Vietnam becoming boom zone for South-East Asia paint

The association then believes the market will grow at a steadier pace of between 10-15% for the following three or four years. The industry is reaping the rewards a series of industrial zones established by the Vietnam government around Ho Chi Minh City, which incorporates Saigon, the former capital of South Vietnam.

Money has come from outside the country too, with regional players also looking to invest in Vietnam’s paint and coating sector. Last year, the Thai paint company 4 Oranges started to export its Vietnamese-made paint from its US$ 14.5 M plant in the southern province of Long An province, which produces 100 M liters of paint a year. In 2006 the company reported a turnover within the country of US$ 50M.

GLOBAL PLAYERS MOVE IN

A number of international companies, including Sigma and Nippon, have paint producing plants in the country. In September, the British paint producer ICI Vietnam opened a new factory in the My Phuoc Industrial Park, Binh Duong province. With a total produce 24M liters of Dulux paints a year. “The move aims to meet rising demand in Vietnam”, said a spokesman for ICI. “As demand rises its capacity will increase.”

The burgeoning attraction of Vietnam of Vietnam is typified by the Danish paint company Hempel. Although Hempel has traded within Vietnam for 11 tears, it opened its first factory in Vietnam in the south of the country in 2006 and its first full year of operation has been deemed a success by Otso Massala, regional business director, Asia Pacific.

The factory already produces substantial volumes of paint and has been allowed by the Vietnamese government to operate as a wholly foreign, independent company.

“The attraction of Vietnam is that industry here is moving faster than elsewhere in the region”, he said. “We find that the local workforce works very staff can be a challenge but they make up for that by being willing to learn”.

Hempel, along with other foreign companies, has found that the Vietnamese are recognizing the benefits of higher quality paints. “More companies are investing in Vietnam and they are familiar with the fact that fine coatings are more durable”, he said. Another key driver has been the decision of the Vietnamese government to promote the country as a shipbuilding nation. “That’s good for companies who produce marine coatings and paints for related infrastructure” he said.

Mr Massala is confident that investing in Vietnam’s paint industry will reap rewards for those prepared to stay the course. “In the long term I am very confident that industry will do well in Vietnam”, he said. In the short term it might be bumpy ride. It depends on how the government steers the economy. At the moment the signs are good as the sentiment is to favor business and relax rules”.

LOCAL COMPANIES EXPANDING 

Tan Nam Phat has earned a degree of international repute by opening the country’s first powder coatings factory, also in Long An, where it produces 1000 shades of glosses and finishes. The production plant covers 500 m2 and funding. “Competition in Vietnam is pretty tough”, said the spokesman. “We faced quite a few difficulties in setting up the factory”.

In a sign that Vietnam is keen to become self sufficient in new technology, researchers at the National Institute for Application Physic and the Vietnam Science and Technology Institute have, this year, developed their first nano-based paint products, which include a self-cleaning paint.

Despite the energy apparent in the paint industry there remains room for consolidation – and indeed co-operation. Technology is never shared, according to a spokesman for European company with a presence in Vietnam, who did not wish to be named, even when such moves would be mutually beneficial. “You can have a company with an electrolytic dissociation system to paint hundred of thousands of automobile bodies – but they choose not to supply their rivals, even though they could make money”, he said.

Meanwhile, environmental controls are evolving. The Hyundai-Vinashin shipyard in the central province of Khanh Hoa was given until the end of 2007 to clean up its act by the country’s ministry of natural resources and the environment.

The move followed complaints from residents around the shipyard that workers had discharged more than one millions tones of NIX, a paint removing chemical, into the surrounding waters and coastal margins. If the pollution was not cleared up by the end of 2007, the shipyard faced indefinite closure, the Vietnamese government has warned.