NEWS & EVENTS

Price war

16/10/2020
An article from Daniel Pham Insight - www.danielphaminsight.com
Price war

A cold war between China and Vietnam manufacturer?

“If the price is your only you are after it’s a race to the bottom”

I’d like to borrow the “Boston matrix” to explain this common practice from the Vietnamese factories that I have met.

 

Boston illustrator to show the price war between Vietnam and China

Explanation of the Situation  of Vietnam production cost


Many of them are serving the local market with a decent market share (cash cow). However, the product they are making doesn’t have many entry barriers. There are more and more competitors every year. And soon the “cash-cow” will fall into the “old dog” category where lowering product price is the only competitive strategy applicable. There is no winner in this race.

In order for a company to have sustainable growth, constant investment in R&D to explore new product / new market is a must. And hopefully the “Question mark” will turn into another “cash cow” or better a “star product” where both market demand and share are growing.

At the moment, there is a lot of incentive for international companies to consider moving their supply chain to Vietnam. Thus the market is growing and presenting great opportunities for Vietnamese factories. Those that have the sheer desire to grow, constantly learning, and investing in new opportunities will have more chances to be successful.

I’m really enjoying the job that provides me with the chance to constantly spread this message to the local factory owners and work with to make it happen.

To the “stars” we go.

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