Preface

As a newly official member of the World Trade Organization (WTO), Vietnam is offering great attractiveness to foreign companies and businessmen to do business with the country in several prospective fields. To update foreign importers and investors with latest developments and big export potentials of Vietnamese industries in general and plastic product sector in particular, the Export Promotion Center (PROMOCEN) under the Vietnam Trade Promotion Agency (VIETRADE) issues a report on the Vietnamese plastic product sector, one among a wide series introduced by PROMOCEN.

The report is about plastic products including packaging products, plastic construction materials, household plastic products, plastic materials for industrial production manufactured at home and imported for domestic consumption and export. The report is divided into nine following parts.  

• Part 1 deals with the overview details including general information of the development process, current status, position, potentials and strengths of the plastic product sector in the national economy.
• Part 2 gives an overall description about plastic product products’ classification, characteristics and structure. It also names big brands of plastic products well-known mainly in domestic markets.
• Part 3 positions Vietnam as a plastic product production hub in Southeast Asia. It introduces readers with news on the sector production area, scale, capability, technology and method. Besides, it also helps readers be more aware on new production trends of the country’s plastic product sector.
• Part 4 introduces the supply sources of materials for plastic production in Vietnam including domestically produced and import ones.
• Part 5 focuses on the plastic domestic consumption. It envisages the domestic market size, consumption characteristics, power, trends and distribution channels.
• Part 6 and 7 pay special attention on the export and import situation of the country’s sector in recent times, especially from 2003 to six early months of 2008, including export and import value, volume and major markets, etc.
• Part 8 helps readers understand clearly about Vietnamese policies, orientation of plastic product production; and forecast on plastic product export development in the coming years.

·         Part 9 and the Annex of the report provide useful information on plastic products related authorities and associations, annually domestic trade fairs and exhibitions, together with contact details of major plastic producers and exporters.

Part 1: Overview

In Vietnam, the plastic product sector is still very young. Before 1990, Vietnamese domestic plastic output was nearly zero. In 1989, the consumed plastic per capita in Vietnam was approximately 1 kg per year while it was 89.97 kg and 130 kg in Japan, America and Germany, respectively. At the beginning of 1990s, Vietnamese domestic market was full of foreign plastic products.

However, with the open policy of the Vietnamese Party and State together with the market economy shaping, the economy of the country in general and the growth of the plastic product sector in particular have gradually become stable and solid.

Since 1995, Vietnam has been no longer a pure consumer of imported plastic products. The country has been able to satisfy its domestic demand on plastic products and step by step exported its products. Together with the country’s socio-economic development, Vietnamese plastic product sector has risen to affirm its important position in the national economy. In the domestic market, plastic products made by Vietnamese enterprises have been used in almost fields from industry, agriculture, transport, aquaculture, construction, electricity to electronics. Export value of plastic product sector has not been as high as the import value, yet this has been the country’s big achievement after a period of renovating thoughts, technology, surveying the market, and promoting products.

Together with Vietnam’s official joining to the World Trade Organization (WTO), like many other industries, Vietnamese plastic product sector has experienced a spectacular development with the annual growth rate from 15% to 25% over the last ten years. It is considered as one of the most dynamic and key export sectors of Vietnam. The entire sector has actively developed, expanded its production and business, integrated with counterpart sectors in countries in the region and in the world.

Though the current export scale of plastic products is generally at the medium level with the export value of approximately USD 750 million in 2007, the sector is expected to continue to demonstrate its good potential for export in the coming years. Particularly, plastic products are amongst products with the most rapid export growth rate in Vietnam (always over 30%) and the market for this product is still very large and not very difficult to penetrate.

According to statistics and evaluation of the Comtrade, an United Nations Statistics Division, with regard to the plastic products, Vietnam is capable to penetrate foreign markets as it is entitled to enjoy low duty rates or treated equally like other suppliers in almost export markets. Besides, Vietnamese plastic products are evaluated to be highly competitive and accepted in the international market as the country’s plastic product sector is facilitated to access the world’s modern production technologies.

A remaining biggest problem is that Vietnam has not been able to meet all importers’ demands mainly on quantity and types of products. Therefore, if the country can solve problems of input materials, product models, as well meet the requirements of big orders, Vietnamese plastic products can totally be exported in mass owing to the global high demand on these products.

Part 2: Product classification, characteristics and structure

1. Product classification, characteristics and structure

Plastic products made in Vietnam have gradually become more diverse, supplied for many economic sectors such as industry, agriculture, transport, aquiculture, construction, electricity – electronics… In more concrete, plastic products serve eight different technical-economic sub-sectors, namely plastic materials such as plasticised polyvinyl chloride (PVC) resin, plasticised polyvinyl chloride (PVC) compound, dioctin phthalate (DOP), polystyrene (PS), polyethylene (PE), polypropylene (PP); plastic shoes for exports; processed rubber related to plastics; high-tech industrial plastics; plastic-based construction materials; plastic packaging; household plastic products and plastic moulds. For product classification, plastic products can be structured as below:

Unit: %

* Estimated figures.

(Source: Vietnam Plastics Association)

Plastic products of Vietnamese enterprises primarily concentrate on household and packaging plastic products. Following are some details on the four product groups mentioned in the above table.

+ Packaging plastic products: Vietnam produces various kinds of these products including following types:

• Soft single or complex membrane packaging plastic products.
• Knitted fibre packaging plastic products (or also called as PP snake body packaging plastic products).
• Empty packaging plastic products (including bottles, barrels) manufactured by mould blowing method.
• Packaging plastic sheets which are shaped by vacuum production method.
• Containers including beer containers, soft drink containers, etc made by pressing and ejecting method.

Soft single packaging plastic products use materials of PE (PELD, PELLD) and PP while soft complex packaging plastic products use BOPP, OPP, PELD, PELLD, PET, AL-FOIL, PEARLIZE, PP, PA, CPP, MCPP, MPET… After being printed, these products can be joined with BOPP, PELD, PET // AL-FOIL // PELLD, BOPP // PELD, PET // AL-FOIL // PELD // PELLD…  With thin and multi-layer membrane, these packaging plastic products used to pack instant noodle, confectionery, milk, tea, seasoning, foodstuff and frozen processed seafood. These products have been rapidly developed. T-shirt bags used for supermarkets have also produced in mass with huge quantity thanks to great demand in not only domestic market but also in fastidious oversea markets such as Japan, Australia, Europe and America. These products made in Vietnam have been made special progress in colours and printing.

Output of knitted fibre packaging plastic products has increased very fast. If in 1997 it was only 300 million products then it was more than 1 billion products by 2002. These products mainly serve industries of food and foodstuff, salt, chemical substances, fertilizers, and cattle feed, etc.

Empty packaging plastic products have also been very developed. Especially PET bottles have got really high growth rate with the total output reached nearly 1 billion bottles in 2002 which increased 450 times compared to 8 previous years. The Ngoc Nghia Company Limited of Vietnam has led top three of big producers for these kinds of products in the Southeast Asia.

Packaging plastic sheets are mostly used in transportation, agriculture, aquaculture, etc.

+ Construction materials: There are plentiful kinds of plastic products served for construction such as plastic pipes and tubes used for water supply and drainage, electric cable tubes, and telecommunication cable tubes, etc. Products including ceiling sheets, wall slabs, floor sheets, partitions, doors, and windows, etc have progressively taken the place of wooden products thanks to their durability, anti-humidity competence and reasonable price. There are several Vietnamese enterprises who have big production scale of plastic construction materials such as Binh Minh, Tien Phong, Dat Hoa and Minh Hung…

Among various kinds of plastic construction materials, PVC pipes are strongly interested to produce by Vietnamese enterprises. With strong points of being durable against chemical substances, light, easy to be delivered and installed, well insulating, having no rust and capability of sustaining big strikes and pressures, PVC pipes have promptly replaced pipes made of traditional materials such as metal and concrete.

+ Household plastic products of Vietnam are comprised of a large variety of types. Plastics can be found in the kitchen products such as chopstick containers with covers for dust and cockroach prevention, chopping boards with very light and attractive catching trays, chocolate cake moulds and onion and garlic grinding tools, etc. In addition, plastic products provide household with a lot of other useful products that meet the essential demands of the modern life. Such products include video tape returning tools, tie and clothes suspension hooks of various sizes, cosmetic containing trays, dustbins, glass containing trays, ice pots of all kinds, file-shelves, multi-functional containers, etc.

Thanks to the product diversification progress gained by plastic companies, the household plastic products account for a higher content than other materials. Many household plastic products have replaced the household products made of traditional materials such as wood, ceramics, iron, bamboo and rattan. Now that the wooden products have become increasingly scarce and expensive, household plastic furniture has been appreciated for their advantageous features such as the freedom from termite and worm attack and rust, compactness, easy assembly and dismantle, and low price. In order to meet the market demand, plastic companies have accelerated the product diversification and considered it as their competitive advantage. Each company has contributed over 20 types of household plastic products to the market. Recently, with a view to enhancing its competitive strength, Sai Gon Plastic Joint Stock Company has invested over 1 billion dongs in the installation of new moulds for production of high-grade and large-size household plastic products.

Household plastic products are made from recycled plastics, original plastics and high-grade melanine plastics. which are supplied by domestic and imported providers. The designs, models, colors as well as uses of the products are increasingly diversified to satisfy different domestic and international consumers. Though many household plastic products available on the current market have the warranty period of only 10 years, their durability and lifespan are much longer.

+ Plastic materials for industries such as manufacture of household or civil products, toys, automotives, electricity, electronics, aircrafts; printing, painting or glue industries, and others. According to using purposes, plastic materials can be classified as below:

• Common plastic
• Technical plastic
• Specilized plastic

Common plastic is often used in huge quantity and include PP, PS, ABS, PVC,  PMMA.

Technical plastic is the general name of a plastic quality of which is much more dominant than common plastic in mechanical and physical natures such as stretching durability, heat resisting level, etc. Technical plastic is used to produce machinery parts or other parts which require high features. Technical plastic is improved in plain durability, chemical and heat resistance as well as has high use. It is processed with glass fibres, carbon fibres... as per related requirements. Typical technical plastics incude denatured PA, PC, PPO, satured polyester, fluoride plastic, PI (polyimide), sunfonamid plastic, PPS, etc.

Specilized plastics include FEP (flouringted ethylen propylen), SI (silicon), PE with extremely molecule weight, etc

Export plastic products: Vietnam has about 10 main groups of plastic products for export:

• Products used in transportation
• Packaging;
• Plastic membrane,
• Sanitary equipments,
• Office stationery
• School equipments,
• Tilts,
• Pipes and tubes
• Plastic accessories
• Household plastic products.

According to the general assessment of Vietnamese big plastic enterprises, major plastic products for export of the country are packaging plastic products which account for more than 70% of the total export value. Immediately after that are plastic products used in construction, transportation and office stationeries. The rate of value added plastic products among the whole production is not so high.

In the structure of export household plastic products, plastic box is the most favorite product of import markets and accounts for 20% of the total export ratio of the plastic sector. The second is plastic tray with 8-10%, the next is plastic sink, straw, clothes-hanger, pot, plastic spoon, plastic bow, plastic glass…. with 17-20% and the remaining are construction plastic materials such as hard pipes and tubes, ceiling sheets, melamine plastics and other types. Low value added products such as T-shirt bags or garbage bags which Vietnam is very strong at are in danger of loosing export markets as the world’s tendency is limiting the use of nylon bags to protect the environment.

Ratio of export plastic products in the total plastic products locally produced has increased.

2. Well-known brands at home and abroad

Vietnamese plastic enterprises started to be interested in “brand” concept 10 years ago. To date, many enterprises have built up their prestigious brand names such as Binh Minh, Tien Phong, Minh Hung plastic pipe; Tan Tien, Van Don plastic packaging; PET bottle and three-layer bottles of Oai Hung, Ngoc Nghia, Tan Phu …

Some high quality plastic products like oil pipes, spare parts of automobiles, cars, and computers of Tien Phong, Binh Minh, Tan Tien brand names … are quite famous in the domestic market.

Some enterprises have firm footholds in the world market with their products: Rang Dong Plastic Joint Stock Company with bench cloth, and leather imitated cloth; Tan Dai Hung Plastic Joint Stock Company with PP knitted packaging, Hung Yen Plastic Joint Stock Company with HDPE T-shirt bags for containing supermarket’s goods and garbage bags...

Following are details on some typical Vietnamese plastic product brands well-known in both domestic and/or oversea markets.

+ Tien Phong Plastic Joint Stock Company is famous for its products under TIOPLAST brand. Over 45 years of building and growing, the company always is one of the leading company in the field of producing u.PVC, HDPE, PP-R pipe in Vietnam with TQM Quality Management System and get quality management standard of ISO 9001:2000.

In the recent time, in order to meet higher demand from customer, especially big-size diameter pipe with high working pressure, Tifoplast have been invested more modern machines which imported from advanced industry country in the world such as K90, K50 and KME-1-90-30 manufactured from KRASS MAFFEI in Germany; stretch machines model SICA imported from Italy; injection machines imported from Japan, USA, Korea...

TIFOPLAST’s products have been awarded many gold medals at International Industrial products exhibition annually, Quality cup, Gold-globe Prize of MADE IN VIETNAM and gained high-quality-selected by the consumer. In every activity, the company always puts quality as the first guideline.

+ Binh Minh plastic – A brand in integration time

Binh Minh plastic brand has been known as a leading manufacturer of plastic pipes and tubes in Vietnam. Currently, the company has a biggest market share in plastic sector in the country. The company has capability to affect the market price of plastic products in Vietnam thanks to its significantly large scale of production area of nearly 60,000 square meters and most advanced production technologies imported from Germany, Italy, Austria and Canada.

The company’s key products are uPVC spare parts (hard plastic pipes and tubes), together with other high quality products such as insecticide cans, labour helmets and sprayers of various kinds. In 2007, the total production output of the company reached 29,000 tons, increased 20% with a sale turnover of VND 680 billion, an increase of 35% in comparison with 2006.

With the current production competence, Binh Minh plastic products not only serve the domestic market via more than 100 distribution agents but also are exported to Laos, Cambodia, Singapore, Denmark, France, Belgium, etc.

To maintain the company’s position in the domestic market and conserve the Binh Minh plastic brand, the company’s management has defined its consistent development strategy which is to enhance its quality management system as per ISO 9001:2000, invest in labour power, renovate and modernize production equipment and increase product quality. These are complete penetrating guideline in the development process of the company.

Medals awarded by the Vietnamese State and other titles voted by consumers such as High quality Vietnamese product, Top Ten Golden Cup, Vietnamese brand Golden Cup, etc are clear evidences to affirm the products’ quality and prestige Binh Minh has created.

+ Tan Phu Plastic Joint Stock Company was established in 1977. The company has created a strong brand in the market for its products including packaging products made of PE, PET and PP served for industrial and household use.

In 2006 the company’s products were awarded with several prizes such as Vietnamese Industrial Brand Golden Cup, Product Quality Golden Medal and Vietnamese Top Leading Industrial Brand for the three-layer plastic bottles made of PE, EVA, PA and ACCU N180 plastic bottles, etc.

In three recent years, norms for total output value and turnover of Tan Phu Plastic has always increased at an average of 20% per year, profit of the following year is higher than the preceding year from four to ten times. Labour productivity has increased 25% and dividends of the company’s stakeholders also increased.

In the initial time the company just owned a small workshop with an area of 2,700 square meters and 30 workers. By 2007 it owned a production area of 6,500 square meters and had two branches in Long An province and Hanoi capital. From a few hundred tons of products per year, the company has now been able to produce various thousand tons of products of plentiful kinds every year.

+ Rang Dong Plastic Joint Stock Company

2007 was the year which marked the brand image renovation of Rang Dong Plastic JSC. Just in 6 early months of 2007 the company invested more than VND 150 billion to import modern equipment and advanced technologies from Europe. These have facilitated the company to offer consumers with plentiful new key products including plastic packaging products, artificial leather plastic cloth served for the production of shoes, bags, mattresses, cushions, gymnastic tools, carpets for sport competition, etc. Recently, the company has come undone the market PE and EVA membrane printed with flower designs of diversified types to use for bathroom curtains, ERP roofing sheets with dominant features with anti-ultraviolet ray surface to protect human health and raise time for getting light.

Rang Dong Plastic brand, together with TIOPLAST, was included among National Brand Programme proclaimed in 2007.

Part 3: Production

1. Production areas

Plastic producing enterprises mainly locate in Hochiminh city. They account for over 80% of the total number of plastic enterprises in the country. The second place that has many head quarters, factories of plastic producing enterprises is Hanoi. Some other provinces in both the north and south of the country such as Hung Yen, Da Nang, Binh Duong, Dong Nai, Tien Giang, etc are also good locations for plastic enterprises.

2. Production scale, capability, technology and method

Currently, Vietnam has about 2,200 enterprises producing, doing business, exporting and importing plastic products in the whole country. Among this number, 800 enterprises including 200 foreign invested enterprises are big ones and the remainder is small and medium ones. Their goal is to meet the basic demand of in-house fields such as consumption, construction, packaging and hi-tech industries and for export.

In 2007, Vietnam produced 188 million tons of plastic products, increased 17.5% in comparison with that of 2006, equivalent to 48% of export value increase (roughly USD 710 million).

During the past years, Vietnamese plastic enterprises have concentrated in upgrading their production technologies in strategic directions and schemes. A great deal of enterprises have changed their thoughts and bravely invested to wait in front of advanced technologies, enlarge production areas, and improve competitiveness and production scale. The modern technologies of the domestic plastic product sector have now been in tune with several economic and technical plastic industries such as technology to produce plastic electronic chips, DVD, CD, four layer bottles, PET and PEN bottles, BOPP complex membranes, etc. Lots of other modern technologies have also been applied such as injection technology, blowing injection technology and profile, etc.

Every year, domestic plastic enterprises can attract different capital sources to invest in importing modern machines and equipment like rollers, coaters, extruders, ejecting presses, blowers, bonding machines and printers, etc from developed economies like Germany, Italy, Japan, and France. In 2007 import value of plastic production machines and equipment increased 80% compared with 2006 and was the first time it exceeded USD 300 million.

Import value of plastic machines and equipment into Vietnam

Unit: USD million

(Source: Vietnam General Administration of Customs)

Considering in all four aspects including production scale, technology level, production standards and material sources, Vietnamese plastic enterprises are matches with foreign plastic producers. However, due to lack of big brands, Vietnamese plastic products are always cheaper than foreign products. Even products which meet international standards and export to America, Australia, the United Kingdom, etc of Dai Dong Tien, Duy Tan, Cho Lon companies are also not be able to sell at higher price.

Currently, Vietnam has been capable to produce good quality plastic products that use high-grade materials with new treating technologies. They are anti-mosquito tilts, agricultural covering curtains, lining membranes for road; high-pressure HOPE pipes with a diameter of 500 mm; big ribbed pipes with the diameter up to 3,000 mm; high-grade windows; plastic covered metals, insulating plates; spare parts of automotives, electric cables, television covers, fridges, air conditioners, mobile phones, etc.

Most Vietnamese plastic producers are now very much interested in the investment of high quality moulds so that they can serve consumers and other industries with diversified and good products. At present, more than 50% of moulds for production of hard packaging plastic products and almost advanced production equipment for making soft packaging plastic products such as printers, grafting machines and blowing machines have to be imported.

3. Production trends

It is forecasted the Vietnamese plastic product sector has to continue bearing various difficulties like what they underwent in recent years. However, facing new challenges, Vietnamese plastic enterprises do not hesitate but tend to self-adjust to stabilize their production. Most enterprises have tried their best to limit increasing products’ price by applying measures to reduce the production cost, increase production capacity and promote sales. Some enterprises have changed some accessories that have the same quality but are cheaper; or rearranged their producing process. Apart from saving expenses, they also focus on developing some new products and pay serious attention on high-grade products to meet higher and higher demands of customers and industries.

With the world’s new consumption tendency of gradual limited use of nylon packaging products, Vietnamese enterprises are paying more attention to produce self destroying packaging products which are friendly with the environment.  Technology to make these products is similar to that of normal packaging plastic products so it is very convenient and easy for Vietnamese producers to apply.

Part 4: Materials for production of plastic products

1. Domestic production and supply

Materials produced locally only satisfy about 10% of plastic enterprises’ dema