작성일자: 2014.3.17

작성자: 호치민 무역관 Mr. Hong Suk Kyoon(sukkhong@kotra.or.kr), Ms Phuong Nguyen(kotra.sgn@gmail.com)

1. COMPETITION TREND

 ○ Local market for tractors (both used and brand new ones) are dominated by Japanese brand products. Few years ago, Chinese tractors are dominant but the situation has quickly changed nowadays.

 ○ According to the Vietnam Agriculture Online Newspaper (www.nongnghiep.vn), local production for agricultural machinery in general and tractors in particular gain around 30 to 40% the total market. All the rest of local demand should rely on imported sources, mainly from Japan and China. Please note that Japanese products dominate in both brand new and used market segment while Chinese products just available in the segment of brand new ones since local farmers do not trust used Chinese tractors at all.

 ○ Particularly for “used tractors”, the market is totally dominated by Japanese brands. Some of the popular brands for used tractors that could be mentioned include Kubota, Iseki, Yanmar, Hinomoto, Mitsubishi, Shibaura, Satoh. Among them, Kubota, Iseki and Yanmar are the three most popular and are mostly preferred by local farmers. Of them, Kubota seems to be the leading one.

 ○ According to local dealers that we’ve contacted to ask about the market situation, used tractors and used harvesters from Japan are preferred because first, their conditions are still very good. The machinery are rarely broken or damaged during operating. The remaining time for use is still long. And their prices are still affordable to local farmers.

 ○ Also to them, in the market of used products, Chinese tractors cannot gain any shares because the quality is so bad (often got problems during operating) although they are of very cheap prices.

 ○ Concerning Korean used products, local dealers said that first, Korean used tractors are not very familiar maybe because they rarely appear in local market. Second, local dealers evaluated that Korean used tractors are not preferred because the quality is not good. The word “good in quality” here means used tractors from Korea are usually of “very old condition” when import. So the remaining time for use is usually short. Besides, as they are old, they often got problem during operation and easy to get broken or damaged.

 ○ Nowadays, local farmers have the tendency to invest in good quality (high duration) machinery rather than focus on prices. So Japanese used products are their first choices when choosing a tractor. In agricultural sector, the name Kubota has become a leading player in both brand new and used market segment. That is one of the reasons why Kubota has decided to invest in a manufacturing factory here to produce agricultural machinery and equipment including tractors. The investment project with the total investment capital of USD 80 million is to produce tractors and harvesters locally. According to Kubota Vietnam Co., Ltd (owned by Kubota Japan and Siam Kubota Industry from Thailand), the project will have the production capacity of 15,000 tractors and 2,000 harvesters annually. Their major target consumption is the domestic market. So far, Kubota have set up a large distribution network nationwide.

2. RETAIL PRICE TREND

 ○ Below is the retail price trend of some kinds and some brands of used tractors, which are currently sold in Vietnam market. As mentioned above, Japanese used tractors are the most popular products here so we can only find Japanese used products.

 ○ Please note that the prices are “retail prices”. The prices are published on “online buying” website, so it would be somehow fluctuated depending on the time of buying and depending on whether the products are available or already sold out. Therefore, they are provided just for more reference.

       Source: http://maycay.vn/may-cay-Kubota

                    http://maycay.vn/may-cay-Yanmar

                    http://maycay.vn/may-cay-Hinomoto

       Exchange Rate: US$ 1 = VND 21, 120 (as of March 17,2014).

3. DISTRIBUTION STRUCTURE & LOCAL DEALER LIST

□ Distribution Structure

 ○ The distribution structure of used tractor is quite simple. Since a local dealer can deal with many brands of used tractors at a same time, there is no dealing way like sole distribution of sole agent.

 ○ In reality, local trading companies can import directly from foreign suppliers and sell back to other local retailers located in the agricultural areas. These retailers (usually operate in forms of retailing shop or store) will sell directly to local farmers.

 ○ Otherwise, the importers can also sell directly to end-users. Generally, customers will let the seller know about their budget for purchasing a tractor. Then, the seller will suggest what used tractors are suitable to the buyers’ need and budget.

 ○ Please also note that not all farmers are able to equip with tractors. Many of them only rent the tractors in some seasons.

4. TARIFF RATES

 ○ For the time being, products under HS Code 8701.90 imported from Korea has to subject to the import tax rate of 0%. The VAT 10% will be paid by the importer at the custom clearance.

□ Custom rates:

        Note: MFN: Most favorable nations (applied also for imported goods from Korea)

                 AKFTA: Asean – Korea Free Trade Area (applied for imported goods from Korea)

                 ACFTA: Asean – China Free Trade Area (Applied for imported goods from China)

                 ATIGA: Asean Free Trade Area (applied for Asean-member nations)

□ VAT rates:

 ○ The VAT rate of 10% is applied for commodities under HS Code 8701.90 according to the Export-Import Tariff and Value Added Tax on Imports.