Competition Counts In Quality Assessment

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.

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Competition Counts In Quality Assessment

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.

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School privatisation ‘slow'

Though HCM City leads the country in privatising education, it
needs to do much to speed up the process at all levels of education and
improve quality, officials have said.

A Government
resolution on pre-school education targets having 80 percent of nursery
schools for children aged below three and 70 percent of kindergartens
for children aged up to five privately owned by the end of this year.

The city has only crossed the halfway mark yet but is already facing problems in monitoring their quality.

However, Tran Thi Ngoc Anh, head of the People's Council's Culture and
Social Affairs Division, said around 50 percent was a reasonable number
in the current situation. If this rate increased now, facilities and
teaching staff would fall below required standards, affecting the
schools' quality, she told Sai Gon Giai Phong (Liberated Sai Gon)
newspaper without offering an explanation.

Nguyen Thi Kim
Thanh, head of the city Department of Education and Training's
Pre-school Education Division, said it was a contradiction that private
pre-education schools have helped reduce the overload at public schools
but have got no tax breaks.

At the high school level, the
quality of students admitted to private schools remains a concern in the
absence of entrance exams unlike at public schools.

The
fees at private schools, many times higher than at public schools, are
the biggest obstacle to privatising education since poor students can
hardly afford them.

The process of privatisation has,
however, widened the choice of schools for children from high-income
families. Many quality private schools at all levels have been set up,
some even of international standards, but they are affordable only for
wealthy children.

Experts say privatising education has
not helped reduce poor students' expenses for studies as expected though
the city has exempted fees for them since tuition fees account for only
a small part of the costs. They also call on authorities to review the
working of self-financing public schools since they collect higher fees
than other public schools./.

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Coffee exports fall in value, volume

HA NOI — The coffee industry in the first eight months of the year saw a decline in both export volume and value, according to the Ministry of Agriculture and Rural Development.

During this period, the industry exported 840,000 tonnes of coffee, earning export revenue of US$1.2 billion, the ministry said.

It added that the figures were a 1.3 per cent decline in volume and 4.7 per cent fall in value.

In August, the country earned $140 million from exporting 90,000 tonnes of coffee.

In the first eight months of the year, average coffee prices stood at about $1,415 per tonne, a year-on-year decline of 4.6 per cent.

Doan Trieu Nhan, from the Viet Nam Coffee and Cocoa Association, affirmed that although Vietnamese robusta coffee was of high quality, there were serious shortcomings in harvesting and processing resulting in lower prices than that of other countries including Indonesia.

"Farmers can't afford to build cement yards or buy machines to dry coffee so they are failing to ensure consistent quality," Nhan said.

To address this issue, Nhan suggested the Ministry of Agriculture and Rural Development (MARD) establish a quality control standard.

"The standard will help managers prevent low-quality coffee from being exported, and will protect the prestige of the national coffee industry. It will also provide both sellers and buyers a guarantee on place of origin and quality of coffee", Nhan said.

He added that Vietnamese coffee exports would strongly develop in the near future, but only when the industry had good management.

Bui Ba Bong, MARD's deputy minister demanded that provinces develop policies to help local farmers build cement yards or buy coffee drying equipment.

"Processing coffee in farmer households is very important. It directly affects the quality of the coffee," Bong said. — VNS

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Higher quality lifts tea exports in July

Thirty four Vietnamese provinces cultivate tea over 131,500 ha with a yield of about 6.5 ton per hectare

Vietnam exported 10,000 tons of tea last month, earning export revenue of US$14 million, according to the Vietnam Tea Association.

With the money earned in July, total tea export turnover in the first seven months of the year stood at $91 million, a year-on-year increase of 6 percent, the association said.

The association attributed the increase to higher tea prices compared with last year, when tea was strongly affected by the world recession.

The association added that thanks to higher quality and better hygiene, Vietnamese tea was fetching higher prices on the world market.

Russia recently became the largest importer of Vietnamese tea. Other markets included Pakistan , Taiwan , China and Afghanistan .

Although the price of Vietnamese tea this year is higher than last year thanks to improved quality, it still remains low compared to rival products.

In the last decade, the price of domestically produced tea has not significantly increased.

In 1998, the price of Vietnamese tea stood at $1.52 per kilo, while prices abroad averaged about $2.01 per kilo.

In 2009, while tea prices on transaction floors on the world market climbed to $2.43 kilo, Vietnamese tea fell in price to $1.23 per kilo.

"This situation is caused by unhealthy competition among domestic companies," said Doan Anh Tuan, chairman of the association.

"Many companies produce and export low-quality tea, which has strongly affected the prestige of the national tea industry," he added.

Manufacturers have not invested in developing technology and cultivation practices.

"Vietnamese tea is cheaper than that of other countries because it has not caught up with changing global tastes," said Nguyen Thu Hang, representative of Estate Agencies, a regular Vietnamese tea industry customer.

"Another reason for the poor prices is the lack of an identifiable global trademark," she said.

Hang also affirmed that her company would be ready to import Vietnamese tea at higher prices if manufacturers could ensure hygiene and better quality.

Thirty four Vietnamese provinces currently cultivate tea over 131,500 ha with a yield of about 6.5 ton per hectare.

 

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German quality-testing firm offers services

Germany-based quality-testing firm TUV SUD says it can guide Vietnamese apparel, footwear, leather goods and textiles exporters to prosper in EU markets, avoiding several legal pitfalls.

The company said in a statement Thursday that its guidance would be useful for companies to deal with EU regulations, especially those relating to REACH – registration, evaluation, authorisation and restriction of chemical substances.

This would allow suppliers to expand their market share, access key EU markets and reaffirm their global industry standing, the company statement said.

"Local suppliers will have significant competitive advantages over their competitors to access the EU market when they fully understand stringent EU regulations," said Suresh Somou, general director of TUV SUD Vietnam.

With TUV SUD's expertise, complying with REACH requirements would become a simple, step-by-step approach. By understanding the regulations and requirements, suppliers can easily classify their products and determine individual obligations regarding product type, place of manufacture and role in the supply chain.

Failure to comply with the EU's regulatory requirements would lead to costly product recalls and damage brand reputation.

Hence EU brands, retailers and importers are under great pressure to ensure that their products meet the necessary regulatory requirements. Their non-EU suppliers are also required to ensure full REACH compliance.

TUV SUD provides solutions for product quality and safety testing and inspection, engineering support, management system certification, and training.

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Higher quality lifts tea exports in July

Vietnam exported 10,000 tonnes of tea last month, earning export
revenue of 14 million USD, according to the Vietnam Tea Association.

With the money earned in July, total tea export turnover in the first
seven months of the year stood at 91 million USD, a year-on-year
increase of 6 percent, the association said.

The
association attributed the increase to higher tea prices compared with
last year, when tea was strongly affected by the world recession.

The association added that thanks to higher quality and better
hygiene, Vietnamese tea was fetching higher prices on the world market.

Russia recently became the largest importer of
Vietnamese tea. Other markets included Pakistan , Taiwan , China
and Afghanistan .

Although the price of
Vietnamese tea this year is higher than last year thanks to improved
quality, it still remains low compared to rival products.

In the last decade, the price of domestically produced tea has not significantly increased.

In 1998, the price of Vietnamese tea stood at 1.52 USD per kilo, while prices abroad averaged about 2.01 USD per kilo.

In 2009, while tea prices on transaction floors on the world market
climbed to 2.43 USD kilo, Vietnamese tea fell in price to 1.23 USD per
kilo.

"This situation is caused by unhealthy
competition among domestic companies," said Doan Anh Tuan, chairman of
the association.

"Many companies produce and export
low-quality tea, which has strongly affected the prestige of the
national tea industry," he added.

Manufacturers have not invested in developing technology and cultivation practices.

"Vietnamese tea is cheaper than that of other countries because it has
not caught up with changing global tastes," said Nguyen Thu Hang,
representative of Estate Agencies, a regular Vietnamese tea industry
customer.

"Another reason for the poor prices is the lack of an identifiable global trademark," she said.

Hang also affirmed that her company would be ready to import
Vietnamese tea at higher prices if manufacturers could ensure hygiene
and better quality.

Thirty four Vietnamese provinces currently cultivate tea over 131,500 ha with a yield of about 6.5 tonne per hectare./.

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German quality-testing firm offers services

Germany- based quality-testing firm TUV SUD says it can guide
Vietnamese apparel, footwear, leather goods and textiles exporters to
prosper in EU markets, avoiding several legal pitfalls.

The company said in a statement on August 19 that its guidance would
be useful for companies to deal with EU regulations, especially those
relating to REACH – registration, evaluation, authorisation and
restriction of chemical substances.

This would allow
suppliers to expand their market share, access key EU markets and
reaffirm their global industry standing, the company statement said.

"Local suppliers will have significant competitive advantages over
their competitors to access the EU market when they fully understand
stringent EU regulations," said Suresh Somou, general director of TUV
SUD Vietnam.

With TUV SUD's expertise, complying
with REACH requirements would become a simple, step-by-step approach. By
understanding the regulations and requirements, suppliers can easily
classify their products and determine individual obligations regarding
product type, place of manufacture and role in the supply chain.

Failure to comply with the EU's regulatory requirements would lead to costly product recalls and damage brand reputation.

Hence EU brands, retailers and importers are under great pressure to
ensure that their products meet the necessary regulatory requirements.
Their non-EU suppliers are also required to ensure full REACH
compliance.

TUV SUD provides solutions for product
quality and safety testing and inspection, engineering support,
management system certification, and training./.

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