By Steve Toloken
STAFF REPORTER / ASIA BUREAU CHIEF
Published: October 15, 2014 11:21 am ET
Updated: October 15, 2014 11:23 am ET

Image By: Steve Toloken
Peiyu Plastics Corp. CEO Eric Lin, left, and colleague Andy Tsao with examples of the company's thermoformed packages.

TAIPEI, TAIWAN — Taiwanese packaging firm Peiyu Plastics Corp. is making a big bet on Vietnam, with plans to significantly upgrade its factory there to tap local markets and use it as a base to get around Taiwan’s relative political isolation in world trade deals.

Peiyu, based in Taichung, Taiwan, has about 150 employees and a dozen extrusion and thermoforming machines at its Ho Chi Minh City factory, and it plans to invest $8 million to $10 million in the next three to five years to expand there.

“We are doing more and more producing in Vietnam because the costs are cheaper, compared to Taiwan,” said Andy Tsao, senior associate and director of the thermoforming division, in an interview at the company’s booth at the Taipei Plas trade fair, held Sept. 26-30 in Taipei.

As well, he said Vietnam’s anticipated entry into the Trans-Pacific Partnership, a trade deal between the United States and 11 regional economies, and its membership in the ASEAN economic community are big potential pluses for Peiyu, since Taiwan’s complicated relationship with mainland China makes it harder for the island to join trade pacts.

“Beyond the cheaper labor and cheaper land, there are longer term strategic advantages for Vietnam for a Taiwanese firm,” he said.

CEO Eric Lin said that while Vietnam is the company’s largest single factory, right now about 80 percent of Peiyu’s production is at its three Taichung factories. But the Vietnam share of production will grow to 30 or 40 percent in two years, he predicted.

The company is looking to buy a 15 acre plot of land in Vietnam, he said.

Peiyu has not seen a major exodus of Taiwanese or foreign investors in Vietnam after anti-China riots in May burned many factories around Ho Chi Minh City, Lin said.

Peiyu’s factory was undamaged, although several nearby facilities were burned, he said: “We had zero damage. Our company has a good relationship with employees. We will continue to invest in Vietnam.”

Long-term, Peiyu sees opportunities in Vietnam’s local market as use of plastic packaging in supermarkets grows.

He noted that McDonald’s established its first location in Vietnam this year, Starbucks recently entered the country, and the German supermarket chain Metro also has stores there.

Vietnam’s mobile phone manufacturing industry is also large, and the company wants to sell industrial packaging to it, Lin said.

Samsung has its second largest mobile phone manufacturing plant worldwide in Vietnam, and companies from computer chip maker Intel and contract manufacturer Foxconn Technology Group are there, he said.

“We sell a lot of film in Vietnam and we are trying to sell our thermoforming trays for phone manufacturing,” Lin said. “Everybody is going there.”

He said Peiyu is likely to add another 10 to 12 extrusion lines, thermoforming and pressure forming machines in Vietnam.

Globally, the company has about 320 employees and processes about 33,000 metric tons of plastic annually, according to its website.

About 95 percent of the company’s packaging is exported to the United States, while its plastic film production goes to broader locations, including Russia, the United States and Turkey, Lin said.

Peiyu started in 1978 as a trading company, and established its first plastics manufacturing in 2004 in Taichung.