At the beginning of this year, Vietnam "can't wait" to announce its economic performance last year. 7.02% GDP growth rate, 11.29% manufacturing growth rate...Just looking at the data, you can feel the vigorous vigor of this Southeast Asian developing country.

More and more manufacturing plants, more and more big-name landings, and the active investment promotion policies of the Vietnamese government, have gradually made Vietnam a new "world factory" and also a plastic processing industry and related industrial chains. New base.

Active investment and consumption drive double-digit growth in the plastics industry

According to data released earlier by the Vietnam General Administration of Statistics, Vietnam's GDP growth in 2019 reached 7.02%, exceeding 7% for the second consecutive year. Among them, the growth rate of processing and manufacturing led the major industries, with an annual growth rate of 11.29%. The Vietnamese authorities stated that the growth rate of the processing and manufacturing industry will reach 12% in 2020.

In terms of imports and exports, Vietnam’s total imports and exports for the year exceeded the US$500 billion mark for the first time, reaching US$517 billion, of which exports amounted to US$263.45 billion, achieving a surplus of US$9.94 billion. Vietnam's 2020 goal is to reach 300 billion U.S. dollars in total exports.

Domestic demand is also very strong, with total retail sales of consumer goods increasing by 11.8%, the highest level between 2016 and 2019. In terms of attracting foreign investment, Vietnam attracted 38 billion U.S. dollars of foreign capital throughout the year, the highest level in 10 years. The actual use of foreign capital was 20.38 billion U.S. dollars, a record.

All walks of life release a vibrant atmosphere, coupled with the advantages of low local labor, land and taxation, and port advantages, as well as Vietnam’s opening-up policy (Vietnam and other countries and regions have signed more than a dozen free trade agreements). These conditions have prompted Vietnam Become a piece of "sweet potato" in the Southeast Asian market.

Many foreign investors will focus on Vietnam, which is a hot spot for investment. Multinational giants such as Nike, Adidas, Foxconn, Samsung, Canon, LG, and Sony have entered this country.

The active investment and consumer market has driven the vigorous development of various manufacturing industries. Among them, the performance of the plastic processing and manufacturing industry is particularly prominent. In the past 10 years, the average annual growth rate of the Vietnamese plastics industry has remained at about 10-15%.

Large input demand for raw materials and technical equipment

Vietnam's booming manufacturing industry has driven a huge demand for plastic raw materials, but Vietnam's local raw material demand is limited, so it depends to a large extent on imports. According to the Vietnam Plastics Association (Vietnam Plastics Association), the country’s plastics industry needs an average of 2 to 2.5 million raw materials per year, but 75% to 80% of the raw materials are dependent on imports.

In terms of technical equipment, since most of the local plastics companies in Vietnam are small and medium-sized enterprises, they also rely mainly on imports in terms of technology and equipment. Therefore, there is a huge market demand for technical equipment input.

Many machinery and equipment companies, such as Chinese plastic machine manufacturers such as Haitian, Yizumi, Bochuang, Jinwei, etc., have successively set up production bases, spot warehouses, subsidiaries, and after-sales service points in the local area, taking advantage of low cost. On the other hand, it can meet the needs of the nearby local market.

The plastic packaging industry breeds huge business opportunities

Vietnam has many advantages in the plastic packaging industry, such as the strong participation of foreign machinery, equipment and product suppliers. At the same time, due to the continuous increase of per capita plastic consumption in Vietnam, the domestic plastic packaging market is also in huge demand.

Currently, companies from Thailand, South Korea and Japan account for 90% of Vietnam’s plastic packaging market share. They have advanced technology, cost and product export market advantages. In this regard, Chinese packaging companies need to fully grasp market opportunities, improve technology and quality, and strive to gain a share of the Vietnamese packaging market.

In terms of packaging product output, the United States and Japan account for 60% and 15% of Vietnam’s plastic packaging exports respectively. Therefore, entering the Vietnamese packaging market means having the opportunity to enter the packaging supplier system such as the United States and Japan.

In addition, local Vietnamese companies are not mature enough in packaging technology to meet the ever-increasing requirements of consumers, so there is a great market demand for the input of packaging technology. For example, consumers increasingly prefer to choose high-quality and multi-functional packaging to store food, but only a few local companies can do this kind of packaging products.

Take milk packaging as an example. Currently, it is mainly supplied by foreign companies. In addition, Vietnam also mainly depends on foreign companies in the production of non-permeable PE paper bags or zipper bags. These are all breakthroughs for Chinese packaging companies to cut into the Vietnamese plastic market.

At the same time, the EU and Japan's plastic import demand is still high, and customers are increasingly choosing plastic products from Vietnam. In June 2019, Vietnam and the EU signed a bilateral free trade agreement (EVFTA), paving the way for 99% tariff reductions between the EU and Southeast Asian countries, which will create opportunities to promote the export of plastic packaging to the European market.

It is also worth mentioning that under the new wave of circular economy, future green packaging technologies, especially energy saving and emission reduction technologies, will become more popular. For plastic packaging companies, this is a huge opportunity.

Waste management becomes a key development market

Vietnam generates about 13 million tons of solid waste every year, and is one of the five countries that generate the most solid waste. According to the Vietnam Environmental Administration, the amount of municipal solid waste generated in the country is increasing by 10-16% every year.

As Vietnam accelerates the process of industrialization and urbanization, coupled with improper construction and management of Vietnamese landfills, the production of hazardous solid waste continues to increase. At present, about 85% of Vietnam’s waste is directly buried in landfills without treatment, 80% of which are unsanitary and cause environmental pollution. Therefore, Vietnam urgently needs effective waste management. In Vietnam, investment in the waste management industry is increasing.

So, what business opportunities does the market demand of Vietnam's waste management industry contain?

First, there is the demand for recycling technology. Most of the local recycling and recycling companies in Vietnam are family businesses or small businesses with immature technology. At present, most state-owned companies also use foreign technology, and only a few large multinational companies with subsidiaries in Vietnam have their own technology. Most waste management technology suppliers are from Singapore, China, the United States and European countries.

At the same time, the utilization rate of recycling technology in Vietnam is still low, mainly focusing on hardware products. There is a lot of room for exploration in the recycling and recycling market of other types of products.

In addition, with the continuous increase in economic activity and China's waste ban, Vietnam has become one of the four largest exporters of plastic waste in the United States. The huge amount of plastic waste needs to be processed, which requires various effective management techniques.

In terms of waste plastic management, recycling is considered to be an urgent requirement in Vietnam’s waste management and an effective option to reduce waste entering landfills.

The Vietnamese government also welcomes various waste plastic management business activities and actively participates in them. The government is actively experimenting with various innovative methods of solid waste management, such as encouraging research and development of waste-to-energy technologies to make full use of waste and transforming it into useful resources, which further promotes the vitality of waste management and creates business opportunities for external investment.

The Vietnamese government also actively promotes waste management policies. For example, the formulation of the National Waste Management Strategy provides a detailed framework for the establishment of a circular economy. The goal is to achieve comprehensive waste collection by 2025. This will bring policy guidance to the recycling industry and drive it. development of.

It is also worth mentioning that major international brands have also joined forces to promote the development of circular economy in Vietnam. For example, in June 2019, nine well-known companies in the consumer goods and packaging industries formed a packaging recycling organization (PRO Vietnam) in Vietnam, aiming to promote the circular economy and improve the convenience and sustainability of packaging recycling.

The nine founding members of this alliance are Coca-Cola, FrieslandCampina, La Vie, Nestle, NutiFood, Suntory Pepsi, Tetra Pak, TH Group and URC. PRO Vietnam marks the first time that these peer companies have cooperated in Vietnam and are working together to improve the environment in Vietnam.

The organization promotes recycling through four major measures, such as popularizing recycling awareness, enhancing the waste packaging collection ecosystem, supporting recycling projects for processors and recyclers, and cooperating with the government to promote recycling activities, creating post-consumer packaging recycling business opportunities for individuals and companies, etc. .

PRO Vietnam members hope to collect, recycle, and recycle all packaging materials that their members put on the market by 2030.

All of the above have brought vitality to the waste plastic management industry, promoted the standardization, scale and sustainability of the industry, and thus brought development business opportunities for enterprises.

Part of the information in this article is compiled from the Hong Kong Chamber of Commerce in Vietnam.