작성일자: 2013.12.17

작성자: 하노이 무역관 Ms. Doan Thu Thuy (thuydoan.kotra@gmail.com)

 

 

1. Plastic Market Overview in Vietnam

 

 ○ Reflective film is one of many products in plastic industry. Generally, according to Vietnam Plastic Association(VPA), it is one of the most important industries of Vietnam. Additionally, the total capacity of Vietnam plastic industry is about 3 million tons per year and to be kept growing in coming years.

 

 ○ Currently, there are about 3,000 plastic corporations in Vietnam, 80% of which are of small, medium-sized and private-owned. Only 6% of them are state-owned, but they account for about 20% of the total capital invested in the industry. The rest are foreign invested enterprises accounting for 35% in terms of overall capital investment.

 

 ○ In the industry, it is worth considering that Vietnam’s plastic industry still much depends on import materials. Annually, the industry needs to spend billions of US dollars on importing plastic raw material, equipment and machinery. Each year, Vietnam needs an average of above 2.2 million tons of raw materials manufacturing. Plastics firms must rely from 70% to 80% on imported resins. Because these material costs process of nearly 70~80% the finished plastic product price, the competitiveness has been reduced. It is explained by underdeveloped domestic petrochemical industry.

 

 ○ Specifically, the latest and popular technology of plastic industry found in Vietnam can be names as: plastic electronic, chip manufacture, DVD, CD, PET bottle, etc. Most are imported newly from Asian countries.

 

 ○ Besides, domestic supply currently provides about 450,000 tons of raw resins for plastic industry. PVC resins are produced at TPC Vina and Phu My Plastics and Chemical Co. with total capacity of 200,000 tons per year (of which 30% are exported). Formusa Vietnam(100% capital of Taiwan) supplies 145,000 tons of PET resins per year. In August 2010, Binh Son Petrochemical Company officially starts operating the first PP factory of Vietnam, Dung Quat Petrochemical Project. The factory has a capacity of 150,000 tons per year and can produce 30 kinds of plastic resins from Homopolymer PP, meeting part of domestic demand for PP resins. Above all, local factories currently supply 15~20% of domestic demand for raw resins.

 

 ○ However, some plastic products requiring high-technology, thorough R&D activities as well as patent registration such as reflective film have not been developed and produced in Vietnam.

 

 

2. Demand Trends

 

□ Transportation Construction in Vietnam

 

 ○ Reflective film is mainly used in Vietnam as an essential part of traffic sign and labor protection clothes. Actually, there is nearly no data on this product’s market. However, its demand can be seen through the development of transportation construction development in some recent years as well as the volume of labor protection clothes.

 

 ○ In fact, the transport sector forms the majority of infrastructure investment in Vietnam throughout our 10-year forecast period, accounting for 60~65% in 2022. According to BMI, Vietnam still suffers from a significant deficit in transportation infrastructure but they hold firms that Vietnamese government will continue to develop this sector over the medium term. This is reflected in another forecast of BMI on transport infrastructure industry value, which is expected to grow by an average of 4.1% year-on-year between 2013 and 2017.

 

Transport Infrastructure Value, By Industry, VNDbn

Source: BMI

 

 ○ It is clearly that despite crisis, the transportation infrastructure has been kept implementing in Vietnam. Generally, there is an upward trend in transportation infrastructure value surveyed and forecast in the period of 2013 to 2017, reaching a peak of around 60,000 billion VND. The increase by somehow directly affects the demand of traffic safety products including reflective film.

 

 ○ Specifically, within the transportation sector, the roads and bridges sub-sector leads in term of contributions to the total transport infrastructure industry value. Although most of Vietnam’s national road system is paved (only 26%, or 46,650 out of 180,549km, is unpaved, as of 2008), it is widely acknowledged that 40% of the network is in poor or very poor condition and will require substantial investment to reach a maintainable condition. Communications has estimated that Vietnam will require up to US$ 60 billion in the period up to 2020 to fund new road infrastructure projects. Combined with increase traffic levels in Vietnam’s urban areas and growing trade volumes to and from Vietnam, there is a need for roads. However, it is also worth considering that many big projects have been delays for several reasons especially limited budget, lack of financing from the private sector as well as poor management.

 

 ○ Towards railways, it accounted for around 20% of Vietnam’s total transport infrastructure industry value in 2013 according to BMI. Vietnam’s rail network stretches for 2,632km, but only 527km is standard gauge. The network has around 1,790 bridges totaling 45km and 11.5km of tunnels. Currently, there are some main targets of Vietnam Railway Corporation that may help to raise the demand of traffic safety products.

  - Upgrading north-south railway routes and improving the running speed of passenger trains and freight train.

  - Upgrading west-east railway corridor

  - Paying more attention to the development of new routes between Ho Chi Minh-Vung Tau, Thap Cham-Dalat, Yen Bai-Tuyen Quang, etc

  - Preparing to link the railway network to Singapore-Kunming route, Ho Chi Minh – Phnom Penh, etc

 

 ○ Although the airport infrastructure sub-sector accounts for the smallest portion of transport infrastructure, the government has ambitious plans to modernize and expand its airport infrastructure, which consists of 44 airports. The government initial plans were to develop 10 international airports by 2020 – Noi Bai, Cat Bi, Phu Bai, Danang, Chu Lai, Cam Ranh, Tan Son Nhat, Long Thanh, Can Tho and Phu Quoc – and 16 domestic airports in the same timeframe – which includes Dien Bien Phu, Na Son, Lao Cai, Quang Ninh, Gia Lam, Vinh, Dong Hoi, Phu Cat, Tuy Hoa, Pleiku, Buon Ma Thuat, Lien Khuong, Rach Gia, Ca Mau, Con Son and Vung Tau.

 

 ○ Additionally, the writer has called around 10 reflective film suppliers in Vietnam, all of them shares that despite the economic crisis, the demand for this product is stably growing because there are continuously transport construction projects. Besides new projects, all maintenance projects and expansion ones require total new set of traffic signs.

 

□ National Standard for Reflective Sheeting for Traffic Control

 

 ○ In 2008, National Standard No 7887/2008 has been established regulating the technical requirement of retro-reflective sheeting for traffic control in Vietnam. According to that, all kinds of retro-reflective sheeting are classified into 10 types by retro-reflective characters and structures of retro-reflective grains. To be detailed, type I and II has normal retro-reflective character in lens form, type III and IV with high retro-reflective designed in form of lens and non-metallic-coated micro-prism relatively. Meanwhile, almost very high reflective ranked types are normally in form of non-metallic-coated micro-prism.

 

 ○ The National Standard also give out instruction for choosing a suitable reflective sheeting suitable for highways, urban roads and auto roads as stated in the following table:

 

Instruction for choosing suitable retro-reflective sheeting

Type of Road	Suitable Type	Notes
Highway	Type VIII Type IX Type X	Type VIII should be used for highways; Type IX for dangerous road sections, zigzag roads, pass roads, or road with restricted view, misty area, urban highway, school, residence area
High-grade auto road	Type III Type IV Type IX	In roads with high speed design, reflective sheeting which have high number (orderly from IV to III) should be used. Type IX should be used for dangerous road sections, zigzag roads, pass roads, or road with restricted view, misty area, school, residence area.
Low-grade auto road	Type II Type III	In roads with high speed design, reflective sheeting which have high number (orderly from III to II) should be used
Auto road in suburban	Type I Type II	In roads with high speed design, reflective sheeting which have high number (orderly from II to I) should be used
Temporary Road, Road in Construction Stage, Road Section Under Repair and Maintenance	Type V Type VI	Used for temporary signposts, direction instructing cones, traffic control bands.

Source: TCVN 7887:2008

 

 ○ The National Standard also gives out detailed specifications for these 10 types. Accordingly, quality of 10 types of reflective sheeting is evaluated by 12 following technical criteria:

  - Retro-reflective coefficient

  - Durability under weather

  - Daytime luminous intensity coefficient

  - Color durability

  - Shrink degree

  - Bend durability

  - Adhesive coating peel-off ability

  - Adhesive and cling degree

  - Collision and bump durability

  - Smoothness

  - Minimum lifetime requirement

  - Regulations about retro-reflective sheeting signposts maintenance during use

 

 

3. Competition Trends

 

□ Foreign Exporters

 

 ○ As mentioned above, the demand for reflective sheet is stable and has some signs of increasing in upcoming years. Despite that, the local companies cannot produce the products. The market is dominated by imported ones especially from China, Japan and Korea.

 ○ The market leader brand is 3M with estimated market share of more than 60%. 3M Vietnam Limited, a wholly-owned subsidiary of 3M company, was established in November 1994 in Ho Chi Minh City as its 61st international company. Major product categories include Industrial Tapes and Adhesives, Abrasives, Safety and Security Protection Solutions, Renewable Energy Solutions, Commercial Graphics and of course Reflective Film. The company serves a multitude of consumer and industrial markets and is a market leader in many of these markets. The brand has become so popular that whenever anyone mentions about reflective film, it means 3M Reflective Film.

 

 ○ Currently in Vietnam, reflective sheet is used mainly for 2 purposes namely labor protection clothes and traffic safety materials. In order to use for traffic sign, 3M products are undoubtedly unbeatable. Randomly contacting to any reflective traffic sign companies, they are all the distributor of 3M reflective film. Only very few companies supply product imported from China with lower price. However, most customers both individual and industrial ones prefer quality and affordable 3M rather than Chinese products without quality confirmation. However, it is widely said that because 3M Vietnam Co., Ltd has not yet opened any factories in Vietnam, their products are most imported from Chinese manufacturing factory.

 

 ○ The competition only occurs in reflective materials used for making labor protection clothes. Accordingly, China, Japan and Korea are 3 main competitors. Normally, reflective film is imported with HS Code 3919 and 3920. The following import value record of Trade map and estimated forecast of Kotra may illustrate the current competition situation.

 

List of supplying markets for a product imported by Vietnam

(Unit: US Dollar Thousand)

Product: 3919 Self-adhesive plates, sheets, film etc of plastic w/n in rolls

Product: 3920 other plates, sheets, film, foil, tape, strip of plastics etc

Source: ITC calculations based on UN Comtrade statistics

 

 ○ As it can be seen, Japan, China and Korea are 3 biggest supplying markets for these products with HS Code of 3919 and 3920. Towards HS Code 3919, the total value imported reached US$ 160.999 million, of which import value from Korea account for around 23.5%. While with HS Code 3920, Korean products imported has proportion of 12.5% in total import value of US$ 413.295 million.

 

□ Price

 

 ○ The writer has contacted directly to Sales Department of 3M Vietnam Co., Ltd to ask for price list. Actually, the actual price list depends on many factors including your company’s position in distribution network, how big your company is, which projects your company will supply, etc. Therefore, the price may vary. However, they give us the general price in retail market as following.

 

Image	Series	Specs	Price (VND)
	3930 Series (3930, 3931, 3932, 3935)	48in x 50yds	35,000,000
	4090 Series (4090, 4091, 4092, 4095, 4087)	48in x 50yds	75,000,000
	4080 Series (4081, 4083, 4084)	48in x 50yds	75,000,000

 

 

4. Import Tax

 

 ○ Normally, the artificial turf will be imported with HS Code in group 5703 or 3918 which have the following import tax regulation.

 

HS Code	Description	Unit	MFN	ACFTA	AKFTA	ATIGA	VAT (%)
39.19	Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics, whether or not in rolls.
3919.10	- In rolls of a width not exceeding 20cm
3919.10.10	-- Of polymers of      vinyl chloride	Kg	12	5	7	5	10
3919.10.20	-- Of polyethylene	Kg	12	5	7	5	10
3919.10.90	-- Other	Kg	12	5		5	10
3919.90	- Other:
3919.90.10	-- Of polymers of      vinyl chloride	Kg	12	5	5	5	10
3919.90.20	-- Of hardened      proteins	Kg	12	5	5	5	10
3919.90.90	-- Other	Kg	12	5	5	5	10

Note:

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

ATIGA: ASEAN Trade In Goods Agreement

AKFTA: ASEAN-Korea Free Trade Area

ACFTA: ASEAN – China Trade Area

VAT: Value Added Tax

Between two different preferred tariffs, the lower one would be applied

Source: Book on Export – Import Tariff 2013 (Ministry of Finance)