Foreign big guys increase pressure

According to the Vietnam Paint and Printing Ink Association, Vietnam churns out 250 million liters of paint a year, including 180 million liters of decoration paint. Most of the biggest paint manufacturers have been present in Vietnam, either setting up 100 percent foreign invested enterprises, or cooperating with Vietnamese partners.

Chalermsak Pimolsri, Marketing Director of 4 Oranges Company, noted that the market is very potential with the average decoration paint use level of 1.5 liters per head, much lower than 4 liters in Thailand and 7 liters in developed countries.

However, the competition in the market has been so stiff that all manufacturers have to expand their business or they would lose the market share. That explains why foreign manufacturers, though holding 65 percent of the market share and having great advantages in brands and financial capability, still have been making heavier investments.

4 Oranges plans to set up 2,000 color blending centers throughout the country. Jotun has increased its investment capital to $16.1 million dollars to expand the factory and raise the production capacity to 25 million liters per annum.

Dao Tuan Khoi, General Director of Jotun Vietnam, said the company maintains the annual growth rate of 20 percent and the turnover of $50 million a year.

Despite the demand decrease, the profit of AkzoNobel in South East Asia and Pacific in 2012 was still satisfactory, euro15.4 billion, an increase of 5 percent over 2011.

AkzoNobel Vietnam’s CEO David Teng said the company has invested euro13 million more on the factory in the southern province of Binh Duong in order to optimize the paint production.

Domestic manufacturers have to be stronger or die

According to market survey firms, foreign brands have been dominating the market with 65 percent of the market share. Expo is believed to have the biggest output, about 40,000 tons per annum, followed by Akzo with 30,000 tons.

The recent years have witnessed the rise of domestic manufacturers with a lot of domestic brands joining the market and becoming better known, such as Kova, Dong Tam, Tison, Alphanam and Hoa Binh.

Of these, Kova (5,000 tons per annum) and Tison (5,000 tons) have been even more favored than some foreign brands. However, Vietnamese products have been distributed only in provinces, while they still cannot squeeze into big cities – the most profitable markets.

Vietnamese manufacturers have been only focusing on making interior and exterior decoration paints. The poor range of paint products and the bad skills in branding both make domestic brands inferior to foreign ones.

Director of Nero Company Hoang Van Hung said domestic manufacturers have to become stronger or die. It has marketed a new product line – waterproof decoration paint, which is believed to have the same quality with foreign products and the sale prices lower by 30-50 percent.

Hoa Binh Paint has launched a new high grade brand Hodastone, which, though is 2-3 times more expensive than liquid paint, has been favored.  It has high durability and aesthetics, thus suitable to the coastal construction works or the works in cold climate such as Japan or Europe.