VietNamNet Bridge – The Vietnamese mothers’ worry about the quality of foreign made dairy products after a series of bacterial contamination scandals has brought the golden opportunity to domestic producers to conquer Vietnamese hearts.

Dumex’s, Karicare’s and then Similac’s formula products have been recalled just within the last few days, which has frightened Vietnamese mothers. They now tend to use domestic products which are cheaper and believed to be safer.

Different prices for the same quality

A report of the Vietnam Chamber of Commerce and Industry (VCCI) showed that the formula price increases two or three times a year. In 2007-2010 alone, the prices were adjusted 16 times.

In the first six months of the year alone, there were three waves of the price increases, by 5-10 percent for each. Especially, some products saw the prices increasing sharply by 14 percent.

With 200 importers operational in Vietnam, it was expected that the stiff competition among them would benefit customers and ensure the most reasonable prices. However, in fact, the importers have been joining hands with foreign dairy producers to set up sky high sale prices in Vietnam. The Vietnamese formula market has been uncontrollable.

The Ministries of Finance and Industry and Trade have been violently criticized for the failure to control the import formula prices. Meanwhile, Vietnamese consumers have been described as “too easy to be conquered” by foreign manufacturers.

Even after a series of scandals relating to the quality of foreign products, Abbot, one of the foreign manufacturers having substandard products sold in Vietnam, still has sent words, intimating there would be two new price increase waves in August and September.

Meanwhile, the manufacturer dares not do that in the Chinese market. With the transparent policy on sternly protecting domestic production, Chinese competent agencies have been carrying out the investigations over the formula prices.

Abbot immediately has announced it would reduce the formula price in China by 12 percent, while Nestle and Danone have cut the prices by 20 percent. This has forced other manufacturers, such as Nestle SA or Royal FrieslandCampina NV, to follow the move of slashing the sale prices.

The “discriminatory treatment” by the dairy producers to different markets has made Vietnamese feel hurt.

While the imports and the domestic products have similar quality, the sale prices are “as different as a chalk from cheese.”

According to Dr. Nguyen Thi Lam, Deputy Head of the Vietnam Nutrition Institute, the analyses of the components in foreign and domestic products showed that domestic products are in no way inferior to foreign ones in quality.

Time for domestic producers to regain their strength

As Vietnamese mothers have decided to boycott foreign formula and use domestic products, Vietnamese manufacturers understand that their opportunity has come.

In order to conquer Vietnamese consumers’ hearts, dairy producers have to prove the high quality of their products. Bui Thi Huong, a senior executive of Vinamilk, said Vinamilk has requested Fonterra to give official answers in written documents, confirming that it did not sell contaminated materials, and that it has not sold whey protein products to Vinamilk for the last many years.

This aims to prove that the products marketed by Vinamilk have always been safe to consumers.

Vinamilk plans to set up another factory with the capacity of 2.4 million liters per day, after the second phase of the project becomes operational, which is equal to the total capacity of its 9 operational factories. TH True Milk has set up a factory with the capacity of 200,000 tons per annum in the first phase.

DDDN