through many government policies.

The technology in the sector is relatively well developed.

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Disadvantages:

Due to discrepancies in policies, Vietnamese companies currently

face difficulties in terms of high import taxes on some imported

materials, tax refunds and land policies.

Opportunities:

Dutch companies can import wires and cables, wire harnesses, electrical

panels and boxes and transformers from Vietnam. Vietnamese companies

welcome opportunities to expand their export markets to the Netherlands

and are very interested in finding out about the technological

requirements and electrical infrastructure conditions of the Netherlands in

order to expand the market if they meet these requirements (see Annex

4a – Interview results – Electrical equipment manufacturing companies).


A mission of Dutch importing companies could be organised to attend The

7th International Electrical Technology & Equipment Exhibition -

Vietnam ETE 2014 from 16-19 July 2014 in Ho Chi Minh City. The

exhibition showcases Vietnamese companies which manufacture Electrical

Technologies & Equipment, Lights & Lighting Systems and Complete

Equipment Contractors. Dutch companies can meet with Vietnamese

companies in different sub-sectors of electrical equipment manufacturing.

The mission may also include business tours, meetings and working

programmes at electrical equipment factories, projects and power plants

in the southern area of Vietnam.

Dutch companies can also get further support from other organisations as

mentioned in Executive Summary, Annex 15 – Guidance for Dutch

companies to obtain support in the Vietnamese market, and also Annex 2

– List of supporting organisations in promising sectors.


companies – Electrical equipment to look for possible useful contacts for

their business expansion to the Vietnamese market.

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5 Moulding manufacturing sector

Dies, and moulds are fundamental to the manufacture of durable-goods.

Dies are metal forms used to shape metal in stamping and forging

operations. Moulds, also made of metal, are used to shape plastics,

ceramics, and composite materials. A jig is used to hold the metal while it

is being drilled, bored or stamped. Most of the products of major industrial

industries, such as the automotive sector, consumer electronics and

electronic gadgets, are mass produced through mould and die

manufacturing processes. Moulding is a significant sector in supporting

industries.

Machinery capacity:

Generally in supporting industries, the machine capacities of Vietnamese

companies are relatively average depending on the companies’ equipment

investment.

Machinery and technologies in the Vietnamese supporting industry mainly

come from Japan, South Korea, Taiwan and China. Some German, Italian

and US machinery manufacturers have started to enter the market in the

last 7 years and gradually expand their market shares. Some of the brand

names include:

US: Flow, JSW, etc

Italy: Davi, Sodick, Spinner, Pama, Eurstamp, etc

Germany: Siemens, Deckel Maho, etc

Austria: Engel

Japan: Shibuya, Komatsu, Amada, Moriseiki,

South Korea: Woojin, Hyundaiwia

Taiwan: Excetek, Argo, Denver, Proma, etc

China: many different machines used

The Vietnamese can equip themselves with a wide range of new foreign

machines or used machines:

CNC MACHINE TOOLS: CNC Lathe Machine, CNC Milling Machine,

CNC Drilling Machine, CNC Grinder, CNC Wire Cut Machine, CNC

Electrical Discharge Machine,

Machine tools: Lathe, Milling, Drilling, Grinder, Boring Machine,

Slotting Machine, Shaping, Bandsaw, etc

Sheet metal processing machines: Pressbrake, Shearing, Punching

Machine, Plasma/ Laser Cutting Machine, Press/Hydraulic Press

Machine, Plate Bending Roller/Bending Machine, Steel Processing

Machine, Engraved Machine, Shaw, Welding, etc

Injection moulding/die casting machines: Plastic Injection, Die

Casting Machine, Die Spotting Machine, etc.

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5.1 Overview of the moulding manufacturing

sector

There are some key kinds of moulding:

Plastic injection moulds

Press dies, stamping

Die casting moulds

Forging dies

Rubber moulds

Metal moulds

Powder metallurgy moulds and glass moulds

Jigs and fixtures

Vietnamese companies are able to provide all of the moulding types

mentioned. Their products are used mainly in machine tools, automotive,

mechanical products and machinery manufacturing. Dutch companies

manufacturing automotive, machinery and machine tools can cooperate

with Vietnamese moulding companies for sourcing parts and components.

Some key trends and descriptions of the Vietnamese moulding

manufacturing sector include:

The nature of the die and mould business is based on each tailor-

made contract. This is not a mass production industry.

Rising industrial mould imports originate largely in Japan, the US,

and South Korea. Firms have been outsourcing highly-skilled jobs,

such as tool and die making, from lower-wage countries such as

South Asian countries, China, etc because these markets can offer

lower labour cost for highly skilled jobs.

But import and export data among these countries does not give a

complete picture of performance and competition in the tool, die,

and mould industries because the performance of moulding and die

sectors is mainly influenced by the development of the industries to

which they supply.

The moulding and die casting industry is primarily made up of

small and medium-sized enterprises using skilled employees. The

minimum qualification of workers should be college graduation or

higher. Experience is also considered a very important factor for

moulding company staff. Mould and die makers are machinists who

understand how to use complex machines such as lathes, laser

cutting machines, and milling machines, precision machinery, hand

tools, heat-treating, plating, etc.

Therefore, basic high-technology training is necessary for mould

and die makers to work with CAD/CAM and CNC machines. Even

after apprenticeships, workers will continue training and usually

specialise in a particular area, choosing certain types of tools, dies,

and moulds with which to apply their expertise.

To meet market demands, mould and die makers must endeavour

to improve their technologies continuously. Vietnamese

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manufacturers are trying to move towards production of more

complex and customised products.

Cheap labour costs alone are will gradually decrease in importance

in the future. Manufacturers should therefore attain certain

technology levels and continuously upgrade them. Vietnamese

companies in the sector have endeavoured to equip Taiwanese or

Japanese businesses gradually in order to follow the trend.

5.1.1 Government policies

See Annex 11 – Regulations governing promising sectors

The Vietnamese government considers the die and mould sector as a key

area for development in the supporting industry. Besides Decree 186 to

support Vietnamese mechanical industry, specifically the mould and die

sector, there is one further strategy to develop die casting and moulding -

Decree 583 in 2012. With this Decree, the government approved the

master plan to develop the die and mould sector from 2009-2020 with a

vision to 2030. The Decree states that the mould and die sector is a very

important part of the mechanical industry and that the development of the

sector should be in line with the overall plan for the mechanical industry.

So far, the government has introduced a range of policies (master plan for

supporting industry, die casting development plan strategy, etc), however,

it has not yet backed this up with a concrete action plan for development.

5.1.2 Manufacturing/export:

Currently, there are no official figures from the government or related

organisations for measuring the development of manufacturing and

outsourcing capacity in the moulding sector in Vietnam. The moulding

sector falls under the mechanical industry in general. According to

unofficial figures from VAMI – Vietnam Association of Mechanical Industry,

there are more than 100 companies in the sector in Vietnam. The

companies are mostly Vietnamese SME’s with different manufacturing

capacities. Companies can employ from ten to many hundreds of staff and

have manufacturing capacities from 20 moulds/month to hundreds of

moulds/month. On average, it takes around 240 – 260 hours to

manufacture 1 mould in Vietnam. The timing is only average compared to

100 hours in Japan and around 200-300 hours to make a mould in Asian

markets (according to unofficial estimates from moulding companies). This

gives Vietnam an advantage in terms of developing the sector.

The technology applied in the moulding industry in Vietnam is diversified.

Small Vietnamese companies can equip themselves with Chinese or

Taiwanese technologies. However, bigger companies tend to equip

themselves with Japanese machinery or US and European technologies.

More than half of the companies focus on the large domestic market with

low technology requirements and a low end market. Meanwhile the

remaining companies continuously upgrade with higher technologies and

quality to find ways to join the value chain of different sectors, such as the

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supporting industry for electronics, automotive, etc or become an

outsourcing partner for foreign customers.

The Japanese moulding sector and automotive and electronic industries

play a vital role in the Vietnamese mould sector. Not only the output

demand but also the input demand of Vietnamese mould companies is

served by Japanese technologies. According to draft estimates from

experts in moulding (not official estimates), 60% of moulding companies

in Vietnam use Japanese technologies and equipment for the

manufacturing process. The imported equipment/machinery is either

brand new or second hand. According to forecasts from one Japanese

moulding equipment manufacturer, between 2012 and 2015 Vietnam will

buy 2,000 to 2,800 injection moulding machines. This is very positive sign

that companies themselves are trying to increase the competitiveness of

the sector effectively.

Another reason for Japanese role is that Japan is expanding to South Asia

for outsourcing moulding products and they provide very good training

and technical support to the target markets in order to help the

manufacturing companies make moulds using Japanese technology. One

Japanese ODA is planning to contribute towards human resources in order

to enter the mould sector in Vietnam from 2014. JETRO –Japan External

Trade Organization, JICA – Japan International Cooperation Agency and

other agencies have played a central role in the Japanese long term

strategy.

Standardisation factor: as in some other manufacturing sectors,

Vietnamese companies are not fully qualified by international standards

with unified ISO. According to interviews with moulding companies, only a

few companies are trying to equip themselves by adopting relevant

international quality certificates. Around 70% of other companies don’t

bother to follow any because the sector tends to adopt the Japanese

standards 5S, Kaizen, etc and, as their customer bases are now mainly

from Japan, the customers only pay attention to the 5S standard and

product quality. Vietnamese companies therefore normally don’t try to

obtain international quality standards.

Recruitment and training labour in the sector is also a big issue for

Vietnamese companies. There are universities/colleges/vocational schools

providing training for mechanical engineers/machinists however the

education quality is considered very low and cannot meet the average

requirements of human resource standards for the moulding sector. Many

companies recruit staff and accept the fact that they will have to be

retrained in even basic practical skills and/or working with some basic

technologies or machinery. Many companies interviewed raised this issue

as the challenge that they are facing in the business. This is a problem

which needs the support from government.

Another challenging factor for moulding companies is that there is no

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development research institution in the sector to support small and

medium enterprises with learning and/or developing new technologies.

The situation could delay the moulding sector’s development.

The input materials for mould manufacturing partially rely on imports.

Some metals with high processing values are imported from regional

countries such as Malaysia, Thailand and Indonesia. This is a big factor

and increases costs and delivery times for the Vietnamese moulding

industry. By importing Malaysian or Thai materials or parts, producers in

Vietnam incur additional costs in transportation, storage and handling.

This is a big disadvantage for Vietnamese moulding manufacturing

companies.

In addition, in some industries, Vietnam imports high technology moulds

from Japan and Malaysia which Vietnam can’t produce itself. Some of the

higher technologies that Vietnam is lacking include surface treatments,

powder coating and precision moulding for some parts in electronic

products, such as parts for hand phones, etc.

Vietnamese moulding companies are facing very hard competition from

Chinese companies, especially in prices. To compete with China in the

sector, Vietnam is moving towards integral manufacturing, i.e. each

product has specifically designed, unique parts.

Moulding companies are concentrated in three key economic regions, the

North, the Central and the South of Vietnam (see Map 1).

The moulding sector is starting to see interest from foreign investors.

Viedam, a Vietnamese-Danish joint venture was granted an investment

certificate to set up Viedam Mould R&D Center at Saigon Hi-tech Park

(SHTP) in Ho Chi Minh City.

5.2 Value chain

Vietnamese or foreign companies in electronic, electrical, automotive, etc

industries which need moulding can be customers for moulding

companies. Moulding customers are involved in contracting with moulding

companies from the very early stages.

After securing the contract, moulding companies go through all stages of

designing, manufacturing, assembling, testing, sales and after sales. They

may outsource the CAD/CAM design services, or some moulding parts.

Moulding companies get their input materials and equipment from plastic,

metal or equipment suppliers.

Dutch companies can cooperate with Vietnamese companies at any stage

of the value chain.

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Diagram 3: Value chain of mould manufacturing

5.3 Internal/external factors on moulding


5.3.1 Internal factors:

Limited qualified labour resource output from universities, colleges

for the moulding sector

Moulding technologies and equipment are invested individually by

each company

Moulding companies can manufacture a wide range of products

supplied to the automotive, machinery manufacturing and machine


Desig

n

Inpu

ts

Manufa

ctu

ring/a

ssem

bling

Testing

Sale

s/E

xport

Aft

er

Sale

s

Molding/casting

companies

Molding/casting companies

Machinery/

technologies

- CAD/CAM/servic

e providers, or

- Plating, surface

treatment

service

providers, or

- Mold parts

providers

Material suppliers

(metals, plastics)


Customers:

Automotive,

electronic , etc

companies

which need

molding

Molding/casting

companies


Designing following

technical requirement from customers

Delivering molding to

customers which ordered

Returns, repairs,

maintenance, warranty

Purchasing or importing

materials and

equipment/technologies

Manufacturing or

outsourcing the sub-

assembly, final assembly

Testing, logistics

Customers:

Automotive,

electronic ,

etc

companies

which need

molding

Vietnamese

companies

join in all

function of

value chain

from design,

inputs,

manufacturi

ng, testing,

sales/export

/after-sales.

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tools sectors. These are product segments which Dutch companies

could source from the Vietnamese market.

There is fragmented cooperation among moulding companies which

specialise in different processes within moulding manufacturing

5.3.2 External factors:

The government provides full support by launching development

strategies for the sector

Competition from other moulding sectors in regional markets

Initial interest from foreign advanced moulding sectors in Vietnam

Material imported from other markets can be hard to source and

correspond to high prices

5.4 SWOT Analysis:

Dutch companies can cooperate with Vietnamese companies in

outsourcing moulds from Vietnam.

Strength

S1: Labour force is abundant and

cheap

S2: Government realises the

importance of supporting industry

and especially mould sector.

Government launches policies to

support the sector.

S3: Technology is reasonably good

with over 50% of moulding

equipment and technologies coming

from Japan which are popular in the

market

Weakness

W1: Lack of proper training from

universities or vocational courses

for graduate machinists.

Vietnamese companies have to

retrain people upon recruiting.

W2: In particular, die-related

SMEs are especially insufficiently

developed.

W3: The import dependence on

some kinds of materials.

W4: The development of moulding

sector is fragmented, not

consistent across the sector Opportunities

O1: The strong support from

Japanese moulding sector which

provides opportunities for

Vietnamese companies to approach

advanced technologies.

O2: Initial interest from foreign

moulding sector in Vietnam

Threats

T1: The competition of Chinese

moulds with cheap prices.

T2: The substitute products from

Thailand and Malaysia

5.5 Comparison with two key competitors

The Vietnamese moulding sector has not had sufficient investment from

the government. This situation is the same as other sectors in supporting

industries. This is a big disadvantage for Vietnam compared with other

markets. In other markets, there are relevant governmental organisations

to closely monitor and support the companies in the sector such as Japan

Die & Mould Industry Association, Thai Die & Mould Industry Association,

etc. Among regional competition, Malaysia and Thailand are two key

competitors in the sector. Japan is shifting the many parts in mould

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manufacturing to Malaysia as the labour force in the sector from Malaysia

is highly skilled and can carry out much of the detail work. Japan, of

course, still maintains some key technology in Japan only.

Diagram 4: Position of Vietnam’s moulding manufacturing sector

5.5.1 Malaysia

Malaysia's engineering supporting industries, which include the moulds

and dies, machining, metal stamping, casting, heat treatment and

plating/surface treatment industries, have developed rapidly over the last

three decades in tandem with the overall growth of the country's

manufacturing sector. Malaysia is a major outsourcing destination for

MNC’s in the E&E, automotive, machinery manufacturing, oil and gas,

aerospace, medical, defence and photovoltaic industries. Malaysia's mould

and die companies have the capacity to fabricate most types of moulds,

dies and tools to cater to the diverse tooling needs of the manufacturing

sector.

5.5.2 Thailand

The Thai mould sector is quite well developed in terms of supporting

automotive assembly and electronic manufacturing. According to a Thai

Tool and Die Industry Association (TDIA) survey, there are approximately

1,061 mould and die factories in Thailand. They can manufacture a wide

range of moulds with the required high degree of technology.

5.6 Opportunities for Dutch companies in the

moulding sector

Generally, the Vietnamese moulding manufacturing sector is lagging

behind Thailand and Malaysia and facing tough competition from the

Chinese mould industry due to some internal and external factors.

STAGE ONE Simple

manufacturing under foreign guidance

STAGE TWO Have supporting

industries, but still under foreign

guidance

STAGE FOUR Full capability in innovation and

product design as global leader

STAGE THREE Technology & management mastered; can

produce high quality products

Vietnam

Japan, US, EU

Korea,

Taiwan

Thailand,

Malaysia

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However, companies in the sector have made good progress in improving

the technologies to meet domestic and foreign demand. Vietnam has

some comparative advantages and disadvantages in terms of exporting,

outsourcing and manufacturing the above sector, as set out below.

Advantages:

Vietnamese companies are aware of the importance of equipment

in the sector, therefore they have gradually invested in equipment

to increase their competitiveness. Japanese equipment is popular in

the market especially with moulding companies which want to join

the international value chain or wish to expand their outsourcing

market overseas.

The government puts a high priority on this sector with much

support.

The Vietnamese moulding sector has received the interest and

support of Japanese industries when they have been expanding

their outsourcing of supporting industries in South Asia.

Disadvantages:

Companies in the sector are facing challenges with respect to

labour resources as there is a lack of proper training from

vocational schools and universities in skilled machinists. Companies

normally have to retrain machinists when employing them.

The sector still depends on some import materials.

Opportunities:

Dutch companies in automotive, consumer appliances and high technology

appliances can outsource moulding manufacturing in Vietnam. Vietnamese

companies welcome opportunities to receive enquiries from Dutch

companies on moulding requirements especially with medium-sized orders

(see Annex 5a – Interview result – Moulding manufacturing companies).


Dutch companies can attend Vietnam Manufacturing Expo 2014 – the

most comprehensive Machinery and Technology event in manufacturing

and supporting industry from 27-29 August 2014 in Hanoi. The exhibition

unites a large number of Vietnamese companies in the supporting industry

to showcase their manufacturing capacity and look for customers. Dutch

companies will have opportunities to meet with different moulding, die

casting, jig, etc manufacturers and identify potential Vietnamese partners.

After the exhibition, Dutch companies can visit the factories of Vietnamese

companies to see the manufacturing process and management

techniques. Dutch companies can also discuss potential cooperation with

Vietnamese companies.

Besides the mission described above, a buyers/sellers’ mission can be held

where the mission programme is tailored for each Dutch company to meet

with moulding companies (see Annex 5) which match their technological

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requirement. In this mission, Dutch companies cannot meet with many

different companies, however they can meet with specific Vietnamese

companies which can offer the technology they require.

In order to help Dutch companies to cooperate with the appropriate

companies with strong labour resources, Dutch industries can also

organise seminars/training for Vietnamese companies on new

technologies. This is very useful for Vietnamese companies to be updated

with new technologies. These courses can help them to develop and meet

the requirements of Dutch industries. Also in a long term view, supporting

programmes for Vietnamese companies are very useful. This type of

cooperation programme, between Dutch industries with some key

vocational schools or universities, provide short courses on basic

technique on machinery application for graduates before they get a job in

the moulding or metalworking sectors.

Dutch companies also can get further support from other organisation as


companies to obtain support on Vietnam market, and also Annex 2 – List

of supporting organisations in promising sectors.


companies – Moulding to look for possible appropriate useful contacts for

their business expansion to the Vietnamese market.

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B. Promising sectors for exports from

the Netherlands

In Part B of this market analysis, the study will be focusing on the

promising sectors identified in the first stage:

The agricultural industry (focusing on agricultural machinery, agro

processing and packaging, horticultural equipment)

Turbines for wind energy (but only offshore oil, gas, wind etc.)

Equipment and machinery for the autonomous manufacturing of

means of transport such as bicycles, mopeds, baby carriages etc

6 Agricultural industry

The agricultural sector is traditionally a key sector in the Vietnamese

economy, accounting for nearly two-fifths of Vietnam's gross domestic

product.

The economy’s transformation in the 1990s, once the openness to the

global economy had been established, is largely due to agricultural

development. The land laws and market reforms in agriculture fostered a

transition moving from a system of production controlled by public

ownership towards one in which farm households possess effective

property rights over land and farm assets and can decide on production

following market demand.

In 1993, the government made a big improvement in privatisation of land

rights with a new land law and issuance of land use certificates. Although

land still remained the property of the state, under the new law, usage

rights could legally be transferred, sold, leased, bequeathed and used as

collateral for loans. The duration of tenure rights was extended to 20

years for the production of annual crops and to 50 years for perennials.

The impressive transformation of Vietnamese agriculture in terms of land

reform, de-collectivisation and the opening of the agricultural sector to

market forces has permitted Vietnam’s rise from its net importer status to

the second-largest rice exporter in the world. Besides rice, key exports are

coffee, tea, rubber and seafood, fruit and vegetables.

This analysis will focus on 4 key exports which strongly influence the

growth of agricultural machinery (section 6.1): rice, fruit and vegetables,

fisheries, and livestock. After this, the agricultural equipment sector is

described (6.2), as well as agro processing and packaging (6.3) and

horticultural equipment exports from Netherlands to Vietnam (6.4).

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6.1 Background study:

6.1.1 Rice production:

Vietnam is known as one of the most important rice producers and

exporters in the world; it is the second largest rice exporter in the world

after Thailand and India. After the transformation in agriculture, the

country started to export rice from 1987 and switched from a net rice

importing country to a net rice exporting country in 1989. According to the

Vietnam Food Association (VFA), rice exports from Vietnam in 2012 hit a

record of 7.72 million tons with a value of EUR 2.59 billion, contributing

significantly to the total export revenue of the country. Vietnam has

currently exported rice to about 120 countries around the world. Two main

consumption markets of Vietnam are Asia and Africa, accounting for 70-

80% of total exported rice.

Figure 10: Vietnam Rice Export Import (1962 – 2010)

Source: FAO, VFA, GSO

Despite being one of the leading rice exporters in the world, in recent

years, Vietnam’s rice manufacturing and exporting sectors have faced

difficulties and challenges, such as post-harvest losses, which have

prevented the industry developing its full production capacity. The

government, particularly the Ministry of Agriculture and Rural

Development and the Ministry of Industry and Trade, together with many

departments and research institutions, have worked on plans and

strategies for developing Vietnamese agriculture. One of the key parts of

these strategies is about technologies and the mechanisation of the

agricultural industry. This is an opportunity for Dutch companies to supply

agricultural machinery to Vietnam.

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6.1.2 Fruit and vegetables:

The potential of fruit and vegetable production and export in Vietnam,

together with challenges in terms of lacking high technologies in the

sector are big factors leading to opportunities for Dutch companies to

supply agro processing and packaging technologies/equipment to the

Vietnamese market.

Production: Vegetable production in Vietnam has an advantageous

geographical position across many latitudes, tropical climate zones and

even some special sub-climatic temperate regions such as Sa Pa, Tam

Dao, Da Lat; this is favourable for vegetable production. Vietnam can

grow 120 tropical, sub-tropical and temperate vegetables types and,

together with technological advances for off-season vegetable production,

can meet domestic demand and export processing. The increased

consumer demand for vegetable products and export demand leads to the

fact that the area and production of vegetables is increasing. Vietnam is

paying a great deal of attention to quality control and food hygiene and

safety.

Key vegetable species are plants including baby cucumber, mushrooms,

peas, chillies, onions, eggplant, tomato, cabbage, beans, broccoli,

cauliflower, asparagus, fine bean, snow pea, baby corn, okra, baby carrot,

ginger, garlic, taro, etc. Some of the above products are produced by the

production team in gardens or on organic farms, and also involves the

export of processed frozen vegetables.

Beside vegetables, Vietnam also has big potential for fruit production with

many key tropical fruits such as banana, citrus, longan, pineapple, litchi,

rambutan, mango, dragon fruit, persimmon, avocado, passion fruit,

tamarind, mangosteen, pomelo, grapefruit. The average fruit yield in 2011

of the whole country reached 10 tons/ha, an increase of 40% compared to

2005 (7 tons/ha). The total quantity is estimated at 7 million tons.

Export: Vietnamese fruit and vegetables are exported to approximately

40 countries and territories, including the United States, Russia, Japan,

China, etc. Based on the information provided by Vietnam Fruit

Associations in 2011, there are 25 governmental companies, 7 joint

venture companies, 129 private companies and more than 10,000

households taking part in the processing of fruits and vegetables.

Potential trends in the development of Vietnam horticulture in the

next 5 years: The Mekong Delta is the main area of fruit production in

Vietnam and is providing 70% of fruit for the domestic and export

markets. The government targets for fruit production development until

2020 of the Mekong delta include 290,000 ha-310,000 ha planting area

and 3.64-4.25 million tons in fruits. The objectives until 2020: total areas

for fruit plantation in the Mekong Delta grow from 290,000.0 ha

to310,000.0 ha, total output rises from 3.64 to4.25 million tons of fruit,

total export revenue from fresh and processed fruits increases to EUR

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182.50 million. This strong development raises the potential demand for

horticulture equipment.

Food hygiene and safety requirements for vegetables provided to

domestic markets: The Government of Vietnam has paid much attention

to food hygiene and safety. Several regulations for safe vegetable

production comply with the VIETGAP principles which require four basic

criteria: as food safety, worker safety, environmental protection and

traceability. This is a sign of increasing demand for processing and

packaging equipment.

Requirements for vegetable products exported to international

markets:

Production areas must meet the GlobalGAP standards, ISO

9001:2008, HACCP certified by prestigious international

organisations in Switzerland, France, the US.

Advanced technology and equipment for storage and processing.

The companies have to meet the quality and SPS (Sanitary and

Phytosanitary Measures Agreement), Codex Alimentarius (a

collection of internationally recognised standards, codes of practice,

guidelines and other recommendations relating to foods, food

production and food safety) from specific importing countries.

The difficulties faced by exporting and processing companies:

Producers’ lack capital for high-tech vegetable production.

Pre and post-harvest technologies have not been widely applied;

the quality of vegetables only just meets market requirements.

A powerful link between producers and collectors hasn’t been

established; there is no synchronisation between production,

processing and marketing of products.

The technology and equipment of these companies is of a low level,

therefore leading to the products being less competitive in the

markets.

They lack well-skilled, capable workers to apply modern

technologies and operate the advanced equipment lines to meet

the standards of ISO 9001- 2008, HACCP and other requirements

for quality, hygiene and safety of each importing country.

Therefore, aside from some companies that are capable of directly

exporting vegetable products to international markets by the FOB and CIF,

most export under the mandate of the foreign companies or processing for

foreign companies. For example, Lam Dong Agricultural Product Export

JSC has 80% of products exported under the customers’ labels, such as

Japan and Australia. Only about 20% is produced by the company’s

names. Vietnamese companies are endeavouring to overcome

these challenges by investing more in technologies that meet with

international standards for key export products, i.e. frozen and

processed products. This is a very promising market in which

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Dutch processing and packaging equipment companies and

technology manufacturers could sell their equipment to Vietnam.

6.1.3 Fisheries:

The fisheries sector is one of the most important economic sectors as

Vietnam has a coastline of more than 3,200 km with an Exclusive

Economic Zone (EEZ) of more than 1 million km2. The country’s extensive

network of inland waterways also offers an excellent location for an

expansive aquaculture system that supports the country's very large fish

and seafood export industry.

Today, marine products make up the 4th biggest export item (after crude

oil, textiles and garments and footwear). The Ministry of Agriculture and

Rural Development has approved Vietnam’s master plan for developing

the seafood industry, with plans to increase the country’s seafood exports

to EUR 7.30 billion by year 2020. One of key focus areas in the master

plan is upgrading processing technologies and equipment to meet the

requirements of international markets.

Fishery processing is a priority sector, however it has not had sufficient

investment. Currently, fishery processing companies can apply more than

20 sets of standards that are used for fish farming and processing units,

including SQF 1000, BAP, ACC, GlobalGAP, MSC and ASC. Processing

technologies are still very simple and not yet very highly developed.

The current situation within the sector, the fact that the

government is prioritising this sector, and the export demand

create opportunities for Dutch companies to supply technologies

and equipment in fishery processing and packaging to Vietnam.

6.1.4 Livestock:

The Vietnamese are big consumers of pork and prefer pork to chicken and

beef. Besides supplying to the domestic market, Vietnam’s livestock

products are not expected to have held much of a position in the

international market. The country can’t meet the current requirements of

high quality products and prompt deliveries, including the requirements

for food safety.

Mechanised processing equipment is very under-developed (primarily

manual slaughtering), or not reliable nor efficient, and production sub-

processes are not efficiently engineered. More importantly, most firms

are undergoing a transition from manual to mechanised

production. This is an opportunity for Dutch companies to provide

meat processing equipment to Vietnam.

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6.2 Vietnamese agricultural equipment sector:

6.2.1 Overview of agricultural equipment sector:

Since 2004, the Vietnamese government has issued policies to increase

agricultural mechanisation, supporting farmers to buy machines for

agricultural production using province budgets. In 2008, 30 provinces and

cities implemented the supporting policies of loans with a low interest

rates and extended payback periods and training courses on the operation

and maintenance of machines for farmers. Under the Programme of

Mechanisation, manufacturers of tractors and agricultural machines are

given priority in investment. After WTO integration, tax rates were

implemented: for imported agricultural machines from ASEAN countries,

the tax rate since 2010 has been 0% and 5% in some cases.

The agricultural machinery market then formed rapidly. There are various

types of equipment such as engines, tractors with a capacity of 18-35 HP

(either locally manufactured or imported) and a wide range of services

(outlet, after-sale service) to serve all agricultural production activities.

There has been rapid growth in terms of the number and different types of

machinery and equipment used for agricultural production, mainly because

of the growth in rice production towards the domestic market and export.

Average rate of mechanisation in Vietnamese agricultural production

activities as follows:

Table 6: Mechanisation rate in the agricultural sector (2010)

Agricultural production activities Mechanisation

rate (%)

Soil preparation for rice cultivation 72

Soil preparation upland crop 65

Active irrigation for rice 85

Transport in agriculture 66

Rice drying in summer-autumn season in Mekong

River Delta

38.7

Rice harvester 15

Rice thresher 84

Rice milling 95

Irrigation 50

Source: Vietnam Institute of Agriculture Engineering and Post Harvest Technology

(VIAEP)

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Despite the support from government, there are still many challenges in

the agricultural machinery sector:

Low level and incomplete development of agricultural

mechanisation

Low quality of agricultural and rural infrastructure makes it difficult

to apply machines and equipment (farm land use of each

household: 0.7 ha with 7-8 plots)

Post-harvest technology is still poor with a high post-harvest loss

rate for rice (12%), (corn: 18-19%), soybean (6.2-14%), peanuts

(8.5-15%)

The agricultural mechanic section does not meet the demand of

agricultural production activities

Low quality labour source, untrained operators/users of agricultural

machines

Machinery in the market is mostly imported. Some main import

markets include China, Taiwan and Japan. China and Taiwan have

a strong price advantage while Japan has advantages in terms of

quality and strong and professional distribution networks. There

are a few EU brand names from Spain such as APR.

Moreover, in the past 3 years, a new production model, i.e. large scale

farming, has been introduced and proven to be effective. This is forecast

to drive the agriculture sector's growth in coming years. The model

introduces large scale rice cultivation - a "closed chain" that covers

production, processing, distribution and trading, cooperatives, and a

cooperation arrangement between farmers and enterprises. The links

between farmers and businesses will help farmers concentrate on

production, and enterprises will ensure stable outlets for farm produce.

This management method in agricultural production for nationwide

expansion has helped farmers reduce production costs while increasing

productivity and quality, enabling them to raise profits significantly. To

develop this model in the coming years, there will be a high demand for

high-techn agricultural equipment for medium and large sized farms in

Vietnam;this could be an opportunity for Dutch companies to participate in

the market.

6.2.2 SWOT analysis for Dutch agricultural equipment in

Vietnam

Strength

S1: High technology in agricultural

equipment especially in medium to

large scale farm production

S2: Strong reputation on the world

market has been developed. Some

interviewed companies knew about

Dutch agricultural equipment.

Weakness

W1: Dutch agricultural equipment

may not be suitable for

Vietnamese small scale farming

which requires appropriate

machinery (not too heavy

machinery/equipment)

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Opportunity

O1: Together with the development

of large scale rice cultivation in the

future, Dutch agricultural

equipment has good opportunities

to expand to Vietnam.

O2: The Vietnamese government

has prioritised the development of

rice production and exports which is

a good sign for the development of

the sector in future.

Threats

T1: Competition with low price

equipment from China or Taiwan.

6.3 Agro processing and packaging market

6.3.1 Overview of the agro processing and packaging

sector

Although the demand for machinery and equipment is huge, the agro and

food processing and packaging equipment (AFPP) sectors in Vietnam are

still in their infancy. The domestic AFPP machinery industry cannot satisfy

internal demand because (despite some skills in copying and reverse-

engineering), it has proven poor in design and quality. Domestic

equipment is used in small scale processing factories only. Around 70-

95% of all of the equipment and technologies used by local FPP companies

is imported.

Most large and medium sized food processing and packaging companies,

and even small companies, focus on high segment import equipment and

technologies for their manufacturing demand. They can import from

Europe, US, Japan, China, Taiwan or Korea.

Small size firms on the other hand, tend to rely on locally made food

processing and packaging equipment or can also import from China (with

lower prices) or even buy second hand equipment from high technology

countries. The government, however, has a policy of discouraging imports

of used AFPP equipment. This is because these companies provide mainly

to domestic consumption hence the standards required are not as high as

products provided for international market. Cost is a key consideration as

well for the small size firms.

There is a small amount of locally made AFFP equipment but, in general,

manufacturing activities relating to AFFP equipment in the country are

able to handle customised assembly and fabrication only. Vietnam’s AFPP

equipment manufacturing technology is around 30 years behind the global

average.

There are no trade statistics available on AFPP equipment for Vietnam

except estimated figures from Vietnam Plastic Association and Vietnam

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Garden Association that Vietnam AFPP has a stable growth of 15% per

year.

Opportunities: From interviews with companies in the sector (see Annex

6 – List of Interviewed companies – Agriculture), there are signs of

demand in Vietnam within markets in the sub-sectors below. Dutch

companies could exploit opportunities to supply these kinds of equipment

and technologies.

Small volume equipment targeting the large SME population,

particularly those producing high quality products in small volume.

Packaging equipment to produce plastic packages.

Storage technologies to store fresh fruit

Specialised fruit transport vehicles to reduce post-harvest losses

Seafood processing equipment

Equipment suitable for soft drink production.

6.3.2 SWOT analysis for Dutch FPP technologies and

equipment in the Vietnamese market:

Strength:

S1: Dutch agro processing and

packaging technologies are of high

quality.

Weakness:

W1: Dutch processing and

packaging equipment possibly

has a relatively high price.

Meanwhile, Vietnamese

customers are very price

sensitive upon purchasing new

technology as this is a big

investment for the companies.

Opportunities:

O1: Supply of food processing

machinery and equipment is a

growing sector in Vietnam due to the

expansion and importance of the

processed food sector in the country.

There are clear needs from the

Vietnamese market for equipment

and technologies mentioned in

Opportunities above.

O2: The domestic market has an

increasing trend for processed and

packaged food consumption

O3: Supply of higher technology

machinery and equipment is

dominated by foreign suppliers.

Vietnamese customers easily accept

and consider new brands of

technologies/equipment.

Threat:

T1: Many foreign suppliers/

manufacturers entered the

market a while ago; they have

already built up brand name

awareness from Vietnamese

customers, and built up a

customer base. They can reap

the rewards of being the early

birds.

T2: Likewise, the number of local

suppliers catering to the local

needs has increased.

T3: In addition, there is an active

used and refurbished equipment

market

T4: There is some competition in

the market such as FPP

equipment from Japan, China,

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O4: The Vietnamese government

encourages the industry to apply

high technologies and equipment to

follow international standards for

exporting. They are currently taking

a number of initiatives to develop the

FPP sector in Vietnam. This includes

encouraging foreign direct

investment and

technologies/equipment into this

sector.

O5: The Ministry of Agriculture and

Rural Development has approved

Vietnam’s master plan for developing

the seafood industry and

encouraging the application of

modern technologies in fishery

processing for export.

O6: Vietnamese medium sized

companies invest in high

technologies for their manufacturing

and European equipment is one of

the best options for companies to

consider buying.

O7: The Vietnam government is

actively encouraging foreign

investments into the agricultural and

food processing sector.

Taiwan and India. Japanese

products are known for their

quality and durability. Other

markets offer products with

cheap prices.

T5: Companies’ financial

capacities are relatively limited.

Government or state owned

enterprises may rely on budget

allocation for equipment

upgrades. However for private

enterprises, access to bank

financing is difficult and they

often rely on internal financing to

import equipment.

6.4 Horticultural equipment

6.4.1 Overview of horticultural equipment

Similar to agro processing and packaging equipment, horticultural

equipment is relatively under developed. Small individual farmers used to

rely mainly on a manual labour force in farming for activities such as

seeding, irrigating, harvesting, etc but these are becoming too labour-

intensive. Besides, when expanding product ranges and productivity to

meet with export demand, there is an increasing demand for high

technology horticultural equipment in Vietnam.

The horticultural equipment market is still narrow and immature. A few

‘early birds’ have entered Vietnam in the past 5 years, including Israeli,

Spain, France, Korea and Taiwan. Main supplies include:

Greenhouse

Control Systems

Irrigation Systems

Fertiliser Dosing Systems

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Drainage water recycling

Accessories

These brand names enter the market through their sole distributors which

can also provide design, installation and maintenance services to

customers. After some years, a few local companies are even able to

design and supply greenhouse structures made in Vietnam to local

markets. Locally made greenhouses are mainly made out of plastic or

fibreglass of low/average quality. The target segment of this level of

product is among low investment technology end-users. Brand name

suppliers will target large scale farms with higher technology investment.

Local manufacturers can only produce low-tech horticultural equipment;

the high end market and high technology equipment sector are still

dominated by foreign brands. Dutch farming technologies are well known

among professional farmers as the high class technology product. They

welcome opportunities to approach new technology from advanced

markets in order to develop the Vietnamese sector. According to

interviews with Vietnamese horticultural equipment trading companies

(see Annex 6), opportunities for Dutch companies are in supplying high

technology equipment to these sub-sectors:

Temperate Control Systems

Irrigation Systems

Fertilizer Dosing Systems

Specialised tools for fruit harvest

6.4.2 SWOT analysis of Dutch horticultural equipment in

Vietnam:

Strength:

S1: High technology and quality

S2: Strong reputation of high

quality equipment has been

established in the market

Weakness:

W1: High quality goes together

with high price which may cause

challenges when making initial

investments to purchase

equipment

W2: The possible differences in

the manufacturing scale of farms

in two markets. Dutch farms are

normally industrial farms of a

large size and large scale in

production. Vietnamese farms are

still relatively small-scale.

Opportunities:

O1: The Vietnamese government is

prioritising agro product

manufacturing with export focused

targets which require much

Threats:

T1: The possible competition with

low end equipment in price

(Vietnamese consumers are quite

price sensitive).

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upgrading with higher technologies.

O2: The market is still narrow, to

some extent. If they find their way

to Vietnam very soon, Dutch

companies still can enjoy the ‘first

comer’ position in the market.

O3: The growth of the Vietnamese

horticultural sector is forecast to

accelerate in coming years due to

the increase in exporting and

domestic demand.

O4: Supply of higher technology

machinery and equipment is

dominated by foreign suppliers.

T2: It is not always easy to

identify distributors. Sometimes,

it’s a long process for both sides

to get to know each other and

build up trust.

6.5 Distribution Channels for

agricultural/horticultural/agro processing and

packaging equipment to Vietnam

The most common type of distribution channel in Vietnam involves

traders, distributors/agents and direct sales through branch offices.

Sometimes, with large projects conducted by big companies, end users

may also use contractors (Engineering Company/Installation Company) to

procure their FPP equipment.

Diagram 5: Equipment Distribution Channels

Fore

ign m

anufa

ctu

rer

Via Locally based

traders/agents

Via turnkey contractors

Vietnam customers:

vegetable/fruit/rice

farmers, processing and

packaging companies,

exporting companies in

agricultural products

Direct sales through Local

branch office

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6.6 Market Entry Strategies for

agricultural/horticultural/agro processing and

packaging equipment to Vietnam

Equipment manufacturers can use the help of local distributors, agents or

traders to supply their equipment to the end users. Another method is to

set up sales office. The most popular option is to appoint a reliable

distributor, who knows the market and the industry well to identify good

sales and build up trust from customers. These distributors should be

capable of also providing consultation, design, installation, repair and

maintenance services and after-sales services for the equipment. After

being appointed a distributor, the company then can establish its own

network of agents within the region. (See Annex 14 – Doing business in

Vietnam for more information on how to invest/open representative

offices/expand into the Vietnamese market, legal entities, basic tax

system, business tips)

The manufacturer will then also provide training and a useful manual and

installation guide to the distributors so that they can familiarise

themselves with the products. It is important to understand local business

and procurement practices. Some other activities to promote the brand

names could include:

Working with national trade associations to organise product

introduction seminars (see Annex 2),

Participating in regional/ local trade shows (see Annex 1)

Sending representatives to business meetings with prospective

national/ regional partners (see Annex 6)


CBI and partnering associations can organise seminars on Dutch

technologies in the sub-sectors equipment and technologies. Seminars are

for Vietnamese distributors and customers to familiarise themselves with

Dutch equipment brand names and identify suitable technologies for the

Vietnamese market. Seminars should be organised together with meeting

programmes for potential Vietnamese distributors (see Annex 6), end

users (medium and large processing and packaging companies) and key

agricultural exporters.

In addition, Dutch companies providing agro processing and packaging

equipment/technologies can also exhibit in Propak Vietnam from 4-6

March 2014– Trade fairs on post-harvest and food technology,

processing and packaging industries. The main area of focus for

exhibition extends to all related processing, handling and packaging

industries, from pharmaceutical and healthcare to chemical and cement.

Dutch companies could exhibit and organise a Holland Pavilion in the trade

fairs.

Dutch companies also can get further support from other organisations as


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companies to obtain support on the Vietnamese market, and also Annex 2

– List of supporting organisations in promising sectors.


companies – Agriculture to look for possible useful contacts for their

business expansion into the Vietnamese market.

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7 Oil and gas

Over the last two decades, Vietnam has emerged as an important oil and

natural gas producer in Southeast Asia. Oil and gas contributes taxes of

up to 18-20% of the state budget per annum and generates revenue up to

nearly 30% of the GDP.

Vietnam is a promising energy market from both the supply and demand

side. From the supply side, Vietnam possesses large natural mineral

resources. Vietnam ranks third in proven oil reserves in the Asia Pacific

region and is ranked seventh in gas reserves. Besides, strong domestic oil

and gas demand and fast-growing refining capacity have shown Vietnam

as an attractive upstream and downstream market for exporters,

importers and manufacturers in the Asia Pacific region.

The upstream oil sector is also commonly known as the exploration and

production (E&P) sector.

The midstream sector involves the transportation (by pipeline, rail, barge,

or truck), storage, and wholesale marketing of crude or refined petroleum

products.

The downstream sector commonly refers to refining petroleum crude oil

and processing and purifying of raw natural gas.

7.1 Upstream and Midstream

7.1.1 Reserve potentials

According to OGJ (Oil & Gas Journal) and statistics from the US Energy

Information Administration (EIA), Vietnam ranks third in the Asia Pacific

region in terms of proven oil reserves with 4.4 billion barrels by end 2012

after China and India.

Figure 11: Vietnam proved oil reserve (1992 – 2013)

Source: US Energy Information Administration statistics

There are also a large confirmed amounts of natural gas and associated

gas of 24.7 trillion cubic feet (Tcf) by end 2012, up from 6.8 Tcf in 2011.

012345

Vietnam Proved Oil Reserves

(billion barrels)

Vietnam Proved Oil Reserves (billion barrels)

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http://en.wikipedia.org/wiki/Oil_pipeline#For_oil_or_natural_gas

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Increased foreign investment since 2007 has led to greater exploration,

significantly increasing Vietnam's proved natural gas reserves.

Figure 12: Vietnam proved natural gas reserve (1991 – 2013)

Source: US Energy Information Administration statistic

Vietnam's efforts to intensify the exploration and development of its

offshore fields have contributed to the growth in reserves. Ongoing

exploration activities could increase this figure in the future, as Vietnam's

waters remain relatively underexplored. About 100 hydrocarbon-bearing

prospects have been found in 50 fields with estimated reserves of

approximately 643 million tons of crude oil and 680 billion cubic meters of

natural gas. There are 6 operational oil and gas basins in Vietnam,

namely:

Song Hong Basin

Phu Khanh Basin

Cuu Long Basin

Nam Con Son Basin

Malay Basin (Malay – Tho Chu Basin)

Tu Chinh – Vung May Basin

There are 2 more basins in the East Sea namely Truong Sa basin group

and Hoang Sa basin. These basins have not yet been explored. The two

basins which show the most hydrocarbon potential and accommodate

most of the exploration and production activities are Cuu Long (80%) and

Nam Con Son.

0

5

10

15

20

25

30

Vietnam natural gas proven reserves (trillion cubic

feet)

Vietnam natural gas proved reserves (trillion cubic feet)

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Map 2: Major Oil and gas Basins in Vietnam

Source: Petro Vietnam Corporation

7.1.2 Exploration and production

Vietnam ranked third in Southeast Asia after Malaysia and Indonesia and

thirty-first in the world for crude oil and gas production in 2012.

According to Petro Vietnam:

Crude oil output: 16.7million tons (increase 11.6% compared

with 2011)

Natural gas output: 9.3 billion cubic meters (decrease 10.2%

compared with 2011)

LPG production: 800 thousand tons (increase 26.3% compared

with 2011)

Fuel production: 6,804 thousand tons (increase 11.2%

compared with 2011)

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In 2012, Vietnam exploited 290 million tons of oil and 80 billion

cubic meters of gas.

By 2014, Vietnam will provide 4.19% of the Asia Pacific region’s

supply.

Figure 13: Vietnam Oil Production and Consumption (1990 – 2012)


Specifically in terms of gas production: Vietnam produced 272 billion cubic

feet (Bcf) of dry natural gas in 2011, all of which was domestically

consumed. The country is currently self-sufficient in natural gas, but

PetroVietnam predicts that there will be a natural gas supply gap of 1.3

Bcf per day by 2025 as demand surpasses supply.

The Vietnamese government has considered importing liquefied natural

gas (LNG) in the future to meet growing natural gas demand.

PetroVietnam Gas (PV Gas) has signed a memorandum of understanding

and a front-end engineering and development (FEED) contract with the

Tokyo Gas Company to develop the Thi Vai LNG terminal in the Vung Tau

province.

0

50

100

150

200

250

300

350

400

450

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Vietnam Oil Production and Consumption

Vietnam total oil production (thousand barrels per day)

Vietnam oil consumption (thousand barrels per day)

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Figure 14: Vietnam Gas Production and Consumption (1990 – 2012)


Vietnam produced about 49,079 thousand short tons of coal in 2011, of

which almost half (23,739 thousand short tons) was domestically

consumed. Vietnam exports a large portion of its coal and also imports a

small amount. In 2013, the Vietnamese government increased the coal

export tax to 13 percent from 10 percent to reduce exports and satisfy

growing energy demand with domestic production, particularly in the

power sector. Electricity consumption nearly quadrupled from 22 billion

kilowatt hours (KWh) in 2000 to 86 billion KWh in 2010 and was

generated almost entirely by hydropower, natural gas, and coal. Vietnam

anticipates power demand to more than triple to 330 billion KWh by 2020.

On the demand side, as Vietnam has continued to industrialise and

increase higher power capacities, consumption doubled from 176,000

bbl/d in 2000 to 388,000 bbl/d in 2012. It is forecast to increase 5-7%

yearly to 2014; demand will be approximately 460,000b/d by 2014.

Vietnam oil and gas exploration and production also partially supply to

domestic demand and contribute a great deal towards export and import.

Vietnam is a net exporter of crude oil, but is a net importer of oil products.

With oil consumption, the country must import a majority of refined

products to satisfy demand.

Vietnam has boosted exploration activities, allowed for greater foreign

company investment and cooperation in the oil and gas sectors, and

introduced market reforms to support the energy industry. These

measures have helped increase oil and gas production.

0

100

200

300

400

1980198219841986198819901992199419961998200020022004200620082010

Vietnam Gas Production and Consumption (1990 – 2012)

Vietnam natural gas production (billion cubic feet)

Vietnam natural gas consumption (billion cubic feet)

Production = Consumption

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7.2 Downstream

PetroVietnam is planning to develop 3 refinery-petrochemical centres in

the North, South and Central Vietnam. So far, Vietnam has one operating

refinery called the Dung Quat refinery which came on stream in 2010,

with a capacity of 148 KBPD (thousand barrels per day), meeting around

30% of local demand. PetroVietnam owns 100% of this refinery with Frech

Technip as the EPC contractor, using UOP technology. PetroVietnam is

looking to boost crude distillation capacity to around 200KBPD by 2017

and develop Dung Quat's ability to handle sweet and less expensive sour

crude oil from Russia, the Middle East, and Venezuela. Vietnam plans to

offer 49 percent of Dung Quat's equity to foreign investors in order to

finance the expansion of Dung Quat.

The other two planned centres, Nghi Son Refinery ($5.8bn, 200 KBPD) in

the Centre, and Long Son Refinery ($7-8bn, 200 KBPD) in the South are

under preparation. There are some financial and land clearing issues that

have prevented the completion of these refineries.

With the Nghi Son Refinery in the Thanh Hoa province in the North of

Vietnam, PetroVietnam established a JV in 2008 with Kuwait Petroleum

International (KPI – 25.1%), Japanese refiner Idemitsu Kosan Co.

(35.1%) and Mitsui Chemicals (4.7%). The total investment is EUR 5.11

billion. The project owners are working to select the EPC contractor and

construction is expected to start by the end of 2013. Nghi Son Refinery

and Petrochemical complex will be able to process 8.4 million tons of

crude oil per year when it is completed in 2014. It is expected that Dung

Quat Refinery, along with Nghi Son Refinery will be able to supply 60% of

domestic demand by 2016.

Another oil refinery slated to be built soon is the Long Son refinery and

petrochemical complex in Ba Ria-Vung Tau Province. The Long Son

refinery needs investment capital of EUR 5.84 billion and will be able to

refine 10 million tons of crude oil per year. Two local partners, PVN and

Vinachem, have been negotiating with foreign partners including Thailand-

based TPC and SCG about setting up a joint-venture. Companies from

Qatar and Japan (Itochu) have also shown interest.

Apart from these oil refinery projects which have received investment

from PetroVietnam, there are several others which have received

investment by private companies and which are ongoing or under

development such as Can Tho Refinery (2 million metric tonne per annum-

mmtpa), Vung Ro Refinery (4 mmtpa), Nam Van Phong Refinery (10

mmtpa), and Petroleum Authority of Thailand (PTT PLC) refinery project in

Binh Dinh province (EUR 20.95 billion)).

PetroVietnam is also involved in downstream activities via various

subsidiaries such as Petechim and PetroVietnam Oil Processing and

Distribution Company (PV Oil).

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7.3 Sector organisation

The Vietnamese oil and gas industry is dominated by the state owned

Vietnam Oil & Gas Corporation (PetroVietnam). PetroVietnam is the key

company in the oil and natural gas sectors and serves as the primary

operator and regulator of the industry. PetroVietnam comes under the

authority of the Ministry of Industry and Trade (MOIT).

Oil and natural gas production is either undertaken by PetroVietnam's

upstream subsidiary, PetroVietnam Exploration and Production (PVEP),

through PetroVietnam's joint ventures with other companies (JVs) or

through production sharing contracts (PSCs) in which the national oil

company (NOC) has at least a 20% equity interest. International Oil

Companies (IOCs) such as ExxonMobil, Chevron, and Zarubezhneft must

receive approval from the Prime Minister’s Oil and Gas Department and

must negotiate upstream licenses with PVEP if they want to join in with

Vietnamese oil exploration and production.

So far, regarding oil exploration and production, Petrovietnam has

signed more than 80 Production Sharing Contracts (PSC), Business

Cooperation Contracts (BCC), Joint Venture (JV) and Joint Operating

Contracts (JOC) with more than 50 international oil and gas companies.

The total contract values are over EUR 10.22 billion. Currently, 58

contracts remain effective, involving international companies such as

SOCO, Premier Oil, Salamander Energy, BP, RVO Zarubezhneft,

ConocoPhilips, Nippon Oil, Petronas Carigali, OMV, Idemitsu, KNOC,

Talisman, Amerada Hess, Samedan, Pertamina, PTT E&P, ONGC,

Maurel&Prom, ATI and Vamex.

Regarding oil distribution, Petrolimex is the primary company in charge

of importing and distributing petroleum products in Vietnam and accounts

for about 60 percent of the country's total petroleum distribution market.

Petrolimex also operates 300 miles of petroleum product pipelines,

although much of the country's fuel supply is transported by road. Two

other state-owned fuel oil distributors in Vietnam are PV Oil and Saigon

Petro. There are plans to eventually sell equity stakes in Petrolimex and

provide greater competition for the domestic market. So far, only 3

percent of the company's shares have been sold off in a partial

privatisation to Vietnamese buyers.

Regarding gas production, the situation is the same as the oil sector, i.e.

PetroVietnam dominates the natural gas sector. PetroVietnam's main

foreign partners involved in the production and development of natural

gas resources are TNKBP, Chevron, KNOC, Gazprom, Petronas, Thailand's

PTTEP, Talisman, ExxonMobil, Total and Neon Energy. Chevron is likely to

become a major gas producer in Vietnam following the development of

fields in the Malay basin in south eastern Vietnam. Other IOCs such as BP

and ConocoPhillips recently divested their upstream assets in the Nam Con

Son basin, allowing other firms to purchase the shares. Shell has also

expressed interest in entering Vietnam's upstream and downstream

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natural gas markets, including liquefied natural gas (LNG), and is in the

process of signing a memorandum of understanding with the country.

PetroVietnam and Gazprom formed a strategic JV, Vietgazprom, which is

now exploring undeveloped natural gas fields in both countries.

Regarding gas distribution, PV Gas is the major gas distribution arm of

PetroVietnam. PetroVietnam and its JV partners directly negotiate

domestic gas rates with power generators and industrial users on a

project-by-project basis. Natural gas prices are kept generally low

compared to international market rates mainly because wholesale

electricity prices remain low. Transportation costs vary by gas pipeline and

are approved by the Ministry of Industry and Trade. As Vietnam's gas

market evolves and LNG enters the market, gas prices may lift to more

market-average rates.

7.4 Regulatory environment

According to the National Strategy for Energy Development in 2007,

Vietnam’s energy policy is to improve oil and gas capacity to serve

domestic demand and contribute to export.

Only PetroVietnam and its subsidiaries can conduct exploration activities

as primary contractor. However PetroVietnam can directly negotiate with

foreign corporations in many different kinds of cooperation. Decree 115 in

2009 listed the entities which are allowed to join the Vietnam oil and gas

industry.

Together with exploring new offshore basins, Vietnam encourages foreign

investment to the industry in different activities upstream, midstream and

downstream. Decree 115, together with Petroleum Law 2008, and

Petroleum Bidding Regulation 2001, clarified the investment process,

bidding regulations, licensing process and tax issues.

Currently, the Vietnamese government and particularly the Ministry of

Finance manage a so-called “Fuel Price Stabilisation Fund” to support

wholesale and retail petrol distribution companies. This fund helps oil

distributors to absorb the losses when they distribute to the local market

as retail and wholesale oil prices are controlled by the government and are

lower than international market prices. The policy to control the prices is

to sustain a growing economy and manufacturing industry. Decree 84 in

the oil and gas industry has implemented minor reforms which allow petrol

retailers to increase prices by 7% within 30 days when international prices

increase by the same rates.

7.5 SWOT analysis

Strength

S1: Dutch companies have a good

reputation in the offshore

equipment and maritime industry.

Weakness:

W1: This is the sector which

requires long-term planning and

frequent visits to the market to

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build up a strong relationship with

local companies in the sector.

With some key projects, it

requires appropriate lobbying as

well. This is a challenge for foreign

companies in general, in terms of

entering the market.

Opportunities:

O1: Vietnam has strong reserves

and production processes in the oil

and gas sector; this creates high

demand in equipment and

technology in upstream oil and gas.

O2: Vietnam is also starting to

focus on the downstream area with

projects involving the construction

of refineries. This is a big

opportunity for supplying

downstream equipment and

technology.

O3: The Vietnamese government is

open for cooperation with foreign

investors and equipment suppliers.

Threats:

T1: Hard competition from other

equipment suppliers in the

market. They may already know

Vietnam quite well and have good

connections with key players.

7.6 Market entry

For opportunities linked to the supply of equipment and services, foreign

companies are advised to enter the market through selecting local

distributors or agents or opening representative offices. These distributors

and agents or chief representatives have extensive local knowledge and

networks and are able to support the foreign companies to enter oil and

gas projects through direct selling or bidding. (See Annex 14 – Doing

business in Vietnam for more information on how to invest/open

representative offices/expand into the Vietnamese market, legal entities,

basic tax system, business tips).

For investment opportunities, the recommendation is to partner with

PetroVietnam and/or other local or foreign oil and gas companies which

have been operating in Vietnam. If companies want to invest in exploring

oil and gas blocks, they must go through a bidding process managed by

PetroVietnam.

As the Vietnamese oil and gas industry is a large but “narrow” industry

with only some key players in the market, foreign companies that want to

enter Vietnam should make market visits to meet with key players, obtain

market information and set up relationships before making any concrete

moves. Besides, it’s also beneficial for foreign companies to get the

support from high level governmental organisations through missions to

visit the Vietnamese market.

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7.7 Opportunities for Dutch companies in the Oil and

gas sector

Vietnam’s expanding offshore exploration and production has created a

steadily growing market for supplying offshore oil and gas equipment and

services and consultancy services, which were estimated at EUR 2.56

billion in 2013. Sales opportunities for Dutch companies are in the

following areas:

Oil and gas equipment (not only turbines), accessories, chemical,

services for the upstream, midstream and downstream segments

Offshore enhanced oil recovery

Deep-water technology development such as drilling

Seismic surveying for oil and gas exploration

Engineering, construction and production facilities

Drilling and production technologies, including drilling rigs (70-

200m)

Oil spill management

Training and education in all aspects of the industry

Health safety and environmental waste management

Under its WTO commitments, the Vietnamese government has also

opened its oil and gas sectors to foreign companies. This will help Vietnam

to gain support in terms of capital, expertise and technology for the

industry’s development. PetroVietnam plans to focus on the five crucial

areas:

Petroleum exploration, exploitation,

Oil refining,

Gas

Electric industries,

High quality petroleum services.

Key projects: According to Vietnam’s Oil and Gas “Master Plan Toward

2015 and Vision to 2025”, the industry will require an investment of EUR

148.19 billion up to 2025 (PetroVietnam will contribute a 40% share, i.e.

EUR 59.52 billion). There are also big opportunities in investments in the

industry, and in terms of joining partnerships with PetroVietnam along

upstream, midstream, downstream activities. PetroVietnam is working to

promote key projects below:

Upstream: There are opportunities in exploring a number of

undiscovered blocks in Song Hong Basin, Phu Khanh Basin,

Onshore Mekong Delta, Nam Con Son Basin, Phu Quoc Basin,

Malay-Tho Chu-Phu Quoc Basin

Song Hong Basin – Blocks 101 & 100/04

Song Hong Basin – Blocks 108/04 & 116

Song Hong Basin – Blocks Hanoi Trough (MVHN), MVHN-01KT &

03KT

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Phu Khanh Basin – Blocks 122 & 124

Onshore Mekong Delta (DBSCL) – Blocks DBSCL-01, 02, 03 & 04

Nam Con Son Basin – Block 06/94, 22/03

Phu Quoc Basin – Blocks 31, 32, 33, 34, 35 & 36/03

Phu Quoc Basin – Block 37, 38, 41, 43, 44 & 47/01

Malay – Tho Chu – Phu Quoc Basin – Block 48/05

Midstream: PetroVietnam is calling for investment in Nam Con

Son No. 2 Gas Pipeline (EUR 0.95 billion), Ca Mau Gas Processing

Plant (EUR 511.00 million), East-West Gas Connection Pipeline

Project, etc

Nam Con Son 2 Gas Pipelines: The Nam Con Son-2 gas pipeline project

includes a 334 km offshore pipeline connecting gas fields in the Nam Con

Son Basin, offshore southern Vietnam, with an onshore gas processing

plant in the southern province of Ba Ria - Vung Tau. The gas plant will

take 20 million cubic meters of natural gas per day from Hai Thach - Moc

Tinh and Thien Ung – Mang Cau fields in the Nam Con Son basin to

process condensate and liquefied petroleum gas (LPG). The pipeline is also

planned to transport imported gas from other ASEAN countries in

response to demand in the Southeast area of Vietnam. This EUR 0.95

billion project is expected to be operational in 2015.

East-West Gas Connection Pipeline Project: This 30 inch-diameter pipeline

will connect Nam Con Son 2 Gas Pipeline with the ASEAN gas supply

network. The capacity is 3.0 bcm (Phase 1) and 7.6 bcm (Phase 2). The

project is at the basic design and investment report stage.

Downstream: PetroVietnam is calling for investment in Refinery

and Petrochemical projects such as the Dung Quat Refinery

(Expansion) Plant (EUR 292 million), Long Son Refinery (EUR 5.84

billion), Ca Mau Fertiliser Plant (EUR 657 million), etc

Dung Quat oil refinery expansion: this project will cost EUR 2.19 billion to

increase the existing oil refinery capacity to 10 million tons per year by

2018 and includes petrochemicals.

Long Son oil refinery and petrochemical complex: This oil refinery and

petrochemical complex in Ba Ria-Vung Tau Province needs investment

capital of EUR 5.84 billion and will be able to refine 10 million tons of

crude oil per year. Two local partners, PVN and Vinachem, have been

negotiating with foreign partners including Thailand-based TPC and SCG

about setting up a joint-venture. Companies from Qatar have also shown

interest. PVN is still looking for strategic foreign partners and the

commercial operation would be expected to start after 2020.

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Van Phong Oil Refinery: a new oil refinery in Khanh Hoa Province is

developed with the investment of EUR 3.65 million to refine 10 million

tons of crude oil per year.

Thi Vai LNG receiving and re-gasification terminal: this facility will be built

in Cai Mep Industrial Zone, Ba Ria-Vung Tau province using the utilities of

LPG storage project and Jetty of Thi Vai Port with a capacity of 1 million

mtpa. This project developer is working on the Front End Engineering

Design (FEED) and additional geological survey for FEED. The investment

capital is approximately EUR 180 million and the project is expected to

come into operation in late 2015.

Son My LNG receiving and re-gasification terminal: this facility will be built

in Binh Thuan province with the capacity of 3mmtpa in the initial phase

and is expected to be operational at the end of 2018.


Dutch equipment suppliers can attend and exhibit at Oil & Gas Vietnam

(OGAV) 2014 - oil and gas event in Vietnam for both upstream and

downstream oil and gas companies and also its supporting industries 21 –

23 Oct 2014 in Vung Tau – oil and gas area in Vietnam.

The mission of Dutch equipment suppliers can also visit governmental

officials and key players in the Oil and gas sector (see Annex 8 – Key

contacts in Oil and gas industry in Vietnam).

The mission should also visit potential distributors in Vung Tau (oil and

gas industry areas) and Ho Chi Minh City.

Dutch companies wanting to enter Vietnam should make market visits to

meet with key players to obtain market information and set up

relationships before making any concrete moves (see Annex 8 – Key

contacts in Oil and gas industry in Vietnam). Besides, it is also beneficial

for foreign companies to get the support from high level governmental

organisations through missions to visit the Vietnamese market.

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8 Equipment and machinery for the

autonomous manufacture of means of

transport such as bicycles, mopeds,

baby carriages etc.

The sector was identified in step 1 of the Analysis to be a promising

sector. There may be interest from Dutch companies to export equipment

and machinery to Vietnam. However, there is not much interest from

Vietnamese companies for Dutch equipment in the sector. Likewise, there

are only some bicycle manufacturing companies thinking about exporting.

The export market is still very limited.

There are possible opportunities for Dutch companies to collaborate with

Vietnamese companies as supporting industries for the car and vehicle

manufacturing sectors.

The Vietnamese domestic markets for personal means of transport are

shared among: motorcycles (nearly 80%) and cars, mass transportation,

bicycles.

The car manufacturing sector in Vietnam is not developed; it has

only just reached the assembly level for international brands.

Therefore, technologies and equipment for those companies should

be imported in line with the requirements of international branded

manufacturers. Normally the equipment should originate from the

manufacturer’s countries. There are no opportunities for Dutch

companies in this segment.

The bus/coach manufacturing sector in Vietnam is also at a very

low level. There are 9 manufacturing companies in the sector

however their manufacturing capacities are not high enough to

purchase Dutch machinery or equipment. They mainly assemble for

some Japanese coach companies, such as Isuzu or Suzuki. Some

other Vietnamese brand names such as Vinaxuki, Thaco (Truong

Hai) may be interested in Dutch equipment but in practice this is

unlikely as they are more familiar with Japanese technologies in

the sector. The domestic market is dominated by Japanese,

Taiwanese, and Chinese buses or second-hand buses from

advanced countries.

Bicycle manufacturing sector: the domestic market for bicycles is

quite small. Besides, Vietnamese bicycles have lost some key big

markets (Hanoi, Hochiminh, Da nang) to foreign bicycles

(especially Japanese and Taiwanese bicycles). The bicycle

manufacturing sector is therefore very weak. Some Vietnamese

bicycle manufacturers have strategies to develop the technologies

to increase their competitiveness. However, their capital is

insufficient to afford Dutch equipment. They mainly consider

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technologies from regional countries such as Japan or Taiwan or

Malaysia.

In conclusion, there may be only slight interest from bus/coach

manufacturers in Dutch equipment (around 3-5 companies only).

However, it also depends on the price of the equipment. The market is

thus very small to consider a mission of distributors to Vietnam at this

stage. If there is interest from Dutch companies to identify end-users or

distributors, there are only around 3-5 end-users in this market (List of

companies is in Annex 9).

Next step recommendations:

There is no activity to be recommended as there are no clear opportunities

from the Vietnamese market for supplying equipment and machinery for

the manufacture of means of transport. If there are individual enquiries

from Dutch companies, a tailored meeting programme for them with a few

end-users should be effective enough (see Annex 9).

Dutch companies which are interested in working with industries that

support car/automobile manufacturing can also refer to MTA Vietnam

from 8-11 July 2014 in Ho Chi Minh City. This is the 12th International

Precision Engineering, Machine Tools and Metalworking Exhibition and

Conference (Annex 1 – List of Vietnamese trade fairs in promising

sectors).

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Annex 1 - List of Vietnamese tradefair in

promising sectors

No Trade Fair Industry sectors Date/Venue Describe

Electronic

1 NEPCON Vietnam 2014 www.nepconv

ietnam.com

Electronics 9 – 11 Oct 2014/Ho Chi Minh City

Vietnam’s only exhibition of SMT & Testing Technologies and Supporting Industries for electronics

manufacturing – 7th Edition

2 METALEX Vietnam 2014 www.metalex

vietnam.com

Metalworking 9 – 11 Oct 2014/Ho Chi Minh City

Vietnam’s International Exhibition on Machine Tools & Metalworking Solutions for Production Upgrade –

8th Edition

2. Mechanical

1 Vietnam

Manufacturing Expo 2014 www.vietnammanufacturingexpo.com

Mechanical/support

ing industries

27 – 29 August 2014/Hanoi The most comprehensive

machinery and technology event in manufacturing and the supporting industries

2 MTA Vietnam 2014 www.mtavietnam.com

Metalworking/supporting industries/mechanical

8 – 11 July 2014 in Ho Chi Minh City

This is the 12th International Precision Engineering, Machine Tools and Metalworking Exhibition and Conference.

3 Linkage Metalworking

Machine tool and Automation

Metal Cutting Machine Tools, Metal Forming Machines, Production and Process Automation

Linkage Vietnam focuses on industrial automation, metalworking, as well as electricity engineering and the energy industry. It’s the most anticipated and largest trade

fair in Vietnam, introducing state-of-the-art equipment and technologies. This customised one-stop-shop

exhibition will include injection moulding machines, circular looms and bag

making machines, bottle blow moulding machines, several packaging machines, food processing machines, numerous printing machines and various rolls.

4 Metal & Weld Metalworking industry

Technology/Machinery/Engineering/Automation/Other/Construction/Building/Architecture

International Exhibition on Metalworking & Welding Technology Vietnam is a professional forum to create opportunities for local and international metal and

welding enterprises displaying new products and technologies.

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http://www.vietnammanufacturingexpo.com/



http://www.citynetevents.com/saigon/events?event_industry_id=41







5 Vietnam Motor show

Automotive industry

An exhibition for the automobile industry, automotive supporting industries, spare parts companies and firms from other related fields.

Vietnam Motor Show is the most highly anticipated automobile event of the year. The exhibition attracts the participation of the most prestigious automobile brands

available in Vietnam and promises to bring consumers a wide range of choices.

6 Saigon Autotech &

Accessories

Automobile industry

All kinds of automobile and motorcycle products and

products from corresponding,

supporting industries.

Saigon Autotech is a unique professional and large-scale

exhibition with a total

displaying area of thousands of square metres. The Show is expected to attract a huge number of domestic and overseas enterprises, displaying and introducing

their technological products, accessories, spare parts, services to the Vietnam Automobile/Motorbike Industry and Supporting Industries

7 Vietnam Expo Transportation/Logistics/Supply Chain Management, Technology/Machin

ery/Engineering/Automation/Other

Vehicles & Spare parts: Bicycles, electric bicycles; Motorcycles; Auto & auto parts

Machinery & Electronics Machinery & Equipment;

Construction machinery; Chemical products; Electronic & Electrical products; Computer & Communication products; Consumer electronics;

Handtools & Hardware

This exhibition covers the four main displaying areas, e.g. International Pavilions. It covers Machinery -

Electronics, Vehicles - Spare Parts and Home Living and is

believed to provide Vietnamese and overseas enterprises further opportunities to use the high-quality products from companies throughout the world.

3. Electrical

1 Electrical

Technology & Equipment

Vietnam ETE www.cisvietnam.com.vn

Electrical 16 – 19 Jul 2014/Ho Chi Minh

City

The 7th International

Electrical Technology & Equipment Exhibition

Many leading brands and enterprises in the electrical industry and electrical equipment fields in the

country participate in Vietnam ETE. It is the largest specialised electrical technology and equipment event in Vietnam.

4. Agricultural equipment

1 Propak Vietnam 2014: www.propakviet

nam.com

Processing and Packaging

4 - 6 March 2014/Ho Chi Minh City

Trade fairs focussing on post-harvest and food technology, processing and packaging industries. ProPak Vietnam is

an international processing,

filling and packaging exhibition and conference for

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Vietnam’s rapidly expanding manufacturing sectors for food, pharmaceutical, beverage, cosmetic, industrial and general consumer products.

2 Food pack Vietnam 2014 http://www.machinery-

vietnam.com/

Processing and Packaging

26 – 28 June 2014/Ho Chi Minh

Food Pack Vietnam is an exhibition related to the food processing industry in Vietnam.

3 VietnamPlas The International Plastics &

Rubber Industry Exhibition. VnPackPrint The International

Packaging & Printing Industry Exhibition

VnPrintLabel The Vietnam

International Print & Label Industry Exhibition. VnFoodtech The Vietnam

International Food Processing & Pharmaceutical Industry Exhibition.

Plastic, packaging, printing technologies

Blow Moulding Machinery Chemicals and Raw materials Coating compounds, Extruders and extrusion lines

Extruders, Printing Machinery Heat and Control equipment hydraulic and pneumatic Injection Machinery Laboratory Machinery auxiliary industry

Moulds & Dies Parts & Accessories Plastic & Rubber Processing Machinery Professional publications

rubber goods Raw Materials

Recycling machine Semi-Finished & Finished Products

Exhibition attended by companies from Australia, Belgium, China, Germany, India, Indonesia, Italy, Japan,

Korea, Malaysia, Netherlands, Singapore, Turkey, Taiwan, Thailand, UK, and Vietnam taking up around 450 booths every year. The exhibition is organised by

Ministry of Industry & Trade - Vietnam National Trade Fair & Advertising Joint-stock Company, and Yorkers Trade & Marketing Service co. Ltd.

The show benefits from the cooperation of Chan Chao

International Co. Ltd., Paper Communication Exhibition Service, Vietnam Plastics Association (VPA), Vietnam Rubber Association (VRA) and Vietnam Printing Association (Vinaprint).

5. Oil & Gas

1 Oil & Gas Vietnam (OGAV) 2014

www.oilgasvietnam.com

Oil Exploration, Oil Industry, Petrochemicals

21 – 23 Oct 2014 in Vung Tau Oil and gas event in Vietnam for both upstream and downstream oil and gas

companies and the supporting industries

2 Vietship Logistics, Marine, Shipbuilding,

Shipping, Transportation

Financing proposals, maintenance technologies,

materials for shipbuilding, offshore facilities, ship repair products, shipbuilding equipment, shipyard facilities, ...

Vietship is an international trade fair for shipbuilding and

marine technology. The Vietship is a communication and information platform in the industry and offers the exhibiting companies the

opportunity to present themselves to a professional

audience. They expect

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thousands of visitors, international public and private organisations and hope to attract lucrative new business deals. Visitors can find in-depth and

comprehensive information about the latest developments, trends, services and products in the field of shipbuilding and marine technologies.

3 Inmex Vietnam

Marine, Shipbuilding, Shipping

Dredging, marine equipment, marine offshore technology, ocean engineering, port equipment, port technology, ship repair, shipbuilding, underwater robotics, ...

Thousands of professional visitors will be expected from public and private organisations from Vietnam and abroad. There will be opportunities to form

promising and lucrative new business relations and partnerships.

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http://www.tradefairdates.com/INMEX-Vietnam-M11319/Ho-Chi-Minh-City.html

http://www.tradefairdates.com/INMEX-Vietnam-M11319/Ho-Chi-Minh-City.html



Annex 2 - List of supporting organisations in

promising sectors

No Name Address Website Telephone Email

Ministries/Trade promotion organisations

1 Ministry of Industry and Trade – Institute for Industrial

Policies and

Strategies (IPSI)

R.801, 23 Ngo Quyen Str., Hoan Kiem, Hanoi

www.ipsi.org.vn +84 4 39369593

2 Vietnam Chamber of Commerce and Industry (VCCI)

9 Dao Duy Anh St, Hanoi, Vietnam Or 171 Vo Thi Sau,

Dist 3, Hochiminh City, Vietnam

www.vcci-hcm.org.vn

+84 4 35742022

+84 8 39320033

3 Embassy of the Kingdom of the Netherlands in

Vietnam

Daeha Office Tower, 6/Fl, 360 Kim MA St, BA Dinh Dist,

Hanoi, Vietnam

Saigon Tower, Suite

901

29 Le Duan Boulevard, District 1, Ho Chi Minh City, Vietnam

www.hollandinvietnam.org

+84 4 38315650

4 Embassy of the

S.R of Vietnam

261 Laan van Nieuw

Oost-Indie 2593 BR The Hague, The Netherlands

+31 643498835

Electronic

1 Saigon Hi-Tech Park (HTP)

Lot T2-3, D1 Road Saigon Hi-tech

Park, Dist 9, HCMC

www.shtp.hochiminhcity.gov.vn

+84 8 3736 0293

2 Vietnam Electronic Industries Association

11B Phan Huy Chu Str., Hanoi

www.veia.org.vn +84 4 3933 2845

Mechanical

1 Hochiminh City

Association of Mechanical Engineering (HAME)

291 Dien Bien Phu

Str., Dist. 3, HCMC

+84 8 3842

9329

2 Vietnam

Association of Mechanical Industry (VAMI)

F.2 21 story Tower,

124 Minh Khai Str., Ha Ba Trung Dist., Hanoi

www.vami.com.v

n

+84 4 3936

8503

[email protected].

vn

3 Vietnam Steel

Association

91 Lang Ha Str.,

Dong Da Dist., Hanoi

www.vsa.com +84 4 3514

7245

4 Vietnam 401 room, 37 Trang www.vami.com.v +84 4 3936 [email protected].

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Mechanics Development Consultancy Center

Thi Str., Hoan Kiem, Hanoi

n 8503 vn

5 Vietnam Automation Association (VAA)

105 Hoang Van Thai Str., Thanh Xuan, Hanoi

http://www.automation.org.vn/

+84 4 2215 7058

[email protected]

Electrical

1 Vietnam

Electrotechnical Industry Association

P.302, building

CTM, 299 Cau Giay Str., Hanoi

www.velina.org +84 4 2220

1520

[email protected]

2 Electric Wire and Cable Association

Hochiminh City (HECA)

70-72 Nam Ky Khoi Nghia Str., Dist.1,

HCMC

+84 8 3829 9443

Agricultural equipment

1 The Vietnam Gardening

Association (VACVINA)

58 Nguyen Binh Khiem Str., Dist.1,

HCMC

+84 8 3829 6098

[email protected]

Oil & Gas

1 Vietnam

Petroleum Institute (under Vietnam national oil and gas group)

4 Nguyen Thong

Str., Dist 3, HCMC

www.pvpro.com.v

n; www.vpi.pvn.vn

+84 8 3930

3323

[email protected].

vn; [email protected]

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http://www.pvpro.com.vn/

http://www.pvpro.com.vn/





Annex 3a - interview results – electronic

manufacturing companies

Quantitative analysis - Analysis of market expansion plans in next

3-5 years for Vietnamese trading/manufacturing companies in

Metalworking

Electronic companies: Interviews with 63 companies which are

members of VEIA

1a. What sectors correspond to your company’s core businesses?

1b . To which sectors do you supply your products?

(Answer the open question and tick one or more answers for the multiple

choice questions as appropriate)

Electronic companies: In 63 interviewed electronic companies, which

are members of VEIA, 42 companies (66%) are involved in trading

consumer electronic products in the market and repairing and installing

electronic equipment for (mainly) consumer use with some industrial use.

The remaining 33% of companies manufacture computer, electronic and

optical products. Around half of the manufacturing companies interviewed

are companies that involve foreign investment (joint ventures). There is a

worrying trend that is seeing small and medium-sized Vietnamese

companies in the industry, due to lack of capital and technological

capacity, switching from manufacturing to trading. Another reason for this

is that current tax policies, according to interviewees, are more

advantageous for manufacturers with foreign investors than they are for

local ones. Under investment law, and commitment from AFTA, companies

with foreign investors can enjoy extensive income tax exemptions and

flexibility from customs authorities when they import equipment/materials

for manufacturing.

33% of the companies manufacture/assemble for the electronic appliance

and industrial machinery sectors. Some can supply to both.

There are only 5 Vietnamese electronic manufacturing companies that

supply their own products (under their own brand names), the remaining

Vietnamese manufacturers only assemble for EMS’s or ODM’s.

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Agro and food

Horticulture Automotive Consumer appliances

Industrial machineries

High-tech systems and materials

Energy Others

1 Manufacture of fabricated metal products, except machinery and equipment

2 Manufacture of computer, electronic and optical products

20 15

3 Manufacture of electrical equipment

4 Manufacture of machinery and equipment

5 Manufacture of motor vehicles, trailers and semi-trailers

6 Manufacture of other transport equipment

7 Repairs and Installation of machinery and equipment

42

8 Architectural and engineering activities; technical testing and analysis

9 Others

2. Does your company engage in international business in one or some of the areas mentioned below? (Answer

the open question and tick one or more answers for the multiple choice questions as appropriate)

3a . From which countries does your company currently import/export/outsource products or parts or receive

investment? Choose one or more answers.

3b . What products/parts does your company currently import/export/outsource and what investments do you

receive from the selected countries?

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Electronic companies: Of the 42 companies involved in trading consumer electronic products in the market,

most import mainly from US, Japan, Korea, Malaysia, Thailand, Taiwan, UK, China, Hong Kong - for consumer

electronics and office electronics, i.e. smartphones, laptops, printers, PC’s, hard disks, etc. One company can

supply different brand names to domestic markets.

Most of the companies which are manufacturing computer, electronic and optical products, assemble EMS’s and

ODM’s from Japan, Malaysia, Thailand, Korea, Taiwan. They assemble electronic parts for the consumer

electronics, electronic appliance and industrial machinery sectors. Some can supply to both.

There are only 5 Vietnamese electronic manufacturing companies that supply their own products (under their

own brand names). They export consumer electronics, e.g. infrared cookers, amplifiers, karaoke systems, to

Cambodia, Laos, Mianma, Cuba.

None of the interviewed companies exports or outsources to European countries.

US Japan ASEAN countries

Europe Australasia Specific markets

Specific products

1 import of products or parts thereof

22 26 15 36 US, Japan, Korea, Malaysia, Thailand, Taiwan, UK, China, Hong Kong

Consumer electronics and office electronics: smartphones, laptop, printers, PC, hard disk

2 export of products or parts thereof

5 Cambodia, Laos, Mianma, Cuba

Consumer electronics: infrared cooker, amplifiers, karaoke system

3 Outsourcing/captive outsourcing activities such as (parts of) production and/or service (sales, repair etc.) abroad

18 20 Japan, Malaysia, Thailand, Korea, Taiwan.

Electronic parts for consumer electronics

4 invest in companies abroad

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4. Does your company have plans to expand imports from/ exports to, outsourcing to or investment in

international markets in the next 3-5 years? (Multiple answers possible)

5a . Does your company plan to expand its exports or outsourcing activities to any or some of the countries

below in the next 3-5 years? (Choose one or more answers)

5b . Why are you planning to expand exports or your outsourcing activities to specified markets?

………………………………………………………………………………………………………………………..

Electronic companies: Vietnamese trading companies in the electronics sector are willing to have more trading

partners to bring new brand names to the market. US and Japanese products are most welcome. They are open

to trade more European products in general and Dutch products in particular as they are sure product quality

from Europe is guaranteed and corresponds to good brand names. They do not have special awareness of specific

products or brand names from Netherlands. Electronic products where they see good potential for domestic

markets include consumer electronics and industrial electronics, such as testing equipment.

Regarding electronic manufacturing companies, all of the interviewed companies want to expand their markets in

the next 3-5 years however most of them don’t have a clear strategy on what markets to penetrate and what

steps to follow in market expansion. They passively follow the market trends and rely on contracts with existing

customers. The Japanese and US markets are very large and influential in terms of Vietnamese companies. Local

companies normally try to join the value chain of Japanese companies. Once they successfully achieve an initial

contract, opportunities will be open for them to access other customers in the same markets. The business

development division in these electronics companies only manage relationships with existing customers; they do

not yet focus on exploring new markets.

Europe is a relatively new market to electronic manufacturing/assembling companies. None of the companies

interviewed exports or outsources to any countries in Europe. Local companies don’t yet have any practical

market information on Europe and especially the Netherlands; they do however characterise European markets

as having high requirements in terms of technologies and strict quality control standards which they feel would

be hard to follow. Some companies, which supply their product brand names to consumers and currently only

export to Cambodia, Lao, Cuba, Myanmar, do not consider Europe to be a target market in the next 3-5 years,

however they would like to know more about the market if possible.

http://www.cbi.eu/





Alongside the companies which do not have a clear strategy in market expansion, some others are clear in their

vision to expand to Europe (as assemblers) and enthusiastic about getting to know the Dutch market better.


Europe Ho Specific markets

Why

1 yes , in import activities;

42 42 15 20 16 US, Japanese products are most welcomed. Trading companies are

open to trading more European products in the

Consumer electronics; industrial electronics such as testing equipment.

2 yes , in outsourcing activities;

9 12 15 8 US, Japanese, Dutch, Finnish markets

Companies welcome opportunities to outsource to new markets if they have opportunities to approach these markets.

3 yes , in export activities;

5 Expand in the same markets Cambodia, Laos, Mianma, Cuba

The manufacturing capacity can only meet requirements from existing markets

4 yes , in receiving

investment;

5 do not know (Continue with question 6)

6

6. In terms of factors that are significant within expertise of international business, please evaluate the

importance of each factor (rating them from 1 – 5, from less important to very important).

http://www.cbi.eu/





Electronics companies: There are some factors that Vietnamese electronics companies consider very

important, including the local tax and regulatory environment; customs policies and procedures; technological

innovation within the new market; supply chains; intellectual property rights; identifying suitable business

partners; knowledge of the new market and technical standards and norms.

Both manufacturing and trading companies consistently emphasise the importance of local tax and regulatory

environments and customs policies and procedures because these factors strongly influence business.

Vietnamese electronic manufacturing companies currently suffer many difficulties as a result of the local tax

regime and customs. Companies with foreign investors are granted income tax exemptions, preferential land

policies for large investment and rapid support in customs procedures. Local companies, however, are not offered

similar advantages and this leads to high manufacturing costs for local products.

In terms of market expansion, electronic companies value three factors: identifying suitable business partners;

knowledge of the new market; technical standards and norms. These are also areas where Vietnamese

companies lack information. They need support in terms of new market information on market demand, technical

standards required and the business-matching approach.

Companies also consider the supporting industry to be very significant for the development of Vietnamese

electronics. Currently, the Vietnamese supporting industries are very young and fragmented and this adds to

Vietnam’s disadvantaged position compared to other countries. In other markets, such as Malaysia and Thailand,

the cost of manufacturing is lower than Vietnam as they can source parts for the electronics industry locally and

with reasonable prices. Meanwhile, in Vietnam, nearly all parts are imported from Malaysia or Thailand, leading

to high costs and delays in the manufacturing schedule

No Factors Mean Standard Deviation Median

1 Global trends 3.190476 0.644008 3

2 Political and social climate 3.634921 0.48532 4

3 Local tax and regulatory environment (Vietnam) 4.68254 0.469227 5

4 Customs policies and procedures 3.746032 0.80258 4

5 Legal and regulatory systems for the new market 2.904762 0.755929 3

6 Innovation 4.047619 0.633184 4

7 Location and infrastructure 2.777778 0.728331 3

8 Cultural compatibility/language adaption 2.920635 0.768358 3

9 Labour market conditions 2.952381 0.727979 3

10 Supply chain development 3.539683 0.758296 3

http://www.cbi.eu/





11 Intellectual property 3.47619 0.644008 3

12 Living cost 1.984127 0.832642 2

13 Identifying suitable business partners 4.460317 0.502426 4

14 Knowledge of the new market 4.492063 0.503953 4

15 Technical standards and norms 4.444444 0.500895 4

16 Others: supporting industry 4.285714 0.455383 4

7. Do you or your company normally receive support from governmental (Vietnam or foreign) trade-promoting

organisations, associations, or chambers of commerce, such as FME-CWM, NL Agency, CBI, Koninklijke

Metaalunie, etc?

Electronics companies: Most trading companies do not receive support from governmental organisations when

they expand their network with foreign business partners (39 answers – ‘rarely’ and ‘never’ are mainly from

trading companies or companies with foreign investors). The remaining companies have received support from

different governmental organisations such as Jetro (The Japan External Trade Organization), Jica (Japan

International Cooperation Agency), Kotra (Korea Trade – Investment Promotion Agency), VCCI (Vietnam

Chamber of Commerce and Industry), ITPC (Investment and Trade Promotion Center), Taiwan Excellence and

trade departments within the embassies or consulates of foreign countries in Vietnam.

Options Answers

1 always (Continue with question 8a) 2

2 usually (Continue with question 8a) 12

3 sometimes (Continue with question 8a) 10

4 rarely or never (Continue with question 9) 39


8a . For what activities do you receive support from such organisations?

Business matchmaking in many functions such as receptions, meetings;

Support at exhibitions, trade fairs;

Technical support in manufacturing;

Training in production processes.

8b. Are you generally satisfied or dissatisfied with the support provided by these organisations?

8c. What can be improved in terms of the support provided by these organisations?

http://www.cbi.eu/





Electronics companies: Some companies (42%) are satisfied and very satisfied with the support as either the

support is relevant to their businesses or they are open to every opportunity for expanding their networks.

Some companies (58%) don’t have specific comments on the support as they think the support is not really

relevant to the real business situation.

What can be improved in the support of these organisations?

1 very satisfied, (Continue with question 9) 2

2 satisfied (Continue with question 9) 8

3 neither satisfied nor dissatisfied (Continue with question 8c)

14 The support should be more practical and relevant to businesses Some courses are not applicable Too many meetings which do not lead to genuine results

4 dissatisfied (Continue with question 8c)

5 very dissatisfied (Continue with question 8c)

9. Have you/your company ever considered doing business (import/export/outsourcing) with or receiving

investment from the Netherlands?

10. Are there any particular reasons why you have never considered the Netherlands?

11. If you are considering or already doing business with or in Netherlands, what are your general views on the

Dutch market?

Electronics companies: Most companies (86%) welcome opportunities to be connected with Dutch markets if

they have the support or relevant information. According to trading companies’ views, the Netherlands is a high

technology market which will offer many trading opportunities to Vietnamese markets. According to

manufacturing companies, the Netherlands with its high-tech requirements will offer manufacturing companies

many opportunities to upgrade and learn.

Some other companies (14%) don’t want to expand to the Netherlands in a timeframe of 3-5 years because they

think that the products are inadequate to approach Dutch markets; Dutch markets are part of the European

http://www.cbi.eu/





market so technology requirements are too high for their companies.

Are there any particular reasons why you have never considered the Netherlands?

If you are considering or already doing business with or in the Netherlands, what are your general views on the Dutch market?

1 no (Continue with question 10) 9 Products made by the companies are inadequate for Dutch markets. Dutch markets are part of Europe so technology requirements are too high for their companies to access. The current focus is on other markets.

2 yes; (Continue with question 11) 54 Companies welcome opportunities to be connected with Dutch markets if they have support or the relevant information. The Dutch market is a high-tech market which will offer many trading opportunities to Vietnamese markets. The Netherlands, with its high

technology requirements, will offer manufacturing companies many opportunities to upgrade and learn.

12. Would you like to get information about the Netherlands for further expansion in the future?

13. What kind of information would you most like to receive?

Electronics companies: All of the companies that want to expand their business relationships with the

Netherlands would like to receive information about Dutch markets. They need:

More information on market demand

Information on technology requirements

Information on companies with a genuine interest in Vietnamese companies

http://www.cbi.eu/





Response options What kind of information would you most like to receive?

1 yes (Continue with question 13)

54 More information on market demand Technology requirements Companies with genuine interest in

Vietnamese companies

2 no (Continue with question 13)

14. If you have concrete plans to expand to, or do business with companies from the Netherlands, would you like

to receive support from organisations working for the trade, such as NL Agency , CBI , FME - CWM and

Metaalunie ?

Response options:

1 Yes 50

2 No

3 Maybe 4

http://www.cbi.eu/





Annex 3b - List of interviewed companies - Electronics

No Company Address Web Tel Email Note

1

Sao Kim Electronics JSC

178/18 Phan Dang Luu Phu Nhuan, HCMC

http://www.saokim.vn/

+84 37517733

[email protected]

2 VIMETCO,.JSC

Số 20A/5 -Đ.Hoàng Quốc Việt,Dist.Cầu Giấy,Hà Nội,Việt Nam.

http://www.vimetco.com.vn

04.66.727.424/ 04.66.749.332

[email protected]

3 C.TECH CO, LTD

36 Trần Phú, W. 4, Dist. 5,Tp. Hồ Chí Minh (TPHCM)

(08) 38337792

[email protected]

4 Vinasino Electrical Equipment JSC

Lô H.08, Str.1, Khu Công Nghiệp Long Hậu, Huyện Cần Giuộc Tỉnh Long An.

www.vinasino.vn

084-38734630; 084- 38734631; 084-38734632

[email protected]

5 ETS Electronic Co., ltd

Số 4 Ngõ 595/5 Đường Lĩnh Nam - Hoàng Mai - Hà Nội

http://dientuets.vn

04 667.563.99

[email protected]

6 VNPT TECHNOLOGY

124 Hoàng Quốc Việt – Cau Giay, Hanoi

http://vivas.vn/index.php/contact

43.7480921 [email protected]

7 Mach In Mai Hung Co., ltd

248A, Nơ Trang Long, P. 12, Dist. Bình Thạnh, Tp. Hồ Chí Minh

(08) 35165720

8 Phuc Loc Electronics Co., ltd

54 Lot M, Str. 3A, Cư Xá Bình Thới, W. 8, Dist 11, Tp HCM

www.phuclocaudio.com.vn

08. 2215 0269

9 Thivanlabs

40/8 Trần Quang Diệu, W. 14, Dist 3, TP. Hồ Chí Minh, Việt Nam

http://thivanlabs.com

0918699361 [email protected]

http://www.cbi.eu/






http://www.vimetco.com.vn/







http://www.vinasino.vn/

http://www.vinasino.vn/


http://dientuets.vn/

http://dientuets.vn/







http://www.phuclocaudio.com.vn/



http://thivanlabs.com/

http://thivanlabs.com/





10 Vietnam Mechanical electronic JSC

12/1 - ngõ 898 Str Láng, W Láng Thượng, Đống Đa, Hà Nội.

http://www.nangluongvadieukhien.com http://www.invt.org.vn

(04) 3 2595 370

[email protected]

11 Thuận Phát IMOSO JSC

Km 27, Highway Láng- Hòa Lạc

http://www.thuanphat.com

462956935

12 Khai Tri JSC

67- 69 Cách Mạng Tháng 8, Dist 1, HCM

http://www.khaitri.com.vn

(84-8) 3844 5343 / 9 256 169

[email protected]

13 Minh Việt JSC

72, Ngách 95/8, Chùa Bộc, Đống Đa, HN

http://www.minhviet.com.vn

(84-4) 3972 1550

[email protected];[email protected] [email protected]

14 Huetronics JSC

5-7 Hoàng Hoa Thám, Thành phố Huế

www.huetronics.vn

(84-054) 826 081

[email protected];[email protected]

15 Viettronic Da nang JSC

181-185 Điện Biên Phủ, Thanh Khê, Đà Nẵng

(84-0511) 3659183/84 (511) 830421-823801

[email protected]

16 Hải Huy JSC

7 Nguyễn Trãi, Dist. Ninh Kiều, TP. Cần Thơ

http://www.haihuy.com http://www.haihuy.net

(84-71) 825 455

[email protected]

17 POSTEF JSC

61 Trần Phú, Dist. Ba Đình, TP. Hà Nội

http://www.postef.com

(84-4) 845 5946; 823 4128


18 Công ty TNHH Một thành viên Điện tử Sao Mai

27 Hoàng Sâm, Nghĩa Đô, Cầu Giấy, Hà Nội

(84-4) 756 4183; 756 4699

[email protected]

19 VIETCOM Company

18 Nguyễn Chí Thanh, Ba Đình, TP. Hà Nội

(84-4) 834 4665 / 7715126

[email protected] [email protected]

20 GVECO Company

168 Ngọc Khánh, Quận Ba Đình, TP. Hà Nội

(84-4) 835 4363; 834 5479


http://www.cbi.eu/



http://www.nangluongvadieukhien.com/




http://www.invt.org.vn/

http://www.invt.org.vn/



http://www.thuanphat.com/



http://www.khaitri.com.vn/





http://www.minhviet.com.vn/



mailto:[email protected];[email protected]





http://www.huetronics.vn/

http://www.huetronics.vn/






http://www.haihuy.com/



http://www.haihuy.net/

http://www.haihuy.net/



http://www.postef.com/

http://www.postef.com/











21 Vĩnh Trinh Co., ltd

94 Trần Quốc Toản, Quận Hoàn Kiếm, TP. Hà Nội

http://www.vinhtrinh.com.vn

(84-4) 942 3558


22 BDC JSC

61 Thợ

Nhuộm, Quận Hoàn Kiếm, TP. Hà Nội

http://www.bdc.vn

(84-4) 825 4771; 826 8430


23 MISA JSC

Nhà I, Khách sạn La Thành, 218 Đội Cấn, Ba Đình, Hà Nội

www.misa.com.vn

(84-4) 762.7891 /1900 8677


24 Công ty CP Ứng dụng Tiến bộ Khoa học - Công nghệ (MITEC)

Floor 2, Building 381 Phố Đội Cấn, Phường Liễu Giai, Quận Ba Đình, Hà Nội, Việt Nam

http://www.mitec.com.vn

(84-4) 6.2734 616


25 Công ty TNHH MTV Thông tin Điện tử Hàng Hải VN (VISHIPEL)

2 Nguyễn Thượng Hiền, Quận Hồng Bàng, TP.Hải Phòng

http://www.vishipel.com.vn

(84-031) 842 073/ (+84-31) 3746464 / 3569136

[email protected];[email protected] [email protected]

26 Công ty CP Điện tử Hải Phòng (HAPELEC)

73 Điện Biên Phủ, Quận Hồng Bàng, TP Hải Phòng

http://www.hapelec.com.vn

(84-031) 745 383


27

Trung tâm công nghệ phần mềm TP. Hồ Chí Minh (Thuộc Công ty Điện tử Tin học Sài Gòn)

200 Võ Văn Tần, Quận III, TP. Hồ

Chí Minh

http://www.ssp.com.vn

(84-8) 834 1018


28 Công ty CP Điện tử Biên Hoà

52-54 Nguyễn Huệ, P. Bến Nghé, Quận 1, TP. Hồ Chí Minh

http://www.veic.com.vn

(84-8) 829 8100 / 8296 017

[email protected]

29 Công ty Công nghệ Thông tin Genpacific

391A Nam Kỳ Khởi

Nghĩa, Quận 3, TP. Hồ Chí Minh

http://www

.genpacific.com.vn

(84-8) 848 3255

[email protected]

m.vn;[email protected]

30 Tấn Thành Co., LTD

Tầng 5, 14-16 Hàm Long, P. Phan Chu Trinh, Q. Hoàn Kiếm, HN

(84-4) 945 4058


http://www.cbi.eu/



http://www.vinhtrinh.com.vn/









http://www.misa.com.vn/

http://www.misa.com.vn/




http://www.mitec.com.vn/







http://www.vishipel.com.vn/








http://www.hapelec.com.vn/






http://www.ssp.com.vn/

http://www.ssp.com.vn/



http://www.veic.com.vn/





http://www.genpacific.com.vn/











31 Xí nghiệp Tư doanh Điện tử TQT

42 Trần Nhật Duật, TP Nha Trang, tỉnh Khánh Hoà

http://www.tqtbroadcast.com

(84-058) 871 155/(+8458) 871155, 874399

[email protected]

32 CÔNG TY TNHH PHÁT TRIỂN CÁC CÔNG NGHỆ ĐIỆN TỬ CÔNG SUẤT

Tầng 2, Tòa nhà 6 tầng, Km2+500 Phan Trọng Tuệ, Thanh Liệt, Thanh Trì, Hà Nội.

http://powertech.com.vn/?u=cnt

(04) 37931642

[email protected]

33 Công ty Cổ phần Bóng đèn Điện Quang

125 Phố Hàm Nghi, P. Nguyễn Thái Bình, Q. 1, HCM

http://www.dienquang.com

(08-8) 8 290 135

[email protected]

34 4P Co., LTD

Địa chỉ: Vĩnh Khúc- Văn Giang- Hưng Yên

www.4p.com.vn

(84) 3213 729 317


35 Công ty Cổ phần Tập đoàn IDC

17 Lý Nam Đế, Quận Ba Đình, TP. Hà Nội

http://www.idc.com.vn

Điện thoại : (84-4) 3823 4905; 747 2090


36 Công ty Cổ phần Thiết bị Hàng Hải ( MECOM )

30 Hàm Nghi, Phường Bến Nghé, Quận 1, TP. HCM

http://www.mecom.com.vn

(84-8) 8213 639


37 Viet An JSC

Lot A5, Phung IZ, Dan Phuong Ha noi

http://viet-an.vn

04 3363 5443/5/6

[email protected]

38 Xí nghiệp Tư doanh Điện tử TQT

42 Trần Nhật Duật, TP Nha Trang, tỉnh Khánh Hoà

http://www.tqtbroadcast.com

(84-058) 871 155/(+8458) 871155, 874399

39 Tổng Công ty Cổ phần Điện tử và Tin học Việt Nam (VEIC)

15 Trần Hưng Đạo, Quận Hoàn Kiếm, TP. Hà Nội 197 Nguyễn Thị Minh Khai, P.Nguyễn Cư Trinh, Quận I, TP.HCM

http://www.veic.com.vn

(84-4) 3825 6404; 8 255 197

[email protected]

http://www.cbi.eu/



http://www.tqtbroadcast.com/









http://www.dienquang.com/





http://www.4p.com.vn/

http://www.4p.com.vn/





http://www.idc.com.vn/

http://www.idc.com.vn/




http://www.mecom.com.vn/







http://viet-an.vn/

http://viet-an.vn/












40 Công ty TNHH Máy tính CMS

Tầng 13, CMC Tower, Lô C1A cụm sản xuất tiểu thủ công nghiệp vừa và nhỏ, Cầu Giấy Hà nội

http://www.cms.com.vn

[email protected]

41 Công ty TNHH Một thành viên HANEL

2 Chùa Bộc, Quận Đống Đa, TP. Hà Nội

http://www.hanel.com.vn

(84-4) 3852 4555; 572 5174

[email protected]

42 Công ty Điện tử Tiến Đạt

405 Điện Biên Phủ, Phường 4, Quận III, TP. Hồ Chí Minh

http://www.tiendat.vn

(84-8) 839 8757/8359 412

[email protected]

43 Công ty CP Điện tử Tân Bình (VTB)

248A Nơ Trang Long, Quận Bình Thạnh, Hồ Chí Minh

http://www.vtb.com.vn

(84-8) 3516 3885

[email protected]

44 Công ty CP Điện tử Bình Hoà

204 Nơ Trang Long, Quận Bình Thạnh TP. Hồ Chí Minh

http://www.viettronics-binhhoa.com

(84-8) 843 2472 / 843 2458


45 Công ty TNHH Sản Phẩm Công nghệ FPT

Địa chỉ: Số 5 Đào Duy Anh,Phương Liên, Đống Đa, Hà Nội.

http://fptproduct.com.vn

(84-4) 3 73007575

46 Công ty TNHH TMDV Tin học Anh Phương

104 Nguyễn Trãi, Quận 1, HCM

www.anhphuong.com.vn

(84-8) 39250199


47 Công ty CP Đầu tư Phát triển Công nghệ ROBO

25 Phạm Viết Chánh, Quận 1, HCM

http://www.robo.com.vn

(84-8) 39 253 709

[email protected]

48 Công ty thiết bị điện CN Cát Vạn Lợi

504 Le Quang Dinh, Go Vap

http://catvanloi.com/gioi-thieu-thiet-bi-dien-cat-van-loi.html

08 35886496 [email protected]

49 Công ty Cổ phần Cơ khí Điện tử Phú Thọ Hoà (VIEMCO)

1026B Luỹ Bán Bích, Phường Hoà Thạnh, Q. Tân Phú, Hồ Chí Minh.

http://viemco.com

(84-8) 865 3978

[email protected]

http://www.cbi.eu/



http://www.cms.com.vn/




http://www.hanel.com.vn/





http://www.tiendat.vn/

http://www.tiendat.vn/



http://www.vtb.com.vn/

http://www.vtb.com.vn/


http://www.viettronics-binhhoa.com/








http://fptproduct.com.vn/



http://www.anhphuong.com.vn/







http://www.robo.com.vn/












http://viemco.com/

http://viemco.com/





50 Công ty CP Xuất Nhập khẩu Điện tử Việt (VIETTRONIMEX)

74-76 Nguyễn Huệ, Quận 1, TP. Hồ Chí Minh

http://viettronimex.com.vn

(84-8) 829 8201

[email protected]

51 TIE JSC

52 Thành Thái, Phường 12, Quận 10, Tp. Hồ Chí Minh

http://www.tie.com.vn

(84-8) 833 0855

[email protected]

52 Hung Dung Co., ltd km42 Hai Duong

www.hungdunghd.com.vn

0320 378 2396

[email protected]

53 Thanh Long Electronic production JSC

Hap Linh IZ, Bắc Ninh P105 Nhà B7-KTT Thanh Xuân bắc, Thanh Xuân, Hà Nội

http://www.thanhlongpcb.com.vn

0241 3720 668 04 3629 0660

54 Equipment and Technology CEVT JSC

Village 2, Van Phuc, Thanh Tri, Ha Noi

http://www.cevt-jsc.com/

55 Thanh Long Electronic

production JSC

Industrial cluster Hap Linh - Bac

Ninh City - Bac Ninh - Vietnam

http://www.thanhlongp

cb.com.vn/EN/

(+84)-241.3720 668

dientu@thanhlongp

cb.com.vn

56 VIET NHAT Electronics Corporation

21 Ký Hòa, Phường 11, Quận 5, Tp.HCM

http://www.v-n-c.com.vn/Home/Congty/TuyenDung/tabid/98/language/vi-VN/Default.aspx

(08) 3950 6666

[email protected]

57 Hai Dang Co., ltd

666/64/30 Ba Thang Hai St., Dist. 10, Hochiminh City, Vietnam

http://www.haidang.com.vn/

(84-8) 3863 21 59 (6 lines)

[email protected]

58 ELINCO Co., ltd

19 Phố Hoàng Sâm - Phường Nghĩa Đô - Quận Cầu Giấy – Hà nội

http://www.elinco.vn/en/

84.4 38350021; 069.556446

[email protected];

http://www.cbi.eu/



http://viettronimex.com.vn/





http://www.tie.com.vn/

http://www.tie.com.vn/


http://www.hungdunghd.com.vn/





http://www.thanhlongpcb.com.vn/






http://www.thanhlongpcb.com.vn/EN/




























59 Thai Son Technology development Co., LTD

B1 Tuổi trẻ- Hoàng Quốc Viêt - Cầu Giấy-Hà Nội.

http://www.thaison.vn/webs/users/default.aspx

04.37545222

60 Power Electronic Technology Co., ltd

Tầng 2, Tòa nhà 6 tầng, Km2+500 Phan Trọng Tuệ, Thanh Liệt, Thanh Trì, Hà Nội

http://powertech.com.vn/index.aspx

04. 37931642

[email protected]

61 Binh Anh Electronics Co., ltd

Số 62, ngõ 88/61, phố Giáp Nhị, P. Thịnh Liệt - Hoàng Mai - Hà Nội

http://binhanh.com/

(84-4) 3 642 5008

[email protected]

62 FSC Company

Tầng 1, Tòa nhà 3B, Phố Phương Liệt, Thanh Xuân, Hà Nội

http://fsc.vn/gioi-thieu/gioi-thieu-chung.aspx

04.3868 8809

[email protected]

http://www.cbi.eu/













http://binhanh.com/

http://binhanh.com/












Annex 4a – interview results electrical equipment manufacturing

companies

Electrical equipment companies: Interviews with 45 companies which are members of VELINA or HECA or

VAMI and some other companies



(Answer the open question and tick one or more answers for the multiple choice questions as appropriate)

Electrical equipment manufacturing companies: Forty-five companies were interviewed; these are mainly

members of VAMI, HECA and VELINA. All companies interviewed are manufacturing companies. They supply to

consumer homes and/or for industrial uses. Their products vary widely, from electrical wires, cables and

transformers to electrical equipment such as boards, boxes and panels.

Response options Agro and food




Energy Others



3 Manufacture of electrical

equipment

40 10 3




http://www.cbi.eu/





7 Repairs and installation of machinery and equipment


9 Others







Electrical equipment manufacturing companies: Of the 45 companies, around one-third do not yet export,

they currently only supply to domestic markets. Some of them supply to foreign value chains domestically. Some

of the export markets for the remaining companies are Laos, Cambodia, Myanmar, Philippines, Indonesia, the

US, Japan, Latin America and the Middle East.



Specific products



3 5 20 3 3 Laos, Cambodia, Myanmar, Philippines, Indonesia, US, Japan, Latin America, Middle East.

Mainly electrical wires and transformers, electrical boxes and panels

3 Outsourcing/captive outsourcing activities such as (parts of) production and/or

2 Outsourcing activities concern electrical high-

http://www.cbi.eu/





service (sales, repair etc.) abroad

tech products


4. Does your company have plans to expand imports from/exports to, outsourcing to or investment in





………………………………………………………………………………………………………………………..

Electrical equipment manufacturing companies: The target export markets in which to expand differ for

smaller companies with limited exporting experience and larger companies which have an export background.

The US is promising and encompasses companies which already have exporting experience. Some Asian

(Myanmar, Laos, Philippines, Indonesia, Thailand) and African markets have great potential and are accessible

for companies with limited export experience.

US Japan ASEAN

countries Europe Australasia Specific

markets Why

1 yes , in import activities

2 yes , in outsourcing activities

2

3 yes , in export activities

8 6 25 5 5 The countries to which many companies

would like to expand include the US, Asia (Myanmar, Laos, Philippines, Indonesia,

The US looks promising, with companies

which already have exporting experience. Some of the Asian and African markets have great

http://www.cbi.eu/





Thailand) and Africa (Nigeria).

potential and are accessible for companies with limited export experience.

4 yes , in receiving investment



importance of each factor (rating them from 1-5, from less important to very important).

Electrical equipment manufacturing companies: There are some factors that Vietnamese electrical

equipment manufacturing companies consider very important, e.g. the local tax and regulatory environment,

customs policies and procedures, technological innovation in the new market, legal and regulatory systems in the

new market, location and infrastructure, identifying suitable business partners, knowledge of the new market and

technical standards and norms.

Besides the prominent factors that influence company business, such as tax, customs and technological

innovation, one further, important factor is the infrastructure in the new market. This is due to the fact that the

electrical equipment manufacturing supplies sector depends on the different demand from the various

infrastructures in each relevant market.

Two more factors that companies believe to be very significant for development are supporting industry and

material input prices, and the requirements of the new market.


1 Global trends 3.8

0.814639 4

2 Political and social climate 3.955556

0.824499 4

3 Local tax and regulatory environment (Vietnam) 4.155556 0.638021 4

http://www.cbi.eu/





4 Customs policies and procedures 4.355556

0.570309

4

5 Legal and regulatory systems for the new market 4.488889

0.505525

4

6 Innovation 4.044444

0.705677

4

7 Location and infrastructure 4.355556

0.48409

4

8 Cultural compatibility/language adaption 2.177778

0.386646

2

9 Labour market conditions 2.955556

0.73718

3

10 Supply chain development 2.777778

0.420437

3

11 Intellectual property 3.133333

0.726135

3

12 Living cost 2.4 0.495434 2

13 Identifying suitable business partners 4.377778

0.49031

4

14 Knowledge of the new market 4.177778

0.833636

4

15 Technical standards and norms 4.155556

0.767391

4

16 Others: supporting industry 4.222222

0.794552

4

17 Others: input material prices and requirements 4.177778

0.7772

4



Metaalunie, etc?

Electrical equipment manufacturing companies: Most companies don’t receive support from governmental

organisations (55%), the remaining companies (45%) receive support from different governmental organisations

such as Jetro (The Japan External Trade Organization), Jica (Japan International Cooperation Agency), Kotra

http://www.cbi.eu/





(Korea Trade – Investment Promotion Agency), VCCI (Vietnam Chamber of Commerce and Industry) and the

trade departments within the embassies or consulates of some foreign countries in Vietnam.

Options Answers







Business matchmaking in many functions such as receptions, meetings

Technical support in manufacturing

Training in production processes

Directories of companies in sector



Electrical equipment manufacturing companies: Some companies (42%) are satisfied and very satisfied

with the support as either the support is relevant to their businesses or they are open to every opportunity for

expanding their networks.

Some companies (58%) don’t have specific comments on the support as they think the support is not really

relevant to the real business situation and not durable:

The support lacks consistency and durability; it usually takes place on a one-off basis.

Achieved no real results so far in terms of business figures.

The support is not relevant to the company’s development. Company needs real business partners.

http://www.cbi.eu/






1 very satisfied, (Continue with question 9)



15 The support lacks consistency and durability; it usually takes place on a one-off basis. Achieved no real results so far in terms of business figures. The support is not relevant to the company’s development. Company needs real business

partners.






11. If you are considering or already doing business with or in the Netherlands, what are your general views on

the Dutch market?

Electrical equipment manufacturing companies: 42% of companies don’t consider The Netherlands as part

of their market expansion plans because:

Do not consider The Netherlands at this stage as it is too far away. Do not yet have any market

information.

The companies’ electrical equipment may not suit the market demands.

The technical requirements could be very high. Companies cannot meet these.

58% companies are willing to consider The Netherlands in their expansion plan as:

Companies welcome opportunities to be connected with Dutch markets if they have support or the

relevant, necessary information.

The Netherlands is a high technology market which will offer many trading opportunities to Vietnamese

markets.

http://www.cbi.eu/





The Netherlands, with its high technology requirements, will offer manufacturing companies many

opportunities to upgrade and learn.

If there is support from the Dutch government, the process will be efficient so the companies will think

about expanding to The Netherlands.



1 no (Continue with question 10) 19 Don’t think about The Netherlands at this stage as the market is so far away. No market information yet. The companies’ electrical equipment may not suit the demands of the market.

The technical requirements could be very high. Companies cannot meet them.

2 yes (Continue with question 11) 26 Companies welcome opportunities to be connected with Dutch markets if they have support or the relevant information. The Dutch market is a high-tech market which will offer many trading opportunities to Vietnamese markets. The Netherlands, with its high technology requirements, will offer manufacturing companies many opportunities to upgrade and learn.



Electrical equipment manufacturing companies: All of the companies that want to expand their business

relationships with The Netherlands would like to receive information about Dutch markets. They need:

http://www.cbi.eu/






Information on technology requirements

Information on companies with a genuine interest in Vietnamese companies

Information on next mission to Vietnam



26 More information on market demand Technology requirements Companies with genuine interest in

Vietnamese companies Next mission




Metaalunie ?

Response options:

1 Yes 26

2 No

3 Maybe

http://www.cbi.eu/





Annex 4b - List of interviewed companies - Electrical

equipment


1

Vietnam Electric Cable Corporation

70-72 Nam Kỳ Khởi Nghĩa, Q.1, HCM

http://www.cadivi-vn.com

08 3821 4732/ 38292971 (ext:1133)

[email protected]

2 Tan Cuong Thanh Electrical Wire Cable Corporation

426-430 Nguyễn Trãi, Dist..5, HCM

http://www.tancuongthanh.com.vn/lienhe.php

08 39236418

3 Dai Long Cables

D17/26 Ấp 4, Đinh Đức Thiện, Bình Chánh

www.dailongcables.com

08 37605 134

[email protected]

4 Tin Thanh Company

D20/532L Phong Phu Commune, Binh Chanh District,

www.tinthanh.com www.tithaco.com

08 37612 513

[email protected]

5 Thinh Phat Company

114 A Hồ Học Lãm, W. AN Lạc, Dist.. Bình Tân

http://www.thiphaco.com www.thinhphatiz.com


6 Liên Đạt Company

401 An Dương Vương, P.3, Q.5, HCM

http://liendat.com.vn

08 38 333 782

[email protected]

7 CFT Vina Copper Co., ltd

CFT, đường số 9, Khu kỹ nghệ Biên Hòa 1, Đồng Nai

http://www.cft-vietnam.com/

061 3833 500

[email protected]

8 3C Engineering Co., ltd

27 Dinh Cong, Hoang Mai Dist., Hanoi, Vietnam

http://www.3cengineering.com.vn/VN/gioithieu.html

04.3.864.1412/ 3.664.2037

9 Hanoi Transformer manufacturing and Electric Material JSC

No. 11 - K2 Road - Cau Dien - Tu Liem Dist. - Hanoi

http://www.ctbt.vn/

04.3.764.4795 –

[email protected]

10 Electrical Equipment Company (THIBIDI)

09 Street, Bien Hoa Industrial Zone 1, Dong Nai, Vietnam

http://www.thibidi.com.vn/

061.3.836.609

[email protected]

http://www.cbi.eu/



http://www.cadivi-vn.com/










http://www.dailongcables.com/





http://www.tinthanh.com/

http://www.tinthanh.com/

http://www.tithaco.com/

http://www.tithaco.com/


http://www.thiphaco.com/



http://www.thinhphatiz.com/

http://www.thinhphatiz.com/



http://liendat.com.vn/

http://liendat.com.vn/














http://www.ctbt.vn/

http://www.ctbt.vn/








11 Nhat Nuoc Company LTD

Room 106, 10th Floor, VIMECO Build., 9E Pham Hung Road, Cau Giay district, Ha Noi, Viet Nam.

http://nhatnuoc.com/

04.3784.9934

[email protected]

12 Van Son Co., LTD

Số 79 – Lạc Trung – Q.Hai Bà Trưng – TP Hà Nội

04.3.622.6120

[email protected]

13 Tran Phu Electric Mechanical JSC

41 Phuong Liet str. - Thanh Xuan dist. - Ha Noi

http://www.tranphucable.com.vn/

04.3.869.1173

[email protected]

14 Tân Nghệ Nam Electric Wires and Cables

66A, Road 830. Hamlet 3. An Thanh Village, Ben Luc District Long An Provice.

www.tanghenam.com

072 3635 222

[email protected]

15 Thuan Phat Electric Wires and Cable Co., LTD

50 Sreet No.21,

P.Binh Tri Đong B Ward, Binh Tan district

www.luckystarcables.com

08 38 771132

[email protected]

16 Viet A Investment Commercial Industrial Group Holdings Company

Tòa nhà Việt Á, phố Duy Tân, phường Dịch Vọng Hậu, quận Cầu Giấy, TP. Hà Nội.

www.vieta.com.vn

84-43-7919999 ext 163

[email protected]

17 Hoàng Phát Cables

18B Trần Não, P. Bình An, Q.2

www.hp-petrocable.com

054 010 992

18 Hanoi Electromechanical Manufacturing JSC

Km12 - Highway 32 - Phú Diễn - Từ Liêm - Hanoi

www.hem.vn

04-3765 5510

[email protected]

19 Vinakip Company

Ward Xuân Khanh - Sơn Tây - Hà Nội

www.vinakip.vn

04-33838033 [email protected]

20 Cát Vạn Lợi Co., ltd

504 Lê Quang Định, W.1, Dist Gò Vấp, HCMC

www.catvanloi.com

(84.8) 3588 6496/ 2246 4699

[email protected]

http://www.cbi.eu/















http://www.tanghenam.com/

http://www.tanghenam.com/



http://www.luckystarcables.com/





http://www.vieta.com.vn/

http://www.vieta.com.vn/



http://www.hp-petrocable.com/



http://www.hem.vn/

http://www.hem.vn/


http://www.vinakip.vn/

http://www.vinakip.vn/


http://www.catvanloi.com/

http://www.catvanloi.com/





21 Taiphaco Electric Wire & Cables Co., LTD

1092 A, Đường 3 tháng 2, P.12, Q.11

www.taiphaco.com.vn www.taiphaco.com


22 Thành Công Company

11/4A Quốc

lộ 1A, xã Tân Quy Tây, Bình Chánh

08 38758 908

[email protected]

23 Dong Giang JSC

37 Nguyễn Sơn, Ngọc Lâm, Long Biên, Hà Nội.

http://niengiamtrangvang.com/ad.asp?URL=http://donggiang.vn

(04) 8 271389

[email protected]

24 Saigon Electrical Equipment Corporation

N°199 16th Street , Binh Tri Đong B Award, Binh Tan District, Ho Chi Minh City

www.see.com.vn

08-3875 1146

[email protected]

25 Thuong Dinh Electrical Wires and Cables JSC

No. 320 Khuong Dinh Road, Ha Dinh Ward, Thanh Xuan District, Hanoi City

www.cadisun.com.vn


26 Dong Anh Electrical equipment manufacturing JSC

26 - Dong Anh Town - Dong Anh Distric - Ha Noi

www.eemc.com.vn

04 3883 3781

27 SACOMWires and Cables

Bien Hoa I Industrial zone, Dong Nai province, Viet Nam

www.sacom

wirecable.com.vn

08 - 35122923

28 Thu Do Company

15 Khương Hạ – Thanh Xuân – Hà Nội --

[email protected]

(04) 0904637373

[email protected]

29 Sai gon Cable Corporation

Str. 1, Long Thành IZ Đồng Nai Province

www.saigoncable.com.vn

061 3514 125/ 117/119

[email protected]

30 Thiên Phú Group

168, Phố Huế, Q. Hai Bà Trưng, Hà Nội.

http://thienphugroup.com.vn/index.php?option=com_rsform&view=rsform&Itemid=55

(84-4) 33.765.888

[email protected]

http://www.cbi.eu/















http://www.see.com.vn/

http://www.see.com.vn/



http://www.cadisun.com.vn/

http://www.cadisun.com.vn/



http://www.eemc.com.vn/

http://www.eemc.com.vn/

http://www.sacomwirecable.com.vn/








http://www.saigoncable.com.vn/

















31 Thu Duc Electro mechanical JSC

Km số 9 - Xa Lộ Hà Nội - Q.Thủ Đức- Tp.HCM

www.codientd.com

22144647 - 22144379 - 22141417

32 Gelex Emic

52 Lê Đại Hành, Hai Bà Trưng, Hà Nội, Việt Nam

http://gelex.vn/en/index.php/13/contacts.html

+84 4 3825 7979

33 EMJ Group 240-242 Tôn Đức Thắng Đống Đa, Hà

www.emj.vn


34 Dong Hung Company

Quốc lộ 3 – Dục Tú – Đông Anh – Hà Nội – Việt Nam

www.donghung.com.vn

04 - 39611441

35 Dai Thanh Hung Co.., ltd

111 Lương Thế Vinh, P. Tân Thới Hòa, Q. Tân Phú

08 396 12141

36 Truong Phong Co., ltd

37 An Dương Vương, P. An Lạc, Q. Bình Tân

08 38 768 123

37 Tai Truong Thanh Electric wire and Cables

B7/150A Trần Đại Nghĩa, P. Tân Tạo, Q. Bình Tân 79/33 An Co Str., ward 14, Dist 11

www.taitruongthanh.com.vn

08 38770 352

[email protected]

38 VCOM

xã Bình An, Huyện Dĩ An, Tinh Bình Dương

www.vcom.com.vn

0650 3751 501

[email protected]

39 Khang Thinh Company

Tầng 1, Tòa Nhà PVFCCo, 43 Mạc Đĩnh Chi, Phường Đa Kao, Quận 1, Tp.

Hồ Chí Minh

http://www.khangthinhelectric.com

(08) 5448 9698

[email protected]

40 Ngoc Son Co., LTD

Hòa Đình, Phường Võ Cường, TP. Bắc Ninh, Tỉnh Bắc Ninh

http://thietbidienngocson.znn.vn

(0241) 3828170

[email protected]

http://www.cbi.eu/



http://www.codientd.com/

http://www.codientd.com/





http://www.emj.vn/

http://www.emj.vn/


http://www.donghung.com.vn/

http://www.donghung.com.vn/

http://www.taitruongthanh.com.vn/





http://www.vcom.com.vn/

http://www.vcom.com.vn/


http://www.khangthinhelectric.com/





http://thietbidienngocson.znn.vn/







41 Phu Cat Loi Co., ltd

351/42 Nguyễn Phước Nguyên,Q. Thanh Khê, Tp Đà Nẵng

http://www.phucatloi.znn.vn

(0511) 3 727 294

[email protected]

42 Vina CDs

Viên Ngoại, Đặng Xá, Gia Lâm, Hà nội

http://niengiamtrangvang.com/ad.asp?URL=http://www.dienlanhdiendandung.com

04.3995.8182 ;

[email protected]

43 Dien Quang Hue Company 194 Phan Đăng Lưu - Tp Huế

http://www.dienquanghue.com/lienhe.htm

054 3588668


44 Linh Chi Company

17 Ngõ Thông Phong, Tôn Đức Thắng, P. Quốc Tử Giám, Q. Đống Đa, Hà Nội

(04) 38437169

[email protected]

45 Hung Son EQ Company

18/70 Ngọc Khánh, Ba Đình , Hà Nội

http://niengiamtrangvang.com/ad.asp?URL=http://hungsoneq.com.vn

[email protected]

http://www.cbi.eu/



http://www.phucatloi.znn.vn/



































Annex 5a – interview results – moulding companies

Moulding companies: Interviews with 42 companies which are members of VAMI or HAME (HO CHI MINH city

association of mechanical engineering) and some other companies.




Moulding companies: The 42 companies interviewed are mainly members of VAMI, HAME; all companies

interviewed are moulding manufacturing companies. They mainly supply to the automotive industry, consumer

homes and/or for industrial uses and hi-tech equipment. Their products are manufactured on a contractual basis,

they do not engage in mass production.





Energy Others


20 15 12 8







http://www.cbi.eu/






9 Others







Moulding companies: Of the 42 companies, not all of them export; these only outsource activities for foreign

companies inside or outside the market. Some of them have successfully joined the Japanese value chain in

automotive manufacturing and supply plastic injection moulding. The remaining companies supply to the high-

demand domestic market.



Specific products



3 Outsourcing/Captive outsourcing activities such as (parts of) the production and/or service (sales, repair etc.) abroad

29 34 3 Japan, Korea, Malaysia, US, domestic market, Norway, the Netherlands, Germany,

Moulding for automotive manufacturing, home appliances and die casting, moulding for machinery


http://www.cbi.eu/










………………………………………………………………………………………………………………………..

Moulding companies: Based on the sector characteristics, moulding companies do not proactively market

themselves to new markets. They normally join the value chain and expand their market herein. They are,

however, open for opportunities in the new market. Many companies in the sector are well equipped with high

technology mainly from Japan so they are confident about their ability to produce wide varieties of moulds to

other markets. They would welcome orders from any markets.



Why



18 35 30 21 12 Companies welcome orders from any markets

The technology of Vietnamese moulding is relatively good; it can meet the demand from many countries.



5 do not know (Continue with question 6) ;



http://www.cbi.eu/





Moulding companies: Factors that Vietnamese moulding equipment manufacturing companies consider very

important include innovation, labour market conditions, supply chain development, intellectual property,

identifying suitable business partners, knowledge of the new market and technical standards and norms.

Alongside the key factors mentioned, value chain and labour market are very important because moulding

companies are currently facing shortages in skilled labour. Universities/colleges/vocational schools cannot supply

appropriately qualified resources for the sector. Most companies have to re-train new staff from scratch. Besides,

the value chain is very important because moulding companies can establish a stable position in sales volumes if

they can join the value chain.

Three companies also mentioned Vietnamese land laws which are not favourable and supportive to companies in

the market when they expand their manufacturing bases.


1 Global trends 3.142857

0.566178

3


0.505487

2

3 Local tax and regulatory environment (Vietnam) 3.285714

0.45723

3


0.477119

2

5 Legal and regulatory systems for the new market 2.404762

0.496796

2

6 Innovation 3.619048 0.491507 4


0.50087

2


0.477119

2


0.881149

4


0.55005

4


0.505487

4

12 Living cost 2.285714

0.45723

2


0.505487

4

http://www.cbi.eu/





14 Knowledge of the new market 4.595238

0.496796

5


0.503761

4

16 Others: supporting industry 3.880952

0.705462

4

17 Others: input material prices and requirements 3.904762

0.790478

4



Metaalunie, etc?

Moulding companies: Vietnamese moulding has recently been highlighted as a potential sector for

development and Japanese companies and organisations, in particular, such as Jetro and Jica have made a great

deal of effort in terms of supporting Vietnamese moulding companies when they join the moulding value chain.

Many of the companies (74%) therefore receive support from Jetro (The Japanese External Trade Organisation)

and Jica (Japan International Cooperation Agency).

Options Answers







Business matchmaking in many functions such as receptions, meetings, buyers/sellers events

Support in contract processing

Technical support in manufacturing

Training in production processes (5S, Kaizen)

Consultants closely support and visit factories every 2 months for 2 years

Directories of companies in sector

http://www.cbi.eu/





Support when exhibiting at trade fairs



Moulding companies: Most companies are very satisfied and satisfied with Jetro and Jica as the support they

offer is practical and corresponds to business needs.


1 very satisfied, (Continue with question 9) 29









the Dutch market?

Moulding companies: All companies welcome opportunities to connect with Dutch markets. Companies

generally believe that the Netherlands (similar to other European markets) has strong demands in terms of

moulding products and hope to obtain support from the CBI in order to connect with Dutch customers. They are,

however, concerned that the value of each moulding contract at the beginning is so small that it can cause some

difficulties in relation to manufacturing.




2 yes (Continue with question 11) 42 The Netherlands (similar to other European markets) has strong

http://www.cbi.eu/





demands in terms of moulding products and hope to obtain support from the CBI in order to connect with Dutch customers. They are, however, concerned that the value of each moulding contract at the beginning is so small that it can cause some difficulties in relation to manufacturing.



Moulding companies: Most companies would like to access information about the Netherlands for further

expansion in the future. They need:


Companies with real interest in Vietnamese companies and even details of contracts

Information on the next mission to Vietnam



42 More information on market demand Companies with real interest in Vietnamese

companies and even details of the contracts Information on the next mission to Vietnam




Metaalunie ?

Response options:

1 Yes 30

2 No

3 Maybe 12 (companies will join programmes if they are relevant and offer good results)

http://www.cbi.eu/





Annex 5b - List of interviewed companies - Molding


1

Dong Tien Mechanical trading production

955B Huynh Tan Phat, W. PhúThuận, Dist.7

http://www.cokhidongtien.com.vn/

+84 8 6262 3191

[email protected]

2 Hoang Phuc mechanical technology co., ltd

B2/19 Nguyen Huu Tri Str., Tan Tuc Town, BinhChanh

http://hpm.vn

+84 8 3756 2564

[email protected]

3 Nhat Minh - SG Engineering Co., ltd

B3 Lot 4 Dinh Cong new urban Hoang Mai, Hanoi

www.nhatminhsg.com www.nhatminhist.com

+84 4 3640 4476

[email protected]

4 Hayen Corp.

No3, CN6 block, TU Liem IZ, TuLiem, Hanoi

www.hayen.vn

+84 4 3765 6979


5 Viet empire castings Co., ltd

267 Nguyễn Xiển, W. trườngThạnh, Dist.9

http://vietempire.com

+84 8 3746 0760

[email protected]

6 Vija technology JSC

2136 Huong lo 80, Vinh Loc B, BinhChanh

http://www

.vija-vn.com

+84 8 3765 7301

[email protected]

7 Anh Thy Co., ltd

No 10, Road 17,Hiep Binh Phuoc ward, Thu Duc Dist.

+84 8 3727 2405

[email protected]

8 NghiepPhat Co., LTD

240A Duong Dinh Hoi Str., Tang NhonPhu B, Dist 9

www.wireharness.com.vn

+84 8 6288 9210

[email protected]

9 Sang Tao JSC

Lot A10, Tan ThoiHiep IP, Nguyen Anh Thu, Dist12

http://sangtao.com.vn

+84 8 3717 5486

[email protected]

10 Nhat Minh design manufacture co., ltd

30/5A Dong Lan Hamlet, Ba Diem Village, Hoc Mon

http://www.nmmold.com

+84 8 3703 0419

[email protected]

11 Y Chi Viet Co., ltd

173/376A, DieuXieu Str., w8, Long Binh ward, Bien Hoa, Dong

http://www.ichivn.com

+84 61 888 9447

[email protected]

http://www.cbi.eu/








http://hpm.vn/

http://hpm.vn/

mailto:[email protected]%[email protected]

http://www.nhatminhsg.com/

http://www.nhatminhsg.com/

http://www.nhatminhist.com/

http://www.nhatminhist.com/



http://www.hayen.vn/

http://www.hayen.vn/







http://vietempire.com/

http://vietempire.com/



http://www.vija-vn.com/






http://www.wireharness.com.vn/





http://sangtao.com.vn/

http://sangtao.com.vn/

http://www.nmmold.com/



http://www.ichivn.com/

http://www.ichivn.com/





Nai

12 Mida precision Mold Co., ltd

Highway 1A, My Yen Commune, Ben luc, Long An Province

http://www.midamold.com

+84 72 387 0873

[email protected]

13 Technokom JSC

Tan Quang IZ, Van Lam Dist., Hung Yên

http://technokom.com.vn

+84 321 3791 750

[email protected]

14 Vinavit Fastener co., ltd

397 An DươngVương, W.10, Dist. 6, HCM

http://www.vinavit.com.vn

+84 8 3876 7737

[email protected]

15 Thien My industries Co., ltd

98/17 Ung Van Khiem, w25, Binh Thanh

http://www.thienmy.com.vn

+84 8 3512 8535

[email protected]

16 Innotek JSC

Lot 2-4.1 Que Vo II Industrial zone, Que Vo Dist.,

BacNinh

http://www.innotek.com.vn

+84 0241 3623 318

[email protected]

17 Oristar corporation

Floor 9, Detech tower, No8 Ton That Thuyet Str., My Dinh Ha noi

www.oristar.vn

+84 4 3972 0120 (Ext.37)

[email protected]

18 Tam Hiep Thanh enterprise

Thanh Phu Industrial Zone - Thien Tan Commune - Vinh Cuu District - Dong Nai Province

http://casting-tht.com/

+84 61 3865 801

[email protected]

19 TBM Minh Phat Producing trading co., ltd

141-143 XomDat str., w8, Dist 11, HCM

http://www.tbm.com.vn

+84 3858 1816

[email protected]

20 Mo Tien Mold Co., Ltd.

508 Kinh Dương Vương, W. An Lạc A, Dist. BìnhTân, TP.HCM

http://motien.com.vn/modules.php?name=Feedback

+ 84 (8) 3755 0557 - 3755 1462

[email protected]

http://www.cbi.eu/



http://www.midamold.com/



http://technokom.com.vn/





http://www.vinavit.com.vn/




http://www.thienmy.com.vn/





http://www.innotek.com.vn/






http://www.oristar.vn/

http://www.oristar.vn/






http://www.tbm.com.vn/














21 DuyKhanh Engineering co., ltd

310A Luy Ban Bich str., Hoa Thanh, Tan Phu

http://www.duykhanh.com/ www.duykhanh.vn

+84 8 3865 0265

[email protected]

22 Cathaco., ltd 443/11 Le Van Sy, w12, Dist 3

www.catthaicorp.com

+84 8 5434 8247

[email protected]

23 Phuc An Precision engineering JSC

38 Group Dong Anh Town, Dong Anh dist, Hanoi

www.papm.com.vn

+84 4 39655256

[email protected]

24 Viet Chuan JSC

No 9 lot 4A Trung Hoa Rd., CauGiay, Hanoi

http://vietchuan.vn

+84 4 3783 2374 +84 4 3399 6451


25 Huy Thanh co.,ltd

Lot CN3, TừLiêm Industrial park, Minh Khai, từLiêm Dist., Hànội

http://www.huythanhdoor.com

+84 4 3765 7061 (ext. 110)

[email protected]

26 Kim Long production & trading service co.,ltd

Plot A2 CN5, TừLiêm Industrial complex, Hanoi

http://khuonmaukimlong.com

+84 4 3780 5063

[email protected]

27 Vietnam HTMP Mechanical Co., LTD

No27 D1, Dai Kim New urban area Dai Kim Ward, Hoang Mai Dist, Hanoi

http://htmp.com.vn

+84 4 3525 1113/ 14/15/16 04 3763 8122

[email protected]

28 Viet Uc Mechanicals company

No 5 F 1 Hoang Van Thu Ward, Hoang Mai Dist., Hanoi

http://www.cokhivietuc.com http://www.vietucmold.com

+84 4 3681 4158

[email protected]

29 HP-Tech Vietnam Engineering &moulds JSC

km10 highway 5, Duong Xa

Commune, Gia Lam, Ha noi

http://hptec

hvn.com

+84 4 3678

9527

hptechvietnam@g

mail.com

30 Bac Viet Technology JSC

Km 7, Highway 18, Phuong Lieu, Que Vo, BacNinh

+84 24-1361-7936/04-3655-9257

http://www.cbi.eu/



http://www.duykhanh.com/



http://www.duykhanh.vn/

http://www.duykhanh.vn/



http://www.catthaicorp.com/

http://www.catthaicorp.com/


http://www.papm.com.vn/

http://www.papm.com.vn/







http://www.huythanhdoor.com/




http://khuonmaukimlong.com/




http://htmp.com.vn/

http://htmp.com.vn/




http://www.cokhivietuc.com;http/www.vietucmold.com








http://hptechvn.com/

http://hptechvn.com/





31 Dai Kim JSC

No 2 Kim Giang, Kim Giang, Thanh Xuan, Hanoi

http://www.nhuadaikim.com

+84 4-3858-4583

[email protected]

32

Viet Nam CNC and Technology application JSC

Floor 11, Building Vinaconex 9, Lot HH2-2, KĐT MễTrìTừLiêm, Hanoi

http://www.cncvina.com.vn

+84 4 3780 5173/ 74 +84 4 2216 6062

[email protected]

33 ThịnhPhát precision Co., ltd

255/19, 3B Quarter, Thanh Loc ward, Dist 12

http://www.tpprecision.com

+84 8 544 76766

[email protected]

34 Hong Ky Corporation

38 TâyLân, khuphố 7, P. bình Tri Đông A, Binhtân

http://www.hongky.com

+84 8 3754 1122

[email protected]

35 Thong Nhat rubber company

64/6 LũyBánBích, W. TânThớiHòa, TânPhú

http://www.ruthimex.com.vn

+84 8 3961 5453

[email protected] -

36 Lidovit trading & industrial JSC

Lot D5, No3 str., BinhChieu IZ, Thu Duc

www.lidovit.com.vn

+84 8 37294 183

[email protected]

37 SaiGon plastic JSC 242 Tran Phu, W9, Dist 5,HCM

http://www.saigonplastic.com.vn

+84 8 38358 999

[email protected]

38 An Lap Co., ltd

No 209, Amata Str., Amata IP, Bien Hoa Dong nai

http://www.anlap.com/

+84 61 8877 099

[email protected]

39 Vinh Phat Production & Trading Co. Ltd.

1/15&1/17 Trần BìnhTrọng, W.5, Dist. BìnhThạnh

http://vpg.net.vn/en/lienhe

+84 8. 35150097

[email protected]

40 VINH PHU CORPORATION (VPG)

36 VSIP II, 2 street, Vietnam - Singapore II Industrial Park, Binh Duong Industrial

+84 84-0650-3628212

[email protected]

http://www.cbi.eu/



http://www.nhuadaikim.com/





http://www.cncvina.com.vn/





http://www.tpprecision.com/





http://www.hongky.com/





http://www.ruthimex.com.vn/



mailto:%[email protected]

mailto:%[email protected]

http://www.lidovit.com.vn/

http://www.lidovit.com.vn/



http://www.saigonplastic.com.vn/














41 FuviMachanical Technology Company

No 06 , Song Hanh St., Tan Tao Industrial Park, BinhChanh Dist., Ho Chi Minh City

http://www.fuvimold.com/english/data/main.htm

+84 848 37508228

[email protected]

42 Vina Mold & Metal Products Co., ltd

Road 6, Tan Thuan Export Processing Zone, Tan Thuan Dong Ward, District 7, Ho Chi Minh City, Vietnam

http://www.hondalex.co.jp/en/vmmp/about/index.html

+84-8-3770-1476

http://www.cbi.eu/






Annex 6 – interview results – agricultural equipment trading companies

Agro-equipment companies: Interviews with 49 companies which are trading companies supplying to agro

related sectors:

Agricultural equipment and machineries (15 companies)

Agri processing equipment and technologies (11 companies)

Agri food packaging equipment (12 companies)

Horticultural equipment and technologies (11 companies)




Agro-equipment companies: Of the 49 companies, all are trading companies. They import and supply

agricultural equipment to Vietnam. Most of them are involved in repairs to and the installation of machinery and

equipment, architectural and engineering activities and technical testing and analysis. They are in charge of

designing tailored solutions for customers and also source the suitable technologies/equipment for farms (rice,

vegetable, coffee, livestock, fisheries, etc). Some companies even manufacture equipment and machineries as

well, especially some simple small agricultural machinery, greenhouses, processing equipment, etc. However,

Vietnamese equipment accounts for a very small market share. Most of the equipment in the industry is

imported.





Energy Others


2 Manufacture of computer, electronic and

http://www.cbi.eu/





optical products



5 2




38 11


38 11

9 Others







Agro-equipment companies: Of the 49 companies, all engage in imports, design solution packages for

customers and trade imported equipment.

Chinese, Taiwanese and Japanese equipment is dominant in all subsectors, especially when it comes to Japanese

agricultural equipment (tractors, harvest and post-harvest machinery) and Taiwanese food packaging/processing.

Some European players have also started penetrating the market, particularly in the food processing and

packaging sector.

http://www.cbi.eu/





Israel is also strong in horticultural equipment in Vietnam. There are also some European brand names from

France and Spain (greenhouses, irrigation systems, raised beds and planters, pest control system). There are big

opportunities for Dutch brand names in irrigation equipment and technologies because many traders are familiar

with Dutch irrigation technologies.


Europe Australasia Specific markets Specific products


30 49 10 Chinese, Taiwanese and Japanese equipment is dominant in all subsectors, especially when it comes to Japanese agricultural equipment (tractors, harvest and post-harvest machinery) and Taiwanese food packaging/processing.

Some European players have also started penetrating the market, particularly in the food processing and packaging sector.

Tractors, harvest and post-harvest machineries

Greenhouses, irrigation systems, raised beds and planters, pest control systems.


3 Outsourcing/Captive outsourcing activities such as (parts of) the production and/or service (sales, repair etc.) abroad


http://www.cbi.eu/










………………………………………………………………………………………………………………………..

Agro-equipment companies: Horticultural companies welcome opportunities to trade Dutch technologies

because Dutch brand names are respected within global horticulture.

Agricultural machinery trading companies and those working in the agri food processing and packaging sector

also want to trade Dutch machinery however, they are concerned about the price competition in the market with

Taiwanese machinery.



Why


28 36 15 Horticultural companies welcome opportunities to trade Dutch technologies. Agricultural machinery trading companies and those working in the agri food processing and packaging sector also want to trade Dutch machinery however, they are concerned about the price competition in

Because Dutch brand names are respected in global horticulture.

http://www.cbi.eu/





the market with Taiwanese machinery




5 do not know (Continue with question 6) ;



Agro-equipment companies: Vietnamese agricultural equipment trading companies consider some factors to

be very important; these include customs policies and procedures, identifying suitable business partners,

knowledge of the new market and technical standards and norms.

Identifying suitable business partners, knowledge of the new market and, technical standards and norms are also

important factors for international business expansion. Beside these, the price of equipment/technologies is very

important to trading companies as it will strongly affect their business. Vietnamese customers are considered to

be rather price sensitive.



0.492287

2


0.550201

2

3 Local tax and regulatory environment (Vietnam) 3.489796

0.505076

3


0.5

4

5 Legal and regulatory systems for the new market 3.142857 0.707107 3

http://www.cbi.eu/






0.653353

3


0.502545

3


0.305839

2


0.5

2


0.581021

2


0.738863

1


0.579555

1


0.713094

4

14 Knowledge of the new market 4.591837 0.496587

5


1.007202

4

16 Others: price of technologies 4.204082

0.763206

4



Metaalunie, etc?

Agro-equipment companies: 47% of companies receive support from government organisations which are

part of the trade departments within foreign embassies and consulates in Vietnam. The purpose of support is

mainly to create opportunities for vendors from these markets to approach potential distributors and introduce

their products and technologies.

Options Answers

1 always (Continue with question 8a)

2 usually (Continue with question 8a)




http://www.cbi.eu/






Business matchmaking in many functions such as receptions, meetings, seminars to introduce the

technologies that correspond to that market.



Agro-equipment companies: 35% of companies are satisfied with the support they receive. The remaining

companies are neither satisfied nor dissatisfied. They think the support is sometimes irrelevant and the

technologies introduced are not applicable for their core business.


1 very satisfied, (Continue with question 9)



15 The support is sometimes irrelevant and the technologies introduced are not applicable for their core business.







the Dutch market?

Agro-equipment companies: 33% of companies do not consider doing business with the Netherlands because

they think the technologies may be too complex for local demand. Therefore the market segment to be targeted

should be larger farms. Their customer bases, however, are small farms so they cannot open up to Dutch

technologies. Besides, some of companies distribute for Japanese, Taiwanese and Chinese equipment already and

do not intend to expand to other brands.

http://www.cbi.eu/





The remaining companies (67%) are open to finding out more about Dutch technologies in the sectors and

considering expanding their businesses. They think the Netherlands, with its excellent reputation in horticultural

and food processing/packaging technologies, will correspond to good business opportunities for distributors.

Besides, they also want to introduce new and advanced technologies to agricultural industries in Vietnam and

welcome opportunities to connect with Dutch companies.



1 no (Continue with question 10) 16 The technologies may be too complex for local demand. Therefore the market segment to be targeted should be larger farms. They distribute Japanese, Taiwanese and Chinese equipment already and do not intend to expand to other brands.

2 yes (Continue with question 11) 33 The Netherlands, with its excellent reputation in horticultural and food processing/packaging technologies, will correspond to good business opportunities for distributors. They want to introduce new and advanced technologies to agricultural industries in Vietnam and welcome opportunities to connect with Dutch companies.



Agro-equipment companies: Most companies would like to access information about the Netherlands for

further expansion in the future. They need:

New technologies, brand names of Dutch companies

http://www.cbi.eu/





Information on the next mission to Vietnam



33 - The Netherlands, with its excellent reputation in horticultural and food processing/packaging technologies, will correspond to good business opportunities for distributors.

- They want to introduce new and

advanced technologies to agricultural industries in Vietnam and welcome opportunities to connect with Dutch companies.




Metaalunie ?

Response options:

1 Yes 33

2 No

3 Maybe

http://www.cbi.eu/





Annex 7a - Interviewed results - Dutch

companies

Quantitative analysis - Analysis of market expansion plans in next

3-5 years for Dutch companies in the Metalworking industry

Interviews were conducted with 86 companies which are members of CBI

partners. Eighty-six companies are from different Metalworking industries

in which there are 19 companies manufacturing machinery and equipment

and 30 companies manufacturing fabricated metal products except

machinery. These companies supply their products to various sectors,

such as agriculture, chemicals and the high–tech sector.

Overview:

Of the 86 companies, 65% are involved in importing from overseas

markets. These companies don’t import much from South Eastern

markets. Only 4 companies (7%) import from Vietnam.

Of the 86 companies, 85% are involved in exporting; 15% of the

companies export to Vietnam.

Of the 86 companies, 38% are involved in outsourcing; only 9%

outsource to Vietnam.

These figures show that, in general, the Netherlands does not trade with

or outsource to Vietnam.

Plan for expanding markets in next 3-5 years:

In the next 3-5 years, 13% of the 86 companies interviewed plan

to expand their import market; only 9% plan to expand their

import markets to Vietnam. Dutch companies think the skills in

metal treatment and specialised aluminium casting are better. The

processing is more efficient and therefore cheaper, with a better

quality and price.

Of the 14% of companies which plan to expand their outsourcing

markets, 17% plan to expand outsourcing to Vietnam. They have

compared China and Vietnam and realised Vietnam’s potential.

Besides, product protection and product development is easier in

Vietnam than China.

Of the 41% of companies which plan to expand their export

markets, 17% will expand exports to Vietnam. Some reasons

include:

o Vietnamese conditions are suitable for their products, e.g. the

country is still not developed; its infrastructure is not

completely developed. Therefore there will be worldwide

interest in this market.

o It's a growing market and consumers will be more receptive to

Western products.

o The market for oil and gas has good growth in Vietnam.

http://www.cbi.eu/





o Shipping is developing strongly in Vietnam.

o The food industry is developing therefore the market for food

processing equipment is large.

Of the 10% of companies which plan to expand their investment

overseas, 22% will expand their investment in Vietnam.

The plans for increased trade and outsourcing activities are not very

strong at this stage, however, the fact that Dutch companies are starting

to think about Vietnam and finding out about the market is a good sign in

itself.

Important factors in expanding business overseas:

No Factors Mean Standard Deviation

Median


0.972185

4


0.929233

4

3 Local tax and regulatory environment

3.232558

1.059127

3

4 Customs policies and procedures

3.72093

1.03641

4

5 Legal and regulatory systems for the new market

3.72093

1.058869

4


1.024728

3


0.998837

3.5

8 Cultural compatibility/language adaption

3.430233

1.012169

4


1.108912

4


1.114511

3


1.241827

4


0.96335

4

13 Identifying suitable business partners

4.302326

0.882107

4.5

14 Knowledge of the new market

4.139535

1.007767

4

15 Technical standards and norms

3.872093

0.930484

4

Some of other important factors on which Dutch companies focus:

Logistics services quality

Competition

Corruption

Educational level, qualified employees (engineers)

Financial status of business partners

Funding opportunities in these countries

Business attitude of business partners

Business etiquette

http://www.cbi.eu/





Factors which receive ‘high Importance’ scores are:

Identifying suitable business partners

Knowledge of the new market

Technical standards and norms

Legal and regulatory systems for the new market

Customs policies and procedures

Dutch companies consider factors which relate to market information and

potential partners, such as the financial status of potential partners, to be

very important. The CBI and partners can provide effective support in

relation to these factors through programmes and Vietnamese company

networks, built by local consultants in the market.

Support from governmental organisations:

45% of interviewed companies have received support from governmental

organisations. The support they have received includes:

Country information

Trade fairs, mission in agricultural subsidy project

Business contacts in Vietnam

Global market exploration

Subsidy from government

Business culture information on each market

Market research on specific sector in specific market

Training about law and regulation in the new market

Searching for the right partners to work with

Cooperation in exhibition

79% companies are satisfied or very satisfied with support from

governmental organisations.

The remaining interviewed companies think the services should be

improved because the support has not yet turned out to be effective.

Sometimes there is no answer for specific questions and the information is

too general (can be found on Google).

Expansion plans

36% of companies have considered doing business with Vietnam. Some of

the views about the Vietnamese market include:

Corruption and bureaucracy is a big obstruction

It is a growth market and has huge potential for business

Cheap employment and the labour force can speak English quite

fluently compared to other markets

This is an upcoming market. There is a shift from China to

Vietnam.

The remaining companies are not considering Vietnam in their expansion

plans for a range of reasons:

http://www.cbi.eu/





Vietnam is still a small market compared to other countries in

Europe and bigger markets in Asia. If there are enquiries from

Vietnam, however, they could well reconsider.

Vietnam is too far away, the companies do not have any

information.

Vietnamese economy is too small and the standard of living is low;

this is not their target market, i.e. not a high-tech market.

The companies think that products from Vietnam are not of high

quality. Other nearer markets can manufacture products of higher

quality.

The Vietnamese economy is not ready for high–tech products

supplied by Dutch companies

Information about Vietnam

55% of companies want to receive information on Vietnam. The specific

information they need includes:

Oil and gas development on current projects

Opportunities for supplying turbines to Vietnam

Ship-building industry in Vietnam

Healthcare sector if the company wishes to invest in a hospital in

Vietnam

General information on the economy

Outsourcing opportunities in engineering products

How is the market going in the food sector

Information on local companies in the agricultural sector

45% companies do not need information although they plan to do

business with Vietnam. The reasons are:

The already have an agent in Vietnam

A study has been carried out by sales department and they already

have enough key information

They already have their first customer and everything is going well

42% of companies (13/31 companies) want to receive support from CBI

and partners when they expand their business with Vietnam.

http://www.cbi.eu/





Annex 7b - List of interviewed companies - Dutch

companies

Ansaldo Thomassen B.V.

Elcas BV

Avinom BV

CP NL Engineering

Tap Machinebouw bv

Osseman RVS Bewerking vof

Inventflow B.V.

Wartsila Automation Nederland B.V.

Gemco Industrial Development b.v.

Bluewater Energy Services BV

Laude B.V.

Workships Contractors B.V.

DMN Machinefabriek Noordwykerhout B.V.

Burtec bv

Omnivent Techniek BV

NEM Energy B.V.

Cematic-Electric B.V.

Twenteq BV

Cofely Delta Controls

Eurotron B.V.

Huisman Equipment B.V.

NEM B.V.

Machinefabriek G. van der Ploeg B.V.

Johnson Controls Systems & Service B.V.

Wagenborg Nedlift BV

Lamers High Tech Systems B.V.

Axxent Metaal BV

Calpe B.V.

Emergya Wind Technologies B.V.

Duiker Combustion Engineers B.V.

Handel & Constructie H. Meeuwsen bv

Primo Marine

Veluw Metal Creations Nederland bv

Instalho B.V. Scheepsreparatie en Metaalbewerking

KEMA Nederland B.V.

Mooij Agro BV

De Klokslag Engineering B.V.

Technico

Bakker Magnetics B.V.

AEG Power Solutions B.V.

Ten Broeke Metaal bv

Iris2Iris bv

http://www.cbi.eu/





Triogen

Bakker & Co. b.v.

Rockwool B.V.

ESI Eurosilo BV

Racupack B.V.

Brom Mechatronica B.V.

Workfox B.V.

A.A.I.S. Menzing International

Tempress Systems B.V.

WES (Wind Energy Solutions) B.V.

Oosterhof Holman Milieutechniek B.V.

Langenpac B.V.

Feniks Engineering

K. Stok en Zn. BV

Gereedschappenfabriek Van den Brink bv

Mechanisatie en Staalconstructie Graafstra

Bronswerk Heat Transfer B.V.

VDL Steelweld bv

VAF Instruments B.V.

Van Beest B.V.

Verebus Engineering B.V.

Hilarius Haarlem Holland B.V.

Gemco International B.V.

Van den Beucken Verbruggen Machinebouw bv

Sollas Holland B.V.

Telecom Bedrijfscommunicatie B.V.

Willemse & Van Engelen Bakkerijmachines B.V.

Giessendam, Tech. Handelsond.

Parker Hannifin Manufacturing Netherlands (Filtration and Separation) B.V.

IPA Projects & Services B.V.

Peseb bv

DHTC B.V.

Robin Radar Systems B.V.

Krohne Altometer

Huisman Non Ferro Metaal B.V.

Key Technology B.V.

A.S.F. Fischer BV

Sempergreen

Stork Turbo Blading B.V.

SPT Ofshore

Teerling Machines en Metaalbewerking

Agrisun

Hammesfahr Holland B.V.

Itho Daalderop BV

http://www.cbi.eu/





Annex 8 – key contacts in the vietnamese oil &

gas sector

Some key companies/players in the industry:

PVN (Petrovietnam, the National Oil and Gas company),

VPI (Vietnam Petroleum Institute) and PVU (Petrovietnam

University)

PV EIC (Petrovietnam Energy Technology, subsidiary of PVN)

PVE (Petrovietnam Engineering, subsidiary of PVN, provides

engineering design for oil and gas projects)

PetroVietnam Drilling and Well Services Corporation

PV Gas (Petrovietnam Gas Corporation, subsidiary of PVN, in

charge of gas projects)

PetroVietnam Service Corporation

PetroVietnam Technical Services Corporation

PTSC (Petrovietnam Technical Services Corporation, subsidiary of

PVN)

Petrolimex

EVN (the biggest power generation and distribution company)

Nghi Son Refinery Project

Chevron and JGC (EPC’s)

PV shipyard (Petrovietnam Shipyard, subsidiary of PVN specialising

in construction, conversion and repair of diversified types of mobile

offshore drilling units and marine facilities including jack-up,

semisubmersibles)

Vietsovpetro (the biggest oil and gas company in Vietnam,

Vietsovpetro’s total crude-oil turnover so far is US$ 33 billion (22-

25% state income)

PTSC shipyards (subsidiary of PTSC, designing and building

specialised vessels for the oil and gas industry, with its current

priority being to fortify PTSC’s fleet of vessels)

Long Son Petrochemical Complex (LSP)

PV Oil and Technip

http://www.cbi.eu/





Annex 9 – analysis 1

Analysis 1: Analysis to identify the most promising sectors for trading

between Vietnam and the Netherlands and for outsourcing

partnering/investment from the Netherlands

Vietnamese strategies in developing metalworking and the

mechanical industry:

Vietnam is in Southeast Asia area with a large population of 88.78mil and

more than 50% of the population is 15-35 years old. It is therefore

considered a very young population which makes for a strong and skilled

labour force and also a receptive consuming market.

The country has a long history with many wars with China, France and the

US until 1975. After the reunification of the country in 1975, this young

country started to develop its economy and has achieved some gradual

success. It has participated in many bilateral and multilateral trade

collaborations and joined some international economic organisations such

as ASEAN and especially WTO in 2007. This pro-active international

economic integration has brought Vietnam many development

opportunities and also challenges. Vietnam has achieved fast growth rates

with a significantly high annual GDP growth rate of 5-8% since 1990 until

now; the growth forecast for 2013 reveals a more stable increase.

Vietnam has been categorised as an agricultural economy with more than

70% of the population living in rural areas and earning a living from

agriculture. However, since 1986, the Vietnamese government focused on

developing the economy in the industry and service direction, with many

strategies and policies on industrialisation and modernisation. Some

strategies have delivered good results but many strategies are considered

to be too ambitious due to the lack of clear, consistent and effective

implementation plans which incorporate all sectors.

In 2002 and 2009, the government passed 2 strategies on the

development of the Vietnamese industry, especially mechanical

engineering, until 2010, with a vision to 2025. The strategies have created

incentives and support from government for the following focused sectors:

Complete equipment: The government encourages the

development of moulding, forging and the creation of large casts,

in order to synchronise equipment and technologies and meet the

demand for the manufacture of large and sophisticated work pieces

and assemblies. This focus supports production of paper and paper

pulp, production of cement and construction materials, generation

of electricity, production of oil and gas, supply of clean water,

processing industry, etc.

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Prime movers: The government encourages the manufacture of

hydraulic engines of more than 400 HP with a localisation rate of

35-40%; diesel engines of more than 800 HP.

Mechanical engineering servicing the agriculture, forestry, fishery

and processing industries: Government encourages the production

of tractors, manufacturing equipment and machinery supporting

agriculture and the processing industry.

Machine tools: The government encourages research on and the

design and manufacture of modern machine prototypes and the

use of computerised numerical control (CNC).

Construction engineering: The government encourages the

manufacture of metal structures for big construction and industrial

projects.

Ship-building engineering: The government encourages the

development of a ship-building industry at the average advanced

level in the region to export ships of many kinds up to

400,000DWT; and the development of supporting industries for

shipbuilding such as manufacture of steel sheets for shipbuilding,

assembly of hydraulic engines of a capacity of up to 6,000 HP and

manufacture and assembly of onboard equipment, electric and

electronic equipment, maritime facilities and devices, etc with the

localisation rate to 70% by 2020.

Electric-electronic technical equipment: The government

encourages the creation of a modern electric equipment

manufacturing industry reaching the advanced level in the region in

electric equipment and materials by 2020. The sector should meet

domestic demand, reduce imported equipment and export to

regional and world markets.

Automobile engineering - communications and transport

engineering: The government encourages the development of the

automobile industry in order to largely meet the domestic

automobile market demand, and export automobiles and spare

parts; high-class trucks and buses; and even high class cars.

Some of these sectors have achieved relatively good development, such

as shipbuilding, automobile and transport engineering, electric equipment,

electronic outsourcing, moulding, casting and forging manufacturing.

Actually, manufacturing in the above sectors is still considered to be at a

low and medium level of technology and still needs much support from the

Vietnamese government and international cooperation organisations in

terms of policy making, business environment improvement, incentives,

human resources training, technology transferring, etc. This would enable

Vietnam to increase its national competitiveness to confidently join in the

international value chain and shift to upper medium and high technology

value for export and specialise in fast-growing, high value added activities.

Vietnamese metalworking industry in the context of competition in

regional countries

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Compared to other regional countries in the adjacent area (including

Malaysia, Singapore, Indonesia, Philippines, Thailand, Laos, Cambodia),

Vietnam has some comparative advantages and disadvantages in

exporting, outsourcing and manufacturing in the above sectors:

Advantages:

Vietnam has lower labour costs than Malaysia, Singapore and

Thailand.

The engineers in the sectors have been well trained and have a

good working attitude.

There are skilled workers.

Vietnam’s direction towards industrialisation and manufacturing

has achieved positive results. The industry’s value-added index

(Chart 1) has shown increasing trends over the last 20 years.

Vietnam currently has the comparative advantage in manufacturing

products within labour-intensive sectors when other countries are

trying to shift to more technology-intensive sectors.

Foreign manufacturers which look for outsourcing/import partners

in low cost countries are diversifying their selection options and

starting to consider Vietnam as a potential manufacturing base for

some sectors. This trend increases as foreign manufacturers look

for outsourcing/importing partners outside China.

Disadvantages:

The Vietnamese supporting industry is not well developed

compared to supporting industries in other countries such as

Malaysia, Thailand and Indonesia. This leads to high costs for

manufacturers which are looking for outsourcing partners in

Vietnam, e.g. Japanese car manufacturers can only outsource

some parts for their cars to Vietnam, they still have to import other

parts from Malaysia with a higher cost than if they outsourced all

parts and assembled in Malaysia.

Infrastructure in Vietnam is not well developed compared to

Malaysia, Singapore, Indonesia and Thailand.

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Figure 1: Industry, Value-added Index, World Development Indicators

(source: WTO)

In conclusion with respect to the comparative advantages of Vietnam over

other regional countries: although Vietnam has some disadvantages, the

country still offers much benefit to Dutch manufacturers when looking for

importing/outsourcing partners in Vietnam in some niche markets which

are in high demand in the Netherlands. From Malaysia and Thailand, the

Netherlands imports products of a higher technology value such as semi-

conductors, machines, electrical goods, electronic high tech parts; and

from Vietnam, the Netherlands can import and outsource products of a

slightly lower technology value.

Regions of metalworking and manufacturing industry in Vietnam

Vietnam is geographically a long country with 3 areas: North, Middle and

South markets which have different descriptions, rates of development,

development directions and economic structures. Most of the industrial

zones and manufacturing centres in Vietnam are concentrated in three key

economic regions, North, Central and South Vietnam:

The key northern economic region includes seven cities and

provinces: Hanoi, Haiphong, Quang Ninh, Hai Duong, Hung Yen,

Vinh Phuc and Bac Ninh

The key central economic region includes seven cities and

provinces: Danang, Thua Thien Hue, Quang Nam, Quang Ngai and

Binh Dinh

0

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60

1993

1994

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1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

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2008

2009

2010

2011

2012

Vietnam VNM Industry,value added (% of GDP)NV.IND.TOTL.ZS

Cambodia KHMIndustry, value added(% of GDP)NV.IND.TOTL.ZS

Indonesia IDN Industry,value added (% of GDP)NV.IND.TOTL.ZS

Lao PDR LAO Industry,value added (% of GDP)NV.IND.TOTL.ZS

Malaysia MYS Industry,value added (% of GDP)NV.IND.TOTL.ZS

Philippines PHL Industry,value added (% of GDP)NV.IND.TOTL.ZS

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The key southern economic region includes seven cities and

provinces: Ho Chi Minh City, Dong Nai, Ba Ria-Vung Tau, Binh

Duong, Tay Ninh, Binh Phuoc and Long An

According to plans approved by the prime minister, by 2015 Vietnam will

have 91 newly established industrial zones with the total area of 20,839

hectares, and 22 expanded industrial zones with the total area of 3,543

hectares. This will increase the country's total industrial area by 24,381

hectares. This shows the commitment from government to develop manufacturing in Vietnam to meet domestic and export demands.

Analysis 1:

The analysis is carried out by RenMMatrix and Vietnam Insight in both the

Dutch and Vietnamese markets. The methodology applied includes desk

research and in-depth semi-structured interviews.

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The promising sectors identified in the Vietnamese market for

exporting/importing/outsourcing and promising sectors identified in the

Dutch market for importing/exporting/outsourcing will be matched and

studied in-depth in step 2.

1. Vietnamese market in the Metalworking and related industries:

strength factors, potential for development and opportunities in

the next 3-5 years

Introduction: The analysis is carried out by desk research and in-depth

interviews

a. Desk Research: The desk research expanded on different sub-sectors in

sectors under ISIC and SBI codes. The desk research is carried out based

on official sources from:

Statistical data from governmental organisations and associations

in Vietnam such as the General Statistics Office of Vietnam (GSO),

the Ministry of Industry and Trade (MOIT), the Ministry of Planning

and Investment (MPI), the Ministry of Science and Technology

(MOST), the General Department of Vietnam Customs, the Vietnam

Chamber of Commerce and Industry (VCCI), etc

Industry information from industrial magazines such as Vietnam

economy, Vietnamnet Investment bridge, etc.

ISIC Rev.4 CBI sectors Scope of desk research

24 Manufacture of basic metals

Metal parts and components

Potential of mining exploitation in base metals; ferrous and non-ferrous metals such as iron, steel, zinc, bronze, titan. Potential for export/import of these metals


Pipes and process equipment

Study of Vietnamese mechanical industry, supporting industry and import/export potential on different products/sub-sectors such as Forging, Die Casting, Mould Manufacturing, Stamping, Steel Sheet work, Sheet metal processing, Plating, Coating, Heat-treatment, Press forming, Welding, precision technology, Machine parts and components, Jig, Tools, Plastic, Rubber parts, etc. Study of related industries: * Aerospace * Shipbuilding/steel structures/bridges, ports/vessels/containers/* Mining equipment * Light industrial machinery: Textile industry,

leather/Agriculture, processed seafood aquaculture and forestry production/Paper Industry/Packaging/Packaging Equipment * Architecture/Construction/Interior/elevator * Oil & Gas/Petroleum chemical industry/* Chemicals * Precision Equipment Technology * Heavy Equipment Machinery * Power/electrical plant/machine shop gas/wind power industry/solar * Business, producing

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appliances/pumps/generators * Military * Consumer and Household Appliance Products


Electronics and electrical engineering

Study of manufacturing/assembly potential of computer, electronic products



Study of manufacture and import/export potential of electrical cables and wires, electric equipment, control panels, transformers, etc.



Study of manufacturing and import/export potential for machineries in related industries mentioned above.


Automotive parts and components

Study of capacities for car manufacturing/assembly



Study of capacities for bus/motorcycles/bicycles manufacturing/assembly

33 Repairs and Installation of machinery and equipment


Study of machinery manufacturing/repairing for related industries mentioned above


Knowledge Process Outsourcing

Study of research and development, technology consultancy and technology transfer in architectural and engineering

b. In-depth interviews: All findings from desk research on promising

sectors for import/export/investment/outsourcing between Vietnam and

the Netherlands were verified by in-depth interviews with:

* Governmental organisations:

1. Ministry of Industry and Trade – Institute for Industrial Policies and

Strategies – Supporting Industry Enterprise Development Centre (SIDEC)

2. Department of Industry and Trade

3. Dutch Embassy in Vietnam – Economic & Commercial Affairs

* Associations:

1. Vietnam Electrotechnical Industry Association

2. Hochiminh City Association of Mechanical Industry

3. Hochiminh City Electric Cable Association

4. Vietnam Automation Association

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5. Vietnam Association of Mechanical Industry

6. Vietnam Foundry and Metallurgy Sciences and Technology Association

7. Vietnam Steel Association

8. Vietnam Automobiles Manufacturing Association

9. Vietnam Electronic Industry Association

10. Vietnam Titan Association

11. Vietnam Association of Agricultural Mechanical Industry

12. Vietnam Mining Science and Technology Association

13. Vietnam Science and Industry of Automation Association

14. Ho Chi Minh City Electrical Engineering Association

Companies: 15 state-owned corporations/joint stock and private:

1. Vietnam Shipbuilding Industry Group

2. Vietnam Industrial Construction Corporation

3. Machine and Industrial Equipment Corporation

4. CARIC Limited Company

5. Bac Viet Group

6. Mechanical Engineering & Metallurgy Joint Stock Company

7. T&C Vietnam Company Limited

8. Technokom Joint Stock Company

9. Quang Pho Technical & Technology Company Limited

10. Anmi Tools Company Limited

11. VietChuan Joint Stock Company

12. Vietnam Electric Cable Corporation

13. Electrical Equipment Company (THIBIDI)

14. TAT Machinery Corporation

15. LIDOVIT Nuts & Bolts Joint-venture Enterprise

Promising sectors for imports from Vietnam in Metalworking:

Vietnam has the potential to export average technology level products

which are of low value and high labour demand.

a. Promising sector 1: Shipbuilding building industry. This is also a

potential industry for investment from the Netherlands.

Vietnam is currently ranked 6th in the world in terms of the

shipbuilding industry.

Vietnam technology in shipbuilding meets the high requirements of the

international standards in welding, pressing, etc.

Currently, Vietnam can export ships up to 55,000 tonnes and all kinds

of ship, from cargo ships to specialised ships.

Vietnam’s biggest centre for the shipbuilding industry is Hai Phong.

During the last 10 years, Vietnam has invested significantly in the

shipbuilding industry and shipbuilding is one of 6 key industries

included within Vietnam’s development strategy in its vision to 2025

(this strategy will be studied in the next step of the market analysis).

Vietnam Shipbuilding Industry Group (Vinashin) is the biggest state-

owned corporation which functions as a strong engine of development

for Vietnam shipbuilding. Currently Vinashin is facing a hard financial

crisis resulting from mass investments in different industries

(shipbuilding, real estate, construction, supporting industry, etc). They

are therefore restructuring and have decided to focus development

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over the next 10 years on shipbuilding. This is expected to be a very

good factor for this industry’s development.

The shipbuilding industry in Vietnam will gradually rely less and less on

state ownership.

Vinashin is looking for opportunities to cooperate with foreign partners

in 8 of their existing shipyards and some other companies in

supporting industry for shipbuilding (further details of this investment

opportunities will be discussed with Vinashin in the next step).

The development potential of the shipbuilding industry and key

shipyards in Vietnam will be studied thoroughly in next step.

Damen from the Netherlands is cooperating with Vinashin in one

shipyard in Hai Phong. This is one of around 5 significant and

successful investments from the Netherlands in Vietnam.

b. Promising sector 2: Electronic manufacturing/assembly.

Vietnam has comparative advantages in terms of skilled and fairly

cheap labour compared to other regional countries such as Malaysia,

Thailand, Singapore. This is a strength for Vietnam in electronic

manufacturing.

Vietnam has gradually become one of the key electronic assembly

centres in the region especially as China is gradually losing its position

as big electronic assembly country.

In a long-term vision to 2020, the Vietnamese government is

encouraging Vietnamese companies to improve human resources

quality, R&D activities to enhance the competitiveness of electronics

products. It means Vietnamese companies need support in training,

technology and capital to shift from manufacturing civil electronics

products to producing specialised items, from assembling products to

manufacturing parts and software products of high-tech content.

As a result, there are some investment opportunities in electronics

development zones where electronics companies will locate their

factories in Hochiminh City and Vinh Phuc.

c. Promising sector 3: Car manufacturing/assembly.

Similar to Electronics assembly above, Vietnamese companies have

significant advantages in terms of assembling capacity for foreign

companies.

Currently, Japanese car manufacturers (such as Toyota, Isuzu, etc)

invest much in this sector in Vietnam with a great deal of support from

the Japanese government. They are building up supply chains for their

car brands in Vietnam and regional countries.

There are some good Vietnamese private companies which have

successfully joined the supply chain. These companies have received

high levels of support from Japanese companies in relation to high

level technology and manufacturing management knowledge for their

factories.

d. Promising sector 4: Mould manufacturing, moulding products.

Vietnam has good potential for exporting moulding products. There are

more than 50 good companies which can export moulding products,

supporting different industries. They have exported to many countries

including Europe, US, Japan and Australia.

Most of the companies are SMEs and they need much support in

expanding their markets because they still have further capacity to

export.

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The support that these companies need includes knowledge in

manufacturing management and market expansion.

e. Promising sector 5: Electrical wires and cables; electrical equipment

such as low/high voltage panels, transformers, etc.

Vietnam has more than 200 manufacturers and many companies

which have already expanded to US markets.

The product quality is quite good and can meet international

standards. Vietnam can produce electrical equipment up to 500KV.

The industry has already satisfied 90% of domestic consumption and

there is now high demand to expand the market overseas.

However, SMEs in the sectors need much support in investigating

overseas markets such as market information, how to enter foreign

markets, etc (similar to support to moulding companies mentioned

above).

f. Promising sector 6: Sheet Metal processing (Stamping, Plating,

Coating, Heat-treatment, Press forming, Welding)

Vietnam has a big potential to export metal processing products. The

technology required is at an average level therefore many companies

are well equipped with good manufacturing capacity.

Many companies would like to expand the market but only some are

successful in finding their way to join the supply chain. Currently there

are supply chains for many big foreign brand names in machinery

manufacturing in Vietnam.

The other companies need much support to join the supply chain and

engage in exports. They need support to improve technology and

develop manufacturing management, manufacturing efficiency,

market expansion, etc.

g. Promising sector 7: Some other sectors which support different

industries with products, e.g. parts and components, tools, plastic, rubber

parts, home appliances etc. These are not moulding or sheet metal

processing but apply other technologies such as precision technology,

plastic or rubber processing. These sectors’ technologies are of low and

medium technology value.

Similar to the companies in sheet metal processing sectors, SMEs

need to improve their capacity and their ability to find foreign buyers

and join the supply chain.

This is also a potential sector offering good investment opportunities.

The investment can be a joint venture or 100% ownership. This

opportunity will be studied thoroughly in the next step.

h. Promising sector 8: Titan slag for different industries such as painting,

ceramics, welding, coating, aerospace.

Vietnam is considered one of 10 countries in the world which have

large titan deposits. The Vietnamese titan industry is only developed to

the level of exploring, processing and exporting semi-products which

contain titan slag. Exports are encouraged.

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However, the Vietnamese government is encouraging foreign

corporations to invest in the sector with high technology so that

Vietnam can export titan products with higher value content.

This is an investment opportunity, however the titan industry is not

large. There are quite a few key world players in this sector and these

are big corporations. If any investors are interested, they can find their

own way to the industry and don’t need support from the other

organisations.

Promising sectors for exporting to Vietnam in Metalworking:

Vietnam has the potential to import high-tech machinery.

a. Promising sector 9: Small agricultural machinery/agro-food processing

equipment/machinery

Vietnam is an agricultural country with 70% of the population living in

rural areas and earning their living from agriculture. However,

agriculture contributed 22% to Vietnamese GDP in 2012 and one fifth

of total export revenue. This means the industry is not efficient

enough. One of the reasons is that the industry is not well equipped

with modern technology; it still has very low levels of automation.

Vietnamese agriculture is in need of modern technology and

agricultural machinery.

Domestic manufacturers are able to manufacture some kinds of

agricultural machinery however cannot compete with imported items.

Currently, 90% of imported machinery comes from Korea, China,

Taiwan, Japan.

We consider this sector as having export potential for Dutch companies

because the Dutch agricultural industry is highly developed. However,

the export potential to Vietnam is only for small sized machinery

because the Vietnamese farms, rice fields, etc are small compared to

those in the Netherlands.

Besides, price competition with machinery from China, Taiwan is also a

factor for Dutch companies to consider (further details on general price

comparisons will be also studied in the next step).

Another export opportunity for Dutch companies to the Vietnamese

agricultural industry is agro-food processing machinery/technology.

The food processing industry has been growing fast in the past 5 years

at an annual rate of 20-30%. Not only supplying to the domestic

market, the food processing sector in Vietnam is also strongly

increasing exports. Therefore, Vietnam is investing in the technologies

for farming and processing meat and seafood, fruits and agricultural

products such as coffee, cacao, etc.

b. Promising sector 10: Turbines for wind energy.

The Vietnamese energy industry has huge potential for renewable

energy, especially wind/solar/bio renewable energy, compared to

many other countries in the region.

The Vietnamese government considers wind energy a necessary

industry to develop and we consider turbines for wind energy to be a

strength of Dutch industry.

Currently, Germany and the US have already entered the market to

supply for some pilot wind energy projects.

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To enter the Vietnamese market in wind energy, Dutch companies

need to have good consulting companies to support them in market

entry and setting up networks with the Vietnamese government.

Also in energy, but regarding the offshore industry (specifically oil and

gas exploration, exploitation and processing), Vietnam currently

imports all of the equipment for the process (such as casing, drill bits,

valves, etc). There are some key foreign contractors in the industry

such as Sumitomo (Japan), Technip (France), etc. These contractors

will select their equipment suppliers through tendering.

c. Promising sector 11: High technology Transmission system/engine

systems.

In all current manufacturing in relation to shipbuilding, vehicles such

as buses and motorbikes, small machinery in textiles, construction

etc, Vietnam is currently at the level of manufacturing only low and

medium technology parts and equipment. Regarding the engines and

transmission system for those machineries and vehicles, Vietnam has

to import from Europe, Japan and the US.

d. Promising sector 12: Port development expertise and high

technology equipment.

Vietnam has an ambitious strategy in relation to port development in

the country; this has been the subject of studies since the year 2000.

In the long-term, Vietnam has strategies to become a transshipment

country for sea transportation. The Vietnamese government has

identified key areas to develop deep and medium container terminals

such as Hai Phong, Van Phong, Cai Mep – Thi Vai.

It may take some time for the strategy to be implemented. To meet

the demand for port development, Vietnam has strong import

potential for port development expertise including consultancy,

designing expertise and also high technology equipment for port

development, such as cranes for ports.

Conclusion: Promising sectors to be proposed for research in step 2.

These sectors will be reviewed and matched with sectors proposed by

RenMMatrix and then we will finalise which ones are to be studied in more

depth in step 2.

ISIC Rev.4 CBI sectors Promising sectors:

24 Manufacture of basic metals

Metal parts and components

Promising sector 8: Titan slag for different industries such as painting, ceramics, welding, coating, aerospace



Promising sector 4: Mould manufacturing, moulding products Promising sector 6: Sheet Metal processing (Stamping, Plating, Coating, Heat-treatment, Press forming, Welding)

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Promising sector 7: Supporting industry of low to medium level of technology for different industries (shipbuilding, car manufacturing, agricultural machinery manufacturing, etc). The products for export include machinery/engine parts and components (valves, pumps casting), car parts, tools, plastic, rubber parts, home appliances, etc.



Promising sector 2: Electronic manufacturing/assembly.



Promising sector 5: Electrical wires and cables, electrical equipment such as low/high voltage panels,

transformers, etc.



Promising sector 9: Small agricultural machinery Promising sector 10: Turbines for wind energy Promising sector 11: High technology Transmission systems Promising sector 12: Port development, cranes for ports.



Promising sector 3: Car manufacturing/assembly



Promising sector 1: Shipbuilding building industry.




Knowledge Process Outsourcing

2. The Dutch market in the Metalworking and related industries:

factors of strength, potential for development and opportunities in

the next 3-5 years

Introduction

This chapter starts with an overview of promising branches/sectors in the

Dutch metalworking and technological industry for import from Vietnam. It

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also contains an overview of branches/sectors in the same industries

which can be regarded as potential exporters or outsourcers/investors

to/in Vietnam.

The content of this chapter is based on data, intelligence and publications

from: CBS (Central Bureau of Statistics), CBI (Center for the Promotion of

Imports from developing countries), FME-CWM, SNV Netherlands

Development Organization Vietnam, and the Embassy of the Kingdom of

the Netherlands in Vietnam. Furthermore, interviews have been conducted

with officers of: CBS, FME-CWM, NL Agency, CBI, Koninklijke Metaalunie

and the Embassy of the Kingdom of the Netherlands in Vietnam.

The Netherlands is one of the strongest economies in the EU in terms of

GDP growth. The Netherlands’ main industries include:

Food processing,

Chemicals,

Petrol refining,

Heavy engineering - producing petrochemicals and plastics, synthetic

fibres and steel

Light industries, such as electronic goods, home appliances

Technological industries - computing, telecommunications and

biotechnology

Agriculture. This is an important part of the Dutch economy. A highly

mechanised agricultural sector employs only 2% of the labour force

but provides large surpluses for the food-processing industry and

exports.

Sea transportation

Trade is an important aspect of the Dutch economy. International trading

is not limited to export/import or investment, there is a need to off-

shore/outsource part of the production process abroad as this helps boost

productivity growth for industries in the Netherlands. The main motivation

for off-shoring/outsourcing is to reduce labour costs and relocate some

manufacturing sectors which are not the focus of the country to overseas

markets. Therefore, the Netherlands has expanded its trading partners

from mainly EU and US countries to countries from other parts of the

world such as Southeast Asia.

Promising sectors for import to the Netherlands in Metalworking:

a. Promising sector 1: Shipbuilding - Sector supporting sea

transportation.

The shipbuilding industry in the Netherlands is highly developed and

supplies to worldwide markets. To meet the domestic and export

demand, the industry currently imports and off-shores various

specialised parts of the ship (for example, steelworks, boilers,

machines and motors, propellers) and the production process (for

example, welding equipment) or even entire ships.

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Currently the Netherlands has good links with the Vietnamese

shipbuilding industry as a result of importing and opening shipyards in

Vietnam.

b. Promising sector 2: Mechanical sector supporting machinery

manufacturing

Metal parts, tools and components: such as screws, bolts, tubes,

valves, taps

Products from die casting, forging products, pressing, moulding

Components for drive systems

Specific products include:

o castings for equipment such as computers, scales and parking

meters;

o parts for mopeds, bicycles and baby carriages such as luggage

carriers, mudguards and (parts of) frames;

o fixing materials such as screws and bolts

o such as tubes, valves, shutters and taps for central heating

systems

There is also a need for high quality standards (for instance the

European aerospace and automotive sector), and for more

sophisticated products (for instance (parts of) wheel suspension

systems, pumps, transmission systems and gearboxes). However, the

products of higher value technology are always imported from the

countries that already encompass well-developed supporting

manufacturing industries.

c. Promising sector 3: Mopeds, bicycles, motorcycles

Import opportunity to the Netherlands includes parts, frames, gearwheels, metal drive chains, bearings

Table 1 gives some relevant figures for the branches/sectors just

mentioned

Table 1: Potential Dutch market for products from the Vietnamese

metalworking industry

SBI code Enterprises 2013 Investments 2011 Result

2011

Number % of % <100 x mln € % for x mln €

% of

total empl. machinery

total

and eqpmt.

26 1445 11 97 116.5 67 854

14

27 1145 9 95 151.3 80 424

7

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28 2920 23 93 921.0 55 2869

49

29 720 5 95 368.2 20 680

12

30 1365 11 97 77.1 47 477

8

33 5345 41 99 257.9 74 597

10

Total 12,940 100 --- 1,892.0 --- 5,901

100

Source: CBS.

Table 1 shows that a vast majority of the enterprises in the relevant

branches/sectors (>90%) are SME’s (<100 employees). Since well known

low cost countries like China and India are increasingly concentrating on

producing in large series formats and for their own growing markets,

SME’s and their need for small series production runs are less interesting.

This offers possibilities for developing countries such as Vietnam which can

profitably produce on a small series basis for low costs.

However, it is not just about low costs. Two major problems arise in this

respect:

imports of metal parts into the Netherlands, e.g. forgings and castings,

come mainly from other (western) European countries. Among others,

Germany, Italy, France and Spain are mentioned. Turkey is also

included in this picture. This is because distances are relatively short

(transportation costs) and product quality as well as delivery is

reliable;

Except for a few branches/sectors (see next paragraph: Promising

branches/sectors for export / outsourcing to Vietnam), Vietnam is,

according to our spokesmen, hardly known by the enterprises who

are members of the FME-CWM and Koninklijke Metaalunie1. If they

have an image of the metalworking industry in Vietnam at all, it is an

image of poor quality products.

If this strategy is chosen, enterprises that are willing to participate should

improve the quality of their products by training their employees and

organising processes so that they can produce in line with European

standards.

1 Practically all enterprises belonging to the SBI codes in table 1 are members of one or more associations under the wings of FME-CWM and or Koninklijke Metaalunie.

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Promising sectors for export from the Netherlands in

Metalworking:

a. Promising sector 4: Equipment and machinery for the autonomous

manufacture of transport items such as bicycles, mopeds, etc.

Equipment and machinery for the autonomous manufacture of

transport items such as bicycles, mopeds, baby carriages and so on,

instead of just producing parts and/or assembling them.

b. Promising sector 5: Equipment and machinery for the agro food

processing sector

The agricultural sector and the food/nutrition industry in the

Netherlands work closely with Dutch producers of agro-food machines.

The Netherlands is a highly innovative market in the food sector,

providing high-tech solutions/equipment along the supply chain. The

food industry supply chain includes suppliers of climate control

systems, refrigeration and freezing installations, warehouse logistics,

transport systems and other machinery.

There is a clear trend of exporting equipment and machinery for the

agro food processing sector (for instance greenhouses, machines for

the processing, conservation and packing of food (products).

This is also an important and growing sector in the Vietnamese

economy, for the internal market, as well as for export.

c. Promising sector 6: Petrochemical/oil & gas/offshore equipment

The Dutch oil and gas industry is considered to be one of the top five

in the world, together with US, UK, Norway, and France. The

Netherlands is strongest in onshore and offshore gas production and

the supply industry, such as engineering, field development, pipeline

installation, maintenance, manufacturing and material and equipment

supply, onshore as well as offshore.

There is a great trend of exporting the equipment to the world

markets.

Table 2: Potentially relevant enterprises for exporting/outsourcing to

Vietnam

SBI code Enterprises 2013 Investments 2011

Innovation

2008 –

2011

Number % >50 x mln € % for % of

population

empl. machinery

and eqpmt.

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28 2920 13 921.0 55 65

301 1070 4

77.1 47 652

309 210 5

Total 4200 --- 998.1 --- 653

Source: CBS.

The possibilities/strengths of Vietnam are obvious. The big, young, low

cost, labour force has already been mentioned. Furthermore its growing

economy, political stability, geographic position as gateway to Chinese and

South East Asian markets and domestic market of 89 million people, make

it an interesting destination for export and investment.

Nevertheless there are many obstacles. These are summarised in a sector

report on Vietnam’s Shipbuilding industry by the Embassy of the Kingdom

of the Netherlands (May 2013) as follows:

a weak financial sector;

inefficient state owned companies and public spending;

red tape and widespread corruption;

poor infrastructure;

poor vocational training.

These obstacles, in combination with the fact that Vietnam’s metalworking

sector, as well as its business climate (culture, regulations, tariffs, etc.), is

hardly known by Dutch enterprises, means a great deal of work is

required, especially since the Vietnamese government wants to transform

its economy into a model of added value, quality and sustainable growth.

Government agencies in Vietnam as well as in the Netherlands, can/have

to play an important role in this transformation.

2 On investments and innovation, the CBS presents data on a two digit level only. Since codes 301 and 309 contain 94% of the enterprises belonging to SBI code 30, the data on investments and innovation for enterprises belonging to SBI code 30 are presented in table 2.

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3. Business supply – matching demand and proposing promising

sectors

Dutch market in Metalworking and

related industries - Findings from the

Dutch market

Vietnamese market in

the Metalworking and

related industries -

findings from the

Vietnamese market

Promising branches/sectors for

import from Vietnam:

Specific products/sectors:

- metal parts and components

such as: castings for equipment such as

computers, scales and parking

meters; parts for mopeds, bicycles and

baby carriages, such as luggage

carriers, mudguards and (parts of)

frames;

fixing materials such as screws

and bolts.

- pipes and process equipment:

such as tubes, valves, shutters

and taps for central heating

systems.

- components for drive systems: gearwheels, such as cogwheels

for bicycles; metal drive chains for

bicycles, mopeds and maybe

motorcycles;

bearings

These products are categorised into

subsectors below:

Promising

branches/sectors for

import/outsourcing

opportunities from

Vietnam:

Specific products/sectors:

- Ships (this also represents

outsourcing and investment

opportunities)

- Electronic products (this

also represents outsourcing

opportunities)

- Car parts (this also

represents outsourcing

opportunities)

- Moulding products

- Electrical wires and

cables; electrical equipment

- Sheet metal processing

products

- Engine parts and

components (valves, pumps

casting) and tools. These

are products from the

supporting industry with

low to medium level of

technology (this also

represents outsourcing and

investment opportunities)

- Titan slag for different

industries such as ceramics,

coating, aerospace.

These products are

categorised into subsectors

below:

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SBI code 26: Manufacturing of

computers, electronic and optical

product - Electronics and electrical

engineering (CBI sectors)

SBI code 26: Manufacturing

of computers, electronic

and optical product -

Electronics and electrical

engineering (CBI sectors)


electrical machinery and equipment -


(CBI sectors)


of electrical machinery and

equipment - Electronics and

electrical engineering (CBI

sectors)


machinery and equipment not

mentioned before – Pipes and process

equipment (CBI sectors)

SBI code 29: Manufacturing of motor

vehicles, trailers and semi-trailers –


(CBI sectors)


of motor vehicles, trailers

and semi-trailers –

Automotive parts and

components (CBI sectors)

SBI code 30: Manufacturing of means

of transport other than cars and

trailers -Automotive parts and



of means of transport other

than cars and trailers -

Automotive parts and


SBI code 33: Repairing and

installation of machinery and

equipment - Pipes and process



of fabricated metal

products, except machinery

and equipment – Pipes and

process equipment (CBI

sectors)

SBI code 24: Manufacture

of basic metals - Metal

parts and components (CBI

sectors)

Promising branches/sectors for

exporting/outsourcing to Vietnam

- shipbuilding industry. In this

context, also ship design, supply of

equipment for shipbuilding;

Promising

branches/sectors for

exporting to Vietnam

Small Agricultural

machinery

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- offshore oil and gas exploration and

exploitation equipment

- equipment and machinery for

the agro food sector (for instance

greenhouses, machines for the

processing, conservation and packing

of food (products); this is an

important and growing sector in the

Vietnamese economy, for the internal

market, as well as for export.

- equipment and machinery for

the autonomous manufacture of

means of transport such as bicycles,

mopeds, baby carriages and so on,

instead of just producing parts

and/or assembling them.

These products are categorised into

subsectors below:

Agro-food processing

equipment

Turbines for wind

energy

Offshore oil and gas

exploration and

exploitation equipment

High technology

engines/transmission

system

Port development

consultancy/port

equipment

These products are

categorised into subsectors

below:


machinery and equipment not

mentioned before – Pipes and process



of machinery and

equipment not mentioned

before – Pipes and process


SBI code 30: Manufacturing of means

of transport other than cars and

trailers -Automotive parts and


After matching supply and demand between the findings from the 2

markets, i.e. the Netherlands and Vietnam, some sectors have been

identified and proposed for the next analysis:

Potential sectors for trading/outsourcing and investment between the

Netherlands and Vietnam in 3-5 years include:

Shipbuilding: Importing, outsourcing and investment opportunities

in the Vietnamese shipbuilding industry for Dutch companies.

Together with these outsourcing and investment opportunities,

Dutch companies can export high technology equipment for the

sector such as ship engines, transmission systems.

Mechanical supporting industry: Importing, outsourcing and

investment opportunities in Vietnam supporting industry for Dutch

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companies. These include low and medium technology engine parts

and components, tools, moulding products, sheet metal processing,

metal parts for bicycles, moped, motorcycles etc. Also in this

industry, Dutch companies have export opportunities in high

technology machinery such as engines/transmission systems, a

great deal of which are imported into Vietnam.

Agriculture: Export opportunities for Dutch companies in terms of

small agricultural machinery and agro food processing machinery

to Vietnam.

Electrical cables, wires and equipment: Import opportunity from

Vietnam for Dutch companies.

Electronic manufacturing: Import and outsourcing opportunities for

Dutch companies in Vietnamese market.

Car manufacturing: Import and outsourcing opportunities for Dutch

companies in Vietnamese market.

Energy: Export turbines for wind energy to Vietnam or offshore

technology and equipment.

Port development sector: Export opportunities for Dutch companies

to Vietnam in high technology equipment.

Titan: import and investment opportunity for Dutch companies

(import titan slag and invest in developing titan processing industry

in Vietnam).

Of these sectors, the first three (shipbuilding, mechanical supporting

industry and agricultural equipment) are currently showing a clear

interest in cooperating. There has already been a comprehensive study

of ship building and, as a result, two sectors are recommended as

promising sectors for step 2 analysis: mechanical supporting industries

(including moulding, metal processing, plastic/rubber processing) and

agricultural (including agro-food processing equipment).

Besides, one sector can offer import/export/outsourcing and

investment for Dutch companies therefore those sectors are

recommended to be studied in terms of all aspects, including

investment opportunities. This will give Dutch SMEs a full picture of the

promising sectors and what they offer.

The three sectors (Electrical cables, wires and equipment; Electronic

manufacturing; car manufacturing) have shown there is a clear

demand from Vietnamese companies to export, or outsource work,

however there is no emerging interest from Dutch companies

according to the study. Those sectors may be new potential sectors for

cooperation between the two countries in the future. In order to help

Dutch SMEs to be aware of these opportunities in the Vietnamese

market, the 3 sectors will be studied in terms of statistics concerning

development rates, export to other markets and existing countries that

have exported from Vietnam in recent years.

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The last three sectors of Energy (including Renewable energy and

Offshore oil and gas), Port development and Titan are sectors which

have the potential for exporting to/investing in Vietnam however the

there has been no interest from Dutch companies so far. Moreover,

those sectors are “narrow sectors” of mainly large companies. If Dutch

companies are interested in the Vietnamese market, they will be able

to find their own method for approaching Vietnamese companies, and

only need support from governmental organisations, except for

lobbying activities. Therefore, the 3 sectors are not included in step 2

analysis.

Conclusion:

Mechanical supporting industry and Agricultural equipment are

recommended to be studied in step 2. Electrical cables, wires and

equipment; Electronic manufacturing and Car manufacturing will be

studied in a general manner in order to provide Dutch SMEs with initial

insights into the opportunities in those sectors. All interviews in next step

will be carried out with companies in these sectors.

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Appendix 1: Useful contacts

Organisations affiliated to the Dutch government

Embassy of the Kingdom of the Netherlands


Contact: Mr. Bernhard Kelkes

Consulate-General of the Kingdom of the Netherlands


Contact: Mr. Simon van der Burg

NLAgency

www.agentschapnl.nl/vietnam

Contact: Mr. Mark van der Linden

CBI (Centre for the Promotion of imports from developing countries)

www.cbi.eu

Contact: Mrs. Tamar Hoek

Organisations affiliated to relevant branches/sectors in the

Netherlands

Koninklijke Metaalunie

www.metaalunie.nl

Contact: Mr. Paul Verlinden

Association FME-CWM

Dutch organisation of enterprises for the technological industry

www.fme.nl

Contact: Mr. Patrick Walison

Furthermore:

Holland Shipbuilding Association/HME

Association of Dutch Suppliers in Oil and Gas Industry

Federatie Agrotechniek

GMV Facilitating Food

NAFTC

TFHC

Cleantech Holland

Dutch Energy Solutions

http://www.cbi.eu/



http://www.hollandinvietnam.org/

http://www.hollandinvietnam.org/

http://www.agentschapnl.nl/vietnam

http://www.cbi.eu/

http://www.metaalunie.nl/

http://www.fme.nl/



Holland High Tech

VLM

Aqua NL

VNMI

NAG

Bouwen met Staal

FEDET/FEDA

NVKL

Staalfederatie

NEVAT: Leading group of Dutch Suppliers

VIMAG

Consultancy

NLIngenieurs

Dutch association of consulting engineers

www.nlingenieurs.nl

Contact: Mr. Peter van Essen

Appendix 2: Dutch companies active in Vietnam

Shipbuilding and maritime equipment

Alewijnse Marine Systems

www.alewijnse.nl

Breman Shipping Installation BV

www.bremanshipping.com

Corrosion CWC

www.corrosion.nl

CSI control systems

www.csi-systems.nl

Damen Shipyards – Song Cam Shipyard

www.damen.nl

Datema

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http://www.nlingenieurs.nl/

http://www.alewijnse.nl/

http://www.bremanshipping.com/

http://www.corrosion.nl/

http://www.csi-systems.nl/

http://www.damen.nl/



www.datema.nl

Econosto

www.econosto.com.sg

el-Tec

www.el-tec.com.vn

Klay Instruments

www.klay-instruments.com

Mastervolt

www.mastervolt.nl

Merrem & La Porte

www.merrem.nl

NME

www.nme-group.com

Ned-deck Marine

www.neddeckmarine.com

Nieland

www.nieland.com

Rubber Design

www.rubberdesign.nl

Twentsche Kabelfabriek

www.tkfgroup.com

VDL Klima

www.vdlklima.com

Voith

www.voith.nl

Winkel

www.winkel.nl

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http://www.datema.nl/

http://www.econosto.com.sg/

http://www.el-tec.com.vn/

http://www.klay-instruments.com/

http://www.mastervolt.nl/

http://www.merrem.nl/

http://www.nme-group.com/

http://www.neddeckmarine.com/

http://www.nieland.com/

http://www.rubberdesign.nl/

http://www.tkfgroup.com/

http://www.vdlklima.com/

http://www.voith.nl/

http://www.winkel.nl/



Annex 10: methodologies

The Metalworking analysis is carried out using a Customer Centric

approach. This approach keeps the analysis on track in order to provide:

Desk research: Data collection from reliable resources including the

Worldbank; UNIDO; ILO; governmental published data on sectors

(Vietnam and regional markets); industry associations and researched

models from respected researchers. In-depth analysis into each

promising sector with statistics and forecasts on the market potentials,

manufacturing capacities, trading development, government policies

towards the sector and regions of development over recent years. The

market analysis also provides studies for each sector on the value

chain; evaluation of the sector’s internal/external factors; a SWOT

analysis and a Porter five force mode and overview comparison

between Vietnam and regional markets in each sector. The analysis

also provides practical information on distribution channels and

strategic market entries for Dutch industries. All studies show that

Dutch industries have a solid understanding in terms of joining the

cooperation effectively.

Qualitative in-depth interview – semi-structured: The results of the

market analysis are also verified by a qualitative analysis through in-

depth semi-structured interviews with representatives from the

governmental organisations which regulate the industry and related

business associations/chambers of commerce/stakeholders; and with

decision makers from trading/manufacturing companies in the

industry.

Quantitative analysis of interviews with 200 Vietnamese SMEs in the

identified promising sectors in Vietnam (Annex 3, 3a, 4, 4a, 5, 5a, 6,

6a) on their expansion plans to overseas markets/European markets in

the next 3-5 years; their awareness of Dutch industries and the

significant factors they consider when expanding and what support

they need. This analysis will equip Dutch SMEs with market knowledge

and understanding of business partners so that they can draw up

proper strategies and be more successful when entering the

Vietnamese market. This analysis also gives the CBI and its partners a

clear vision regarding the focus of services to Vietnam in the future.

This analysis also includes a proposal plan from Vietnam Insight on

useful supporting programmes for Vietnamese companies in promising

sectors. Together with the analysis itself, Vietnam Insight also

combines a list of potential Vietnamese companies which have been

enthusiastic about joining CBI supporting programme and a list of

associations with which the CBI can cooperate in future programmes.

Quantitative semi-structured telephone interviews with decision

makers/managerial members of 86 Dutch SMEs in the Dutch

Metalworking industry on their expansion plans to overseas markets

(Annex 7, 7a) in the next 3-5 years. This analysis will provide the CBI

and stakeholders with understanding regarding the trends in relation

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to overseas market expansion within Dutch Metalworking SMEs in the

next 3-5 years, a clear insight into Dutch SMEs’ awareness of the

counterpart market, what factors they consider significant in investing

or trading in new markets and what support they need.

The team: The team includes a consultant and research teams from

Vietnam Insight and RenMMatrix:

Nguyen Nhat Minh – Senior Consultant – Project leader – Vietnam Insight

Nguyen Chi Trung – Senior Consultant – Vietnam Insight

Nguyen Nhat Tan – Consultant – Vietnam Insight

Truong Hung Thien – Senior Market researcher – Vietnam Insight

Mr. Matthew Chong – Independent Consultant

Drs. Wil .J.A. Nelissen – Research Director - RenMMatrix

Drs. Anouk .E.E. Peerboom – Senior Project leader – RenMMatrix

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Annex 11 – regulations governing promising

sectors

1. Electronic manufacturing assembly

Besides the two decisions 186 and 10, specific to the electronics industry,

the government has also placed a strong focus on the development of the

electronics industry with Decision 75 in 2007 – Approving the master

plan on the development of Vietnam’s electronics industry up to 2012,

with a vision toward 2020. The objectives of the master plan include:

The industry will achieve a production turnover of US$ 4-6 billion

and an export turnover of US$ 3-5 billion, create 300,000 jobs, and

grow at an annual rate of between 20% and 30%.

The electronics industry will become a motivating force for

development, making significant contributions to export.

To create 500,000 jobs and build a contingent of engineers and

technicians with international qualifications.

Domestic manufacture will be capable of satisfying most of the

market demand and not depend on imported products.

Supporting industries for electronics manufacturing will be

developed to meet domestic manufacture and export demands.

Manufacturing establishments will be located rationally according to

regional development orientations.

The decision has highlighted specific points for implementing the decision

such as investment into research and development for the industry, calling

for foreign investment with technology transfer into the industry, human

resources development, tax regimes, building IT, electronics parks.

In 2010, the government also passed Decision 1755 – Approving the

scheme to make Vietnam a country strong in Information and

Communication Technology. The Decision’s objectives include the

development of Vietnamese ICT to supply the local market and:

By 2015: Vietnamese enterprises will be fully capable of designing

and manufacturing equipment with gradual substitution of import

items, stepping up research into the manufacture of integrated

circuits, designing and producing Vietnamese branded ICT

hardware products for domestic consumption and export, becoming

one of the 15 leading countries in software and digital content

processing services.

The specific areas for implementing the decision objectives include:

taxation, land policy for ICT project and capital sources allocation.

Additionally, there was Decision 698 in 2009 – Approving the overall

plan on the development of information technology and human resources

up to 2015 and orientation toward 2020. There are many plans on

developing human resources including initiatives on research centres, high

tech parks and human resource development programs with developed

countries.

Many decisions and policies from the government have shown that the

government understands the importance of the electronics industry in

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economic development. Since then, the electronic industry has

restructured and witnessed rapid development.

2. Electrical equipment manufacturing

The Vietnamese government considers the industry an export sector

with great potential and has launched master plans to develop the

industry. Decision No.186 in 2002, approving the strategy on the

development of Vietnam’s mechanical engineering industry until 2010,

with a vision towards 2020, has set the direction for the mechanical

industry in general and electrical equipment manufacturing sector in

particular. Besides this, and specifically to regulate the sector, the

government also drew up the master plan to develop the sector in

Decision 48 in 2008 – Approving the planning on Development of

the Electric Equipment Manufacturing Industry in the 2006-2015

period with a vision towards 2025. The objectives of the master plan:

The average production values maintain a growth rate of 17-

18%/year,

The sector satisfies over 70% of the domestic demand for electric

wires and transformers by 2015. To satisfy 55% of the domestic

demands for electric motors and some types of common generators

by 2015,

By 2015, Vietnam’s electric equipment-manufacturing industry will

reach regional, advanced standards on technologies in order to

manufacture transformers, generators, electric motors, medium and

high-voltage instruments, electric wires and cables for domestic

consumption and export. The industry’s export turnover is projected

to reach 18%/year in the 2011-2015 period and 15% in 2016-2025.

By 2025, Vietnam will be capable of manufacturing and supplying

complete electric equipment sets for transmission lines and

transformer stations.

By 2015, to satisfy 60-70% of the domestic demands for electric

instruments; the export value will represent 19-20% of the industry’s

production value.

By 2015, to satisfy 55-65% of the domestic demand for motors and

about 50% of the domestic demand for some types of generators of

lkV-lkW capacity; the export value will represent 30-40% of the

industry’s production value.

By 2015, to basically satisfy the domestic demand for distribution

transformers of uniform national quality standards, trying to meet 50-

60% of the demand for 110kV -220k V transformers. The export value

will be approximately 30-35% of the industry’s production value.

To achieve these objectives, the government is encouraging foreign

investment into the sector to draw in high technology and focus on

research. Some of the key products that the Vietnamese government is

targeting for development are static electric machines, different kinds of

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transformers, rotary electric machines, motors/generators for household

and industrial uses, electric wires and cables, electric instruments, electric

boxes and panels, measuring equipment, etc. The sector also plans to

build up a system of centres for inspecting electric equipment according to

national standards to ultimately ensure conformity with these international

standards. This will help the local sector to meet the requirements of

international standards and expand into overseas markets.

The government is also offering many incentives to companies which

create energy-efficient products and items that are used to tap renewable

energy resources as well as those which conduct research for energy

conservation purposes. Specifically, the State has created favourable

conditions for them to seek preferential loans from development banks,

the assistance fund for science and technology development, the national

fund for technological renovation, and the national energy efficiency and

conservation programme.

3. Moulding sector

The Vietnamese government considers die and mould as one of the key

sectors for development in the supporting industry. Besides Decision 186

to support the Vietnamese mechanical industry, specifically the mould and

die sector, there is one more strategy for developing die casting and

moulding - Decision 583 in 2012. According to the Decision, the

government approved the master plan to develop the die and mould

sector from 2009-2020 with a vision to 2030. The Decision states that the

mould and die sector is a very important part of the mechanical industry;

the development of the sector should be in line with the overall plan for

the mechanical industry. The objectives of the policies include:

Manufacturing value of the sector to reach US$998 million in 2015,

US$1,519 million in 2020 and US$3,078 million in 2025

Export value to reach US$50million in 2015, US$152 million in

2020 and US$619 in 2025.

To achieve the objectives, the Decision provides a list of key projects in

which setting up satellite systems for manufacturing companies is one of

the primary plans. The total investment for the sector until 2015 is US$

945 million and US$ 593 million for the period 2016-2025.

So far, the government has indicated various policies (master plan for

supporting industry, die casting development plan strategy, etc), however,

the government has not yet presented a concrete development action

plan.

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Annex 12 - trading between the netherlands

and vietnam - first 6 months of 2013

Source: Vietnam Custom Statistics

4 of the largest imports from Vietnam to the Netherlands: textiles and

garments, footwear, computers, electrical products, spare-parts and

components thereof, telephones, mobile phones and parts thereof

Import from Vietnam to Netherlands first 6 months,

2013 (US$) Fishery productsFruits and vegetables

Cashew nut

CoffeePepper

Rice

Pastrycooks, sweets and cereals products

CoalChemicals

Chemical products

Plastic products

Rubber

Rubber productsHandbags, purses, suit-cases, headgear

Bamboo and rattan productsWood and wooden products

Textiles and garments

Foot-wears

Ceramic products

Precious stones, precious metal and articles thereofIron and steel products

Computers, electrical products, spare-parts and components thereofTelephones, mobile phones and parts thereof

Machine, equipment, tools and instruments

Other means of transportation, parts and accessories thereof

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4 of the largest exports from the Netherlands to Vietnam: milk and milk

products, machinery, equipment, tools and instruments, iron and steel,

ferrous waste and scrap.

Export from Netherlands to Vietnam first 6 months,

2013 (US$)

Fishery products

Milk and milk products

Pastrycooks, sweets and cereal products

Animal fodders and animal fodder materials

Chemicals

Chemical products

Pharmaceutical products

Plastics

Plastic products

Rubber

Yarn

Textile, leather and foot-wear materials and auxiliaries

Ferrous waste and scrap

Iron and steel

Iron and steel products

Computers, electrical products, spare-parts and components thereof

Machine, equipment, tools and instruments

Insulated wires and cables

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Annex 13 - Action plan and further proposals to

CBI

Observations of Vietnamese SME’s in promising sectors have been

gathered via an in-depth study of promising sectors, a comparison of the

advantages of Vietnam over other regional countries, conducting

interviews with Vietnamese businesses about their market expansion

plans in the coming 3-5 years, their awareness about the Dutch market

and the support they need in order to expand to the Netherlands and

interviewing Dutch companies about their views on the Vietnamese

market (see Annex 3a, 4a, 5a, 6, 7a).

Observations of Vietnamese SMEs in the promising sectors:

Each company in each sector has different challenges. Therefore,

to support Vietnamese companies effectively and practically, the

support should be tailored to their real needs.

The Vietnamese companies in promising sectors in this study are

mainly SMEs which are characterised by short-term vision and

strategies, limitations in terms of planning and the implementation

of business development, and a tendency to deviate from plans as

a result of limited resources. Therefore, any collaborations and/or

programmes for them should encompass SMART objectives and

strong follow-up. The objectives should be clearly discussed with

companies and informal commitment/agreement should be

obtained from them to follow the programmes. Together with clear

objectives, a so called Business supporting plan can be drawn up

by consultants and company owners/leaders. The plan may include

activities, expected outcomes, timelines, etc. These activities can

help develop the commitment from companies.

Companies have practical views on their activities. 60-70% of the

interviewed companies mentioned business results. This is a

normal approach from enterprises that all trade and investment

promotion organisations should note during all activities. For

example, in each activity, even with buyer/seller match, if the

matching is not accurate, the companies will not be willing to

attend.

Companies always like support programmes with free access.

However, to some extent, they don’t take it seriously and offer less

commitment to programmes which are too easy for them to join.

An attitude of cooperation should therefore be built up, e.g. a so

called “Public Private Partnership” may be a good approach. It

means the companies also have to make a partial financial

contribution to the programmes. This will automatically lead to

improved commitment from participants. Moreover, if the

supporting programmes offer practical value to companies, they

are normally willing to contribute.

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Companies want to expand their networks internationally and

domestically. Therefore activities which can bring companies

together under a group/club/forum which share the same

interests/concerns/challenges/difficulties motivate companies to

join in order to share ideas.

Companies always want to promote their company’s name and

reputation. However, small and medium companies usually face

challenges when they do business with foreign business partners

for the first time as their names are not yet known. Foreign

partners are always concerned about financial positions, company

development, etc. Therefore, activities which can verify their

names, capacities and abilities to foreign partners are very helpful

to them.

Vietnamese enterprises, especially in the manufacturing industry,

are limited in terms of international market knowledge and

marketing ability so they feel very unsure about approaching

international markets by themselves. It is therefore necessary to

support them in marketing activities and be aware of modern

trends in service quality.

Two key organisations which are already successful and about

which various companies have been very positive are Jetro and

Jica. Their supporting programmes are long-term, practical, very

detailed (even in terms of all of the different enquiries from and

discussions with Japanese partners and Vietnamese companies),

very consistent and regular, and involve many volunteers and

(human) resources.

In order to be competitive and ensure programmes are useful, the

programmes should be creative, well planned and suited to the

capacity of the supporting organisation.

On the basis of a general understanding of SME’s and as a result of the

interviews, I set up a Programme Basic Matrix which applies the matrix

methodology to designing supporting programmes. The Programme Basic

Matrix includes:

Vertical axis: The key needs of companies in promising sectors

include needs from industry levels to company levels. Industrial

needs are supported by governmental level programmes.

Entrepreneurial needs can be supported by related organisations.

Horizontal axis: Implementation methods

Suggested programmes are formed as a result of combining

companies’ needs and implementation methods.

The matrix can be used in designing supporting programmes. This is a

basic matrix; the matrix can be expanded via other studies which can

prolong and add further items to the Needs or Methods axes.

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PROGRAMME DESIGN BASIC MATRIX

No Demand Off-line/off-site On-line/off-site (social media) Off-line/On-site

Directory Booklet Website Blogs/ microblogs

Social networking sites

Content communities/ Forum

Online training

Mission/ Reception

Seminar/ training

Exhibition/ Trade fairs

On-site visits

A. Industry levels

1. Capital support

2. Tax regimes

3. Supporting industry development

4. Customs procedures and transparencies

5. R&D, technology development

6. Human resources development

B. Company levels

1. Financial

Sponsorship Sponsorship enabling companies to advertise on Dutch associations websites

Sponsor companies to attend trade fairs overseas or locally.

Sponsorship for on-site visit to factories of business partners overseas.

2. Non-financial

2.1 Marketing

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Verification of company names

Issue directories of Vietnamese companies in the various sectors to promote to Dutch companies

Website directories of Vietnamese companies in the sector accessed by Dutch companies

Verify companies so that they can join key international forums within promising sectors

Promotional activities Blogs on Vietnamese industries/Dutch industries

Facebook, Twitter on Vietnamese industries/Dutch industries

Advertising

Training in marketing skills such as exhibition skills, etc

Online marketing courses

Training on different marketing skills

2.2 Manufacturing

Training on production processes

Key tips in production process booklet

Companies to join forums to share ideas on improving

Training on production process

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technical processes

Technical support in analysing production process

CBI technical experts to visit companies

Need training support for human resources -more training required

Cooperate with colleges in Vietnam to design short practical courses with consultancy from Dutch experts

2.3 Technology

Training on new technology

Training on new

technology

Technology transfer

2.4 Business development activities

New market information

Booklet on Dutch market

Seminars/training on Dutch market

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New technology requirement/ standards

Booklet on Dutch market technology standards

Seminars/training on Dutch market technology standards

New business opportunities/ partner matchmaking

Directories of Dutch companies sent to

Vietnamese companies

Buyers/sellers’ reception

Buyers/sellers exhibition/trade fairs

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Some activities can be applied and carried out from the matrix:

Directories of Dutch companies to be sent to Vietnamese

companies

Sponsorship for companies to advertise on Dutch associations

websites

Sponsor companies to attend trade fairs overseas or locally

Sponsorship for on-site visits to factories of business partners

overseas

Issue directories of Vietnamese companies in the sectors in order

to promote them to Dutch companies

Website directories of Vietnamese companies in the sector

accessed by Dutch companies

Verify companies so that they can join key international forums of

promising sectors

Blogs on Vietnam industries/Dutch industries

Facebook, Twitter on Vietnam industries/Dutch industries

Online marketing courses

Marketing training courses on different marketing skills

Key tips in production process booklet

Companies to join forums to share ideas on improving technical

process

Training on production processes

Booklet on Dutch market technology standards

Booklet on Dutch market (general)

Training on new technology

Cooperate with colleges in Vietnam to design short practical

courses with consultancy from Dutch experts

Visits from CBI technical experts to the companies

Buyers/sellers at exhibitiona/trade fairs

Buyers/sellers’ reception

Seminars/training on Dutch market technology

Objectives of CBI and partners for promising Vietnamese companies

(from my perspective):

Build up effective and efficient programmes and optimise the

benefits for Dutch and Vietnamese companies as a result.

Suggestions

The CBI has already carried out many programmes in Vietnam with good

results. My proposals are largely based on the current activities of CBI

together with some different approaches, with a view to making all

supporting programmes more effective and efficient.

To achieve the objective, some suggested approaches and action plans

include:

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Utilising resources from related partners and having a clear

implementation plan for all resources.

Building up one team of 2 permanent consultants in each area (2

key economic areas, Hanoi and Ho Chi Minh City) who would be in

charge of technical and marketing. These 2 teams will have close

contact with companies and make frequent visits to companies in

the programmes.

The programmes supporting exports from/imports to Netherlands

are separate.

Outlines of support programmes for 3 sectors: electronic, electrical

equipment, moulding manufacturing:

Select a pilot team of 8-10 companies in each sector based on their

potential and enthusiasm to join CBI programmes. The pilot

programmes should be open to a limited number of companies with

high commitment from both sides.

Consultants to study the companies’ needs in more depth and

evaluate the businesses. These studies and evaluations will help

the consultants understand and identify the real needs of the

enterprises and ensure that the supporting programmes are

appropriate for the companies’ needs.

Consultants can then group companies into similar needs, e.g.

companies lacking skills in business development and marketing,

businesses wishing to improve their production processes and other

prominent needs such as Dutch market information and technical

requirements, etc.

Design business-supporting activity programmes in 1 year for each

group (maximum 3 activities/year) with clear objectives, timelines

and outcome evaluation.

In practice, activities can be the same for companies in different

groups, however, the follow-up can be different in each company.

Follow-up activities are extremely important. If this involves

training, the follow-up will help companies to remember to apply

the skills they have learnt in their businesses. If this concerns an

exhibition, the companies are encouraged to follow-up the potential

partners they meet, etc.

Follow-up activities carried out by consultants are scheduled

quarterly, during visits to companies to get feedback.

The active participation from companies is encouraged and

evaluated using company scorecards. If a company does not

participate actively, they will not be eligible for next year’s

programme.

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Annex 14 - doing business in vietnam

FOREIGN INVESTMENT IN VIETNAM

In recent years, especially after Vietnam’s accession to WTO in 2007,

Vietnam has become an emerging destination for investment. Many

investors see a promising, more transparent, predictable, stable and

equitable business environment in Vietnam, with accelerated economic

reform, and a strengthened rule of law.

In accordance with the current laws, investments can take the form of

“direct” and “indirect” investments.

1. Direct investments include the following activities:

Establishing economic organisations in the form of 100% capital of

domestic/foreign investors (also called 100% foreign owned

enterprises);

Establishing joint venture economic organisations between

domestic and foreign investors (“JV”);

Investing in the contractual forms of Business Cooperation Contract

(BCC), Build – Operate – Transfer (BOT), Build – Transfer –

Operate (BTO), and Build – Transfer (BT);

Investing in business development

Purchasing shares of or contributing capital to the companies to in

order to get involved in the management of Investment activities;

Investing through a merger and acquisition approach.

2. Indirect investments include the following investment activities:

Purchasing shares, stock, bonds;

Investing in securities or investment funds;

Investing in other intermediary financial institutions.

There are many methods for a foreign company to expand their business

to the Vietnamese market:

1. Representative Office or branch: Foreign investors may also create a

commercial presence in Vietnam by establishing a representative office or

a branch. A representative office has no legal status and is not permitted

to conduct any business activities in Vietnam. The Chief Representative

does not have the authority to sign any economic or commercial contracts

with Vietnamese businesses on behalf of the parent company unless

he/she is authorised by the parent company.

A branch is allowed to conduct business activities in Vietnam. Branches in

Vietnam are strictly controlled and closely monitored by the Government

Agencies, such as banking, insurance, legal services, securities and fund

management.

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2. Investment in Buying Shares of Vietnamese Shareholding Companies:

Foreign investors may buy shares in newly equitized state-owned

enterprises or shares issued by shareholding companies, and contribute

towards the legal capital of limited liability companies, partnerships and

cooperative unions. The value of shares sold to foreign investors must not

exceed 30% of the company's total shareholding.

3. Agency and Distributor Relationships.

Foreign companies may function as agencies and distributors for

Vietnamese companies. Technology and trademark license agreements

must be properly registered with Vietnamese authorities.

4. Franchising.

Many domestic companies have begun to employ these regulations to

establish franchises for coffee shops and convenience stores.

Legal entities

To carry out a project, an investor must set up a legal entity. There are 4

forms of entities in Vietnam:

Limited Liability Company (LLC): is an enterprise that has legal

person status. They are either a single-member Limited liability

company or accommodate more than one member.

Joint-stock Company: Shareholders may be organisations or

individuals; there must be a minimum of 3 shareholders but there

are no limits on the total number of shareholders.

A partnership is an enterprise which is owned by at least two

members. A partnership is not permitted to issue shares.

A private enterprise is an enterprise owned by one individual who is

liable for all activities of the enterprise by his/her assets.

TAX SYSTEM IN VIETNAM

Companies established in Vietnam must pay tax on their income. A foreign

enterprise with a permanent establishment in Vietnam must pay tax on all

income in Vietnam and on foreign income that relates to the permanent

establishment. A foreign enterprise without a permanent establishment in

Vietnam must pay tax only on income arising in Vietnam.

Most foreign investments and foreign investors will have to pay the

following taxes:

Corporate income tax

Value added tax

Export/Import duties

Special sales tax

Personal income tax of Vietnamese/ expatriate employees

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KEY POINTS TO START

Culture and Communication

Greet your Vietnamese business partners by name - make an effort

to pronounce the name correctly (e.g. Mr Nguyen Van Nam would

be Mr Nam, Nguyen is the family name);

Stress mutual cooperation (technology transfer/training) and

mutual benefits. Avoid any suspicion regarding motives;

Socialise without being lavish;

Avoid conflict (loss of face), retain a sense of humour;

Be patient; things do not work at the same pace as in the West.

Avoid getting frustrated;

Build relationships first. Business will not happen without them;

Explain everything clearly, over and over again if necessary.

Business Tips

Visas are required. Check with the nearest Vietnamese Embassy;

Make contact at an early stage with the decision-makers at all

levels;

Seek assistance from the Vietnamese Chamber of Commerce and

Industry and other Governmental organisations working to build

business in Vietnam. These organisations have influence and a

wide range of contacts;

If you are planning to set-up in Vietnam, consult a lawyer about

the possible options and how you plan to conduct business there.

There are limits on what some types of business entities such as

“Representative” offices can do;

Use an interpreter at meetings. Immediately follow-up any

agreement you may have reached, in writing. Yes, may not mean

“yes”; it may mean “yes, I understand what you are saying”;

At a working level the bureaucracy can sometimes be frustrating,

pedantic and even seem obstructive. But things usually work in the

end;

Shirt and tie is acceptable business wear for “everyday” meetings.

You may wish to wear a jacket for more formal events;

Use a business card. Present it with your right hand or two-handed.

Money Tips

The Vietnamese Dong (VND) is not convertible and there are

controls on foreign exchange transactions. Current rate of

exchange is EUR1.00 = VND28,500

Remittance of foreign currency outside of Vietnam is only allowed

for certain “proper” purposes such as payment of goods and

services (subject to the importer having an import licence and

submission of other documentary evidence of the import, e.g.

purchase contract, customs clearance documentation etc).

Remittance of dividends is subject to Tax Authority clearance;

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Letters of Credit are a common method of payment when exporting

to Vietnam. Foreign exporters should have a Letter of Credit

opened by a foreign bank with a branch in Vietnam;

Seek legal/banking advice if you are not sure.

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Annex 15 – guidance for dutch companies for

obtaining support in the vietnamese market

Expanding business overseas is an inevitable trend in global business.

Dutch companies who want to look for Vietnamese companies as

manufacturing partners, outsourcing partners, or local distributors for

products and services, or investment partners can follow some of the

channels and use the contacts provided in Annex 2 – List of supporting

organisations in promising sectors:

The first steps are to gather information, conduct research about new

markets, build up your network, and find potential business partners.

There are many ways to find support in exploring a new market. Here are

7 ways that are worth considering:

1. Trade Directories and Websites:

Companies can have these Directories published in Vietnam and collect

information from websites (such as: www.yellowpages.vn). They provide

information on government and private-sector services, markets, industry

sectors, and potential partners. They also offer statistics and trade leads.

It could, however, lead to an excess of information which requires much

revalidation.

2. Vietnam Trade Offices:

Vietnam Trade Offices are established in over 40 countries all over the

world. As part of the Embassy of the Socialist Republic of Vietnam, their

mission is to help Vietnamese businesses who wish to expand their

businesses overseas or find business partners in foreign markets. The

Vietnamese Trade Office under The Embassy of the S.R. of Vietnam in the

Netherlands can be found in The Hague.

3. Dutch Embassies and Consulates in Vietnam:

Similar to Vietnam Trade Offices, Dutch Embassies in Vietnam have their

own commercial departments located in the two big commercial cities of

Hanoi and Ho Chi Minh City. These provide services to companies from

their country to do business and/or sell products or services in the

Vietnamese market. Their (fee-based) services will provide you with

tailored market studies on your specific enquiry.

4. Trade Shows or Market Visits (See Annex 1 – List of Vietnamese

Trade fairs in promising sectors)

You will not be successful unless you visit the target market yourself or

attend Trade Shows. This can help you study the market at first hand and

identify and build up strong relationships with local business partners. You

can talk directly to potential buyers/sellers/manufacturing partners and

learn everything you need to know about the market, local regulations,

competition and distribution channels. You can find information on

upcoming trade shows on websites and use it to prepare for business

trips. To optimise the result of your market visit, start preparing and

arranging meetings with key contacts and business partners around 2-3

months in advance.

5. Government Trade Promotion Organisations

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In Vietnam there are some governmental trade promotion organizations

such as Vietrade, and some State Departments. The main purpose of

these agencies is to support companies doing business in the Vietnamese

market through their work on policies in the sector, by issuing a

guidebook on Vietnamese business, organising trade fairs, or hosting

market visits/missions, etc. The government trade promotion

organisations offer very basic information for your specific enquiries.

Although this information will be accurate, it may not help you much as it

is not tailored to your company’s needs. Some medium-sized and large

enterprises in some specialised industries such as infrastructure, oil and

gas, etc will need much support from these organisations in meetings with

government officials.

6. Non-Government Trade Support Institutions

This includes the Vietnam Chamber of Commerce and Industry (VCCI),

Investment and Trade Promotion Center (ITPC) and other Product-Based

Associations such as VAMI – Vietnam Association of Mechanical Industry,

etc. VCCI is present in Hanoi, Ho Chi Minh, Can Tho, Vung Tau, Da Nang

and has other representative offices in many cities. Product-based

associations are located in big cities; they are still young and have not yet

gathered members from across the whole country. Their job is to check

out local partners, arrange meetings and provide other services, such as

organising seminars for companies (with the corresponding charges).

Being independent and non-governmental, these organisations also offer

supporting services and can make business partners recommendations

through their trade missions. They do not, however, have sufficient

resources to provide tailored market studies and responses to your

detailed enquiries.

7. Trade Service and Consulting Companies

You can also use a Consulting company. They provide a comprehensive

service for customers at any stage of your company’s development and

offer a wide variety of trade, financial and consulting services including

market research, business-matching, tailored business representation,

market visit preparation, etc. These companies have reliable partners and

a clear understanding of the market. Consulting companies build trust and

reputations based on their knowledge and every member of staff will be in

charge of a few sectors, so they have time to concentrate on every client.

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import study metalworking vietnam 2014

Documents

electronic sector

vietnamese economy overview

metalworking market

domestic market

overview of industry

historical overview

vietnamese country data

internal factors