LONDON, April 19, 2016 /PRNewswire/ -- Chemical industry plays an important role in economic development as it provides material inputs for a number of essential industries, serving manufacturing and consumption, such as Fertilizers, Paints and Printing Inks, Pesticide, Detergents and etc.. Chemical industry is expected to grow at a rate of 17.49%, much higher than the GDP growth rate forecast.
Chemical industry contains 8 groups of products namely Fertilizer and Nitrogen, Detergent, Pants and Printing Ink, Synthetic Rubber and Polymer, Plant Protection Chemical, Basic Chemical, Synthetic Fibers and Other. Particularly, Fertilizer and Nitrogen accounts for the highest proportion (30%) in the industry by revenue, followed by the group of Detergent. The group of Synthetic Fibers contributes little to the structure of chemical industry by revenue. Fertilizer and Detergents are groups of products with high growth rates while other groups, such as Plant Protection Chemical, show signs of slowdown in both volume and revenue.
One of the biggest weaknesses of Vietnam chemical industry is the ability to supply input materials, thus, the majority of input materials have to be imported. The reason is that domestic petrochemical industry is underdeveloped, particularly, Vietnam has only Dung Quat oil refinery in operation, meeting a small part of domestic demand. This makes the chemical industry suffered great pressure from input costs and significant impacts of output prices as well as the profit margin of the enterprises.
Technology machinery systems of the chemical industry are largely at average level compared to those of other regional countries, leading to the low in productivity and added value. Thus, domestic production of groups of product such as Basic Chemical, Synthetic Fiber, Synthetic Rubber and Polymer has not met domestic demand.
The chemical industry has sector-specific risks, especially risk of safety in use and risk of environmental pollution. Therefore, the State's policies and regulations to manage the industry are stricter and require enterprises spend more on labor protection, fire prevention as well as water treatment systems, making the investment costs increase. This contributes to raise the barriers to entry, thus, competitiveness in the chemical industry is at medium level.
The majority of enterprises in the industry have small or medium scale, and under the intense competition with multinational corporations having financial strength, technological level as well as better marketing strategies. In groups of products such as Detergents, Plant Protection Chemical and etc., multinational corporations almost dominated the domestic market. Domestic enterprises mainly process for multinational corporations and find niche markets to survive.
Vietnam Chemical industry is still in the stage of strong growth. With the development plan for chemical industry of the government, the trend of deep integration into the world, the increase in foreign investment, urbanization and population growth, the chemical industry is still full of potential for development.
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