Survey time: Mid-to-late May 2007 Survey locations: Hanoi, Vietnam and Ho Chi Minh City
Survey respondents: dealers with operating area of ​​30-35 square meters, and operating electrical and lighting products (including 9 in Hanoi and 13 in Ho Chi Minh City), 8 brand agents and 3 brand manufacturers.
The purpose of the survey: to provide in-depth understanding and analysis of the operating environment and distribution brands of channel distributors in Vietnam in the past five years, and to make recommendations on the marketing strategies adopted by many existing brands in China to enter the Vietnamese market.
Brand status
Brand growth: In 2002, there were only 6-7 Vietnamese electrician brands; in 2007, it increased to around 20.
Brand names: Legrand, Sanshe, Philips, Megaman, SBN, Hager, SINO, LS, GP, Panasonic, GEWISS, PamIza, SOMER, COMET, AC, MPE, SIEMENS, etc.
Market trends: As the capacity of the Vietnamese market increases, so will the brands.
Major competitive cities: densely populated areas such as Hanoi and Ho Chi Minh City.
More ideal Chinese brands: Sanshe, Junlang, Yingyan, NVC, Matsumoto, Langneng, etc.
Market situation
Overview of store operations: The building materials stores in Hanoi and Ho Chi Minh City are relatively intensive street operations. Due to the high architectural style and rent, the operating area is generally small. Agents with international brands generally have small exhibition halls on the building materials street. It is worth noting that no matter whether it is Hanoi or Ho Chi Minh City, there are not many agents with strength.
International brands with small showrooms: SIEMENS, Panasonic, Hager, Megaman, Philips and SINO.
Store business model: Each product has its own secondary distribution channel in Building Materials Street. All electrical and lighting products (including commercial lighting) are distributed in the form of a general agent. The retail price is 20% off the written offer. The purchase price of the first-tier distributor is about 50% of the written price, and its gross profit margin is generally 30%. For engineering distributors, the price is more favorable.
Terminal performance: Like China's terminals, which products are better for sales or higher gross profit, which products are loyal to the brand and focus on product profits.
Advertising promotion methods: Promotional methods are still based on price discounts, and less use of other hybrid promotions. In addition to samples, panels and promotional materials, other outdoor advertisements are also evident. For example, China’s NVC has large outdoor billboards in Hanoi.
Vietnam's local brand development: For example, Ho Chi Minh City's Xing Power Equipment Co., Ltd. has represented Qisheng for 7 years, and also represents other 7 brands of electrician and lighting products.
AC company has been the agent of Matsumoto Electric and Masano Electric for 8 years. Since 2003, it has launched its own brand AC, and is now gradually upgrading to COMET, becoming the top five electrician and lighting brands in Vietnam.
In-depth analysis
Deng Guoyan, general manager of COMET (transliteration) and various agents agreed that the Vietnamese electrician and the Mingming market will gradually develop in depth. The reasons are:
(1) Almost all electrical products are OEM to major manufacturers in China, and only switch panels are produced in Vietnam. In order to reduce costs, manufacturers will further fight the price war. At present, all the measures adopted by the brand are mainly based on expanding the terminal occupancy rate, supplemented by engineering orders, which is very similar to the promotion methods of market development in China at this stage.
(2) Manufacturing methods and design have restricted the entry of some high-end brands in China. Due to the low capacity of the Vietnamese market, some high-end Chinese brands will not notice her development or concentrate on developing this “virgin landâ€. At the same time, due to the French system of interviews, it has also restricted the entry of some brands to a certain extent. However, for border goods and some second-tier brands, there are still certain market opportunities.
Therefore, since 2004, Sanshe entered Vietnam in the name of a Japanese company and carried out key developments. Now, regardless of the sales of the three companies, such as electricians and lighting, or the OEM three brands, they have become representatives of Chinese products. Langeng entered Vietnam through border goods.
Because of the influence of various factors, sales of lighting products and A4 brackets are very good, but electrical products have been rejected. However, the visibility of general commercial lighting products such as NVC, Sanxiong and Aurora is still relatively high.
Generally speaking, the Vietnamese market does not have high requirements on the design styles and patterns of the products. Therefore, the key lies in the distribution ability of the general agents.
(3) The strength of brand promotion and after-sales service have become the focus of opening up the Vietnamese market. Many well-known brands in China, the Gudi, Matsumoto and Zhengye showrooms under the Weixiong Group reached a peak in 2004, and established joint ventures and OEMs. However, after 2004, the original network channel was gradually seized due to the agent's main push of the AC brand and COMET's own brand, which eventually led to the decline. However, the Zhengye exhaust fan is still the first brand of Vietnamese exhaust fans, and has reached the first place in the named purchase rate. The newly emerging Sanshe has become a leader in Chinese brands in the industry.
Thanks to the active cooperation of exhibition halls, outdoor advertisements, door advertisements, display boards and various promotions, the network channels are perfect, and the price of the products is also in line with the needs of the local consumer market. Therefore, the continuous investment promotion and after-sales service of the brand is very important. In particular, lighting products, according to 9 agents, lighting products are imported from China's OEM, but also the current customer complaints, the key point is the quality of lighting products and repair rate are very high.
(4) Before entering the Vietnamese market, it is necessary to conduct in-depth investigation and understanding in order to have a long-term marketing strategy. After entering Vietnam, the products can be distributed to countries and regions such as Laos, Cambodia, Thailand and even Malaysia. Although there is a certain market and profit, this is not entirely suitable for the entry of many Chinese brand manufacturers.
According to many friends who have operated overseas markets, the Vietnamese market has certain specialities and is not intended to be a key investment. Moreover, at present, Chinese companies have too few successful cases in the process of globalization.
However, TCL's disappointment in Europe does not mean that TCL is not successful in Vietnam. TCL entered Vietnam in 1999 and is now among the top five local brands in Vietnam.
In this regard, Deng Weiwen, general manager of Vietnam TCL, believes that it is good to use and integrate local resources and adopt appropriate marketing strategies. In fact, operating the Vietnamese market is not as difficult as the legend. The key is whether brand manufacturers can seize opportunities, plan for cost inputs, and formulate long-term market strategies during the incubation period or development period of the market.
It can be said that Vietnam is a practice and practical base and opportunity for Chinese brands to learn international marketing. Moreover, in Vietnam, companies pay less tuition fees, which is very beneficial for accumulating experience and opening up other countries' markets, and companies can also understand the practice of international marketing.
In Hanoi, the 4S showroom in the United States has been renovated and is now open to the public. Although the US's nearly 500 square meters display is simple, it has already reflected the Chinese brand's emphasis on the Vietnamese market. Moreover, Midea's small appliance production base in the Singapore Industrial Park in Ho Chi Minh City has also been put into production, which will accelerate the development of Chinese brands in overseas markets.
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