LookAtVietnam – China is the huge production base of the world. mobile phones, computers or clothes, which bear the well known US or Italian brands, are made in China or assembled with the accessories sourced from China. it is understandable why Vietnam has been importing so much. However, experts believe that now is the time to reconsider what and how much to import from China.
Vietnam infatuated by cheap technologies
Vietnam is importing billions of dollars worth of technologies from China, which as a country is not a source of modern technologies. But Vietnamese enterprises have been persuaded by the low prices
However, the cheapest turns out to be the most costly. Vietnamese industries now suffer bad consequences of using cheap technologies.
Chinese enterprises have been the EPC (Engineering /Procurement / Construction) contractor in most of the coal-run thermopower plants in Vietnam and Chinese technologies have been applied in most of them. The reason behind this is simple. The prices of the technologies, as the officials from the Ministry of Industry and Trade revealed, are just Â½ of those offered by G7 countries.
In other cases, Vietnam has to choose Chinese contractors because the contractors promise to help Vietnam arrange capital for the projects.
However, the implementation of most of the power projects has been slow, while the plants’ operation is not stable or reliable. The technical problems were described by Minister of Industry and Trade Vu Huy Hoang at the latest National Assembly’s session as “shortcomings”. However, as for Minister of Planning and Investment Vo Hong Phuc, these “shortcomings” can cause serious problems:. Some projects have been delayed for two-three years, and the problem is that there is a serious shortage of electricity in Vietnam
Until now, the two power generation units of the Hai Phong thermopower plants, where Chinese enterprises act as EPC contractor, have stopped operation, while the contractor is still busy fixing the equipments.
The equipments used at the power plants break down all the time, leading to the paralysis of the whole chain. The project has beendelayed for two years and it should be handed over to the Vietnamese investor by February 2011.
Making a rod for its own back
The story about the steel industry is also a typical example of the consequences of using cheap Chinese technologies.forVietnamese enterprises
According to Nguyen Tien Nghi, Deputy Chair of the Vietnam Steel Association, 29 percent of hot rolled and cold rolled steel products have been fed up with the imports from China. Especially, as for the rolled structural steel, the figure is higher at 34 percent.
Chinese rolled steel imports to Vietnam are subject to 10 percent tax, but they still sell at prices lower by 300-500,000 dong per ton than domestic products. This has caused distress to many Vietnamese. The market share held by Vietnamese enterprises has now reduced from 27 percent to 18 percent.
What will happen to Vietnam’s steel industry in the next four years, when the import tariff is cut to zero percent under the framework of the ASEAN-China free trade agreement?
According to Nghi, the competitiveness of Vietnamese enterprises is very weak, because they use the cheap and backward technologies imported from China.
To date, many companies are still using the furnaces with the capacity of 20-40 tons per batch. The most modern 350 cubic metre blast-furnace technology is being used by Hoa Phat Company.
The paradox is that Vietnamese enterprises are using the technologies that China has discharged and have banned since 2005.
Vietnam has been importing not only machines and equipments, technologies and high grade products, but it has been importing consumer goods in large quantities. Despite the warnings about the quality of many import products, more and more consumer goods have been flowing into Vietnam. China-made fabric is now accounting for 90 percent of Vietnam’s market. Meanwhile, in February 2010, Vietnam’s agencies discovered three batches of fabric from China contained high content of formaldehyde, a substance that causes cancer. In March, the HCM City Market Control Sub-department discovered that 7500 out of 7608 China made necklaces and rings contain lead and cadmium.