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Vietnam plastics & rubber industry: Taking advantage of technology breakthroughs

Vietnam plastics & rubber industry: Taking advantage of technology breakthroughs

Friday 17, 01 2020
Despite being considered as a potential industry, in order to make good use of opportunities for development, it is necessary for enterprises within the plastic and rubber industry to be more proactive in updating technology, new trends and improving competitiveness.

Opportunities in fierce competition

With an average growth rate of 12-15% / year, it is not an exaggeration to say that plastics and rubbers are among key industries. According to the General Department of Customs, rubber exports in August 2019 reached 180,980 tons, worth more than US$ 244 million with an increase of nearly 6% in volume and 12% in value over the same period last year. In the first 8 months of the year, rubber export reached 962,100 tons, worth more than US $ 1.3 billion, up 9.7% in volume and up 7.6% in value over the same period last year.

Vietnam plastics & rubber industry: Taking advantage of technology breakthroughs

According to the General Department of Customs, though trade tensions have not had much impact on Vietnam's rubber export, businesses have actively diversified the market by boosting exports to India, South Korea and Brazil.

As stated by Mr. Nguyen Quoc Anh, Chairman of Ho Chi Minh City Association of Plastics and Rubber, the industries are facing opportunities and challenges in today's volatile business environment: “The US-China trade war is causing a 'trend' of buying rubber goods from Vietnam instead of China. Prior to the war, most of the goods were ordered from China, however, the US-China trade war has led to a shift to other countries, including Vietnam. This requires manufacturers in this industry to invest in technology to meet the standards of buyers".

In addition, Vietnam's signing of free trade agreements (FTAs) also provides opportunities for businesses to export plastic and rubber products as purchasers are gradually shifting orders from China to Vietnam to take advantage of cheap production costs and tax incentives. On top of that, the demand of plastic and rubber products in the European Union (EU) and Japan markets is also high, which means there are several export potentials due to the needs of consumers.

According to Mr. Vo Hoang An, Vice Chairman of the Vietnam Rubber Association, Vietnam's rubber products such as tires, components and technical rubber are being exported to major markets including the US, Malaysia, Belgium, Germany, Brazil, Japan, Thailand ..., which shows the great prospect and potential of Vietnam's rubber industry in the coming years. However, the industry is facing many difficulties in terms of raw materials and production equipment which is imported completely.

More than 80% of domestic enterprises are small and medium-sized enterprises with quite limited technological level. About 85% of machinery and equipment in the industry have to be imported. Currently, domestic enterprises are competing relatively well with foreign companies as well as imported products. However, the dependency on foreign technology will last long and cause many difficulties for businesses in the industry. Notably, in recent years, leading businesses and corporations in the world, when cooperating with partners, have always prioritized environmentally friendly products and put it into consideration when signing contracts. This is one of the challenges that Vietnam plastics and rubber industry may face.

Investment in technology is vital

According to Quoc Anh, in order to compete better, domestic manufacturers must consider investing in new machinery, especially energy-saving production and environmental protection technologies. At the same time, businesses need to promote investment in the development of raw materials production for export production and domestic consumption, contributing to reducing imports. Promoting regional collaboration to meet the requirements origin and take advantage of preferential tariffs from free trade agreements should also be encouraged.

According to Professor, Doctor of Science Luu Dzuan: "The plastic industry is playing an important role in the processing and packaging process, contributing significantly to the development of other industries. In particular, the need to improve product quality on the basis of environmental protection, along with the desire for product innovation and development has created many opportunities for businesses. However, to participate in global value chains, it is vital for plastic companies to consider technology innovation to manufacture products that are eco-friendly and meet the prescribed quality standards”.

Accordingly, in order for domestic and foreign manufacturing enterprises to gain access to modern machinery products and to find partners, potential customers, experts think that taking part in international exhibitions are trade opportunities and also an effective solution to current technology problems.

One of the typical exhibitions that can be mentioned is VietnamPlas 2019, which will take place from 3 - 6 October in Ho Chi Minh City. The exhibition focuses on displaying many advanced technology applications, machines and raw materials of 520 brands from 15 markets such as Austria, Belgium, China, Germany, Hong Kong, India, USA ...

This is considered as an effective trade promotion bridge to help businesses search for high quality machines, learn the latest advances in the plastic and rubber industry, and have the opportunity to interact directly with world leading brands.

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