The machines and equipment with low quality and low costs have been flooding Vietnam, which should be seen as a big threat to Vietnamese mechanical engineering products, experts have warned.

A lot of machines and equipment sourced from China have been imported to Vietnam in masses recently. Especially, Chinese producers can do the outsourcing for Vietnamese enterprises at different price levels.

Vietnamese enterprises complain that the current policies do not encourage local production: a lot of machine imports under the mode of complete built units (CBU) can enjoy the import tariff of zero percent, while enterprises have to pay taxes when importing machine parts and accessories. As a result, mechanical engineering products have been blocked on the home market.

Cheap products dominating the market

Tran Tien Dung, an executive of a HCM City-based forwarding company, which specializes in making authorized import, said that the number of clients who order machine imports from China have been increasing sharply. The number of orders the company has got so far proves to increase by two folds than that of the last year.

Dung said that the products the company imports under the clients’ authorization are mostly machines, equipments and accessories, while the clients are mostly newly set up companies.

“Low prices are the biggest competitive edge of Chinese products, which explains why Chinese products have been preferred to the source technologies from the US, EU or Japan,” Dung said.

The statistics from the General Department of Customs also show that the imports of machines and equipments from China have been increasing continuously in the last consecutive years. In the first four months of 2009, the import turnover of these products was 1.074 billion dollars, while the figure soared to 1.595 billion dollars in the first four months of 2011.

“TH”, the owner of an equipment shop on Nguyen Thai Binh Road in Tan Binh District of HCM City, when asked to give advice about what to buy to install a production line for 10 garment workers, said that there must be at least eight sewing and two overlock machines.

He said that if purchasing Japanese products, one would have to pay some 100 million dong. Meanwhile, if purchasing Chinese goods, one would have to pay 54 million dong only. It is because a Chinese overlock machine is priced at 7 million dong, while a Japanese product costs 14 million dong.

“You get what you pay for,” he said. “Though Japanese goods are expensive, they will still run well after 10 years. Meanwhile, Chinese goods have low durability”.

“The paintworks of Chinese goods will be flaking off after one year, while the machine will rattle,” he added.

Especially, brand new mechanical machines sourced from China can only enjoy one-year warranty, if buyers accept to pay 20 percent of the machines’ prices additionally. Meanwhile, suppliers do not have to provide warranty for electrical machines.

Current policies encouraging imports

According to Do Phuoc Tong, Director of Duy Khanh, specializing in making mechanical engineering products, Chair of the Tan Phu District’s Mechanical Engineering Enterprises, said that a lot of products imported from China can be manufactured in Vietnam. However, the current policies now encourage the imports

Tong said that many kinds of machines and production lines now can enjoy the zero import tariff, which allows imports to easily compete with domestic products. Meanwhile, if domestic enterprises import machine parts to assemble domestically, they have to pay the tax rates of 15-20 percent.

“The unreasonable taxation has been bringing benefits to importers and putting big difficulties for domestic production,” he said.

According to the General Department of Customs, the enterprises which import Chinese machines and equipments are mostly Vietnamese enterprises (74.7 percent), while foreign invested enterprises’ (FIEs) imports just account for 25.3 percent.

TP