The household appliance industry in Việt Nam has great potential, but fierce competition is expected to occur among producers, distributors and retailers.— Photo vietnamnet.vn

HCM CITY — The household appliance industry in Việt Nam 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 per cent of total private spending.

The industry ranks fourth of 11 major commodities, with yearly turnover of US$12.5 – 13 billion and annual growth of 10 per cent.

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 per cent of total market, the ministry said.

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

Furthermore, more people are buying made-in-Việt Nam goods.

Local brand names like Happy Cook, Sunhouse, Sơn Hà, Tân Á and Điện Quang represent 85 – 95 per cent 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 per cent in the first quarter of 2017 while urban areas only reached 6.5 per cent.

Ordinary commodities grew 40 per cent and luxury items rose 38.5 per cent.

Kangaroo ranked first in the market with a high-quality water purifying machine, at a turnover of VNĐ2 trillion ($89 million) in 2016.

Sunhouse followed with a turnover of VNĐ1.8 trillion ($80 million) and took 10 per cent market share during the 2010-2016 period. The company reached a stable high growth of 30 per cent each year.

At least 80 per cent 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 and South 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,” Nguyễn Xuân Phú, chairman of the Sunhouse Group’s management board, was quoted as saying in Thời Báo Kinh Doanh (Business Times) newspaper. — VNS