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Local firms leave home soil to int’l players

Local firms leave home soil to int’l players

Monday, November 12, 2012, 10:49 GMT+7

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

Tuoi Tre

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