Information of Vietnam Plastic
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1 Information of Vietnam Plastic General Information Currently, Vietnam has more than 1,000 plastic companies which are mainly in HCM City and the southern provinces of Dong Nai, Binh Duong and Long An. - Plastic products were one of the fastest growing exports in Vietnam in the last five years and have great potential to perform well on the international market with the sustaining average annual growth of 20% to 25%. - Employees have a solid educational background, are hardworking and capable of advancing their skills. - The plastics sector is aggressively promoted by the Vietnamese government. It aims to achieve sufficient supply of home-produced raw material through resin production facilities. In parallel, the government issued a blueprint for developing supporting industries such as mold-making, plastic recycling, chemistry and machinery supply. - Modern manufacturing equipment such as: calendering and coating, extrusion molding, injection molding, extrusion blowing, laminating and printing lines... have basically met plastics production for end-user consumption, construction, packaging, and engineering sectors. - Several businesses have built up their brand prestige in local market; examples: Binh Minh JS Co., Tien Phong, Minh Hung plastic pipes; Plastic packaging of Tan Tien, Rang Dong, Van Don JS Co., PET bottles and 3-layer bottles of Oai Hung, Ngoc Nghia, and Tan Phu Plastic Co Some businesses have constant overseas orders of quite great quantity; examples are Rang Dong Plastic JS Co. with their tablecloths and synthetic leather products, Tan Dai Hung Plastic JS Co. with PP woven bags, and Hung Yen Plastic JS Co. with HDPE shopping bags and garbage bags. The period of The year 2010 was a brilliantly successful year for Vietnam plastic exports, with export revenue for this product surpassing 1 billion USD for the first time. According to the General Customs Bureau official records for 2010, total export revenue of Vietnam plastic products doc 1
2 was 1,049,000,000 USD, surpassing 2009 s by 30%. Total export revenue exceeded 2010 s target by 5%. This is considerable growth by Vietnam plastic industry, showing a strong recovery of the industry after the 2008 financial crisis, a positive sign of a bold development seen in Vietnam plastic industry and giving a signal for a fully successful year for Vietnam s export revenue for plastics grows constantly. Contrast that 1+ billion of the present with 2005 s export revenue of a mere 336 million USD. Vietnam plastics are exported to, for example, Japan, USA, The Netherlands, Germany, Cambodia, UK, Indonesia, and Malaysia, and have been shipped to 151 countries up to now. Figure 1: Vietnam plastic export revenue in (in million USD) USD Source: National Statistics/Vietnam Plastics Association Export Products At this moment Vietnam exports over 20 categories of plastic products to world markets, of which three categories had export revenue of over 100 million USD and 8 categories of over 10 million USD in the year Export revenue of main products such as plastic sheets, boards and films, household and industrial plastic products, tarpaulin, statues, flower pots, and ornamentals are rising stronger than in recent years doc 2
3 Figure 2: Spilt of Plastics Products for Export 2010 Source: National Statistics/Vietnam Plastics Association Product categories having highest export revenue in the year 2010 were products used in transportation, packaging which are also Vietnam s core export products. Year 2010 total export revenue of these categories totaled 387 million USD, a year-on-year increase of 12%. These products are accounting for highest export value equivalent to 37% of general export revenue of Main import markets of these products in 2010 included Japan, Germany, UK, USA, and Cambodia. Table Export Plastic Products Categories Category 2009 (USD) 2010 (USD) 2010/2009 (%) Products used in forwarding and packaging 345,360, ,141, Plastic sheets, boards, films 113,871, ,396, Household plastic products 57,889, ,640, Industrial plastic products 66,864,703 84,904, Tarpaulin 43,457,321 65,167, Small statues, flower pots, and ornamentals 36,858,418 48,839, Offices, school equipment 32,824,185 37,236, Pipes and fittings 15,180,029 31,391, Materials used in construction 10,119,348 14,556, doc 3
4 Sanitary equipment 10,271,424 13,395, Cosmetics cases 11,025,114 9,180, Caps, lids, valve caps 8,203,561 7,211, Belts 5,021,203 6,407, Home, automobile fittings 7,272,712 4,754, Safety and safeguarding equipment, tools 4,991,762 3,208, Sanitary, medical and surgical products 1,853,111 2,567, Toys 4,501, , Thread bobbins, reels 632, , Garment and accessories 3,998, , Others 20,778,188 16,697, Source: Vietnam Plastics Association Export Markets In 2010, Vietnam plastics were exported to 151 world markets, of which exports to Japan hit figures far higher than others with its 259 million USD. In addition, 20 other markets reached over 10 million USD and 38 others exceeded 1 million USD in the recent year of main export markets of Vietnam plastic products in 2010 Source: Vietnam General Statistics Office Japan has been a leader for importing Vietnam plastic products since 2009 with Vietnam s export revenue in that regard for 2010 registering year-on-year strong growth with 259 million USD, up 32%. Export revenue accounted for by the Japan market was 25% of total export revenue of plastic products in Products most exported to this market are: products used doc 4
5 in transportation; packaging such as plastic bags, shopping bags and plastic boxes; and industrial and household plastic products. The US, no surprise, is a big market that had a year-on-year lower export revenue in 2010 with just 107 million USD, down 19% compared to 2009 s. The reason of this drop was the US anti-dumping tax applied from August 2009 against Vietnam plastic bags and shopping bags, bringing about a considerable fall of products used in packaging; this is a core export product of Vietnam and significant in export revenue. This situation lasted from August 2009 until the end of 2009 and affected the year 2010, despite Vietnamese businesses great efforts to make headway into this market, changing their product export structure in recent The US market also accounted for a considerable portion of total export revenue of plastic products (10%). Plastic categories responsible for the most exports to the US are products used in transportation, packaging, plastic boards, sheets, films, household plastics, and tarpaulins. Exports to EU in 2010 also registered admirable year-on-year growth with a high revenue of 49 million USD, up 32% against last year. The 2010 exports to France amounted to 24 million USD, a year-on-year increase of 8%. Exports to Italy were up 2% compared to last year with 17 million USD. Exports to Germany rose significantly last year with export revenue of 69 million USD, a year-on-year increase of 29%. Germany at the moment is a potential market for Vietnam s plastic products; it has been associated with constant growing export revenue in Germany market revenue accounts for 7% of total 2010 export revenue of plastic products, and is expected to maintain that strong growth in Product categories exported to this market mainly include products used in transportation, packaging, tarpaulin and household plastic products doc 5
6 Exports to the Netherlands continued to rise in 2010 with annual export value of 64 million USD, a year-on-year increase of a staggering 45%. Of course the Netherlands is seen as a potential market offering superb opportunities to Vietnamese exporters. Two most-exported products categories to the Netherlands are: products used in transportation; packaging; and small statues, flower pots, and ornamentals. All exports to Belgium, Spain and Sweden markets surpassed 10 million USD in 2010, of which highest revenue came from Belgium with a year-on-year increase of 41%. Expectations are that 2011 export revenue associated with EU markets will have higher growth than Cambodia is the ASEAN leading market importing Vietnamese plastic products in 2010 with revenue of 58 million USD, a year-on-year increase of 50% which is expected to keep growing vigorously in Most-exported to this market are products used in transportation, packaging, household plastic products, ornamental stuffs Exports to other markets in ASEAN also had very strong growth in 2010 of which Indonesia had a year-on-year rise of 126% with 43 million USD. Exports to remaining markets rose boldly in 2010, especially the Philippines and Singapore markets had year-on-year growth of 80% in Considering the geographical conditions and tax barriers, the forecast growth in 2011 export revenue from markets in the ASEAN region is considered quite fine. Revenue from 10 export markets of Vietnam s plastic products Country First 6 months of 2011 Japan 193,284, ,579, ,691, doc 6
7 The US 131,965, ,473,387 53,891,196 The Netherlands 44,708,043 64,705,472 40,455,450 Germany 54,588,946 70,399,387 47,996,330 Cambodia 39,960,900 59,249,781 37,787,711 The UK 37,926,505 50,063,417 32,667,931 Indonesia 19,304,244 43,601,518 32,234,760 The Philippines 18,879,460 33,723,279 19,078,577 Malaysia 20,735,194 28,514,749 17,935,629 France 22,191,286 24,143,307 15,339,877 Source: Vietnam General Statistics Office Strengths of Vietnam s plastic sector Vietnam s plastic industry includes about businesses from North to South. Most (83%) are in the South - Hochiminh city, Binh Duong, Dong Nai, Long An, and Ba Ria Vung Tau. The North has 13% of them, and the Central 3%. Plastic products having a great competitive edge are packaging, household products, and construction and engineering plastics. Vietnamese plastic products are, in the main, exported. These plastic products have gradually reached the point to where they control the market of several countries. Strengths of Vietnam plastic products by clusters a) PE films and bags - Printing capability: Some Vietnamese manufacturers demonstrate their ability to care for a nice printed bag that could constitute a plus for the Vietnamese manufacturers when compared with Chinese manufacturers, as well as an ability to remain flexible and deal with smaller orders doc 7
8 - Fast development of internal demand will also support export; for instance the plastic packaging supply to the growing domestic export businesses in food, electronic equipment and garments will make the critical mass for production achieved faster. - Some established contacts with international-buying decision-makers exist already and may be consolidated. Further, Vietnam s image in developed nations seems good and may be further capitalized. - The ability to reduce film thickness through optimum choice of resin is not obvious. The resin available in Vietnam is considered adequate. b) Woven webbing and bags - This segment includes the following products: Ø Consumer (essentially heavy-duty multi-trip Reusable shopping bags) Ø Industrial 25 kg bags Ø Leno & Rachel bags Ø FIBC (flexible intermediate bulk containers) Ø Agricultural, Construction & Tarpaulin - State-of-the-art manufacturing capabilities of the Vietnamese operators are presented in this segment; LOHIA STARLINGER lines, at tape extrusion and stretching level as well as weaving level, which offer good overall competitive performance against best competitors. Relative homogeneity of origin of machines makes monitoring of performance and maintenance easier within the country. - Combination of cheap and skilled employees for product confection and assembly using textile-based sewing technology is a plus. ISO certification is now in place and running. Implementation of quality control for the webbing products is a prerequisite for establishing recognition of quality supplier. c) Laminations - Development of the domestic food market and of modern distribution and retail will push for more portion packaging, reinforcing the segment. Manufacturers seem quite dedicated to quality improvement and diversification. Multilayer equipment is in place. Overall quality of print laminates is an asset for supply of demanding export markets such as Japan and Europe doc 8
9 d) Sheets extrusion & formed containers - There is one competent and dedicated operator who invested in a co-extrusion state-of-theart line. e) Injection molding products - Low cost resulting from low labor cost essentially and dependability for some relatively simple injection molded parts such as those close to consumer goods. - One operator has the advantage of performing with a large clamping force machine allowing injection molding of large parts such as pallets. f) HDPE blow molding products - Ability to network with local companies involved in the supply of labels and shrink sleeves for quality print on small blow molded containers. g) Flexible packaging tubes - The cluster has a complete range of products, which covers all packers needs and has certification credentials. - One world-class operator procured a co-extrusion state-of-the-art line, and 8 color printing capability. - The cluster seems to manage well its promotional tools, including facilitation of information supply for export such as quantity per type of product and per 20 container loads. - The cluster has a track record of multiplicity of clients that implies an ability to also serve modest-sized markets and orders. Conclusion In fact, the industry has not yet efficiently tapped its, adding that the country needs to restructure the sector to raise the proportion of value-added products such as packing and construction materials by doc 9
10 It also can be seen that local firms should pay attention to domestic market which is very potential, recommending the government to develop plastic recycling in a bid to reduce the import of raw materials amid the global price hikes. Vietnam currently needs about 2.2 million tons of raw materials such as polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) and hundreds of other chemical accessories, whereas local sources can only provide 450,000 tons. To boost the industry, companies should apply modern technologies to improve product quality and cut costs. Also, the government should offer preferential interest rate in 10 to 15- year loans to encourage local firms production. Corporate income tax should be reduced to 10 percent from current 25 percent in the first five years of operation after making profits./. References: - Vietnam Plastic Association Report (annual); - General Statistics Office of Vietnam MOIT report quarterly doc 10
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