The Economic war between the U.S and China is rising: the concern from building material businesses

(Investment Newspaper) – A rise in the US – China economic war is indicated by an event a couple of days ago in which the US President threatened to apply tax on the 500 billon dollar worth of good exported from China to the US. That amount of good almost equals the total quantity of good exported from China to the US in 2017. Recent warnings showed that this economic war will have noticeable impact on the operation of businesses in the building material industry, including businesses in Vietnam.

Hard to avoid the impact

According to economic specialists, the building materials from China invading Vietnam – in any segment from high quality to common product – are coming with competitive price. The competition with Chinese materials is not easy. Regarding to the story 3-4 years ago when Ministry of Health presented the warning from World Health Organization stating chrysotile-including building materials are carcinogenic, Mr. Nguyen Van Hien – CEO/Director or Huong Hoang Jsc., – said that: “This information has made the AC roofsheet producers to be miserable. Immediately, Chinese metal roofsheet and galvanized roofsheet flood into Vietnamese market…” Therefore, the US – China economic war will have drastic impact on Vietnam, it’s hard to avoid the flood of cheap product from foreign countries into Vietnamese market. “While the “health” of domestic building material producers, especially AC roofsheet producers, is weak, the flood of foreign products will tire those producers out”, Mr. Hien worried.

Having the same opinion, Mr. Le Van Nghia – Director of Dong Anh Construction Investment and Construction Material JSC., – said: “The economic war will have dramatic impact on domestic building material producers. If the businesses do not try to enhance the product quality, invest in technology, they would probably close”.

Some opinions worry that the amount of Chinese brick consumed in domestic market is now quite large, reaching hundreds of million US dollars each year excluding informal import.

With steel industry, researches show that China is the most considerable opponent as they are the biggest steel producer in the world, have neighboring position with Vietnam and are the source of around 36% of steel imported to Vietnam. The most concerned problem from this economic war is that Chinese steel will widely enter Vietnam, undercover as Vietnamese steel and be exported to the US, which will seriously affect the reputation of Vietnamese products.

While the producers are anxious about the situation of the economic war, Mr. Tong Van Nga – Chairman of Vietnam Association for Building Materials – thought that: at this moment when the US – China economic war has just started, the building material industry will not be affected much. Our building material products are not the similar to products in the list of exporting goods from China to the US. “We are exporting cement, clinker to China… Other glass products, ceramic tiles or bathroom equipment from Vietnam are exported to many other markets not only China or the US”. Mr. Nga evaluated and considered that the possibility of an impact from the economic war on the domestic building material market is low.

Enhance competitive capabilities

Assessing the impact of the US – China economic war, Mr. Luong Van Khoi, Vice Director of National Centre for Socio-Economic Information and Forecast, said that this war could end up with negative effect on Vietnamese economy, the impact on Vietnamese economy might even be bigger than on the US and Chinese economies. Nevertheless, recent policies released in Vietnam show that we are heading the right way dealing with the unpredictable impact of this economic war. “However, domestic producers have to prepare for themselves a superb competitive capability with high quality products and good business management capability”, Mr. Khoi suggested.

On the businesses’ side, regarding to the forecasting impacts of the economic war on domestic building material market, Mr. Tong Van Nga said that despite the dramatic development of the domestic building material industry in the last 10 years, which ends up with a much higher product quality compared to Chinese’ products, the businesses could not be allowed to be satisfied. The businesses must improve product models, invest in technology, increase productivity… in order to increase competitiveness of the products. Meanwhile, Mr. Hien stated: “Released economic policies must have the objective of creating favorable condition for domestic businesses to stabilize and steadily develop”.

Related to creating a stable and develop market for exporting businesses, the Ministry of Industry and Trade recently pledged that they will enhance researching, forecasting and warning with exporting goods so as to guide the producing and export ac