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Rubber

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I. Overview

Vietnam’s rubber sector has been developing rapidly during the recent years, with the simultaneous growth of cultivated area, output and export turnover. In 2007, Vietnam ranked fourth among the world rubber exporting countries, following Thailand, Indonesia and Malaysia.

Rubber product market faces two main challenges: the availability of raw material and  production of popular rubber products; however, Vietnam stands out as a country capable of supplying, producing and consuming these products.

Vietnam rubber processing industry emerged in the fifties of the 20th century with some rubber processing brand names and products well known both on domestic and foreign markets. The investment in rubber sector over last several years has focused on the expansion of rubber cultivated area (at present, the cultivated area of the whole country is 500,000 ha), exploitation and preliminary treatment to export raw material. Over 90% of Vietnam’s rubber output is exported in the form of raw material, and the rest 10% (over 50,000 tons) is processed for domestic use and export. This rate is low as compared with abundant sources of rubber materials produced annually; therefore, although Vietnam is one of the big rubber exporters, the profit from rubber is much lower than that of Malaysia and Thailand.

Finished rubber output and export value are low due to continuously increasing prices of rubber materials since early 2006. Moreover, it requires a large amount of investment in rubber processing unit (about USD 150 million for a tube manufacturing factory with capacity of 1 million pieces per year), and it takes a long time to recover investment and gain profit. Many companies and enterprises in the sector rarely invest in finished rubber production. As rubber material export is not a long-term trend, enterprises in the sector are boosting processing stage to export high quality rubber products. Vietnam rubber sector has paid attention to investment and the improvement of production capacity of finished rubber.

II. Production

1. Geographical areas of production

Since rubber materials are mainly supplied from Southeast provinces (339,000 ha accounting for 66%) and Highland region (113,000 ha accounting for 22.6%), most of finished rubber producers are located in these regions.

2. Characteristics, categories and composition of products

This report refers to manufactured rubber products under eleven product groups at 4 digit HS code level ranging from HS4006 to HS4016.

In spite of its limited development as compared with natural rubber, finished rubber product lines are diverse, including:

  • Bicycle and motorcycle tires and inner tubes and technical rubber lines have been produced in Vietnam for over 25 years with various specifications satisfying consumers of different tastes. Original remolded tires for vehicles brings benefits to consumers by being sold at the price 45% lower than that of finished tires and its value in use is equal to 70% as compared with that of finished ones. In the Southeast area some most advanced and modern technologies and equipment are applied in manufacturing Bias-technology tires and inner tubes such as automatic close treatment 270-liter line from Italy, tire balance tester and 4 automatic component tire surface extruder from Germany, etc.
  • Rubber gloves, condom product lines serve in medical sector and for consumption.
  • Seals, gaskets, covered cables and rubber gaskets product lines serve in industrial production, construction and consumption.
  • Product lines serve sport, entertainment and medical activities.
  • Other finished rubber products such as rubber conveyor, etc.

Product structure and investment orientation pay more attention to bicycle, motorcycle and automobile tires. Products made from centrifuge latex such as condoms, medical pipes and gloves have low density in spite of their high potential for development.

Vietnam rubber products are produced with modern equipment lines and advanced technologies from Europe. All products have high quality with outstanding features satisfying customers’ tastes. Vietnam rubber products are ensured with quality and can compete with flexible price policy and careful customer care.

Strong points of products in bicycle, motorcycle and automobile tire and inner tube lines are blistering free, heavy load capacity, heat resistance, abrasion proof, no elasticity in friction lining ensuring the stability and safety when running, even at high speed.

3. Scale and production capacity

Contrary to exporting rubber materials, strength of finished rubber processing industry is still limited. By 2007, Vietnam had more than 70 rubber preliminary processing units with capacity from 500 to 20,000 tons per year controlled by Vietnam Chemicals Company (Vinachem) and Vietnam Rubber Group (Geruco). Vietnam Rubber Group has high-tech factories with capacity of 260,000 tons of latex per year located suitably in material regions. Processed products have high quality and reputation domestically and abroad  (20% products for domestic use and the rest for exports). About 70% of processed rubber is used for inner tube production, and 15-20% used for the production of mattress, gloves and 10% used for other demands.

The continuous increase in the world demand for rubber and reasonable prices encourage the expansion of the cultivated area in the country and development in foreign countries. Rubber planting area increased significantly from 7,077 ha (in 1900) to 480,200 ha in 1920. New planting area in 2007 is 20,000 ha, increasing  the total area to 536,000 ha. Planting area in Lao in 2005-2007 was 20,000 ha, and in 2007, Vietnam enterprise began to plant rubber trees in Cambodia on an area of 300 ha. It is expected that total planting area of Vietnam will reach 700,000 ha by 2010.

However, Vietnam frequently concentrates on unprocessed natural rubber products, with approximate 60% natural rubber standardized in technical features and original natural rubber. The reasons for this are inappropriate processing method and small production scale of finished rubber as well as low production capacity.

At present, Vietnam is investing in a technology line under international standard (ISO 900:2000) to produce finished rubber products to increase economic benefit. Vietnam rubber products for domestic use and exports having good reputation and high quality are inner tubes and tires of automobiles and motorcycles, rubber gloves, etc. According to Ho Chi Minh City Rubber and Plastics Association, Vietnam rubber export value in 2007 was USD 800 million, of which USD 600 million was for tire exports.

The production potential and capacity of rubber products of Vietnam large enterprises are rather high. By the end of 2007, Vietnam Chemicals Group met 100% plan for all rubber products.

Products

Accomplishment (%)

Output growth as compared with the same time in 2006 (%)

DRC bicycle tires

105.3

6.8

SRC inner tubes

105.9

(-12)

CASUMINA automobile tires

107.0

45.0

SRC motorcycle tires

106.5

36.0

DRC motorcycle inner tubes

104.8

48.0

CASUMINA motorcycle inner tubes

114.1

34.0

(Source: Vietnam Chemicals Group - Vinachem)

4. Sources of production materials

Vietnam sources of natural rubber materials are diverse.

Main rubber material supply areas are the Southeast (339,000 ha), Highland (113,000 ha) North Central (41,500 ha), and South Central Coast (6,500 ha) accounting for 66%, 22.6%, 8.3% and 1.3% respectively.

It is planned to plant rubber trees with high benefit on poor land in the Northern mountainous provinces (Dien Bien, Quang Tri, Son La, Lai Chau).

Dien Bien will plant on 1,000 ha in 2008 and on 20,000 ha in six years time with latex capacity of 2 tons per year.

Quang Tri plants rubber trees mainly in Vinh Linh with 3,500 ha available for exploitation.

Son La also has a pilot area of 70ha with reasonable result.

Lai Chau has the area of 100 ha.

Nghe An has that of 1,559 ha.

Kon Tum planted nearly 3,000 ha in 2007, mainly in Dak To (885ha), Dak Ha (795 ha), Sa Thay (685 ha), Ngoc Hoi (300 ha), Kon Ray (200 ha) and Kon Tum town (80 ha).

Tay Ninh plants on 52,603 ha.

For small scale rubber planting, the implementation of the project “Diversification in Agriculture” was assisted by the World Bank (WB), French Agency for Development (AFD) and Vietnam government. It started in December 1998 and ended on 30 December 2006. The project was completed after 8 years with total expenses of 86.9 million USD aiming to increase income and create jobs for local people in 12 poor provinces in Highlands and Coastal Central provinces (Kon Tum, Gia Lai, Dac Lac, Dac Nong, Quang Binh, Quang Tri, Thua Thien Hue, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Binh Thuan) with good results.

Planting area under the Project: Diversification in Agriculture in 2000-2006

Province

2000

2001

2002

2003

2004

2005

2006

Total

Quang Binh

120

119

83

 

542

747

259

1.87

Quang Tri

 

190

303

202

1,035

1,019

1,134

3,884

Thua Thien Hue

 

393

1,007

1,437

1,209

916

992

5,954

Quang Ngai

 

69

98

83

 

 

 

250

Phu Yen

 

102

266

513

254

322

346

1,803

Binh Thuan

 

69

27

236

430

355

605

1,721

Kon Tum

3

477

598

389

664

957

1,589

4,676

Gia Lai

 

58

98

336

768

1,446

2,412

5,118

Dac Lac

 

36

103

62

101

219

278

800

Dac Nong

37

471

1352

810

960

313

869

4,812

Total

159

1,984

3,934

4,069

5,964

6,292

8,484

30,888

Planned

532

2,354

4,243

5.800

5.900

5.900

5.300

30,029

% Accomplished/

Planned

30

84

93

70

101

107

160

103

(Source: Report on completion of the Project: Diversification in Agriculture)

5. Production trend

Thanks to abundant rubber material sources, the price of finished rubber and products made from rubber much higher than that of exported raw rubber, Vietnam rubber sector will focus on rubber products for consumption by applying advanced technology and modern equipment and through activities to attract direct foreign investment.

Moreover, rubber sector will give priority for rubber industrial products as supplementary materials for shoes and garments sectors (shoe soles and tops, elastic threads, etc.)

6. Major producers

Some large-scaled enterprises famous for finished rubber production in domestic and foreign markets are:

+ Vietnam Chemicals Group (Vinachem). This company has three units producing bicycle, motorcycle and automobile tubes, rubber gloves and industrial rubber products, namely Sao Vang Rubber Company, Da Nang Rubber Company and The Southern Rubber Industry Joint Stock Company (CASUMINA). The Group is also a joint venture with foreign partners (Vietnam-Inoue joint-venture and Vietnam-Yokohama) in producing bicycle, motorcycle and automobile tubes and strollers. Vinachem’s rubber products for domestic consumption and export generate high profit for the rubber sector.

+ Sao Vang Rubber JSC (SRC) - under direct management of Vinachem is famous on domestic and foreign markets for bicycle, motorcycle and automobile tires and tubes. The Company has increased production capacity of automobile tires, and especially motorcycle tires thanks to investment in equipment, new design and production technology. Quality of these products is stable and has improved with various types to meet consumer demand. Output and consumption of motorcycle tubes and tires of SRC increase sharply. In the first 11 months of 2006, the Company produced and consumed 900,000 motorcycle tires (equal to 101% of the year 2006 plan, increasing by 32% as compared with that at the same time in 2005), 4 million motorcycle tubes (equal to 114% as planned in 2006, increasing by 34% as compared with that at the same time in 2005).

+ Da Nang Rubber JSC (DRC) has 7 sub-units, two of which specialize in finished rubber, namely, Automobile Inner tubes and Tires Enterprise and Motorcycles – Bicycles Inner Tubes and Tires. Established in 1975, DRC is one of the top enterprises in inner tubes and tires production serving Vietnam transport sector. In parallel with the cooperation with European experts in advanced technology, DRC invests in most advanced synchronous production lines. Input materials and semi-finished products are strictly investigated under each production process with modern specialized equipment before brought into production.

Products are tested on mile machines and classified by KSC before launching into the market. Internal and customer quality management is strictly conducted in compliance with ISO 9001 Quality Management System. DRC’s automobiles’ and motorcycles’ inner tubes and tires are certified to meet the Japan Industrial Standard (JIS) by Quacert Vietnam. DRC is the first enterprise in Vietnam succeeding in producing ORT automobile super load solid tires with the following specifications: 12.00-24; 18.00-25; 23.5-25; 21.00-33; 24.00-35; 27.00-49, etc. Large-sized ORT tires are advanced products used for super load trucks in mines; containers at wharfs; tractors and dozers at construction site.

At present, there is no enterprise capable to produce this product. Apart from Bias-technology automobile tires in the South East Asia, DRC has succeeded in producing Radian-technology automobile tires for passenger automobiles, light trucks in Vietnam. With its experience in producing automobile and motorcycle tires, DRC continues to satisfy various demands of domestic and international customers. It is qualified to be the top inner tubes and tires producer in Vietnam. DRC inner tubes and tires account for the biggest market share in the country and are exported to European and American markets.

+ The Southern Rubber Industry JSC (CASUMINA) has 7 sub-units, one of which specializes in rubber gloves, called Viet Hung Rubber Glove Enterprise.

Vietnam Rubber Industry Group (previously Vietnam Rubber Group) has 22 enterprises cultivating, exploiting, processing rubber, and gathering in the Southeast, Highland and Central Coastal areas. Its rubber products have high quality and are famous both in the country and abroad. Its products have been exported to 36 countries and territories and gained good reputation with customers.  Inner tubes and tires of CASUMINA are produced under ISO 9001 Quality Management System and comply with Japan and European Quality standards.

7. Well-known product brands

DRC is a brand name famous for automobile, motorcycle inner tubes and tires in the country of Da Nang Rubber JSC (DRC). DRC has succeeded in producing automobile super-load tire of the following specifications: 27.00-49 and 33.00-51 serving mineral exploitation and transport; tires 27.00-49 for 80-ton truck with diameter of 2690mm, weighing 1,300 kg; tires 33.00-51 for 110-ton truck with a diameter of 3040mm, weighing 2230 kg. These tires are produced in Vietnam under the DRC brand name , which are for both domestic consumption and for export.

For many years, DRC has enjoyed success as a Vietnam brand name awarded with many prizes for quality, and impressive business results.

DRC is also a brand name established on careful and professional customer care policy. DRC has established strong distribution channels in all 64 provinces of Vietnam.

CASUMINA is well known both in Vietnam and abroad for automobile and motorcycle inner tubes and tires produced by The Southern Rubber Industry JSC. The company has cooperated with Germany, Indian Groups in development and export products under the brand name CASUMINA or production in CASUMINA.

KYMDAN: Sai Gon Rubber JSC with the trademark KYMDAN is known by customers for high quality, 100% natural latex mattresses. They are consumed all around the world. Combining advanced technology and traditional know-how, all products are made from 100% natural rubber with original quality and 14 advantages, which are not achieved by any other products. KYMDAN has registered for copyright protection in 79 countries and territories.

SRC is a brand name of the biggest inner tubes and tires producer in the North: Sao Vang Rubber JSC (SRC). Bicycle inner tubes and tires are conventional products, with high quality and reliability not achieved in other products of private enterprises

III. Domestic market

1. Market information

With a population of over 80 million people, rubber products are consumed in Vietnam in a relatively high volume. The demand on domestic and export markets is constantly increasing.

Finished rubber products in domestic market are controlled by Vietnam National Chemical Corporation (Vinachem) with three main members:  The Southern Rubber Industry Joint Stock Company (CASUMINA), Danang Rubber Joint Stock Company (DRC) and Sao Vang Rubber JSC (SRC).

Since 2005, tires and tubes for motor automobiles and motorcycles faced drastic competition between domestically manufactured products and imported ones. Currently, foreign branded tires and tubes, even those for big trucks and those used for bad, rocky and muddy roads, are losing competition against their domestically produced counterparts.

By 2005, there were 12 brands of tires and tubes for motor automobiles, 50 percent of which are in the form of joint-venture or foreign-invested enterprises located in Vietnam, and imported tires and tubes.

2. Domestic consumption

Volume of domestically consumed rubber of Vinachem, the biggest supplier of finished rubber products, makes up 80% of home market shares and keeps a relatively high annual growth rate. Most of tires for bicycles and motorcycles are consumed right after they are manufactured. All of the three enterprises directly under management of Vinachem usually have to work for three shifts a day, even on public holidays to manufacture and deliver enough tires and tubes for motor automobiles and motorcycles as required.

Since June 2006, domestic consumption of motor automobile tires was back to regular increasing speed whilst many imported tires were of lower quality, thin and not durable enough. Therefore, domestic automobile tires, though adjusted to increase by 5-7% in terms of price, were still in low supply. Volume of rubber enterprises’ motor automobile tires sold out is 6% to 66% greater than production volume. As for CASUMINA, only in five first months of 2006, it sold 214 thousand motor automobile tires in the market, increased by 37% in comparison with the same time of the previous year.

In 2007, domestic rubber product consumption continued to grow rapidly. Consumption value of rubber products inland in 2007 reached USD 650 million. Thanks to investment in upgrading products, reducing prime cost, promoting trade names and stable price of rubber materials, production and consumption of rubber products of three Vinachem’s enterprises, Sao Vang Rubber, Danang Rubber JSC and the Southern Rubber Industry JSC achieved the best growth rate compared with that of the past years. Especially, motor automobile tires increased by 31.5% in terms of production and by 45.5% in terms of consumption compared with that in 2006. As a result, rubber inventories are in small number; particularly, inventories of tractor tires reduced by 45% compared with that in 2006 and inventories of motor automobile tires by 50% of production and consumption output planned for a month. Remarkably, even Sao Vang Rubber, which has tradition of great inventories, has its inventories in 2007 much lower than that in 2006.

During September and October of 2007, most of the consumers tried to find and buy genuine imported tires and tubes: for instance, buying Japanese tires for Japanese motorcycles, buying Huyndai tires and tubes for trucks manufactured in Korea, etc. Nowadays, however, the majority of consumers choose to buy Vietnamese products as , after four and five years of experience, they realize that domestic products have as good quality as the foreign ones, even better in some factors, and in addition they are 15-20% cheaper. Even such foreign –invested enterprise specializing in manufacturing tires and tubes for motor automobiles and motorcycles in Vietnam as Yokohama has higher price than that of Casumina and RSC, about 5-10%, whereas their products are similar n quality. In fact in the market of motorbike tires and tubes, the domestic products are stronger than foreign ones. Generally, such traditional rubber products for consumption as automobile and motorcycle tires and tubes are popular under brands and trade names of CASUMINA, DRC, SRC and KYMDAN, etc. For motor care tires, DRC holds the largest market share in Vietnam.

3. Consumption trends

Due to the fact that consumption and living standard of the people continuously grow, consumers have stricter requirements for quality, functions and models of products. Demand for high-ranking motor automobile tires shall also develop in near future.

4. Price

To produce rubber products, 20-25% natural rubber is required, the rest 70-75% include synthetic rubber and chemicals. Price of rubber materials constantly grows; this is due to the prices of crude oil, gold prices and several other impacts.

In 2007, although rubber materials of Vietnam increased at a certain point of time, their supply significantly reduced due to the impact of various factors; the annual average price, nevertheless, reached USD 1,944 per ton, increased by 7% compared with USD 1.809% in 2006.

5. Distribution channels

Rubber products for domestic consumption are distributed through various channels, inclusive of trading companies, wholesale and retail agents, shops, supermarkets and markets. Rubber producers also directly supply the market.

Rubber products used as input materials for industrial production sectors are also directly provided by producers to consumers  or through trading companies.

IV. Exports

1. Export value and volume over last 5 years

Up to 2007, Vietnamese rubber was exported to more than 40 countries over the world and its export turnover ranked the forth; its output stood fifth following Thailand, Indonesia, Malaysia and India. Average growth speed of Vietnamese rubber export in the period of 2001-2006 gained 17.66%, the highest in comparison with that of rubber exporting countries such as Thailand (2.37%), Indonesia (5.27%), Malaysia (3.52%). From 2002 to 2007, Vietnam’s rubber output increased to 173%  or 700,000 tons in comparison with 454,800 tons in 2002, its turnover grew to nearly 600%. In 2002 its turnover was USD 230 million and in 2007 it reached USD 1.36 billion. It is estimated that Vietnam’s rubber export will have growth rate increased by 4%, the export turnover increased by 12.4% in comparison with that of 2007.

Output and export turnover of Vietnamese rubber

Year

Output (ton)

Turnover (USD)

2002

454.800

230.000.000

2003

433.106

383.500.00

2004

513.252

580.000.000

2005

587.110

610.000.000

2006

690.000

1.286.000.000

2007

700.000

1.360.000.000

( Source: Governmental Statistical Office)

Among rubber exports, the export turnover of finished rubber gained USD 150 million in 2007, in which tires of all kinds held the majority with 11% total export turnover. Particularly, Vietnam National Chemical Corporation (Vinachem) gained USD 22 million from exporting  rubber products in the first nine months of 2007, which was the highest value in the whole chemical sector. In the final three months of the year, enterprises of the sector continuously expanded searching for new markets, intensified advertisement and marketing, and strived for adding USD 30 million into export value of finished rubber products.

2. Export markets

Vietnam exports rubber to 40 countries, in which exports to China account for 60% of total export output. The undeclared cross-border trade with China faces many risks in payment, while export via official channels is limited because of the high export tax from Vietnam to China.

In terms of finished rubber products, Vietnam has exported them to more than 15 countries such as Singapore, Malaysia, Brunei, Pakistan, Argentina, Brazil, Turkey, Australia, New Zealand, the UK, Japan, US, etc.

Rubber export markets of Vietnam in 2006

Market

Quantity (ton)

Percentage (%)

Value (1.000 USD)

USD/ton

China

469,975

66.38

851,379

1,812

Korea

32,324

4.57

50,768

1,571

The Federal Republic of German

30,066

4.25

58,606

1,949

Taiwan

22,429

3.17

44,580

1,988

Russian Federation

20,475

2.89

41,858

2,044

The US

17,360

2.45

27,875

1,606

Belgium

12,324

1.74

18,839

1,529

Italia

11,790

1.67

21,309

1,807

Japan

11,563

1.63

23,823

2,060

Malaysia

10,109

1.43

19,457

1,925

France

8,348

1.18

16,581

1,986

Spain

8,079

1.14

14,590

1,806

Turkey

7,482

1.06

14,157

1,892

Indonesia

4,841

0.68

6,166

1,274

Canada

4,043

0.57

7,906

1,955

England

3,818

0.54

6,216

1,628

India

3,750

0.53

6,914

1,844

Brazil

2,866

0.40

4,685

1,635

Ukraine

2,650

0.37

5,223

1,971

Slovakia

2,532

0.36

4,903

1,936

Hong Kong

2,403

0.34

4,506

1,875

Argentina

1,877

0.27

3,702

1,972

Holland

1,622

0.23

3,269

2,015

Poland

1,521

0.21

3,051

2,006

Singapore

1,500

0.21

2,949

1,966

Finland

1,048

0.15

1,948

1,859

Sweden

876

0.12

1,676

1,913

Australia

806

0.11

1,628

2,020

Republic of Czech

644

0.09

1,294

2,009

Thailand

523

0.07

826

1,579

Portugal

497

0.07

933

1,877

Cambodia

461

0.07

938

2,035

Republic of North Africa

282

0.04

512

1,816

Republic of Ireland

238

0.03

460

1,933

Greek

200

0.03

421

2,105

Philippines

179

0.03

388

2,168

Slovenia

121

0.02

278

2,299

Sri Lanka

84

0.01

87

1,033

Others

6,279

0.89

11,664

1,858

(Source: Vietnam General Administration of Customs)

3. Major export enterprises

In 2007, there were about 130 rubber-exporting enterprises, some of which  have been  highly esteemed  by the Ministry of Industry and Trade

Southern Rubber Industry Joint Stock Company (CASUMINA)

Address: No.180 Nguyen Thi Minh Khai, District No.3, Ho Chi Minh City

Tel: 84-8-9303122

Fax: 84-8-9303205

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.casumina.com.vn

Rubber Industry & Import-Export Joint-stock Company (RUBICO)

Address: 64 Truong Dinh Street, District 3, Ho Chi Minh City

Tel: 84-8-9327173

Fax: 84-8-9327171

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.rubico.com.vn

Danang Rubber Joint Stock Company (DRC)

Address: No. 1 Le Van Hien, Khue My Ward, Ngu Hanh Son District, Da Nang City

Tel: 84-511-954942

Fax: 84-511-950486

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.drc.com.vn

Geru Star Sport joint stock company (Geru Sport Co.)

Address: 1/1 Tan Ky Tan Quy, Son Ky Ward, Tan Phu District, Ho Chi Minh City

Tel: 84-8-8425110

Fax: 84-8-8425008

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.gerusport.com

Dong Nai Rubber Company (DONARUCO)

Address: Xuan Lap, Long Khanh Township, Dong Nai Province

Tel: 84-8-9400345

Fax: 84-8-9400874

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.donaruco.com

Thong Nhat Rubber Company (RUTHIMEX)

Address: No. 83/3 Luy Ban Bich, Tan Thoi Hoa Ward, Tan Phu District, Ho Chi Minh City

Tel: 9612568

Fax: 9612234

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.ruthimex.com

Apart from the above-mentioned enterprises, Casumina has the rubber export quantity increased strongly. In 2004, its export quantity was 1.5 times more than that in 2003. Casumina also made registration of trademark protection in three countries such as Singapore, Malaysia and Cambodia.

4. Export opportunities and advantages

Accession  to the World Trade Organization (WTO) has brought positive effects and has created favorable conditions for exporting of the Vietnamese finished rubber products.  For example, before the accession to the WTO, Taiwan imposed discriminatory tax on finished rubber products of Vietnam whereas most of competitors were tax-exempt.

With the accession to the WTO, Vietnam’s  enterprises were provided the  opportunities to sign the finished-rubber supplying contracts with the WTO member countries  and to avoid dependence on exporting primarily to the markets with high potential risks.

Furthermore, opportunities of attracting investment, transferring technique and high technology from the developing and developed countries to Vietnam will grow. Joining the WTO and accepting its rules and regulations are considered as conditions assisting Vietnam in gaining reputation with the  foreign investors  from the member countries of WTO in the field of the finished rubber processing. Vietnam’s rubber manufacturers will have opportunities to cooperate with foreign investors in building the rubber latex processing factories in order to produce high-content finished rubber, to modify the structure of production, to create favorable conditions for market shift. Growing investments in Vietnam will increase the value -added of Vietnam rubber sector, reduce rate of raw rubber export, will create favorable conditions to transfer structure from raw-product exports to finished product exports.

Besides, the rubber products made in Vietnam have two competitive advantages. Particularly, sources of materials of natural rubber have great and stable reserves with high quality and an annual stable increase, which effectively serve production of the export rubber. The other advantage is abundant labor force of Vietnam as well as low cost of labor.

V. Imports

1. Import volume and value

As the capacity of the finished-rubber production of Vietnam has been improved, the import density of these articles from the foreign markets is increasingly going down.

2. Import markets

Vietnam primarily imports bicycle tires from Indonesia, motorcycle tires from Thailand and automobile tires from Thailand, Indonesia, Taiwan, Malaysia, Singapore, etc. Imported products are diverse (tires for high-speed and long-distance vehicles).

Values of tires and tubes imported from Taiwan and exported to Taiwan by Vietnam were nearly equal in 2006 because many Taiwanese companies have been investing in Vietnam. Up to September 2007, value of rubber consumption products exported from Taiwan to Vietnam was twice as much as that of the same exported from Vietnam.

In 2004 and 2005, foreign tire and tube brands such as Veloce, Cammel (Thailand), Inoue (Japan), Kenda, Shinfa (Taiwan), had a lot of difficulties in expanding market in Vietnam primarily due to high sales prices; whereas, manufacturers with 100% capacity from Vietnam have been intensifying investment in renovating the technology, raising the quality of products meeting international standards.

3. Major importers

Enterprises importing rubber products from foreign markets are mainly commercial ones such as Sai Gon and Daklak Company (SADACO), Tu Thanh Rubber Conveyor Company, Thien Hoa Company Limited, Thien Bao Anh Co., Ltd, etc.

VI. Vietnam’s export development policy for the sector

Since the finished rubber brings high economic profit and has export potential, in 2008 Ministry of Industry and Trade has released policies and solutions to promote the development of export. Thereto, the rubber processing sector needs to diversify exports, to reduce the turnover of raw rubber exports, to raise the processing content gradually, to adapt the product structure in order to adapt itself to other markets such as the EU, North America and to reduce dependence on the Chinese market.

Furthermore, the sector will accelerate attracting investment, especially foreign investment in producing the products from rubber such as tires, tubes, gloves, lifebuoys in order to raise the export value in the coming years. The details of some solutions are described below:

Marketing:

- Concentrate sources to evaluate and anticipate the market in the coming years; assess types of tires of automobile, motorcycles, technical rubber products domestically produced and the imported ones in detail for making programs, plans and investment itinerary and diversifying products properly.

-Organize the distribution network; marketing and sales methods with the core understanding of each customer’s needs in a specific geographical area and seizing the opportunities for rubber export.

Product diversification:

- Bicycle tubes and tires: continue to produce traditional products; research on producing bicycle tires and tubes for sport and export.

- Motorcycle tubes and tires: continue to produce the existing products; conduct research on producing motorcycle tubes from butyl rubber and some tubeless tires for motorcycles.

- Automobile tubes and tires: continue to diversify models; concentrate on producing tubes and tires for agricultural trucks, medium and small trucks; conduct research on producing proper tires for the express automobiles, the long-distance lorries as well as specific tires, radian tires and motorcycle tires.

Technology:

- Improve product design and rubber making-up sheets in order to decrease generating heat, increase in stability, adhesion and abrasion resistance.

- Change from motorcycle tire heating process into cure system with high-pressured air.

- Cooperate with developed countries in order to perfect and improve product quality by applying modern technologies.

Management:

- Improve operation capabilities of the management, save materials consumption and power, promote incentives for innovating technology; enhance production and capacity in order to improve the product quality and reduce price.

- Apply and implement regulations of ISO 9002 quality management system.

Training:

- Allocate more resources for HR training on management and technology.

- Change to flexible training methods (domestic, overseas or on-site training)

VII. Sector development orientation and projection to 2010

The orientation for the development of Vietnamese rubber sector to 2010 consists of transferring material rubber production and export and prioritizing industrial rubber production and export in combination with material rubber export. The details are as follows:

  • Change the product structure towards proper integration in developing the industry and related services in order to increase the rubber product value and invest in promoting production and service.
  • Diversify investment forms and multiple ownership (including foreign investment) in order to exploit advantages in rubber cultivated areas; enhance the competitive capabilities of rubber products in accordance with the general plan of the sector to 2010 and its orientation to 2020.
  • Prioritize investment and development for high valued rubber products.
  • Average growth rate of revenue in the period of 2006 – 2010 is 27% per year, to 2015 it will be 12% per year and it is projected at 11% per year to 2020 in the whole rubber sector, including rubber material and finished rubber.

The sector has tried to gradually raise the turnover of rubber products for the industry sector, studying markets, selecting technology, HR training, investing in industrial rubber products, simultaneously developing automobile tubes and tires. Below is the detailed description:

  • Setting up joint ventures with domestic and foreign partners to produce 3 million sets of automobile tires and tubes per year from domestic materials.
  • Carry out marketing, technology development, and implementing the production methods in order to expand range of producing other industrial rubber products,  in many forms such as purchasing production licenses or taking part in the joint ventures or joint stock companies.

By 2010, Vietnam will increase in rubber planting area to 700,000 ha, 1.5 times more than the current area, and the yield is expected to reach about 520,000 tons. With this plan, it is expected that the rubber sector will stably decrease in exporting raw materials and increase the finished rubber exports.

VIII. Useful contacts

1. Relevant ministries and organizations

Ministry of Industry and Trade

Address: 54 Hai Ba Trung, Hoan Kiem, Hanoi, Vietnam

Website: www.moi.gov.vn

Vietnam Rubber Association

Address: 236 Nam Ky Khoi Nghia, District 3, Ho Chi Minh City, Vietnam

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.vra.com.vn

Vietnam General Rubber Corporation

Address: 236 Nam Ky Khoi Nghia, District 3, Ho Chi Minh City, Vietnam

E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.vngeruco.com

Vietnam National Chemical Corporation

Head office: 1A Trang Tien, Hoan Kiem District, Hanoi, Vietnam

E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.vinachem.com.vn

Vietnam Ministry of Agriculture and Rural Development

Address: No 2 Ngoc Ha Road, Ba Dinh District, Hanoi, Vietnam

E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Website: www.agroviet.gov.vn

2. Trade fairs and exhibitions of the sector in Vietnam

Plastics & Rubber Vietnam 2007 was held from 07 to10 March at the Ho Chi Minh International Exhibition and Convention Centre (HIECC), Ho Chi Minh City.

REFERENCES

Import-export reports published by the Vietnam General Administration of Customs since 2003 through 2007.

List of Vietnamese trusted exporters posted on Ministry of Industry and Trade Website addressed www.moit.gov.vn

Directory of Vietnamese manufactured rubber product manufacturers, exporters and traders on www.vietnamtradefair.com

Websites of manufactured rubber product manufacturers, exporters and distributors in Vietnam.

News and articles related to manufactured rubber products posted on website of Ministry of Agriculture and Rural Development.

News & reports on manufactured rubber products published by Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) at www.ipsard.gov.vn and Information Center for Agriculture and Rural Development (Agroviet) at http://xttm.agroviet.gov.vn

Articles on manufactured rubber products published on Vietnam News, Vietnam Economics News, Vnexpress, VietNamNet, Saigon Economic Times, etc since 2003 through 2007.

News and articles from Radio The Voice of Vietnam (VOV) and Governmental Website.

Annual publication “International Merchandise Trade Vietnam”  from 2003 to 2007,  General Statistics Office of Vietnam.

 


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