Vietnam’s cement industry faces shake-up

by VOV01 September 2015 Last updated at 09:30 AM - The cement industry posted growth in the first seven months of the year on the back of strong domestic consumption despite lagging exports, according to the latest statistics of the Ministry of Construction (MOC).

For the seven months January-July, sales prices remained stable with increased volume pushing overall sales of cement and clinker upwards by 10% year-on-year to an estimated 40 million metric tons, fulfilling 57% of the year’s annual target.

An uptick in construction in the residential real estate market along with stepped up work on infrastructure projects throughout the nation benefited the cement industry as a whole, said the MOC.

Nguyen Quang Cung, president of the Vietnam Cement Association (VCA) in turn reported the industry is on target to hit sales of 5 million metric tons by the end of the year, surpassing the annual target.

However, the outlook for sustainability over the long term remains unclear as the state divests itself of its remaining ownership in the industry over the remaining months of 2015 and opens it up to free market forces.

Vietnam has signed several free trade agreements (FTAs) with other economic regions, including ASEAN, the EU, the Republic of Korea (RoK) and Eurasia – all of which cast a damper over the industry’s ability to survive in a post free-trade world.

“The cement industry as a whole admittedly lacks the requisite entrepreneurial spirit and ambition to get engaged and compete with its peers from other countries,” Cung stressed.

Countries, such as Russia and India in particular, have solid cement industries churning out millions of metric tons of top quality product annually on a much more economical basis than Vietnam is currently capable.

All told roughly 104 countries across the globe are strong in producing quality concrete on a timely and consistent basis Cung said, adding that without the benefit of the protection of the government the cement industry is likely to fall apart and crumble.

For his part, Le Van Toi, head of the Building Materials Department under the Ministry of Construction suggests the entire industry needs to reinvent itself by modernizing and get on board with the latest innovations, expert know-how and best new practices.

The industry needs to reorient to the nation’s new open marketplace and learn how to compete using superior knowledge to innovate, finish their work faster, better and more profitably.

Most importantly Toi stressed, there needs to be a focus on marketing— getting proactive in studying the global consumer markets to find out what their needs and buying habits are and then producing a product that meets their expectations.

They also need to get their accountants crunching the numbers, analysing the trends and correlations over the last four years and do some forward thinking ‘what if’ scenario analysis so they can approach the market on a more informed basis.

There is still time to get the industry on the path to success and prosperity said Toi, but as of now— the industry’s foundation is weak and it may just crack under the pressure of FTAs.


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