In the next five years, we may find that those leading companies in China’s auto industry have shifted their production bases to Vietnam. Today, Vietnam has officially been allowed to join the World Trade Organization after a 12-year negotiation. After a watery Vietnam enters the WTO, China’s products will gain more market access opportunities and Chinese auto companies will usher in new business opportunities.
Tariff Cuts Reveal Opportunities
According to Vietnam’s “Materials Daily†report recently, the deputy head of Vietnam’s WTO accession delegation stated at the regular meeting of the government that from January 1, 2009, Vietnam will officially open the automobile and motorcycle market, and will allow wholly foreign-owned enterprises to set up a car. And motorcycle sales company.
In fact, due to the high tariff imposed on automobile imports, Vietnam is still one of the countries with the highest automobile prices in the world. Due to its limited market capacity and relatively heavy assembly capacity, the average actual output is only 30% of the design capacity. Most of the automotive parts and components are imported from abroad. Therefore, the price of the automobile market in Vietnam is much higher than that of similar products. market price.
With the reduction of tariffs, Vietnam’s cars will also, like China’s accession to the WTO, directly reflect the benefits to the people. An investment company recently released a report saying that Vietnam is accelerating its changes at a rate that exceeds the most optimistic estimates, and the growth in consumption is surprising.
According to the development plan announced by the Ministry of Industry of Vietnam, the total annual automobile growth rate in Vietnam during the period from 2005 to 2010 was 16%, and the annual growth rate during 2011-2020 was 8%. Based on this calculation, by 2010, the country’s total vehicle ownership will reach 1.2 million, and by 2020 it will reach 2.8 million. Experts in the automotive industry in Vietnam generally believe that since 2006, Vietnam’s annual auto sales should be more than 100,000.
Multinational companies take the lead
Vietnam has always been committed to making the automotive industry a pillar industry in the country. While implementing the protection policy for the automobile industry, the Vietnamese government also did not forget to actively attract foreign investment.
There are currently 13 automobile joint ventures in Vietnam. Ford, Mercedes-Benz, Toyota, Daihatsu, Daewoo, Isuzu, Suzuki, Hino and other multinational automobile brands have entered the Vietnamese automotive market. In addition, commercial vehicles in China have also established an assembly base in Vietnam. After more and more automobile manufacturers have set up factories in Vietnam, more auto companies have begun to notice the potential of new WTO members and consider establishing a joint venture in Vietnam. .
Chinese cars need to accelerate
After Vietnam's accession to the WTO, China and Vietnam, the partners in ASEAN, will be more closely linked. Mature Chinese companies can invest in factories in Vietnam. Local land and labor costs in Vietnam are low. By investing in factories, investors can not only make profits, but also drive the export of equipment, spare parts and skilled workers.
It is understood that China’s auto companies have apparently accelerated their pace in Vietnam. Vietnam is also offering preferential policies to this neighbor. With the entry into force of the China-ASEAN FTA cargo trade agreement, China’s automobile tariffs on exports to Vietnam will also be gradually reduced. China's vehicle imports can also enjoy a preferential tax rate of 5%. The scope of tax reduction also includes various special vehicles. According to Vietnamese media reports, currently more than a dozen brands of Chinese automotive products are assembled and sold in the Vietnamese market, and their prices are more than two percent lower than similar models in South Korea, Russia and other countries.
However, China’s investment in Vietnam’s auto market has obviously lagged behind, and Vietnam has become “a new gold rush for Japanese businessmenâ€. Honda, Mercedes-Benz, BMW, General Motors, Daewoo, and Toyota all said that in the first 10 months of this year, sales of cars have increased by 15%. Despite news that China's SAIC Group intends to enter the Vietnam market through a joint venture, it will start production of Shanghai GM Wuling, and the project investment is expected to be 50 million US dollars. However, there are still many variables in the project and it has not been officially recognized.
Some experts believe that China’s commercial vehicles have great advantages in the Vietnamese market and can fully counter the challenges of the international auto giants. However, in terms of passenger vehicles, due to the early entry of multinational giants, not only has occupied most of the market share, but also has been known by Vietnamese consumers. If Chinese cars want to grow in Vietnam, they cannot use price alone to fight against them. Use quality to promote yourself.
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