Many sweet products from Southeast Asian countries like Indonesia, Thailand or Malaysia have been shipped to sell in Vietnam as the tax on confectionery imported from Southeast Asia is now zero percent.
Imported confectionery products, whose price varies from VND11,000 (US$0.51) to over VND60,000 ($2.8), attract many local customers thanks to their diversity in terms of shape, color, taste, and flavor.
Thu Ha, a seller at a market in Ho Chi Minh City, said that the volume of foreign confectionery products has increased two to three times in the last two years.
Foreign confectionery firms encourage Vietnamese sellers to display as many products of theirs as possible and offer them various kinds of incentive in return, which is a way to make sweet imports more competitive in the local market.
The Vietnamese market is expected to be even more competitive as tax rates on confectionery imported from other Southeast Asian countries have been zeroed, according to experts.
Firms from other nations in the region have established their wide distribution networks and conducted many exploratory researches in Vietnam in recent years, they said, implying that domestic companies are facing mounting pressure.
A representative from Pham Nguyen, a company, said that Thailand is considered a “kingdom of sweets” in Southeast Asia as Thai firms are not only professional in product development and export but also fast in catching up with customer trends.
Vietnam still has to import raw materials including oil, butter, and sugar from other Southeast Asian countries, hindering local companies from decreasing their price to attract more customers.
“Vietnamese companies should actively learn from foreign firms’ strength and focus on the process of research and development. They need to optimize the use of current machines to make products with a competitive price and stable quality,” Vo Tri Thanh, a business expert, said.
Mondelez International Inc., a multinational confectionery conglomerate based in Illinois, paid $370 million in November 2014 to buy an 80 percent stake in Vietnamese company Kinh Do Corp's snack business, resulting in a rearrangement in the balance of local and imported sweet products.
Mondelez International Inc. already has a small presence in Vietnam selling some of its Oreo, Ritz, and Cadbury products.
After the business deal, the conglomerate acquired two Kinh Do manufacturing facilities, as well as the Vietnamese firm’s distribution network.
Vietnam’s revenue from confectionery reached VND27 trillion ($1.25 billion) in 2014, an increase of 10.65 percent compared to 2013.
It is expected to top around VND40 trillion ($1.8 billion) with the estimated production of more than 200,000 tons in 2018.