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End of the road for motorbike industry?   2012-01-31 - VNS

It is not clear if the Vietnamese motorbike industry is coming or going.

Experts reckoned in the past that demand should dry up when the number of bikes in the country topped 30 million. But according to the Ministry of Transport, by August 2011 the number had reached 33.4 million.

On the other hand, all major manufacturers – who, one presumes, do their market research – have firm expansion plans.

What we do know is that a slew of forecasts about the industry has gone wrong. The Ministry of Industry and Trade predicted earlier that Viet Nam would have a population of 99.6 million and 33.5 million motorbikes by 2020, or one motorbike for 2.97 people.

In Thailand, the ratio is 2.9, and the Thai motorbike market has indeed saturated.

Professor Kenichi Ohno from Japan's National Policy Research Institute had predicted that when the number of motorbikes reached 30 million, the Vietnamese market would saturate. He expected this to occur some time in 2017-2020.

There are indications demand has been falling. Last year 66,000 motorbikes worth US$94 million were imported, a 38.9 per cent fall in volume and 27.8 per cent in value.

In December alone 3,000 motorbikes were imported in the form of complete built units for $5 million, a decrease of 1,000 units and $1 million.

Normally, demand always surges in the final months of the year.

But look at the flip side. Last year Honda, Yamaha, and Piaggio launched expansion plans as well as promotion campaigns, revealing confidence in the market.

In April Italian manufacturer Piaggio broke ground for its second scooter plant in Vinh Phuc Province, aiming to raise its capacity in the country from 100,000 to 300,000 units a year in mid-2012.

In August Yamaha announced an investment of $26 million to double its capacity to 1.5 million units per year, aiming to compete with its Japanese rival Honda.

Honda followed, breaking ground in Ha Nam Province for its third motorbike plant in the country at a cost of $120.5 million which will raise its annual capacity in the country to 2.5 million when it becomes operational later this year.

But it is not clear how much exports to regional markets figure in the companies' plans.

While both output and consumption rose in 2011, the big inventories left with the manufacturers revealed demand was not too strong.

The industry's inventory index rose 41.7 per cent, or double the consumption and production indexes.

Rosy future for cosmetics

The Vietnamese cosmetics market has been quietly growing from 3 per cent of the overall ASEAN market a few years ago to 5 per cent last year, Dr Alain Khaiat, deputy president of the ASEAN Cosmetics Association, said.

Thailand is the leader of this market with 30 per cent, followed by Indonesia (23 per cent), the Philippines (21 per cent), and Singapore (9 per cent), while Brunei, Cambodia, Laos, and Myanmar are smaller, he said at a conference in Bangkok last week.

"The Viet Nam market has been growing quite fast in the last few years. As the economy continues to grow more people will be able to afford more products," Khaiat was quoted by the Tuoi Tre (Youth) newspaper as saying.

But he also pointed out some problems that could hinder its development.

"One thing hurting in Viet Nam is that there are too many fake products. The Government has to be tough on those making or selling fake products and the public has to be educated not to buy these."

It would also be beneficial for farmers in Viet Nam to develop organic farms, he said.

"If organic cosmetics grow, companies manufacturing these will need to find organic plants to put in their products. I believe there is an opportunity there.

"Of course, there are risks, there are also rewards as the price for organic plants is higher."

Post-harvest technologies

Despite their high quality, Vietnamese fruits are being exported to some Asian markets at prices just a little bit higher than at home.

Dam Van Hung, director of the Ben Tre-based Huong Mien Tay Co., says fruit exporters have been unable to fully tap overseas markets since they have paid little attention to post-harvest technologies.

To promote fruit exports, Huong Mien Tay has invested VND7 billion ($330,000) in building a factory to process and pack green-peel pomelo for export.

Hung says post-harvest technologies not only bring clean and safe products to customers but also improve the quality of their products.

The company has also signed contracts with six co-operatives in Ben Tre Province that grow pomelos on 200 ha to VietGAP (Vietnamese Global Agricultural Practices) and GlobalGAP standards. It will pay 15 to 20 per cent more for the fruits than market rates.

Hung says the plant's use of modern post-harvest technologies has helped Huong Mien Tay expand its overseas markets from Asia and the Middle East to others including France, Spain, and Canada.

"We exported some 200 tonnes of green-peel pomelos in 2011 and the figure is expected to increase to 300–400 tonnes this year.

"The use of post-harvest technologies has helped us to increase export prices by 10–20 per cent."

Nguyen Van Tuan, a farmer in Ben Tre's My Phuoc Trung Commune, says the contract signed with Huong Mien Tay has helped raise the quality of his pomelos and improve his family's living standards.

Dr Nguyen Minh Chau, head of the Southern Fruit Research Institute, says Huong Mien Tay's alliance with farmers has created standard and safe products which can meet the demand of customers in "fastidious" markets, benefiting both farmers and exporters.

Truong Van Cho, director of the Tien Giang Province Department of Agriculture and Rural Development, says the Mekong province grows many fruits to VietGAP and GlobalGAP standards including Vinh Kim Star Apple and Hoa Loc Mango. But these fruits have yet to capture overseas markets since growers have not signed sales contracts with exporters who employ modern post-harvest technologies to process these fruits.

"Other enterprises in other Mekong provinces should learn from the experience and success of Huong Mien Tay Co."

Hung says: "Policies to promote the use of post-harvest technologies to improve the quality of products could help increase exports of Viet Namese fruits by 30 to 40 per cent in the next few years."

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