INDUSTRY ANALYSIS

1. Rivalry
- Number of rivalry: Ponima, vietnam steel corporation, Vietnam Germany Steel Pipe Joint
Stock, Guang Lian Dung Quat,posco …
- Recently when Vietnam join WTO, there are more opportunities for foreign steel
company would appear in Vietnam market.
- Steel industry was formed long time ago, there are number of big and small companies
operate. In just HCM city about 1600 companies.
- Steel industry is a high profitablity sector at current time because Vietnam now is in the
process of establishing and building infrastrure nationalwide.

2. Threats of new entrants is low

- The invesment capital for establishing a steel factory is very high, while most of the
materials are imported from China. The risk of operating in heavy industry is quite high.
Less people want to invest in steel industry
- Entering steel industry require the proof of maintaining high capital, less companies have
enough capacity to do so.

3. Pressure from substitute products

- Clay will be a substitute products for steel in the future, but this material would be
applied in most developed countries before entering Vietnam market.
However, it is undeniable that steel is a traditional and most popular material in all over
the world, it will take time to use a new material

4. Bargaining power of suppliers

- From beginning of 2010, price of all products has increased about 15-20% and steel is not
an exception. The imported steel has increased about 6%
- Most the inputs were imported from China, SMC would have to suffer high price due to
the appreciation of RMB. Even they have good relationship with the supplier, but the
suppliers tend to have more power in offering price and this company will have to face
 many challenges when the price of input increases while they can’t offer higher price for
customers. SMC does not have much power in bargaining over material price.
- SMC is the main distributor of many big steel companies such as Ponima, Vinakyoei,
South Steel, so the revenue they receive would be lower than the supplier, and they have
less chance to push the price higher in the market

5. Bargaining power of buyers

- SMC account for 30% market share in the South of Vietnam and 3% in total market
share. Their main customers are mostly in the South, or they have more power in
bargaining with buyer in the south rather than in the whole country.
- Although there is an slight increase in product price, it does not reduce the demand for
steel is still high because Vietnam is still in the process of constructing infrastruture, they
can negociate with customer to have reasonable price