China’s brands need to catch up in Vietnam

By Ding Gang Source:Global Times Published: 2016/9/7 18:38:39

Illustration: Liu Rui/GT

Vietnam is a kingdom of motorbikes. In the country, with a population of over 90 million, there are nearly 20 million motorbikes. Chinese tourists tend to think most of the scooters they see are made by Chinese. But in fact, they are largely Japanese-produced.

Over 80 percent of motorcycles in Vietnam are Japanese brands, and China has lost ground in the Vietnamese motorbike market. I visited a local factory built by China's Zongshen Industrial Group during my recent Vietnam trip. The factory has given up its motorcycle manufacturing business, switching to producing farming machines instead.

According to Hoang The Anh, deputy director of the Institute of Chinese Studies at the Vietnam Academy of Social Sciences, because of a lack of brand awareness and long-term vision among Chinese enterprises, the Chinese-made products including motorbikes failed to gain a foothold in the Vietnamese market.

A manager surnamed Ou from the Zongshen Vietnam Company attributed the failure to cut-throat competition among varied Chinese factories and self-destructive operations in which they put on sale cheap motorbikes assembled from smuggled components.

Despite their high prices, Japanese bikes are superior across-the-board. After building their brand reputation, Japanese manufacturers aim at gaining more market shares by producing mid-to-low end motorcycles. The latest model only costs approximately 3,000 yuan ($450).

China is a well-known motorcycle and components manufacturer. Japanese Vietnam-based vehicle and motorbike factories still have to import a great deal of spare parts from China. As Chinese enterprises are in the lower end of the industrial chain, their Japanese counterparts with brand advantages have gained the most benefits.

Japanese enterprises have also begun to export vehicles and motorcycles manufactured in their factories in Thailand and Vietnam to the Southeast Asian and the Japanese domestic markets. They have set up a whole chain of production, marketing and sales, bounding together employment in the Southeast Asian nations with Japan's global brand expansion.

During my stay in Vietnam, many Vietnamese I talked to compared "made-in-China" products to "made-in-Japan" ones. But the statistics and research findings they cited were all released a few years ago. Obviously, they are not fully informed about the progress China has made in its manufacturing industry, but are stuck in their stereotyped views.

Since the mid-1990s, thanks to China's reform and opening-up and geographic advantages, Chinese-made garments, daily necessities, and electric appliances have flooded into Southeast Asia. Today, they still dominate the major urban markets. 

These cheap and low-quality products gradually influenced local views toward Chinese-made products, tarnishing China's reputation.

Although now many Chinese-made products are now comparable with those made by Japan and South Korea, implicated by the early records, Chinese brands will find it hard to compete with their Japanese and South Korean counterparts.

The development of Japanese-made products has enabled Japan to have a better image than China in the Southeast Asia. While many attributed the improved image of Japan in the region after WWII to the country's considerable aid there, a more important factor is the influence of Japanese-made products.

Hoang The Anh told me that referring to China, many aged Vietnamese would recall Phoenix bicycles and Bee sewing machines, two Chinese brands popular in Vietnam decades ago. When I did interviews in Alaska, US, over 10 years ago, several American editors along with me also mentioned Phoenix bicycles, talking about their initial impression on China.

Brands are closely related to the image of a state. As China begins to play an important role in the global stage, it's necessary to carefully mull why Chinese motorbikes have lost ground in Vietnam.

The author is a senior editor with People's Daily, and currently a senior fellow with the Chongyang Institute for Financial Studies at Renmin University of China. dinggang@globaltimes.com.cn. Follow him on Twitter @dinggangchina

Posted in: Columnists, Ding Gang

blog comments powered by Disqus