Thai goods have not flooded Vietnam’s market like Chinese goods have, but they have gradually increased their presence, becoming another threat to domestic production.
Statistics demonstrate that Thai imports to Vietnam are diversified and their volume has been increasing rapidly (see box). It is clear that Thai goods compete most fiercely in consumer goods markets, with processed foods, cosmetics, ready-made clothing and footwear.
Thai goods claim “above-average” market
According to Thailand Commercial Affairs Division in HCM City, Thai goods do not compete with Vietnamese products in the low-cost sector, but mainly compete as products with above-average prices.
Le Van Hung, Deputy Head of the Marketing Division of Acecook Vietnam, noted that Thai instant noodles are trying to attract Vietnamese consumers with unusual tastes. According to Hung, Thai instant noodles do not compete with Vietnam-made products priced at of 2,000-3,000 dong per box. Instead they appeal to the above-average market segment.
Mai Tan Dung, Business Director of Lan Hao Cosmetics Company, admitted that Thai products have nearly no rivals in hair care products with average and above-average prices. According to a My Hao Cosmetics Company survey, Thai cosmetics products are now available at small hairdressing salons and account for 80 percent of goods at shops specializing in cosmetics for hairdressers in Tan Binh, Kim Bien and Binh Tay markets.
According to Dung, Thai goods have sold well because prices are relatively ‘soft’, just 10-20 percent higher than Vietnamese products, and yet cheaper by 60-70 percent than German, American or French products
At Soai Kinh Lam cloth Market in HCM City, a Thai suit for women and children priced at 250,000 dong has been selling better than equivalent domestic garments selling for 100,000-150,000 dong.
Hue, a clothes wholesaler, acknowledged that Thai clothes now sell better than Chinese products, thanks to better materials.
Nguyen Thi Phuong Mai is the owner of A-T Children’s Fashion Shop in HCM City that specializes in Thai imports. She agreed that even though Thai clothes are 30 percent more expensive than Chinese products, Thai garments still sell better because of their higher quality.
The owner of Thao My Shop in HCM City complained that, in selling both Vietnam and Thai goods, the Vietnamese goods lack diversification.
The path of Thai goods
Vietnam is clearly a target market for Thai producers. According to distributors, besides goods imported through official channels, they are also crossing the land borders and being carried into Vietnam by travelers.
Nguyen Tung, the manager of the official distribution agent for Adda footwear in HCM City, noted that the volume of goods imported across the border gate is ten times bigger than imports through official channels. Footwear shops that sell Adda products mainly sell products imported across the border.
According to Nguyen Thi Phuong Mai, it is very easy to buy Thai products. Merchants can contact Thai companies via Internet, at trade fairs and through addresses on product packaging. When merchants order several thousands of products, Thai companies will ship products by air to Vietnamese merchants.
According to the Ministry of Industry and Trade, the import revenue of Thai goods in the first six months of 2010 reached $2.5 billion, an increase of 37.8 percent in comparison with the same period of 2009.
Meanwhile, according to the Thai General Department of Customs, Thai total export revenue to Vietnam in the first five months of 2010 was $2,099.3 million, an increase of 37 percent in comparison with 2009. Cosmetics export revenue was $25.9 million (a 34.2 percent increase), garment export revenue was $1.3 million (a 14.4 percent increase).
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