A conversation with executives at Vietnamese film extruder Rang Dong Plastic Joint-Stock Co. offers a glimpse into the challenges facing the country's economy, as it tries to go from the certainty and limits of state planning to the risks and potential of global markets.
The formerly completely state-owned company, one of the largest extruders in Vietnam with significant domestic market share in vinyl sheet, started privatizing last year. It trimmed its workforce by more than a third, has made plans to invest in another plastic packaging plant, and is upgrading its equipment.
But Rang Dong also realizes that while its size is large for Vietnam, its 500 employees and 33.1 million pounds of PVC consumed a year are tiny on world markets, and it needs to step up to be competitive.
``In Vietnam we are a big company, but to compare with others around the world, we are medium- and small-sized,'' said Ho Duc Lam, chairman and general director, in a Nov. 20 interview in his Ho Chi Minh City office. ``We are a new company, so our competitiveness is still limited.''
The firm is in the midst of spending at least $12 million on various projects, including $5 million on its new Ho Chi Minh City packaging plant, to be built to international Hazard Analysis Critical Control Point food safety standards. It also is relocating a plant in Hanoi to build offices on some land it owns in the city's downtown, and upgrading its equipment.
Some of that is being financed by profits, with the rest from bank loans and ``preferential'' loans from the government, because the firm is using more environmentally friendly production, company officials said.
For example, it is buying nontoxic plasticizers and eliminating heavy metals from its PVC, said Le Van Bao, assistant to the general director. Ho said the company is also closely following worldwide debates about PVC, as it wants to boost exports from 10 percent of sales to 30 percent.
Ho said Rang Dong, a large supplier of raincoats and bags and a well-known brand in Vietnam, also makes PE film. The company is focusing in several areas: synthetic leather from vinyl and polyurethane, plastic film for flexible packaging and flame-retardant chemicals, he said.
For now, Ho said he thinks the firm's privatization has put it on the right path.
It has more flexibility as government ownership shrinks from 60 percent this year to 40 percent in 2007. It went from 800 employees before privatization, to 500 now, and saw sales rise, he said. Le noted that the employees who left were given government-financed buyout packages.
``Operating costs are very uncontrollable under a state-owned company,'' Ho said. ``When we became a joint stock company, everything is very controllable.''