Vietnam: Green Construction Opens up Opportunities for Building Materials Suppliers


Vietnam’s economic expansion is resulting in rapid urbanisation, requiring consistent investment into infrastructure and housing developments. But while Vietnam is addressing the increased demand for housing, the country is facing pressures from climate change and resources conservation.

Basic construction materials such as brickwork and steel consume a great amount of resources and energy to produce, but continue to be widely used.

New environmentally friendly materials are required for the transition to sustainable housing. In recent years, Vietnam’s government and civil society have been promoting the adoption of new building materials such as unbaked brick by issuing regulations and mandating targets.

Michael Sieburg, the Manager for marketing consultants Solidiance, said: “these moves are a welcome step in the right direction of establishing a regulatory framework that promotes the adoption of green building materials, but it will take time to transition from traditional building methods.”

Domestic companies are already taking advantage of access to local resources to produce such materials, but their limitations in technology, marketing, and research and development are hampering market penetration.

This leaves opportunities for international building material suppliers to enter the market and provide high-end, customised, and aesthetic products which can satisfy market preferences.

A pressured urbanisation

The urbanisation rate in Vietnam is forecasted to increase to 45 percent from the current 27 percent by 2020. According to Vietnam Construction Material Association, the country will need to develop an additional 364 million sq m to current 600 million sq m of housing space in urban areas.

Meeting that demand using traditional building materials would require 42 billion standard bricks which consume the equivalent of about 3000 hectares (ha) of agricultural land and five tons of coal, while producing 17 million cubic meters (m3) of Carbon Dioxide (CO2) gas.

To cope with the situation, the Vietnam government has passed circular No.09/2012/TT-BXD, governing the minimum proportion of unbaked brick used in buildings, aiming to boost the production and consumption of green building materials.

According to the circular, by 2015, unbaked bricks must account for at least 30 percent of bricks for buildings with nine floors or more, and eventually rising to 50 percent in the following years.

Domestic players pioneer the change

With an abundant supply of locally available raw materials, domestic companies have in recent years introduced a variety of new building materials for residential construction projects. Substitute materials have gained traction such as autoclaved aerated concrete (AAC), polyurethane (PU) foam, and aluminium air bubble.

Due to advantages of time and cost in production and implementation, AAC, for example, has gained prominence with architects and contractors who value environmental protection and greener living environments.

In the last two years, 12 light-concrete producing factories have begun production in the country, with a total capacity of 1.5 million m3 per year, equal to about 1.05 billion bricks.

How can global companies enter the Vietnamese market?

Despite the growing adoption rates, new construction materials are finding it difficult to compete against traditional ones. In addition to Vietnamese consumers’ and industries’ strong attachment to traditional construction methods using bricks and mortar, local manufacturers of sustainable building materials are struggling to compete in the price-sensitive market.

Most of them are small and mid-size companies, run by local entrepreneurs, possessing insufficient technological and financial capacity to produce, market and distribute products to the price-conscious end of the market.

At the other end of the market, the high-end segment with sophisticated demand for customised and aesthetic materials for interior decoration and outdoor landscape is also beyond reach for domestic companies.

These conditions represent a huge opportunity for the leading global manufacturers to expand their businesses and introduce innovative products to Vietnamese consumers. However, understanding key decision makers within each segment will be vital to fill existing market gaps and secure a sustainable market position.

Row houses

Row houses are a traditional structure in many Vietnamese locations. The row house is a multi-storied structure usually located in a rectangular plot, which has a width much shorter than its length, and connected on each side with neighbouring row houses.

Homeowners, on the advice of architects, will have great influence on the construction materials and brands used. During the design and construction, homeowners will visit many retail outlets of competing materials and brands to compare, purchase, and arrange delivery.

For material suppliers to target this retail segment, a distribution network including licensed retail agents is often required, in addition to investment on end-consumer advertising such as billboards and commercials.

Apartment blocks

Apartment blocks are showing rapid uptake as urbanisation requires more efficient use of land for residential uses. Socialised apartment projects are a newer concept, but are being promoted by the People’s Committees of large cities to provide affordable housing to the population.

However, such projects are often influenced by government agencies and regulation, resulting in complicated and arbitrary tendering processes. Partnering with a local material distributor is often recommended to help navigate such processes and leverage existing relationships.

For international projects, often higher-end condos and apartment buildings, international companies often utilise in-house sales teams to target domestic consultants which have strong influence in selection of materials and brands.

However, given the difficulties of opening a local subsidiary which is allowed to invoice sales, international companies often set up local representative offices and use local distributors to invoice, import, and distribute.

Detached house

Urban detached houses are stand-alone residential units with surrounding garden, fencing, patio, or driveway; more common in suburban areas outside of city centers for higher-income groups. Such projects are often constructed by domestic developers, which will be the primary decision makers.

Consistent sales presentations and potential invitation of key decision makers of large developers to overseas factories and project sites may be required to develop relationships for new brands


Source: Construction Digital

Print Friendly

Leave a Reply

Your email address will not be published. Required fields are marked *

Read previous post:
Quayside Isle Singapore, a Step Closer Towards Greener Hospitality Industry

Green movement in Asia's hospitality industry has taken off to catch up with the nature's deteriorating pace. Retail segments including...