FWD: [vnnews-l] Trade: VN tough ride for Honda (fwd)

[Hai-Tri Le <haitril@microsoft.com>]

Ne^'u Honda ma` co`n pha?i than nu+~a thi` ca'c co^ng ty kha'c cha('c co`n
ga(.p kho' kha(n ga^'p bo^.i !
HT

> >
> > > Subject: INTERVIEW-Vietnam a tough ride for Honda
> > >
> > > Reuters
> > > Wednesday - Oct 27, 1999
> > >
> > > INTERVIEW-Vietnam a tough ride for Honda
> > >
> > > By Dean Yates
> > >
> > > HANOI, Oct 27 (Reuters) - The motorbike division of Japan's Honda
> Motor 
> >Co
> >is
> > > struggling to blaze a trail in Vietnam, even though motorbikes are the
> 
> >key
> > > mode of transport in the country and sales are bucking an economic
> >slowdown.
> > >
> > > Haruo Takiguchi, general director of Honda Vietnam Co Ltd, said high 
> >taxes
> > > and other costs along with tough localisation requirements made it 
> >almost
> > > twice as expensive for Honda to make a motorbike in Vietnam compared 
> >with
> > > nearby Thailand.
> > >
> > > Bikes made by Honda in Vietnam also had to compete with motorbikes
> >assembled
> > > from imitated components or full units smuggled across the country's 
> >land
> > > border, Takiguchi said.
> > >
> > > Vietnam's market of 79 million people might have strong potential -- 
> >which
> > > was why Honda built a manufacturing plant -- but the firm was unsure
> if 
> >it
> > > would invest fresh funds over the next few years, Takiguchi told
> Reuters
> >late
> > > on Tuesday.
> > >
> > > His comments echo growing disenchantment among foreign investors in
> > > communist-ruled Vietnam, who say the country is one of the most 
> >expensive
> >in
> > > Asia to do business. Vietnam says it will lower costs, but over a
> period
> >of
> > > years.
> > >
> > > ``We appreciate the efforts of the government, but still we have many
> > > anxieties and difficulties,'' Takiguchi said.
> > >
> > > Honda Vietnam is a 70:30 joint venture between the Japanese giant and
> a
> >local
> > > firm. It started making bikes last year.
> > >
> > > Honda, which invested $47 million in the entity, had wanted to set up
> a
> >100
> > > percent owned company, but Takiguchi said the government insisted it 
> >link
> >up
> > > with a local partner.
> > >
> > > LOCAL MARKET FLOODED WITH IMPORTS, SMUGGLED BIKES
> > >
> > > Takiguchi said he was puzzled why Hanoi allowed the four foreign 
> >investors
> > > manufacturing motorbikes in Vietnam to suffer when they were helping
> >develop
> > > a local components industry, transferring technology and providing
> jobs.
> > >
> > > Vietnam has banned the import of fully assembled motorbikes, but
> allows
> > > completely-knocked-down units (CKD) to enter, which Takiguchi said was
> a
> >key
> > > problem.
> > >
> > > He said some 25 local firms were bringing in large numbers of CKD
> bikes
> >from
> > > China, and many of these were made up of imitated parts that sold for 
> >less
> > > than $1,500 when assembled. Honda Vietnam's flagship, the Super Dream,
> >sells
> > > for $1,990.
> > >
> > > Those CKD imports along with the smuggling of 30,000-40,000 fully
> built
> >units
> > > each year meant Honda and the other three foreign bike makers
> accounted
> >for
> > > only 40 percent of total annual demand, Takiguchi said without
> providing
> > > exact figures.
> > >
> > > ``We cannot understand why the door is open to these imports when they
> 
> >do
> >not
> > > contribute to the local economy,'' he said.
> > >
> > > In addition, Honda Vietnam was required to start making engine
> >components --
> > > which means expensive technology -- within six years, something that 
> >took
> >15
> > > years in Thailand where Honda has capacity to make one million bikes a
> >year,
> > > Takiguchi said.
> > >
> > > That investment would come from retained profits, he said.
> > >
> > > To make matters worse, Hanoi now wanted Honda Vietnam to drop its
> retail
> > > prices, something Takiguchi said was impossible without lower costs
> and
> > > greater sales volumes.
> > >
> > > Last year Honda sold 80,000 units and hoped to sell 100,000 this year,
> >rising
> > > to 140,000 next year, Takiguchi said, adding that the firm was making
> a
> > > slight profit. He gave no details.
> > >
> > > He said Vietnam's economic slowdown was not a problem because
> Vietnamese
> > > placed so much value in a motorbike, as a vital mode of transportation
> 
> >and
> >a
> > > family asset.
> > >
> > > 22:30 10-26-99
> > >
>