Domestic detergent manufacturers still await their opportunities

Domestic detergent manufacturers still await their opportunities

Vietnamese detergent manufacturers have been courageously struggling with foreign ones to regain the home market. However, they have not succeeded.

In order to survive, the biggest domestic manufacturers have to do three things at the same time – doing the outsourcing for the opponents, making products under their brands, and expand the export markets.

Trinh Thanh Nhon, General Director of ICC, admitted that its Bay brand detergent now still holds a small market share despite the company’s great efforts to improve the production and advertisement programs.

In 2000-2006, ICC spent $10 million and VND1 billion every month on the advertisement and marketing campaigns.

However, the efforts were in vain. In order to avoid the direct confrontation, domestic manufacturers target the rural markets which are believed to be easier to be pleased, especially the western provinces of the south. However, the big detergent brands have also been marching towards the market.

As a result, ICC now has to earn its living by cooperating with the rivals. “ICC has been earning money by doing the outsourcing for P&G. Though the company still tries to maintain its Bay brand, it can only bring modest turnover, about 20 percent of the total revenue,” Nhon said.

Lix has also been making money by doing the outsourcing for Unilever and for supermarkets’ private brands. Having realized that it’s very difficult to exist in big cities, Lix has been trying to develop the rural markets and export products to Taiwan, Japan, Singapore, the Philippines, South Korea, Australia, Cambodia and Africa. The exports bring $15 million to Lix every year.

The stiff competition on the domestic market has also prompted Vico, the real owner of Vi Dan brand, to make Ariel brand detergent for P&G. It also can make money from the exports, about $30 million a year.

Meanwhile, My Hao has been determined not to do the outsourcing for any other brands. Luong Van Vinh, General Director of My Hao, said if it did this, it would lose the My Hao brand and would never be able to regain it.

In order to develop My Hao brand, Vinh accepts to pay $1 million a year to improve the production lines and expand the distribution networks.

My Hao has large and powerful groups of marketing officers in every province and city whom it spends big money and long time to train. According to Vinh, each marketing officer has to approach 40-50 customers a day.

Despite the weaker brand, Vinh said My Hao does not intend to set up low prices for its products. It has been following the “reasonable pricing” policy, which means its products are 20 percent cheaper than that of foreign brands.

Nevertheless, while having to do the outsourcing for others, domestic manufacturers still cherish the dream of selling products under their brands.

Vinh of My Hao said that the company hopes to raise the exports from 6-7 percent of total output now to 15-20 percent by the end of the year. My Hao has spent VND10 billion more to increase the production capacity.

Lan of Vico plans to upgrade the production technologies to make out better products with lower prices than that of the rivals. This serves the plan to increase Vico’s market share from 12 percent currently to 20-25 percent. Especially, Vico accepts to pay the commissions triple than that offered by foreign rivals.

vietnamnet