(VietnamNet) – Vietnamese Steel Association says that Vietnam – Italy Steel Company (VIS) has placed an order of 5,000 tons of China-made VIS trademark steel and would reimport them to sell in Vietnam. Many domestic steel companies worry that this could have bad impact on the domestic steel manufacturing.

China-made steel with Vietnam trademark: Will it be all right?

Mr. Pham Chi Cuong, Chairman of Vietnam Steel Association, says that at the moment, the price at which Chinese steel embryos are sold to Vietnam is around US$ 480-490 per ton. Each ton of steel embryos requires about 30-50 US dollars to become finished products whilst at the same time, the price of steel finished products sold in China is about $50 lower than steel embryos exported to Vietnam. Therefore, imported steel embryos to make products will be expensive but hiring Chinese companies to produce steel bars, attaching Vietnamese brands, reimporting to sell in Vietnam will be much cheaper.

In the official dispatch No. 88/CT/TT-TGD, dated 24 February 2007, answering the steel association’s question, Mr. Dinh Van Vi, General Director of Vietnam – Italy Steel Company, admitted the fact: “At the moment, since the price of imported steel embryos is higher than that of finished products, we are concerning in renting prestigious foreign companies to produce steel for us to help stabilizing domestic prices, following directions of both the Association and the Government.

Low-price Chinese steel bars still could not tap into Vietnamese market during last period because of the brand issue. Vietnamese customers have been accustomed to Vietnam trademark steel bars and not familiar with using China trademark steel bars. If China-made steel bars are labeled Vietnam trademark, they will flow into Vietnamese market and badly influence domestic steel production.

Vietnam Steel Association has held a meeting with business members to discuss this matter. At the meeting, Mr. Le Ngoc Son, Head of the International Cooperation Department of Vietnam – Italy Steel Company pointed out four reasons for which the company placed orders for China-made products.

First of all, domestic prices for steel embryos have been increasing rapidly. Each ton of steel embryos in China is 500.000 VND cheaper than in Vietnam, which makes domestic manufacture extremely difficult. Thus, Vietnam – Italy Company would like to diversify trading solutions and minimizing risks.

Secondly, as the world has pressured on China to reduce its manufacture to protect the environment, China has closed down a series of small plants whose gross outputs are less than 2 billion tons per year. This helps limit the number of suppliers and leads to selling prices which are profitable for sellers.


In addition, since Vietnam – Italy’s market share is only around 180.000 ton per year; its policy would not impact other enterprises.

Finally, we can not produce C3 steel in Vietnam because we can not ensure the mechanic – physical characteristics. Therefore, Vietnam – Italy Company only places orders on large diameter C3 steel to provide for high construction site of its own customers.

However, all four reasons that Vietnam – Italy represents are refused by other steel manufacturing enterprises.

Should we accept China-made steel with Vietnam trademarks?

Mr. Pham Chi Cuong says that contrary to what Vietnam – Italy Company has announced many domestic plants have been able to produce C3 steel. Some specific examples are Thai Nguyen Iron and Steel Company, Pomina ( Vietnam steel), Vinakyoei ( Vietnam – Japan).

Mr. Pham Phu Chau, Head of the Plan Projecting Department of the Pomina Steel Company states that a single order of 5,000 tons of the Vietnam – Italy Company does not impact in short-term but in long-term, this is really a danger to the whole steel industry. If the Vietnam – Italy Company imports Chinese steel bars to sell in a price lower than that of the domestic market, they will sell well which will lead to further imports, may be three or four times bigger than their 180,000 tons per year of current figure. The key factor is that the Vietnam – Italy Company does not produce anything, so there is nothing to discuss about the limiting ability. They just import as much as the market needs. The government should help stop the problem immediately. The situation cannot be considered as processing because if so, the company has to transmit materials to China.

Mr. Hoang Van Tong, Deputy General Director of Thai Nguyen Iron and Steel Company says that recently, his company has received several offers from Chinese steel enterprises asking to share the company’s trademark, produce massively, then reimport to Vietnam but his company has refused all of them. If all enterprises did the same as what Vietnam – Italy Company has done, what would happen to the steel industry of Vietnam?

Some other steel plants such as Nam Do Company, Vinakansai – Vinashin Company, and so on affirms that they received similar offers from Chinese companies but they all refused.

Mr. Tran Anh Son, Vice Manager of Vietnam Competition Administration Department (Ministry of Trade) asserts: “Due to term No. 178 in the Law on Trade, the process only takes up one or some stages of the production.” Actually, Vietnam – Italy Company‘s C3 steel products are produced in China from the beginning to the end, using 100% Chinese materials and but branded VIS.

Mr. Son says: “This fact makes it unpredictable to forecast what could happen if all other manufacturers of all domestic industries just bring their brands overseas, use 100% foreign ingredients, labor and technology to produce goods, then reimport to Vietnam instead of buying ingredients and making products in Vietnam.”

Mr. Son also states that the government has had relatively clear definitions in the official dispatch No. 548/CP-KTTH dated June, 7th 1999 concerning processing orders from abroad. The dispatch says “Products processed overseas and then reimported to Vietnam are allowed to be processed in some stages only that can not be carried out in Vietnam because of the lack of technique.”

However, Vietnam – Italy Company’s representative argues that there is a newer official dispatch than the dispatch No. 548 from the government which will be represented if necessary.

Mr. Nguyen Van Thang, a specialist from the Department of Mechanics, Metallurgy and Chemicals considers the issue as a pretend to ask for help a little for later domination. By sharing trademarks, foreign goods with low-price will dominate the market step by step and ruin domestic production.

Some steel enterprises explicitly announce that they can do the same as what Vietnam – Italy Company has done.

According to Mr. Pham Chi Cuong, during the recent time, lower-price Chinese steel rolls entering Vietnam’s market has made many difficulties for domestic companies who produce this kind of goods. Many steel mills has stopped producing steel rolls and started importing them directly from China to sell in Vietnam. Now, if companies lend a hand to bring Chinese steel bars into Vietnam, the domestic steel industry could face with the danger of stopping production.
In that case, Chinese steel bars will dominate Vietnam’s market and if there is any adjustment on prices or taxes from China, the whole market will be affected as a result.