The protracted domination of a few State-owned enterprises in the field of quality assessment is being challenged by hundreds of local private and foreign firms
The quality assessment sector was arguably established in 1957, when the Import-Export Testing Department under the Ministry of Trade, a precursor to Vinacontrol, sprang to life. Vinacontrol is currently a joint stock company whose operation has expanded beyond quality assessment to include issuing international quality certificates, evaluating environmental standards and impacts, appraising prices, auditing, and training quality assessment professionals.
The company’s ups and downs closely mirror those in the industry. Monopoly no longer prevails as enterprises, including local private and foreign entities, have mushroomed. However, the market is not yet fully open as State-run quality assessment businesses are still influenced by various interest groups. Liberalization is most pronounced in segments where Vietnamese technologies are not yet able to flourish or win over foreign customers.
Capable quality assessment enterprises in Vietnam at present include Cafecontrol (agro-products), FCC (sterilization), the Ministry of Agriculture and Rural Development’s Nafiqaved (fisheries) and the Ministry of Science and Technology’s QUATEST 3 (consumer goods). The last company has recently turned into a force to reckon with, even among international quality assessment organizations. Some noteworthy foreign firms which have entered the sector are Switzerland’s SGS, Germany’s TUV SUD, Britain’s Intertek, and U.S.-based UL.
Owing to enticing profit prospects, the race rages on. Quality assessment accounts for a significant share of the operating costs of many enterprises, especially exporters and subcontractors. Consequently, domestic industry associations are setting up their own quality assessment arms to seize a slice of the profit pie.
However, fair competition remains elusive, or so some foreign firms argue. Despite their resources and reputation, these companies have yet to prosper in Vietnam due to limited market access.
In fact, competition has become increasingly ferocious. In 2002, the number of quality assessment firms in Vietnam shot up to more than 200 and, according to experts, exceeded those of Europe and the remaining Asian countries combined. Slashing prices was a popular strategy and fake certificates became rife. Ultimately, it was producers which felt the pinch of customers’ ire.
Hoang Lam, vice director of QUATEST 3, says that many enterprises still resort to bribes and other dubious practices to get sub-standard products certified. Sometimes, complacency and recklessness on the part of exporters and quality assessment organizations have caused them to overlook several shortcomings and led to customer dissatisfaction.
Fortunately, as competition intensifies, enterprises no longer have to wait for a long time to get their goods certified. Instead, it is quality assessment firms which must vie against each other for market share.
Fresh air
Foreign certification organizations have not created much fanfare since they started entering Vietnam. After the establishment of several representative offices and joint ventures, foreign-owned quality assessment firms have sprung up in Vietnam, too.
SGS, which arrived in Vietnam in the late 1980s, joined forces with Vinacontrol to set up a financially and technologically capable joint venture in quality assessment. However, they parted company in 1995 following an operational glitch. Two years later, SGS Vietnam Co. Ltd. emerged as the first wholly foreign-owned quality assessment company in Vietnam.
According to an expert from SGS, what his company lacks is not capital or technology, but market share, which is held mostly by domestic firms. SGS is known for energy certification, especially that related to oil. However, after its partnership with Vinacontrol ended, the energy arm was transferred to the Vietnamese partner. Subsequently, an energy quality assessment company aided by the oil and gas sector entered the fray and soon became the forerunner.
Henry Bui, managing director of a U.S.-based quality assessment firm, which has penetrated Vietnam’s market, says that he has had to reduce the fees charged by its modern laboratory in HCM City to 93% of international fees to stay competitive.
J.C. Sekar, managing director of UL for ASEAN, says that 70% of Vietnamese products are for export. Consequently, it is necessary to make sure they meet the increasingly stringent standards imposed by the Government and importing countries.
Apart from joining hands with QUATEST 3, using this center’s equipment for testing and upgrading laboratories to meet international standards, UL cooperates with producers such as the Vietnam Electric Cable Joint Stock Co., which has poured some US$200,000 into UL’s laboratories to produce electric wires and cables good enough for the U.S. market.
Meanwhile, TUV SUD has channeled millions of dollars into laboratories aimed at checking the quality of exported textiles, apparel and leather. In addition, it has joined forces with QUATEST 3 since May 2010 to exchange technical and professional information on quality assessment in various countries.
Industry associations also have plans to set up their own quality assessment centers to reap benefits. For instance, since most Vietnamese leather and footwear products are bound for other countries, Diep Thanh Kiet, vice chairman of the Vietnam Leather and Footwear Association, says that quality assessment takes a substantial share of a company’s operating costs. Therefore, to slash such costs and capture the market share previously held by external firms, some of which are based in Hong Kong or Singapore, this association will develop two international-standard quality assessment centers, with an estimated cost of US$3-5 million each.
As technical standards proliferate, quality assessment has become increasingly important. The market will even expand as identifying appropriate energy labels for such complex equipment as photocopying machines, television and refrigerators requires modern laboratories which, according to Luong Van Phan, vice director of the Vietnam Standard and Quality Institute under the Directorate for Standards, Metrology and Quality, gobble tens of billions of dong each and require much office space and competent human resources.
The quality assessment sector was arguably established in 1957, when the Import-Export Testing Department under the Ministry of Trade, a precursor to Vinacontrol, sprang to life. Vinacontrol is currently a joint stock company whose operation has expanded beyond quality assessment to include issuing international quality certificates, evaluating environmental standards and impacts, appraising prices, auditing, and training quality assessment professionals.
The company’s ups and downs closely mirror those in the industry. Monopoly no longer prevails as enterprises, including local private and foreign entities, have mushroomed. However, the market is not yet fully open as State-run quality assessment businesses are still influenced by various interest groups. Liberalization is most pronounced in segments where Vietnamese technologies are not yet able to flourish or win over foreign customers.
Capable quality assessment enterprises in Vietnam at present include Cafecontrol (agro-products), FCC (sterilization), the Ministry of Agriculture and Rural Development’s Nafiqaved (fisheries) and the Ministry of Science and Technology’s QUATEST 3 (consumer goods). The last company has recently turned into a force to reckon with, even among international quality assessment organizations. Some noteworthy foreign firms which have entered the sector are Switzerland’s SGS, Germany’s TUV SUD, Britain’s Intertek, and U.S.-based UL.
Owing to enticing profit prospects, the race rages on. Quality assessment accounts for a significant share of the operating costs of many enterprises, especially exporters and subcontractors. Consequently, domestic industry associations are setting up their own quality assessment arms to seize a slice of the profit pie.
However, fair competition remains elusive, or so some foreign firms argue. Despite their resources and reputation, these companies have yet to prosper in Vietnam due to limited market access.
In fact, competition has become increasingly ferocious. In 2002, the number of quality assessment firms in Vietnam shot up to more than 200 and, according to experts, exceeded those of Europe and the remaining Asian countries combined. Slashing prices was a popular strategy and fake certificates became rife. Ultimately, it was producers which felt the pinch of customers’ ire.
Hoang Lam, vice director of QUATEST 3, says that many enterprises still resort to bribes and other dubious practices to get sub-standard products certified. Sometimes, complacency and recklessness on the part of exporters and quality assessment organizations have caused them to overlook several shortcomings and led to customer dissatisfaction.
Fortunately, as competition intensifies, enterprises no longer have to wait for a long time to get their goods certified. Instead, it is quality assessment firms which must vie against each other for market share.
Fresh air
Foreign certification organizations have not created much fanfare since they started entering Vietnam. After the establishment of several representative offices and joint ventures, foreign-owned quality assessment firms have sprung up in Vietnam, too.
SGS, which arrived in Vietnam in the late 1980s, joined forces with Vinacontrol to set up a financially and technologically capable joint venture in quality assessment. However, they parted company in 1995 following an operational glitch. Two years later, SGS Vietnam Co. Ltd. emerged as the first wholly foreign-owned quality assessment company in Vietnam.
According to an expert from SGS, what his company lacks is not capital or technology, but market share, which is held mostly by domestic firms. SGS is known for energy certification, especially that related to oil. However, after its partnership with Vinacontrol ended, the energy arm was transferred to the Vietnamese partner. Subsequently, an energy quality assessment company aided by the oil and gas sector entered the fray and soon became the forerunner.
Henry Bui, managing director of a U.S.-based quality assessment firm, which has penetrated Vietnam’s market, says that he has had to reduce the fees charged by its modern laboratory in HCM City to 93% of international fees to stay competitive.
J.C. Sekar, managing director of UL for ASEAN, says that 70% of Vietnamese products are for export. Consequently, it is necessary to make sure they meet the increasingly stringent standards imposed by the Government and importing countries.
Apart from joining hands with QUATEST 3, using this center’s equipment for testing and upgrading laboratories to meet international standards, UL cooperates with producers such as the Vietnam Electric Cable Joint Stock Co., which has poured some US$200,000 into UL’s laboratories to produce electric wires and cables good enough for the U.S. market.
Meanwhile, TUV SUD has channeled millions of dollars into laboratories aimed at checking the quality of exported textiles, apparel and leather. In addition, it has joined forces with QUATEST 3 since May 2010 to exchange technical and professional information on quality assessment in various countries.
Industry associations also have plans to set up their own quality assessment centers to reap benefits. For instance, since most Vietnamese leather and footwear products are bound for other countries, Diep Thanh Kiet, vice chairman of the Vietnam Leather and Footwear Association, says that quality assessment takes a substantial share of a company’s operating costs. Therefore, to slash such costs and capture the market share previously held by external firms, some of which are based in Hong Kong or Singapore, this association will develop two international-standard quality assessment centers, with an estimated cost of US$3-5 million each.
As technical standards proliferate, quality assessment has become increasingly important. The market will even expand as identifying appropriate energy labels for such complex equipment as photocopying machines, television and refrigerators requires modern laboratories which, according to Luong Van Phan, vice director of the Vietnam Standard and Quality Institute under the Directorate for Standards, Metrology and Quality, gobble tens of billions of dong each and require much office space and competent human resources.
No comments:
Post a Comment