The tariff cuts made by Vietnam under the WTO commitments have clearly encouraged FIEs to import products to sell domestically instead of injecting money and spending time on production factories in Vietnam.

Dao Ngoc Hoang Giang, General Director of Sao Mai Office Equipment Company, a subsidiary of Sao Mai Group, said that it was foreseeable that FIEs, which have manufacturing factories in Vietnam, would push up the import of products under the form of complete built units (CBU) and the distribution of their parent groups’ products, made in the home countries or third countries

Mochizuki Kentaro, President of Sanyo HA Asean Corporation, said that previously, when importing household articles, importers were imposed the tax rate of 50 percent. The import tariff was later lowered to 20 percent has been slashed to five percent.

He said the low import tariffs would encourage investors to import products instead of making products in Vietnam. However, Sanyo still maintains the production of refrigerators and washing machines in Vietnam, because the consumption of the products in the domestic market is stable. Besides, Sanyo still receives the orders to make products for export to Japan, countries in the Middle East and ASEAN countries.

Sanyo plans to sell 460,000 washing machines in 2011, an increase of 100,000 products than in the previous year, through domestic distributors.

As for Sony Vietnam, the company has been determined to increase the sales after ending up the joint venture with Vietnamese Vietronics Tan Binh in late 2010.

According to Yuzo Otsuki, General Director of Sony Electronics Vietnam, the business has been going well. Sony has not thought of setting up factories in Vietnam, but it plans to strengthen trade in Vietnam in the immediate time.

In 2010, Bravia brand imported TVs alone made up 60 percent to Sony’s growth. At a new product launching ceremony held recently in HCM City, a representative of Sony Vietnam said Sony is moving ahead with the plan to expand its market share by establishing new retail centers in Hanoi and other big cities, where Sony’s import products will be on sale.

Other foreign manufacturers have also been hurrying to expand their distribution networks in Vietnam. According to the HCM City Planning and Investment Department, FIEs have been taking necessary steps to fulfill their plans.

Samsung Vina, for example, has followed necessary formalities to implement the right for distribution. Michelin Vietnam has also made similar moves.

Commenting about the activities of foreign household goods, electronics and office equipment companies in Vietnam, Dao Hoang Ngoc Giang said that many investors have obtained the licenses to wholesale, and to retail products. Fuji Xerox, the Japanese printer manufacturer, and Sharp Vietnam are the two examples.

“The market has become stiff with the participation of the companies which can act as manufacturers, importers and distributors,” Giang said.

In fact, foreign companies have to bear some limitations in distribution. They can only sell products to the clients who have tax codes, i.e private businesses and individual consumers, not the public administration sector. Nevertheless, analysts believe that they still can expand the market by cooperating with domestic distributors.

Foreign companies which are licensed to distribute products would directly contact the foreign invested enterprises operating in Vietnam, mostly in big cities such as HCM City, Hanoi, Hai Phong, Da Nang, Binh Duong and Long An. Meanwhile, they would reach out to farther localities by using sales agents.

Source: TBKTVN