2.1.1 Overview1
Viet Nam economy is developing so well, the GDP grow rate of the year 2006 is 8.2%. The government is trying managing to keep the rate of 8% per year for the period of 2006 – 2010. The growing economy motivates the growing speed of construction as well as the manufacturing of building materials. As a result, it can see that this is a great opportunity for the market of wall and ceiling systems. In the recent years, the consumption of grid ceiling and gypsum board of Viet Nam market is considerably growing with the statistical average rate of 30% per year. As the predicting, the total consumption of the year 2006 is 13,000,000m2; and the year 2007 will be 18,000,000m2. Compare the number of year 2006 with some neighbor countries, there are Thailand with 60,000,000m2; Indonesia with 40,000,000m2.
1 (Soucre: Marketing department of VTI)
13,000,000
60,000,000
40,000,000
0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 Volume (m2)
Vietnam Thailand Indonesia
Consumed Volume in 2006
Figure 2.1 – The consumption of gypsum board in some ASEAN countries
By the way, it makes sure that the potentiality demand of Viet Nam Market is so big; the forecasting consumption of 5 next years will be at the annual growing rate of 30%. (Source: Marketing department of VTI)
History numbers Forecasting
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total
1,000m2
3,200 4,300 4,500 5,500 8,300 13,000 18,000 23,400 30,400 39,500
Rate of
growing - 34.4
% 4.7% 22.2
%
50.9
% 56.6% 38% 30% 30% 30%
Figure 2.2a – The consumption of gypsum board in Viet Nam
0 5000 10000 15000 20000 25000 30000 35000 40000
Volume (m2)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Consumed Volume of Gypsum board in Vietnam
Figure 2.2b - the consumption of gypsum board in Viet Nam
The five forces analysis of gypsum board market will show the detail overview of this Viet Nam industry in the year 2007.
2.1.2. Five forces analysis in 2007
Threat of new entrants
================
Low
Bargaining power of suppliers
===================
Average
Intensity of rivalry
===============
High
Threat of substitutes
=================
Low average
Bargaining power of buyers
=================
High
2.1.2.1. Bargaining power of buyers: High
In the previous years, the supplement of gypsum board completely depended on importation. It meant that the supplement was not regularly. Therefore, the bargaining power of buyers was mainly upon suppliers.
In the late year of 2006, two domestic manufactories (Lafarge and VTJ – Vinh Tuong Join Stock Company) introduced the products into the market. There were many dynamic competitions of theirs for entrance market. It raised the bargaining power of buyers higher in 2007.
However, the demand is growing highly; maybe bigger than supply in some next years. Hence, the bargaining power of buyers will decrease when the growing speed of market increases.
2.1.2.2. Bargaining power of suppliers: Average The bargaining power of suppliers is not high.
To grid ceiling, VTI – Vinh Tuong Industrial Corporation is a sole agent of BlueScope Steel (Australia) in Viet Nam. However, the source of steel (category 2) is decreasing. It requires VTI have to search substitute material to make sure the effect of investment of the new machine.
To gypsum board, VTJ has many suppliers from Thailand, China, Korea, and Taiwan.
2.1.2.3. Threat of new entrants: Low
The investment amount of manufacturing grid ceiling is not much, but of the gypsum board is so big. It takes the amount of 10 millions USD.
Moreover, it is hard to meet the considerable profit if the business produces only grip ceiling. Beside the difficulty of setting up the low cost rate, the building of distribution system is very hard.
Therefore, with two already big factories of Lafarge and VTJ in Viet Nam, the threat of new entrants is low. There will no have investors joining into manufacturing gypsum board in Viet Nam next 3 years.
2.1.2.4. Threat of substitutes: Low average
To grid ceiling and partition, VTI is the leader in Viet Nam. The purpose of the year 2007 is that VTI will present some new products.
Accordingly, the threat of substitutes is so low.
To gypsum board, there are many substitutes like Eron, Cemboard, Prima, Villaboard, Cellulose board, Metals board… However, all most these boards have a big difference of cost and quality compare with gypsum board. Thus, in a general view, gypsum board will be a main product in the interior decoration.
2.1.2.5. Intensity of rivalry: High
Although the growing rate of gypsum board market is big (average of 30% per year), the intensity of rivalry is so blazing hot by doing of Lafarge to gain the current distribution.
In addition, when VTI falls in being lacking in supplying board, many small producers make a pressure on customers to take their grip ceiling.
After five forces analysis for gypsum board market in Viet Nam, it can see that the competitive industry will be so hot in 2007, mainly reason come from Lafarge. But, this is still an attractive market and its growing rate will continuously increase high next years.