Changing Approach to Foreign Markets

10:28:03 AM | 2/1/2020

After 25 years in ASEAN and more than 10 years in the WTO, Vietnam has now become the 22nd largest exporter in the world.

Grasping opportunities from FTAs

Looking back on the integration and development process, we found that Vietnamese companies have been making good use of opportunities from free trade agreements (FTAs) ​​and other regional and multilateral cooperation frameworks.

Vietnam's exports have increased rapidly at a high growth rate of over 15% a year in 2011-2019 and officially reached a record milestone of US$500 billion in mid-December this year. This achievement is even more significant in the context of weakening global economy and trade caused by trade conflicts and strategic competition among major economies in the world. This achievement has led Vietnam to maintain the trade surplus for a fourth consecutive year in 2019 (a trade surplus of about US$9.9 billion).

In particular, many exports of Vietnam hold an important position in the world trade map like garment and textile (ranking 7th in the world by export value with US$33 billion a year), leather and footwear (ranking 3rd in the world by production and 2nd by export, with US$$17 billion), electronics (ranking 12th in the world by export, with telephone export ranking 2nd in the world with about US$50 billion a year), seafood (ranking 4th in the world in export about US$9 billion), wooden products (ranking 5th in the world in export with about US$9 billion). Some other agricultural products of Vietnam always stand among the world’s top exports like coffee, pepper and rice.

Vietnam has effectively utilized its FTAs as shipments to countries with FTAs signed with Vietnam ​​recorded high export growth as compared with the performance before the enforcement of FTAs. For example, exports to South Korea increased 21.6 times; to India, 15.6 times; and to Chile, 3.6 times. Notably, Vietnam achieved positive changes in the domestic business sector when it outperformed the FDI business sector in export in recent years. The share of export value held by the domestic sector continued to rise to account for over 30%. This is a bright spot in Vietnam's merchandise exports.

Proactively dealing with trade remedies

Up to now, Vietnamese exports have faced more than 150 trade defense cases initiated by 19 countries and territories, with a focus on anti-dumping, safeguard and anti-subsidy.

The Ministry of Industry and Trade cooperated with other ministries and sectors to fight on the legal ground by requesting the Government to bring the case to the WTO Dispute Settlement Mechanism when measures imposed by other countries show signs of breach of WTO regulations. Presently, the Ministry of Industry and Trade is working with the Ministry of Agriculture and Rural Development, the Vietnam Association of Seafood Exporters and Producers (VASEP) and enterprises to handle two WTO-related dispute cases: (i) U.S. antidumping duty on pangasius, and (ii) U.S. Catfish Monitoring Program. In the process of handling those two cases, the ministry adopted various channels to exchange, discuss and propose to the United States to find solutions to the case to ensure rights and interests of enterprises. These efforts also contributed to the recent U.S. recognition of catfish inspection system as equal to the U.S. This ensures our stable pangasius export to this market.

As a result, Vietnam obtained positive outcomes in the above cases. In particular, it successfully appealed (not applying measures or not extending the application of measures) 57 out of 137 cases, accounting for about 42%; ensured the continued export of many Vietnamese products like basa fish and prawn to major markets such as the United States and the European Union (EU) at a zero or very low tariff rate. We brought five cases to the WTO Dispute Settlement Body, of which three cases ended with positive results (for us). The above-mentioned efforts to trade remedies have helped protect legitimate interests of manufacturers and exporters and support export development for enterprises.

Reducing fairs, tapping overseas Vietnamese networks

In the coming time, trade promotion will reduce activities with temporary effects such as fairs and exhibitions and increase those with long effects for approaching foreign markets and expanding the domestic markets by delivering skills training, prioritizing introduction and promotion of strong agricultural products of Vietnam, supporting niche market development for a number of high value-added products to potential markets.

Regarding branding, businesses will be guided and supported to foster branding activities for export products through the National Brand Program to popularize their images and brand names in key and potential markets and focus on branding for some key industries such as garment and textile, seafood and fruit.

A new feature in carrying out the project to encourage Vietnamese companies to directly join foreign distribution networks in the period up to 2020 is improving operations by linking overseas Vietnamese companies with domestic ones, using overseas Vietnamese networks to support Vietnamese companies to explore and expand export markets, and relying on this force to inform the quality of Vietnam's exports to boost sales of Vietnamese companies in foreign supermarkets.

The most important is focusing on improving corporate competitiveness. Vietnamese businesses must change their thinking to adapt to the new context, actively learn and capture information and flexibly approach, utilize opportunities, seek information and prepare themselves for regional and international competition, have innovative thinking and acumen in business, have plans to build up their capacity, especially brand name, reputation and quality to do successful business on a larger scale and in a longer future.

Huong Ly (Vietnam Business Forum)