Domestic glass companies are losing market share to foreign businesses because of loopholes in import duty policies, weak market management and customer preference for imported products, according to a recent report in the Vietnam Investment Review.
Raw glass has an import tax of 35 per cent, while the tax on finished glass is only 5 per cent. In addition, instead of outsourcing, several import companies have reduced the size of their raw glass to take advantage of lower import duties. According to the report, the fraudulent activity has affected domestic raw material glass producers and outsourcing businesses in Viet Nam.
Market management has also been ineffective, leading to unregulated glass imports and smuggled glass. These products, especially thick glass, do not meet quality standards. In some cases, importers claim they use a 2mm thick glass standard, but the glass is only 1.7mm thick.
Nguyen Minh Khoa, director of Viglacera Float Glass Company, said that Saint-Gobain closed its factories in China in October last year because fake products under its brand name had flooded the Chinese market.
However, many high-rise building projects have used glass with the Saint-Gobain brand name imported from China.
“The fraudulent activity has increased at an alarming rate,” he said.
Nguyen Cong Chinh, general director of Sado Group, which specialises in producing glass in Dong Nai Province, said that many of the high-rise projects had foreign consultants who had suggested use of imported glass despite its high price (US$150-130 per sq.m).
Nguyen Quang Cung, deputy chairman of Viet Nam Association for Building Materials, said that agencies need to adjust raw and finished glass import duties to encourage local production and create a fair playing field.
Domestic glass companies should also talk to authorities and protect their rights, Cung said. Local businesses have said that market management was weak and that it should be more transparent.
Khoa said that the quality of imported glass should be checked before it is accepted, and that the State should also issue support policies to encourage the use of locally made glass.