Opportunities for Vietnamese Firms Doing Business with U.S. Partners

10:19:01 AM | 31/7/2020

The highlight of Vietnam’s exports in the first half of the year is continued growth momentum to the United States, which spent over 10% more on Vietnam’s products, reaching US$30.3 billion. The U.S. continued to be Vietnam's largest export market in the first half of the year, far outstripping China with US$19.5 billion.

Stateside shrimp exports sharply increased 18.2% year on year to US$115.5 million in the first quarter of 2020. The Covid-19 pandemic has spread widely in the United States since March 2020, resulting in postponed import of goods, including shrimps, into this market. This is the second largest import market of Vietnamese shrimps. While shrimp supply from India, Ecuador and Thailand is declining due to lockdowns, U.S. customers turn to Vietnamese shrimps. Besides, this year, Vietnamese shrimps being granted zero export tax to the U.S. is a great advantage for Vietnamese businesses to export this item.

Besides shrimps, in addition to maintaining outsourcing orders, many Vietnamese producers are seeking to increase “made in Vietnam” exports to the U.S.

Many businesses now consider it a top priority to keep existing orders with their U.S. partners in this context.

Ms. Nguyen Ngo Vi Tam, General Director of Vinh Hoan Seafood Processing and Export Joint Stock Company, said, from July 2020, the company’s shipments to the U.S. are expected to fully recover when states have reopened economic activities. The resumption of economic and trade activities means that consumption power in this market will recover quickly.

To enter selective markets like the U.S., Mr. Mai Thanh Phuong, President of Hoang Gia Pha Le Company, which makes stone plastic composites (SPC), said the company purchased SPC technology from Unilin Company, affiliated to Mohawk Group (U.S.), one of the largest manufacturers of construction materials in the country. This technology makes flooring simple and easy. In addition, products that must meet GreenGuard Gold standards (clean, environmentally friendly products) to be qualified for the U.S. As planned, its products will be available on shelves in U.S. supermarkets next August.

For Vietnamese businesses, the U.S. is a huge but demanding consumer market, with many strict and complicated regulations, especially amid escalating U.S.-China trade tensions.

Many experts said that China's export turnover to the U.S. slumped while Vietnam's export value to the U.S. increased sharply. There have been many warnings against China using Vietnam as a transit point to export goods the U.S.. Therefore, the risk of origin fraud and evading trade remedies that U.S. customs authorities applied to various countries, including China, is something that Vietnamese businesses need to keep in mind.

Ms. Bui Kim Thuy, Representative of U.S - ASEAN Business Council, said, the U.S. is not an easy market; there are a lot of strict requirements and conditions of product quality. But once through this door, businesses will have access to a giant growing market. One point Vietnamese businesses need to remember is that large U.S. corporations mainly focus on developing technology and energy, and thus foreign manufacturing has a lot of opportunity to enter this market.

Besides, according to Mr. Erik Frankel, Director of Vietsway, businesses need to carefully plan their commodity export, carefully study the market, as well as export methods and procedures.

In order to plan exports to the U.S., exporters must check U.S. restrictions on imports, estimate customs fees, prepare mandatory documents. They must be clear about which agencies are responsible for commodity imports into the U.S.

While shipping goods, businesses need to have a certificate of tax debt guarantee, honestly declare customs procedures, check the accuracy of documents and pay customs fees as prescribed.

In addition, depending on specific products, the U.S. Customs and Border Protection Agency (CBP) will work with other agencies such as the Food and Drug Administration (FDA), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) which will set different standards for each type of product.

Most failures of foreign trade contracts, according to Mr. Phan Trong Dat, Deputy General Secretary of Vietnam International Arbitration Center (VIAC), come from subjective factors: Lack of understanding of policies, customs regulations; lack of good relationship with U.S. distributors, shippers, banks, customs and lawyers; uncontrolled product quality; costs; and poor market forecast.

To avoid disputes, businesses need to choose the right partners and consult with trade offices and lawyers. When signing contracts, they need to thoroughly understand contract laws, including forms and terms.

By Quynh Anh, Vietnam Business Forum