Vietnam: Construction Glass Producers Crying For Help

Date: 5 August 2009
Source: VietNamNet

Date: 5 August 2009

VietNamNet Bridge – A lot of domestic construction glass producers have had to temporarily stop production as stocks have become big and products remain unsold.

Meanwhile, domestic products cannot compete with imports in terms of price.
Tran Quoc Thai, Chairman of the Vietnam Glass Association, said in an interview with Thoi bao Kinh te Vietnam recently that if there were not timely intervention in the market, damages to the glass industry would be very large.
Do you think that domestic producers are facing difficulties due to backward technologies and uncompetitive prices?
The domestic glass industry is facing a lot of difficulties, though enterprises have been trying to settle problems, like by cutting expenses, slashing sale prices and boosting exports. However, no effective solution has been found yet.
Some enterprises have stopped production, while others have had to slash sale prices to compete with imports and clear stocks.
I have to say that domestic products are in no way inferior to products imported from regional countries. In fact, our products have quality higher than imports from China. Moreover, I can say that Vietnam-made products are not uncompetitive in price.
It would be unreasonable to simply look at figures about prices to look for the nature of the problem. Low-quality products surely have lower sale prices. The problem here is that consumers do not have enough knowledge to assess the quality of products.
As for imports from ASEAN, the products have the same quality as domestic products but have advantages in import duty (5 percent vs. the normal rate of 40 percent) and export price policies (foreign countries, in oversupply, are ready to export at very low prices and keep the prices stable in their domestic markets) – it is understandable why imports have sale prices lower than domestically-made products.
The noteworthy thing here is that domestic producers have to adjust sale prices continuously to compete with imports, while production costs have increased by 40 percent since the beginning of the year.
How have the massive imports affected the operations of domestic glass producers?
To date, five production lines of enterprises which are members of the association have stopped operating. The stocks by early 2009 reached 34 million square metres, while the total sold volume in 2008 was 80 million square metres. Thousands of workers have lost jobs.
In order to reduce the stocks, some enterprises have had to smash finished glass products to put into furnaces again, because furnaces need to run uninterruptedly. Meanwhile, the expenses are very big for stopping production (maintaining equipment, paying workers while waiting for production to resume), while expenses for resuming production are even higher. It takes 20-30 billion dong on average to stop production.
The two enterprises that asked for an investigation over floating glass imports imported about 7 million square metres of equivalent products in the first quarter of the year. We still do not have figures about the glass imports by the end of July 2009.
However, if compared to the total imports in the whole year 2008 at 25 million square metres and the imports of 13 million square metres in 2007, we have every reason to believe that the trend of increasing imports continued in the last seven months, and if there is no timely intervention measure, domestic producers will heavily suffer.
We welcome the decision by the Ministry of Industry and Trade to initiate a probe on the basis of the petition by the two enterprises.

600450 Vietnam: Construction Glass Producers Crying For Help

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