The pressure of mergers and acquisitions of foreign investors is increasing strongly on Vietnam’s plastic industry.
A series of big names of Vietnam plastic industry (VN) are gradually falling to the giants of Thailand, Korea and Japan. This is raising concerns in the coming time the remaining domestic enterprises (DN) will be strangled right on the Vietnamese market.
Not only domestic consumption, Vietnam’s plastic products are exported to many markets such as Korea, Japan, China … Photo: HTD
Not only Thai people see the attraction of Vietnam plastic market but also Korean people have put plastic market in sight. After acquiring Minh Viet Packaging Company from Masan, Dongwon Systems Corporation (South Korea) has collected Tan Tien Plastic Company ‘shares in the market.
This is one of the leading units in the field of complex packaging for the food industry with an average annual revenue of VND 1,300-1,500 billion. Most of Tan Tien’s customers are big brands with strong brands in Vietnam market such as Unilever, Ajinomoto, Acecook, Trung Nguyen, Vinamilk, …
Up to now, Dongwon Systems Corporation of Korea has been a major shareholder in Tan Tien with the ownership rate of up to 97.83%. After the acquisition of Tan Tien, the entire Vietnamese board of directors, including the founders of this enterprise, was “knocked out” from the key positions of the company, leaving it to the Koreans to manage.
The Japanese are no less when MeiwaPax Group Company spent 16.5 million USD to buy Saigon Packaging Company (Sapaco); Oji Holding Corporation purchased United Packaging Ltd; Sagasiki Vietnam purchased Goldsun Printing and Packaging Company.
ACCORDING TO VIETNAM PLASTIC ASSOCIATION, IN 2017, THE TOTAL EXPORT VALUE OF VIETNAM PLASTICS INDUSTRY WAS OVER 3 BILLION USD, INCREASING 17.6% COMPARED TO 2016.
The pressure increased Massive investment of foreign enterprises in the plastic industry in Vietnam, according to economic expert Dinh The Hien is to take advantage of investment incentives on land, taxes and raw material prices; energy, cheap labor to save costs in order to achieve the best price. Vietnam’s participation in a series of free trade agreements also brings significant advantages for foreign enterprises.
“With strong capital pouring into the plastic industry, foreign businesses also take advantage of the value chain from input to output that they have worked hard to build in Vietnam. For example, Thai people have invested in plastic granules, have a factory system and an extensive distribution network from sales, mergers of retail systems in Vietnam ”- Mr. Hien looked take.
This pressure is obviously very large for Vietnamese plastic companies, especially in the context that most domestic plastic enterprises are always in shortage of capital, outdated technology, and lack of highly qualified human resources. “The difficulty of Vietnamese plastic companies also comes from the reliance on imported raw materials. Plastic industry always has relatively high operating expenses, leading to high cost of goods sold. Therefore, it only needs objective factors such as exchange rate, interest rate, sudden change of import tax policy to make net profit immediately hurt, ”said VPA president.
To cope with and be able to stand firm in the market, representatives of some Vietnamese plastic companies said they are trying to change. “Our current strategy is to identify the target product, target customer and focus all resources on it, not spread out. In order to reach the fastidious customers, we invest in technology, machinery and equipment in each production step so that our products have high accuracy in size, low scrap consumption rate, and lower prices. into products to improve competitiveness ”- leader of Rang Dong Plastic Company said.
Many opportunities for plastic industry
According to the Vietnam Plastics Association, the average plastic consumption per capita will increase and reach 45 kg / person / year by 2020, equivalent to a growth rate of 4% / year. Real estate and construction industry continues to recover in the coming years will boost construction plastic products.
According to the Ministry of Industry and Trade, many Vietnamese plastic enterprises import the world’s most advanced technologies in production to create products that meet international standards. Thereby qualified for export to fastidious markets such as Europe, USA and Japan.
If in terms of scale and technology to increase competitive advantage, some businesses in the plastic industry are doing very well. There was a wave of expanding production scale of Vietnamese enterprises.
For example, An Phat Company continually expanded and built more factories to seven to meet customer needs. Dong A Plastic has just put into operation a profile factory with 17 automatic production lines and batching plants.