The household appliance industry in Vietnam has great potential, but fierce competition is expected to occur among producers, distributors and retailers (Photo:
HCM City (VNA) - The household appliance industry in Vietnam has great potential, but fierce competition is expected to occur among producers, distributors and retailers.

According to the Ministry of Industry and Trade, spending for household appliances is estimated to take 9 percent of total private spending.

The industry ranks fourth of 11 major commodities, with yearly turnover of 12.5 – 13 billion USD and annual growth of 10 percent.

The ministry expects that a big proportion of young people will lead to a strong rise in purchase of household appliances.

The spending from consumers aged 18 – 45 represents 57 – 60 percent of total market, the ministry said.

At the same time, per capita income is over 2,000 USD per year, and demand for quality and models has also increased.

Furthermore, more people are buying made-in-Vietnam goods.

Local brand names like Happy Cook, Sunhouse, Son Ha, Tan A and Dien Quang represent 85 – 95 percent of market share in their categories thanks to good quality, affordable prices and wide-range distribution systems.

At the same time, rural markets have moved from hand-made and simple household appliances to popular Vietnamese brand names.

According to a market survey conducted by Nielsen, shopping growth in rural areas increased 12.4 percent in the first quarter of 2017 while urban areas only reached 6.5 percent.

Ordinary commodities grew 40 percent and luxury items rose 38.5 percent.

Kangaroo ranked first in the market with a high-quality water purifying machine, at a turnover of 2 trillion VND (89 million USD) in 2016.

Sunhouse followed with a turnover of 1.8 trillion VND (80 million USD) and took 10 percent market share during the 2010-2016 period. The company reached a stable high growth of 30 percent each year.

At least 80 percent of market share belongs to local brand names, while the remaining are foreign brands.

However, most local enterprises are mostly joint-ventures with Chinese. In the last two years, new names like VnTech, AsanZo and Korihome have become competitive.

But foreign competitors from Thailand and Cambodia will have an advantage in the future when import taxes are cut based on regional trade agreements.

International brand names from Japan, Germany, Taiwan (China) and the Republic of Korea have also strengthened their entry into the country through imports, distribution and retail; or M&As to quickly control the market.

For example, local company Sunhouse with six factories and a full distribution system is seeking partners, citing the M&A between Sweden-based Electrolux, Chinese Haier, and Japanese Muji and Zojirushi.

“Sunhouse is looking for a multinational partner to expand our international markets, improve our company governance, and transfer technologies,” Nguyen Xuan Phu, chairman of the Sunhouse Group’s management board, was quoted as saying in Thoi bao Kinh doanh (Business Times) newspaper. - VNA