In the south, the potential customer base is highly fragmented. Greater familiarity with concept of private business and a more dynamic business environment has, among people in
south, spawned a huge number of small, private and household businesses which are open new ideas and new opportunities. In this environment it is hard for the SKF team of engineers identify targets and to keep their lists of prospective customers up to date. Few of the more ft 500 registered SKE customers in the south are large-scale concerns, the main exception bei the two state-owned Ha Tien cement companies. Most industrial customers are concentrated the steel, paper and sugar businesses in Bien Hoa province, while farmers in the Mekong de area are big users of rice-processing equipment and other agricultural machinery. Marine-u bearings are also important products for a region with so many rivers and a long coastline. FE customers in the south are as yet familiar with the SKF brand.
By contrast, industry in the north of the country is concentrated at a relatively small number large state-owned enterprises. The principal customer base has so far been fairly easy to dent but purchasing patterns in northern enterprises are dominated by high cost-conscipusnesS. Giv the availability of cheap Russian-made bearings costing as little as one-third the price of equivalent SKF product, it has proved difficult to convince customers working with cheap.
Russian-made machinery of the long-term benefits of using high quality but more expensive bear ngs.
Most of SKE Vietnam's customers are in the aftermarket, requiring spare parts to repair existing machinery. Over time, the company intends to develop an OEM customer base as well, but this requires a different marketing approach. OEM business is less profitable than the aftermarket (because original manufacturers are highly cost_conscious) but it is a means of developing SKE's image and brand name in Vietnam and, more importantly, it generates the future aftermarket.
- Obviously, since OEM customers are, by definition, manufacturers of machinery for other industries, OEM business requires a country to have a reasonably-sized manufacturing base - and this is not yet the situation in Vietnam. However, it is an important long-term investment for SKE to make, since afterrnarket customers are likely to automatically replace a worn-out bearing in a machine with a new one of the same brand. OEM business represents approximately 20% of current SKF Vietnam sales.
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