작성일자: 2013.7.31

작성자: 하노이 무역관 Ms Nguyen Quynh Chi(nqchi.kotra@gmail.com)

 

 

1. Overview of Valves Market

 

 ○ Vietnam is being industrialized; therefore, many industrial projects are being constructed. Valve is being used in most of industrial factory that have high pressure. The most commonly factories that use valve are waterworks, petroleum chemical production factory, sugar production factory, cement, etc.

 

 ○ For the new factory, normally the production facilities are bought in completed form. As Vietnam is not able to make most of industrial machinery and equipment, these production facilities are mostly imported. Therefore, valve for these industrial projects is also imported together with other machinery and equipment.

 

 ○ There are many kinds of valve: butterfly valves, gate valve, check valve, bowl valve, control valve for water supply and drainage, for chemical and petroleum industry, but local companies in Northern areas are making only valve for water supply and drainage.

 

 ○ At the present, Vietnam has not produced industrial valves for domestic demand. Most of the industrial valves in the market are imported from other countries such as Korea, Italy, Taiwan, etc. For pipe and valve in water industry, there are some Vietnamese manufacturers to provide thermoplastic pipe, fittings and valves:

 

Some water piper and valve manufacturers in Vietnam

 

 ○ For industrial valves, imported products are dominated in Vietnam market, originated from several countries. Especially in some big cities, demand for building of office, residential, urban areas and industrial zone is high, therefore, materials for construction are in need with high quality and safe for health.

 

 ○ As a result, materials for water industry in general and industrial valves in particular have a good way to develop in Vietnamese market. Thus, there have been several number of dealer companies that trade industrial valves, which means that, the competitions is relatively high in this field.

 

 ○ However, to the plastic water equipment such as pipe and valve, Vietnam with the advantages of plastic industry is getting high implementation in producing competitively all kind of this product.

 

 ○ Growth of Vietnam Plastic industry:

  - Vietnam plastics manufacturing industry is one of the fastest-growing industries in Vietnam, sustaining average growth of 20-25% in recent years, having great potential to perform well on the international market. In contrast with the slowdown of global plastics industry during the economic crisis, the growth of Vietnam plastics industry even remained high thank to domestic demand.

  - Up to 2011, Vietnam plastics industry includes about 2,000 businesses from North to South. About more than 80% are located in the South – Ho Chi Minh City, Binh Duong, Dong Nai, Long An and Ba Ria Vung Tau Province. The North possesses of 13% and the Central 3%. The plastics sector is one of ten industries aggressively promoted by the Vietnamese government since it accounts for 4.48% overall domestic industry. It targets to achieve sufficient supply of home-produced raw material through resin production facilities.

 

 ○ Segmentation:

 

 

  - According to Vietnam Plastics Association, Vietnam plastics industry is still not centralized in terms of structure; proportion of each sector remains unequal. Consumer and packaging sector play a decisive role of the industry. Currently, packaging is the second largest product segment of plastics and has the highest import value accounting for 66% of total export. Following the global trend, plastics packaging firms, especially those that produce PET bottles and recycled plastics, have much potential in coming years with forecasted growth of more than 20% per year. Meanwhile, consumer plastics sector possesses of 40% of total companies in the industry but accounts for approximately 20% of total export value. Construction sector just meets domestic need with the growth rate of 15-20%/year. As for engineering plastics sector, the quantity of companies only stays at modest number of 14%. Major products of engineering plastics sector is plastic equipment which is used in automobile assembly, electronic devices, etc.

 

 ○ Output:

  - The industry produces most of what the domestic market consumes. Plastics products account for 4.48% of total domestic output and serves as an essential supporting industry that needs the government’s attention. The industry is one of the State’s top priority sectors due to high and stable growth, strong exports, and competitiveness compared with other countries in the region.

 

      Source: Vietnam Plastics Association

 

 

  - As for engineering plastic product manufacturers: Firms of engineering plastics only account for 10% of total plastics companies but produce around 20% of total manufacturing output. This shows that these firms have large scale. The main products in this segment are plastic counterparts used in assembling automobiles, motorcycles, and plastic electronic devices. These firms mainly supply domestic needs and export is about 11% of the total plastics export turnover of Vietnam.

  - Therefore, beyond the market of plastic valve and pipe, the foreign suppliers will have to face the strong and serious competition with the local producers and low price products imported from China.

 

 

2. Import Situation

 

 ○ According to www.trademap.org and KOTRA Survey, the import of valves, cocks and taps generally increase over time. Except for the slight downfall in 2009 when Vietnam Economy struggled:

 

 

 ○ Specifically, in the period of 2006 to 2008, Vietnam valves market had been expanding at the respective rates of 64.96%, 59.23% and 26.31%. The corresponding volume for each year is US$ 65.8 million, US$ 104.8 million and US$ 132.4 million.

 

 ○ Afterwards, in 2009, the total imported volume dropped by almost 15% to US$ 112.6 million. However, the volume headed up right afterwards. In 2010, the market growth rate was 37.35% and the total import marked up to US$ 154.7 million. The corresponding statistics for 2011 were 13.71% and US$ 175.9 million.

 

 ○ As one might observe from the above graph, valves and taps imports are growing at a diminishing rate years after years. After growing at rocketing rate of roughly 60% in 2006 and 2007, the market grew at under 30%. The long run anticipated annual growth rate for the coming 5 years is 12.05%.

 

 ○ Afterwards, as the market reaches its maturity stage, the rate will dropped to around 5% to 6% per annum.

 

 ○ Vietnam does not have many facilities to produce good quality valves and cocks. Therefore, domestic competition is at low and major competing forces derive from international trade sector. Below are the import volumes by years and countries:

 

 

 

 ○ Products from Japan seem to be most dominant of all countries. It is understandable since Japan is one of the nations, which provide Vietnam the largest amount of Official Development Aid(ODA). A significant fraction of which flows into Fire Fighting projects and therefore, boosts up the imports from Japan to Vietnam. By the end of 2011, Japan’s market share in Vietnam is approximately 19.33%.

 

 ○ China products come second in line with 18.66% of the market. China has competitive advantages in prices. However, its products are not appreciated since they are not as long-lasting as products originated from other countries. In the long run, Chinese products may not be appreciated for the shortcomings.(The growth rate for 2011 was only 0.49%)

 

 ○ Thailand and South Korea’s products, on the other hand, are appreciated for their excellent qualities. Anyway, import from South Korea seems to grow faster due to the better trade promotion programs in Vietnam. Thailand and South Korea’s market shares are respectively 7.64% and 7.07%.

 

 ○ Italy comes next in line with superiority in automatic features and it is growing significantly with the anticipated rate of 20% to 25%. Its market share in 2011 is 7.97%.

 

 ○ The United States’ anticipated growth rate is a bit lower at 15% to 17%. Its current share is 6.9%.

 

 ○ The remaining 32.42% are shared among 20 other nations

 

 

3. Pricing

(Exchange rate: 1 USD = 21,000 VND)

 

□ Plastic valve

 

 

□ Butterfly valve

 

 

□ Gate valves

 

 

□ Check Valve

 

 

 

4. Import Tariff

 

             Note: MFN: Most Favored Nations(Korea belongs to this group of nations)

        CEPT: Common Effective Preferential Tariff(ASEAN 10 member countries)

        AKFTA: ASEAN-Korea Free Trade Area

             Source: Export–Import Tariff and VAT on Imports Book(Ministry of Finance)