Vietnam’s building materials industry development and prospects

Yunzhong Industrial Park, Beijiang, Vietnam (Figure 2) (Yunjiang Industrial Park, Beijiang Province, Vietnam, developed and built by Chinese-funded Fuhua Co., Ltd. in 2013. With the entry of many PV companies, The industrial zone has become one of the demonstration parks for capacity cooperation between China and Vietnam.)

High value-added market potential

Vietnam is located in the eastern part of the Central South Peninsula with a land area of ​​329,556 square kilometers. It is about 91.713 million (2015) and is the 14th most populous country in the world. Vietnam is in the period of rapid development of modernization, and construction-related industries have become the main sectors for job creation. However, the overall development level of the building materials industry in Vietnam is not high, and the production of low value-added building materials is excessive, while the high value-added production capacity is insufficient to meet domestic demand.

Development Status and Prospects

Vietnam is rich in metal and non-metal mining resources, attracting domestic and foreign funds to enter the building materials industry. The investment in the local building materials industry is relatively scattered, and the production process is backward. Most enterprises have not established R&D institutions, and their products are weak in competitiveness. The foreign-funded building materials enterprises have advanced production technology, rich management experience and perfect marketing network, which has driven the overall competitiveness of the building materials industry to a certain extent.

However, the current Vietnamese building materials companies have over-invested in some low-value-added building materials products with small investment and fast profits, resulting in a shrinking market and lack of competitiveness. In 2015, Vietnam’s national steel output was about 11 million tons, twice the domestic demand.

Interested in high value-added building materials such as bridge structures, concrete, steel cables, metal sheets, steel blades, etc., which are required to invest in large capital scales and require high levels of production technology. There are not many building materials companies. Ordinary building materials are oversold due to overproduction, and high value-added building materials required for large-scale construction projects still need to be imported.

Policy Orientation

Restricting the low value-added building materials industry and promoting the development of high value-added building materials industry

The Vietnamese government encourages domestic development of high value-added building materials. The 2015 Vietnam Government Work Report clearly stated that in 2016— in 2020, the development of an advanced and internationally competitive construction industry will be achieved. Rapid development of the building materials industry, especially new, high quality materials. By 2020, the industrial and construction industry will account for about 40% of gdp.

For the low value-added building materials industry, the government has adopted a policy of internal integration and external control. Taking steel as an example, the Ministry of Industry and Trade of Vietnam approved the “Vision to 2020— 2025 Steel Production and Distribution System Development Plan” in January 2013, and will eliminate small-capacity steel, billet and rolling mills by 2020. In June 2014, Vietnam set domestic steel production standards and steel import standards, restricting steel imports to protect domestic steel companies. In March 2016, the Ministry of Industry and Trade of Vietnam issued the 818/qd-bct decision to take anti-dumping investigations on galvanized steel pipes imported from China (including Hong Kong) and South Korea.

Industrial Patterns

Mainly concentrated in the northern middle reaches and mountainous areas, the Red River Delta Plain and the central coastal areas

The Vietnamese building materials industry is mainly concentrated in Ho Chi Minh City and the northern middle reaches. Areas and mountains, the Red River Delta Plain, and the central coastal areas.

Ho Chi Minh City is dominated by the steel industry. Ho Chi Minh City is the largest industrial and commercial center in Vietnam and the political, transportation, cultural and technological center of southern Vietnam. Ho Chi Minh City has a good industrial base, especially for the development of light industry. Ho Chi Minh City’s rolling steel products account for 48% of Vietnam’s total.

The northern middle reaches and mountainous areas are dominated by wood and building materials. The area is vast in size, complex in terrain, small in population density and backward in traffic. However, the area is rich in hydropower and mineral resources, and contains a large amount of coal, iron, phosphorus, limestone, copper, zinc and rare earth. The mining industry accounts for a large proportion, but the development rate is slow and does not match each other.

The Red River Delta Plain is dominated by cement and pottery. The industrial production level in this area is relatively high, but there are fewer people and less minerals. The industrial development relies too much on raw materials in the field. Almost all machinery and equipment are outdated and the operating rate is low.

The central coastal areas are dominated by cement and timber. The area is about 1,800 kilometers long from Qinghua to Shunhai, and is divided by rivers and mountains. It has a large population and is unevenly distributed, mainly concentrated in coastal strips and plains. The climate is harsh and it is the region with the most typhoons and floods in Vietnam. Industrial development is single and the foundation is poor.

Market Opportunities

Strong demand for high-end products

Since Vietnam’s reform and opening up, the building materials industry has developed rapidly, but due to the poor industrial base, the market has been in short supply.

On the one hand, the demand for residential, industrial and commercial buildings and hotels in Vietnam has continued to increase substantially in recent years, and the decision-making departments have gradually implemented some important infrastructure projects in the coming years, including roads, railways, ports, Airports, drinking water supply systems and various industrial infrastructure projects have rapidly expanded demand for building materials. Taking the cement industry as an example, cement demand has jumped at an average annual rate of 17.7% in the past 10 years. According to the 2014 government plan of Vietnam, 127 infrastructure construction projects will be launched by 2020. At present, there are 64 cement plants in operation in Vietnam.

On the other hand, the government has vigorously promoted the development of the construction industry. The domestic demand for building materials products has been boosted by accelerating the restructuring of state-owned enterprises in the construction industry and increasing financial allocations to construction-related fields.

The boom in the construction market has brought huge business opportunities to the Vietnamese building materials industry. According to the Ministry of Construction, Vietnam’s building materials industry is growing at an annual rate of about 17%. At present, there are about 300 large and small building materials enterprises in Vietnam, but these enterprises have scattered investment, backward production technology, insufficient product research and development capabilities, and market competitiveness.It is weak, and most of the high-end products in the Vietnamese building materials market still need to be imported to meet the demand.

Based on this, international building materials products have actively entered the Vietnamese building materials market. The quality, grade and price of Chinese building materials are generally compatible with the development level of Vietnam, and the transportation cost is low, which has obvious competitive advantages.

The Yunzhong Industrial Park in Beijiang, Vietnam, was developed and constructed in 2013 by Chinese-funded Fuhua Co., Ltd. With the entry of a number of PV companies, the industrial zone has become one of the demonstration parks for capacity cooperation between China and Vietnam.

Status of cooperation

To the development of high value-added building materials industry, transfer excess capacity

Sino-Vietnamese cooperation in the field of building materials has steadily advanced. In the field of trade, Vietnam is the top 10 country in China’s export of building materials. In 2015, 1— in December, China exported 1.71 billion US dollars of ceramic products to Vietnam, 1.52 billion US dollars of steel products, and 4.756 million US dollars of base metals, cermets and their products. In the investment field, a large number of Chinese-funded enterprises flocked to the Vietnamese building materials industry, but many Chinese-funded manufacturers have backward production facilities, narrow factory buildings and low-end products, which are difficult to connect with the development prospects of the industry. In the field of research and development, the two sides actively carry out strategic cooperation. For example, in 2009, Tianjin Cement Industry Design and Research Institute and Vietnam dong lam Cement Co., Ltd. signed a design consultation and equipment supply contract for an annual output of 1.5 million tons of cement clinker production line with a contract value of approximately US$94.67 million. The project is located in Phongdien County, Hutian Province, Vietnam, with a total investment of approximately US$194 million.

Cooperation Suggestions

Expanding Building Materials Cooperation and Promoting Interoperability

At present, China’s building materials industry is facing severe overcapacity, market demand is not strong, and downward pressure is increasing. Severe situation. A large number of building materials companies in China need to develop overseas, realize the output of equipment, personnel and technical capabilities, and promote the utilization of excess capacity. Therefore, Guangdong building materials enterprises should effectively hedge against the decline in domestic demand under the pull of foreign engineering contracting construction enterprises, and build a high-end building materials industry in Vietnam, thus driving the entire “infrastructure industry chain” to go out.

At present, Chinese building materials companies have shown greater enthusiasm for opening up the Vietnamese market. However, ASEAN experts believe that Chinese companies are not sufficiently deep on the Vietnamese market. Commodity export prices are high, market propaganda is small, overseas marketing means are relatively simple, and there is a shortage of multinational management talents. It is becoming a four-way “four-way” for Chinese companies to explore the Vietnamese building materials market. Although the Vietnamese building materials market is full of business opportunities, Chinese companies can use the “dexterity” to quickly occupy a favorable position.

First, strengthen understanding and analysis of Vietnamese building materials market information.

Only by obtaining sufficient and accurate information can the company plan, evaluate and implement the operation and investment. Chinese companies should collect the price, quality, demand, logistics, customs clearance and commodity inspection of Vietnamese building materials. Market information such as standards and payment procedures, and comprehensive understanding of business opportunities in the Vietnam building materials market and target consumers.

Second, reduce product costs and master market initiative.

On the one hand, we must make good use of various preferential policies to reduce export costs. China & mdash; ASEAN Free Trade Area “After the implementation of the tax reduction plan, China’s building materials enterprises should make good use of the rules of origin and other tax reduction and exemption to enhance the price competitiveness of products in the Vietnamese market. On the other hand, it is necessary to take advantage of the large professional market to form a cluster effect. Building materials export enterprises to explore the Vietnamese market should move from the previous “single soldier combat mode” to the “army attack mode” to find powerful Vietnamese partners with smaller marketing costs and publicity costs to win more trade opportunities.

Third, take advantage of the Vietnamese building materials market and innovate investment methods.

First, make full use of the Expo platform. The Vietnam International Building Materials and Home Products Exhibition was founded in 1958. It has been held in Hanoi every year since 1998 and was held in Ho Chi Minh City in September. The expo is a large-scale and professional exhibition of building materials industry in Vietnam, which helps Chinese enterprises to understand the demand of the building materials market in Vietnam and adjust their investment strategies flexibly. Guangdong Province should guide Chinese-funded enterprises to actively participate in the use of information exchange platforms to grasp the trend of building materials market.

The second is to try joint venture development. Guangdong building materials enterprises can jointly develop Vietnamese building materials raw materials through cooperation, shareholding, investment holding, etc., which will help stabilize the international raw material market price and guarantee the source of building materials, thus laying a solid foundation for the upgrading of the domestic building materials industry. In addition, the use of cross-border mergers and acquisitions and strategic alliances will help my building materials companies quickly become familiar with the Vietnamese market environment and effectively reduce risks.



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