Businesses do not care about the domestic market

(Baonghean)- The industry of manufacturing goods to serve domestic needs in Nghe An in recent years has begun to create prestigious brands, known to consumers and manufacturers in the province and in the country. These are TH True Milk, Trung Do Granite tiles, Hoang Mai Cement, Hoang Thi Loan Knitting... However, the number of such brands appearing is not much.

Production line at Hoang Thi Loan Textile Joint Stock Company. Photo: Phan Van Toan

Faced with difficulties in the market for export products due to competition with foreign enterprises, tariff and non-tariff barriers, manufacturing goods to serve domestic needs is a choice that businesses are aiming for. To increase the value of goods to serve domestic needs, Nghe An enterprises should take advantage of available human resources and natural materials, improve product quality, reduce costs to be able to produce good products at competitive prices. The advantage of geographical location, convenient transportation system for exchanging and transporting goods, rich natural resources, abundant labor resources (being trained in increasingly specialized and systematic professions) is the basis for manufacturers in Nghe An to target the domestic market with a population of more than 90 million people, market demand is not "difficult".

The industrial production situation in Nghe An province in 2013 and the first half of 2014 still faced many difficulties, but some products with a large proportion in the province's industrial production value such as sugar, electricity production, fresh milk... still increased quite well. In the first 5 months of 2014, some products increased compared to the same period in 2013 such as: Milk of all kinds reached 46,036 thousand liters, up 295.63%; sugar 126,919 tons, up 19.65%; yarn of all kinds 5,187 tons, up 11.07%; knitted products 5.5 million pieces, up 55.19%; packaging 23 million bags, up 29.48%; standard construction bricks 291.5 million pieces, up 63.07%; cement 591 thousand tons, up 25.87%; Electricity production reached 729 million kWh, an increase of 9.95%. The new increased capacity of the industry has improved since the completion and operation of projects such as: Hua Na Hydropower Plant, Khe Bo Hydropower Plant, Hanosimex Garment Factory, MLB Tenergy Garment Factory, TH Fresh Milk Factory, Tien Phong Plastic Factory... However, currently, most of the main products produced in Nghe An are food, essential food, electricity, textiles for export, while product groups such as garments, electronics, household appliances for consumption, domestic production is still very limited, not meeting the needs of the province and the country.

Although the tastes and requirements for product quality of domestic consumers are not too strict, it does not mean that "our road is wide open for us to walk", but Nghe An manufacturers are facing competition from domestic enterprises. Overall, the production capacity of consumer products of enterprises outside the province is much better than that of most enterprises in Nghe An. Ms. Tran Thi My Linh, Hung Binh Ward, Vinh City said: she often shops at supermarkets because there the goods have good prices, guaranteed quality, and she is not afraid of "buying too much" like when buying at the market. Goods in supermarkets are mainly high-quality Vietnamese goods, especially plastic and textile products. When asked about buying products produced in the province, she said that goods from our province are almost absent in supermarkets, even in markets and agents. If there are, the quality and design cannot be equal to similar products produced domestically. Especially goods with unattractive designs and packaging that do not attract customers' attention.

It is worth mentioning that while Nghe An's main export products are mainly forestry and aquatic products, minerals, construction materials, textiles, and wood products (most of which are pre-processed and then exported, the technology and intellectual content in the products is still low, leading to low added value), the domestic production capacity is still weak and has not been properly invested to take advantage of the province's strengths in resources and labor. Specifically, one of the products with a large export proportion in Nghe An is textiles. In 2013, the province's textile export turnover reached 31.7 million USD, accounting for 9.2% of the province's total export value. However, most textile factories in the province mainly produce for export.

Meanwhile, the demand for ready-made garments in the province is relatively large, but only a few factories such as Hoang Thi Loan Knitting Factory serve domestic demand. Therefore, it is understandable that Chinese textiles still flood the market. Regarding wood chips, in recent years, the export turnover of acacia wood chips accounts for a large proportion of the total export value of the province. In 2013, the export turnover of this item reached 80 million USD, an increase of 24.5% compared to 2012, accounting for 23.2% of the total export value of goods in the province. Wood chips from acacia trees in Nghe An are highly appreciated by foreign importers, but Nghe An does not have a paper factory large enough to take advantage of the abundant local raw materials as at present. Therefore, wood chip manufacturers are forced to export to foreign markets, mainly China. But currently, exporting wood chips to this market is facing difficulties, so the export value in the first 5 months of 2014 decreased by 23.81%.

Or for bamboo and rattan products, this is a product with many advantages of Nghe An but the domestic market lacks this product. According to Mr. Thai Dai Phong, Director of Duc Phong Company Limited: The reason why Nghe An enterprises are reluctant to invest in consumer goods production is because most of the enterprises are small-scale. If they want to "compete" with other domestic enterprises, they must invest a large amount of capital to compete in quality, design, survey, market development... On the other hand, the protection of intellectual property rights in Vietnam is not really strong enough to limit the production of counterfeit and fake goods in production and business. Counterfeiting and imitation of products are still widespread and difficult to control, so enterprises are reluctant to concentrate large capital because of the high risk. Therefore, enterprises in Nghe An still choose the export direction because, according to them, export value brings higher economic efficiency and lower risk. According to Mr. Phong, his company's rattan and bamboo products are mainly exported because the product price is too high compared to the cost that people are willing to pay to buy the products, so only by exporting can the company develop.

In addition to the domestic market demand, especially in rural, mountainous, remote and isolated areas, domestic goods producers are also supported by the Domestic Market Development Project associated with the Campaign "Vietnamese people prioritize using Vietnamese goods" for the period 2014 - 2020. The total estimated cost of implementing the Project is about 228.93 billion VND. Regarding Nghe An province, Resolution No. 26-NQ/T.Ư, dated July 30, 2013 of the Politburo on the direction and tasks for developing Nghe An province until 2020 clearly stated: From now until 2020, Nghe An needs to continue to improve the leadership capacity and fighting strength of the Party organization, strengthen solidarity and unity, promote internal strength, take advantage of and attract all resources both inside and outside the province and abroad, strive to build Nghe An into a fairly developed province in the Northern region by 2015, creating the foundation to basically become an industrial province by 2020... The Resolution also proposed many solutions to achieve the goal, including the solution: Focus on exploiting and promoting potentials and advantages, developing the economy quickly and sustainably associated with renewing the growth model, improving quality, efficiency and competitiveness. Shifting the economic structure towards industrialization and modernization in accordance with the characteristics and location of the province.

In my opinion, for the industry to develop as desired, in addition to the orientation and macro solutions of the province and the country, each enterprise itself also needs to have a medium-term and long-term production and business strategy with the orientation of maximizing the exploitation of the domestic market.

Lan Huong

(Nghe An Trade Promotion Center)