Packaging industry faces competition

Packaging industry faces competition

Plastic packaging manufacturers have been forced to make adjustments in anticipation of more competition in the overseas markets.

In the first six months of the year, the plastics industry exported US$825 million, up by 21 per cent compared over the same period last year.

Independent market observers said this was a positive sign because the export value of many industries, such as garments and footwear, in the country had grown slowly in the period, averaging only 10 per cent growth rate.

However, many CEOs of plastics-production enterprises, particularly plastic-bag manufacturers, said they had foreseen problems that could affect their export activities.

According to the Viet Nam Plastics Association, Japan, the EU and the US are the biggest importers of Vietnamese plastic products, at rate of 27 per cent, 25 per cent and 12 per cent, respectively.

Plastic packaging accounts for 66 per cent of the total plastic industry's export value.

However, consumption has decreased in these overseas markets because of prolonged economic recession, affecting the Vietnamese industry.

Tran Viet Anh, general director of the Nam Thai Son Import and Export Company that specialises in plastic-bag exports, said 60 per cent of the company's total products were exported to the EU market.

However, since May the number of orders from that market had begun to drop, Son said.

The company had to cut production prices to ensure this year's export value of US$22 million, equivalent to last year's figure, are maintained.

Nguyen Van Khue, general director of the RKW – Lotus Joint Stock Company, said that Viet Nam's exports of plastic bags to the EU had some advantages because this market had placed anti-dumping duties on plastic bags from Thailand and China, with rates of between 7.9 and 14.3 per cent, and between 8.4 and 28.8 per cent, respectively.

The duties on Thai and Chinese plastic bags caused prices to jump 10 per cent higher than similar Vietnamese products, according to Khue.

However, the EU's anti-dumping policy on Thai and Chinese plastic bags is expected to be lifted in September, so the Vietnamese product's price advantage will be lost.

Japan is a big importer of Vietnamese plastic bags, but the country is a choosy market and has rejected large volumes of Vietnamese plastic products, according to Anh.

Pham Trung Cang, chairman of the Dai Tan Hung Plastic Joint-Stock Company, warned of unhealthy competition occurring among domestic plastic bag manufacturers which have cut prices.

Anh said that those companies' profits were too low to allow them to reinvest in their business

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