Vietnam’s premium sanitaryware products are on the rise with rapidly increasing purchasing power of the domestic consumers. This has led to further expansion of the Vietnamese sanitaryware sector to cater the consumers with premium products. With already a large production capacity of over 25 million pieces per year, Vietnam is now heading towards hitting a massive capacity of 27-28 million units a year by 2020, as expansion plans are going ahead more or less smoothly.

Most significant of the latest development is the rising trend of installing plant for premium segment of sanitarywares, mostly, porcelain and vitreous china, as demand for such durable quality sanitarywares are increasing steadily in both the domestic and export markets.

 

Growing demand

Vietnam’s sanitaryware industry is growing faster and most of the expansion is coming up from the porcelain and vitreous sanitrayware sectors due to increasing demand both at the domestic and the export markets. Vietnam is already the largest manufacture of ceramic sanitary wares among the ASEAN countries that in 2017, a half of the total sanitaryware production of ASEAN region (35 million pieces) came from Vietnam.

A significant part of the total production capacity of the quality manufacturing is operated by the foreign investors, which include, Japanese Lixil owned Vietnam subsidiaries, INAX and American Standard, Japan’s TOTO subsidiary TOTO Vietnam, and Taiwanese Caesar owned Vietnam Caesar. The Vietnamese companies, such as Viglacera Group, Thien Thanh Sanitary Wares Co., Hao Canh Sanitary Wares Co. and JSC Ceravi Porcelain, continuously maintain a significant influence with a half of the country’s total standard sanitaryware capacity in the domestic market, as well as in export shipment, mainly to the East Asian Countries. However, Vietnam consumes a large quantity of imported sanitarywares, shipped mostly from the East and Southeast Asian countries.

Vietnam exported around US$115 million worth of sanitarywares in 2017. Main export markets are Japan and Taiwan, which buy some 70% of the exported sanitarywares. Other important buyers are USA, Myanmar, Philippines, Cambodia, China, Netherlands, Thailand and India.

Vietnam’s sanitaryware exported value in thousand US$

HS Code	2013	2014	2015	2016	2017
6910	95,604	110,788	94,974	97,647	114,706
Sources: International Trade Centre (ITC), Geneva, calculations based on UN COMTRADE statistics

 

In spite of a large domestic production, the diverse market demand and large consumption opened the country as a major importer also. Vietnam import sources are China and Thailand, which ship some 80% of the imports. Other important sources are India, Indonesia, Malaysia, Japan, South Korea and USA.

Vietnam’s sanitaryware imported value in thousand US$

HS Code	2013	2014	2015	2016	2017
6910	8,915	12,088	21,333	23,154	95,067
Sources: International Trade Centre (ITC), Geneva, calculations based on UN COMTRADE statistics

 

When Vietnam’s building materials in general faced a slump situation last year, sanitaryware market remained stable, according to the Ministry of Construction. This year, the consumption has improved further and expected to be stronger in the export markets, as expected.

 

Main exporters of sanitarywares to Vietnam	Imported value in thousand US$ in 2012	Imported value in thousand US$ in 2013	Imported value in thousand US$ in 2014	Imported value in thousand US$ in 2015	Imported value in thousand US$ in 2016
World	6,637	8,915	12,088	21,333	23,154
China	2,308	2,520	3,356	7,282	9,622
Thailand	2,386	3,381	5,757	9,573	8,821
India	0	1	12	209	1,879
Indonesia	340	401	531	917	1,033
Malaysia	203	991	485	131	528
Sources: International Trade Centre (ITC), Geneva, calculations based on UN COMTRADE statistics

 

Main importers of Vietnamese sanitarywares	Exported value in thousand US$ in 2012	Exported value in thousand US$ in 2013	Exported value in thousand US$ in 2014	Exported value in thousand US$ in 2015	Exported value in thousand US$ in 2016
World	79,597	95,604	110,788	94,974	97,647
Japan	55,427	68,107	69,845	57,629	54,594
Taipei, Chinese	9,479	11,900	15,667	14,299	14,128
USA	3,974	3,926	5,396	2,911	5,284
Myanmar	1,370	2,312	3,583	3,506	4,628
Philippines	578	179	1,457	3,159	2,661
Sources: International Trade Centre (ITC), Geneva, calculations based on UN COMTRADE statistics

 

Going high-tech

Industry sources suggest that domestic and foreign investors in sanitaryware manufacturing will naturally look for latest production technology that minimizes production cost in the present situation of rising wages and increasing cost of energy and raw materials, by abandoning old production systems.

TOTO, INAX, American Standard, Caesar and Viglacera are the five largest manufacturers in the premium sanitaryware segment. TOTO entered the high-end segment, while INAX, American Standard, Caesar and Viglacera competed in the mid to high middle-class segments. VNDIRECT reported last year that in 2016, TOTO grabbed high-end segment with 4% of the total market shares. INAX focused on low-cost products and distribution system with 30% market shares, Caesar excelled in diversity product with 17%, and Viglacera concentrated on the middle segment with a 12% market share.

In 2016, more than 50% of the sanitarywares market was captured by 3 foreign manufacturers, INAX, Caecera and TOTO with production capacity of 3 million, 1.7 million and 0.4 million pieces, respectively. Vietnam Building Ceramic Association(VIBCA) said in 2014-2015 the estimated production and real production were 15.05 million pieces and 12.5 million pieces, respectively. VIBCA said the estimated production capacity and real production jump to 25 million pieces and 17 million pieces respectively, in 2016-2017.

 

Vietnam’s ceramic sanitaryware output (m. pieces)
Particulars	2012	2013	2014-2015	2016-2017
Production capacity	13.6	14.7	15.05	25
Real production	9.5	10	12.5	17
Source: Vietnam Building Ceramic Association (VBCA) VBCCA Note: Utilization of capacity 80-85% of the production is consumed domestically.

 

Property development

According to the associations of real estates and the developers and institutes of development studies, some 1 million new houses are going to be built in 2 years, 2019 and 2020, to accommodate the migrant populations and industrial workers, including the employees of the the state-owned organizations, in the cities and urban centers, out of the total demand for accommodations of 3 million industrial workers alone.

There fore, demand for premium property will continue to rise as the middle-class population is estimated to grow to 44 million by 2020 and 95 million by 2030, as estimated by the market research firm Nielsen. The largest urban market are the 2 largest metropolitan cities, Hanoi and HCMC, including their suburbs.

 

Edited from Asian Ceramics