VietNam Business

Saturday, October 30, 2010

Computer market grows 19 percent

The Vietnamese computer market is predicted to see a year-on-year
increase of 19 percent thanks to a dramatic increase in laptop sales,
according to market research firm International Data Corporation (IDC).

In the second quarter of this year, computer sales marked a 12 percent increase on Q1, the IDC reported.

The increase was attributed to Vietnamese consumer preferences for laptops rather than desktop based PCs, it said.

In Q2, the number of laptops imported to Vietnam rose by a
dramatic 38 percent over Q1, and 33 percent over the same quarter last
year.

Laptop sales in the second quarter totalled 462,407, the corporation said.

It believes that the start of the new school year in August, combined
with sales promotions, would give computer manufacturers a well-needed
shot in the arm, ensuring that they were likely to achieve their
turnover targets.

With manufacturers looking to clear old
models, free accessories and big discounts are likely to be offered to
consumers, it said.

The brand-name laptop market grew 38 percent in the second quarter, with Dell, HP, Acer, Lenovo and Asus doing well.

Dell became the market leader for the first time, with an 11 percent
share of the market thanks to efficient distribution and competitive
prices.

HP cut imports due to high stock levels and
was second with a 10.5 percent market share. They were followed by Acer
with 9.9 percent, Lenovo with 5.1 percent, and Asus with 4.8 percent.
While the laptop market recorded good business results, the PC market
showed a distinct downturn.

In the second quarter,
the IDC reported, only 273,101 PC units were imported, down 8 percent
over the first quarter, just a 1 percent increase compared with the same
period last year.

It said almost all computer
companies had recently faced challenges caused by lower demand and
over-stocking of personal computers.

This would become more serious when demand dropped, and Government projects cut IT spending.

IDC spokeswoman Phan Yen said the Vietnamese computer market in the
first half of this year had faced many challenges because of lower
demand, which was predicted to slacken towards the year-end.

The recent depreciation in the dong was not likely to help matters, she added./.

Credit card growth sluggish despite incentives

High interest rates, annual fees and safety considerations have
prevented the credit card industry from getting off to a roaring start
in Vietnam.

Although both domestic and foreign
banks have launched several promotion programmes, they still have failed
to attract enough customers to use credit cards for their shopping and
other needs.

Because they expect the market to be a
lucrative one in the future, the banks are pushing the use of cards so
as to acquire and expand their market share.

The promotion campaigns have included direct marketing and the granting of credit cards without any fees.

Ho Anh Ngoc, head of retail banking in the southern region for
Techcombank, said his bank plans to increase the number of its credit
card users to 23,000 by the end of this year. It is targeting customers
from all income segments.

Other banks such as
Vietcombank, Eximbank, Asia Commercial Bank have launched their own
promotions to expand the use of credit cards.

Customers travelling to Singapore between August 27 and September
30, can get a set of X-mini Capsule speakers from Eximbank if they spend
at least 500 USD using their Visa card over three days.

Phi Thi Phuong, head of Eximbank's card management department said
since early this year, Eximbank has issued 4,000 credit cards,
increasing the total number of customers to 30,000.

To attract
more customers, international banks like HSBC and ANZ have sought to
increase their market share by marketing on websites and through emails
and phone calls to customers.

The banks have also
linked up with trade centres and supermarkets to offer discounts for
those using Visa or MasterCard for their shopping.

Hoang Long, who works for a transportation company in District 3, said
he received an invitation to open a credit card from ANZ, but failed to
get one because his monthly salary was less than 5 million VND (256
USD).

Furthermore, late payments on a Visa card
attract very high interest rates of between 1.5 percent to 1.9 percent
per month, and this is something that gives pause for thought to
Vietnamese clients.

HSBC and Techcombank levy overdue fees of 1.87 percent and 1.6 percent per month respectively.

Card owners also have to pay other kinds of fees.

Nguyen Tu Anh, director of Smartlink Card Joint Stock Co, said
customers have to pay considerable attention to opening fees, annual
costs, loan rates and exchange rates for international payments.

Hai Duyen, a regular customer of Techcombank, said credit cards were
not all as safe as presumed. Recently, she had her pocket picked, and
lost 20 million VND (1,025 USD) through her visa card.

According to Duyen, credit cards do not require any password like the ATM card. Thieves can use a forged signature.

Moreover, Vietnamese customers are still not used to using cards for their shopping, and prefer to use cash instead.

Also, many shopping centres are yet to install POS machines to accept credit card payments./.

Auto industry suffers from structural weaknesses

Vietnam's auto industry has survived its first decade, but had
failed to live up to expectations because of a limited market, supply
industries and roading, an expert has said.

"
Vietnam is a developing market with a very limited size, but it has 11
joint venture companies with a production capacity of just thousands of
vehicles per year. How can it be effective?" senior independent
economic commentator Pham Chi Lan said.

As a result,
domestic vehicle makers like Vinaxuki and Truong Hai Auto struggled to
compete against foreign enterprises who had more advantages, she said.

Ministry of Industry and Trade heavy industry
department deputy Ngo Van Tru said the domestic auto consumption of just
100,000 vehicles with 400 models per year was hardly enough to support
the industry.

Lan said countries like Japan and
China had several auto producers, but they were able to create healthy
competition and to meet demand.

The sluggish
development of domestic auxiliary industries didn't help the situation.
Carmakers had to import components and parts, which pushed up prices and
made them less competitive.

Lan said most local
carmakers did not trust the quality of components and parts made in
Vietnam . Enterprises, on the other hand, considered it too risky to
produce components and parts in Vietnam .

Hanoi
Export Processing and Industrial Zone management board head Nguyen Xuan
Chinh said one of main reasons auxiliary industries hadn't developed was
that auxiliary enterprises and auto assembling companies did not trust
each other.

A representative of Vinaxuki, who asked
to remain anonymous, said: "Vinaxuki produces 40 percent of its own
components and parts. We plan to raise that to 60 percent."

Meanwhile, another fact against the development of the car industry was the nation's poor roading.

Main roads in Hanoi and HCM City , for example, could
adequately accommodate only 15 percent of all vehicles, instead of the
standard 40-60 percent. The density of vehicles per kilometre in Hanoi
was 6,500, including motorbikes.

The sources said authorities should give tax incentives to encourage domestic auto production by a certain deadline.

Economist Lan said: "Auxiliary enterprises should produce components
and parts for many different vehicles, which would help them save
production costs and human resources."

The
Government should encourage local firms to produce autos which satisfied
the demands of motorbikes and made the vehicles more competitive with
foreign one, Lan said./.

Friday, October 29, 2010

Last-minute profit-taking weighs on VN-Index

Heavy sales in the final minutes of Sept. 10's session on the HCM Stock
Exchange dragged the VN-Index down to a close of 451.39 points, a
decline of 2.65 percent.

The volume of trades
continued to be modest at 52.5 million shares, totalling 1.3 trillion
VND (66.7 million USD), while Saigon Securities Inc (SSI) reclaimed the
place as the most active share, responsible for 2.27 million trades.

Blue chips did lose ground on Sept. 10. Masan Group (MSN) was one of
the few to escape the fall, closing unchanged at 49,000 VND. But Bao
Viet Holdings (BVH) plunged to its floor price, closing off 5 percent to
47,500 VND per share.

Among 26 gainers on the day, most were penny stocks.

Foreign investors contributed to the market correction by meagre buys
in HCM City, picking up a net of just 600,000 shares, worth 26.6 billion
VND (1.36 million USD).

On the Hanoi Stock Exchange, the HNX-Index shed 3.74 percent to end the session at 131.15 points.

The value of trades once again exceeded that on the HCM City exchange,
reaching 1.37 trillion VND (70.2 million USD) on a volume of 57.8
million shares.

Foreign investors were net sellers Sept. 10 in Hanoi, offloading a net of 97,000, worth 2.69 billion VND.

The next session on September 13 on HCM Stock Exchange would see the
introduction of a lengthened period of continuous trading. This change
was expected to boost trades./.

SMEs need to be better audited

Small and medium-sized enterprises should improve their auditing standards if they wish to access much needed capital, a conference in Hanoi heard Thursday.

There are about 450,000 enterprises in the country, according to Dang Van Thanh, chairman of the Vietnam Accounting and Auditing Association.

He said about 96 percent of those firms are SMEs, which contribute about 40 percent of Vietnam's total GDP.

However, he said almost every business in the country faces difficulties accessing credit.

Statistics from the State Bank of Vietnam 's Credit Department showed that just half of the 163,000 non-State enterprises had taken out bank loans, accounting for 27 percent of the country's total debt.

"It means that half of the non-State businesses, most of which are SMEs, are suffering a capital shortage," he said.

Another investigation released by the Ministry of Planning and Investment's Development Department shows that just one-third of SMEs has access to bank loans.

Nguyen Minh Tuan, deputy head of the Vietnam Chamber of Commerce and Industry's Business Development Institute, agreed that accessing credit is a problem for SMEs.

Economist Nguyen Dai Lai said banks pay particular attention to production and business plans and capital ability when they consider loan applications.

"Financial transparency and demonstrating the ability to make a profit are vital for any business that wishes to get credit," Lai said.

To meet bank requirements, participants at the conference were told about the need for independent auditing.

"Independent auditing could increase the reliability and accuracy of businesses' financial reports," Lai said.

Nguyen Thi Huong Nga, ANZ Bank's country head of Credit Risk, said financial reports need auditing certification because it increases confidence in the information provided.

"However, many SMEs are not aware of the importance of auditing in answering capital questions," said Le Thi Hong Len, head of the Association of Chartered Certified Accountants (ACCA) Vietnam.

Nguyen Thanh Trung, general director of Mazars, said financial reports are needed to access long-term credit businesses.

"Auditing is not a compulsory requirement for SME's. However, it is helpful and makes accessing credit easier," he said.

SMEs need to be better audited