Amplifying export market share in Northeast Asia
15:16, 2014/09/16
Thanks to favourable legal frameworks from free trade pacts, geographical advantages, and traditional ties Vietnamese companies have ample opportunity to expand exports in Northeast Asia and increase their market share.
Key trade promotion markets
China is currently the largest export market for Vietnamese agricultural products and a key potential market for other sectors such as garment and textiles, leather and footwear, seafood, furniture, commodities, electronics, and auto parts.
China is currently the largest export market for Vietnamese agricultural products and a key potential market for other sectors such as garment and textiles, leather and footwear, seafood, furniture, commodities, electronics, and auto parts.
Russia is a traditional market of Vietnam with many bright spots on the horizon for exponential export growth.
The two countries are currently negotiating a free trade agreement between Vietnam and the Customs Union (Russia, Belarus and Kazakhstan), which negotiations are expected to conclude early next year, bringing promise of much liberalised trade.
The Republic of Korea (RoK) and Japan are also considered highly lucrative markets with an inordinate potential for market share growth.
Le An Hai, Deputy Head of the Asia-Pacific Market Department, reveals the Ministry of Industry and Trade (MoIT) has an elaborate marketing plan in the works to carry out a wide foray of activities to stimulate trade in the two markets in the near future.
Japan is the largest trade partner of Vietnam. Exports to Japan, ranking second after the US, have been on an uptrend and in the first eight months of this year alone two-way trade turnover reached US$17.3 billion.
In recent years, a host of successfully negotiated important economic agreements have created favourable conditions for Vietnam to increase its agricultural exports to Japan. A sharp reduction in tax rates on for all farm produce has opened opportunities for Vietnamese businesses to gain ground.
Most notably the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) Agreement and the Vietnam-Japan Economic Partnership Agreement (VJEPA) have provided increased incentives for Vietnamese exports to Japan.
Likewise, the ASEAN-Korea Free Trade Agreement (AKFTA) has actively facilitated Vietnamese exports to the RoK in recent years. Many exported products have achieved robust growth as a result.
However, not all products fully capitalise on incentives brought by trade agreements. RoK commitments to Vietnamese advantaged products like tea, pepper, coffee and fruits remain severely limited.
Quarantine and technical standards are the major barriers restricting Vietnamese exports to the RoK. In the current negotiations of a Vietnam-Korea Free Trade Agreement (VKFTA), Vietnam is making greater efforts towards addressing these obstacles and eliminating them.
Garments are one of the RoK success stories, having fully exploited incentives and propelled exports upwards. In the first 7 months of this year, garment exports to the market skyrocketed 36%.
Meeting requirements
Due to different crop and weather patterns plenty of opportunity exists to export agriculture products to the Japanese market but there are snags in complying with the stringent food hygiene and safety requirements of the Japanese market.
Official statistics show impressive growth rates in recent years ranging from 10-30% annually, however the overall agriculture export value is still modest, and remains only a fraction of its fullest potential.
Le An Hai says Japan and the RoK are two of the most demanding markets in the world and they are not easily penetrated.
As a case in point, Hai cites the deal to export fresh mango and dragon fruit to the two markets, which took Vietnam over four years to negotiate.
Vietnamese products have barely scratched the surface of the Japanese market Satoshi Nakajima, Japanese Consul General to HCM City, says, adding Vietnam accounts for just 1.65% of total Japanese market share.
Despite huge potential, local businesses have not been able to effectively tap into the market due to weak capacity and competitiveness.
A representative from Thang Long Company says Vietnamese Trade Offices overseas should support businesses by supplying information about market trend and taste and lists of strong partners as if they access the information their competitiveness should improve.
In addition to market promotion programmes, local businesses should pay more attention to approaching Japanese and Korean retailers who are operating in Vietnam, as this should offer opportunity to penetrate their supply chains in other countries, Hai advises.
The most important thing is businesses must ensure the quality of products and grasp opportunity to access purchasers to boost exports.
The two countries are currently negotiating a free trade agreement between Vietnam and the Customs Union (Russia, Belarus and Kazakhstan), which negotiations are expected to conclude early next year, bringing promise of much liberalised trade.
The Republic of Korea (RoK) and Japan are also considered highly lucrative markets with an inordinate potential for market share growth.
Le An Hai, Deputy Head of the Asia-Pacific Market Department, reveals the Ministry of Industry and Trade (MoIT) has an elaborate marketing plan in the works to carry out a wide foray of activities to stimulate trade in the two markets in the near future.
Japan is the largest trade partner of Vietnam. Exports to Japan, ranking second after the US, have been on an uptrend and in the first eight months of this year alone two-way trade turnover reached US$17.3 billion.
In recent years, a host of successfully negotiated important economic agreements have created favourable conditions for Vietnam to increase its agricultural exports to Japan. A sharp reduction in tax rates on for all farm produce has opened opportunities for Vietnamese businesses to gain ground.
Most notably the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) Agreement and the Vietnam-Japan Economic Partnership Agreement (VJEPA) have provided increased incentives for Vietnamese exports to Japan.
Likewise, the ASEAN-Korea Free Trade Agreement (AKFTA) has actively facilitated Vietnamese exports to the RoK in recent years. Many exported products have achieved robust growth as a result.
However, not all products fully capitalise on incentives brought by trade agreements. RoK commitments to Vietnamese advantaged products like tea, pepper, coffee and fruits remain severely limited.
Quarantine and technical standards are the major barriers restricting Vietnamese exports to the RoK. In the current negotiations of a Vietnam-Korea Free Trade Agreement (VKFTA), Vietnam is making greater efforts towards addressing these obstacles and eliminating them.
Garments are one of the RoK success stories, having fully exploited incentives and propelled exports upwards. In the first 7 months of this year, garment exports to the market skyrocketed 36%.
Meeting requirements
Due to different crop and weather patterns plenty of opportunity exists to export agriculture products to the Japanese market but there are snags in complying with the stringent food hygiene and safety requirements of the Japanese market.
Official statistics show impressive growth rates in recent years ranging from 10-30% annually, however the overall agriculture export value is still modest, and remains only a fraction of its fullest potential.
Le An Hai says Japan and the RoK are two of the most demanding markets in the world and they are not easily penetrated.
As a case in point, Hai cites the deal to export fresh mango and dragon fruit to the two markets, which took Vietnam over four years to negotiate.
Vietnamese products have barely scratched the surface of the Japanese market Satoshi Nakajima, Japanese Consul General to HCM City, says, adding Vietnam accounts for just 1.65% of total Japanese market share.
Despite huge potential, local businesses have not been able to effectively tap into the market due to weak capacity and competitiveness.
A representative from Thang Long Company says Vietnamese Trade Offices overseas should support businesses by supplying information about market trend and taste and lists of strong partners as if they access the information their competitiveness should improve.
In addition to market promotion programmes, local businesses should pay more attention to approaching Japanese and Korean retailers who are operating in Vietnam, as this should offer opportunity to penetrate their supply chains in other countries, Hai advises.
The most important thing is businesses must ensure the quality of products and grasp opportunity to access purchasers to boost exports.
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