Vietnam and Russia have developed a stable, long-term diplomatic relationship. In the area of economics and trade, Russia has been a traditional partner of Vietnam. At the Hanoi – Moscow Trade Promotion 2012 seminar, Vietnam Business Forum talked with Mr Xlipnhiop, Minister of Trade of Asia – Europe Economic Commission. Anh Phuong reports.
“The two nations have witnessed progress in their economic collaboration. In 2011, the trade turnover between Vietnam and Russia reached US$2.12 billion, of which export turnover hit US$1.38 billion, up by 66.2 percent against 2010, marking the first year Vietnam had a trade surplus with Russia. According to statistics of the General Department of Vietnam Customs, in the first two months of 2012, Vietnam’s export to Russia was equivalent to US$223.7 million, an increase of 35.82 percent compared to the same period of the previous year. In addition, according to the mid-term trade and investment of Vietnam and Russia until 2012, the import – export turnover of the two nations will reach US$3 billion. “We are both aiming at the objective of raising bilateral trade turnover to US$5 billion by 2015 and US$10 billion by 2020,” said Mr Xlipnhiop.
What features of the Russian market do you think Vietnamese enterprises are interested in?
Vietnam’s commodities will have great competitive advantages when competing with products of the same types in Russia. Furthermore, as planned, within three and four years’ time, a number of Vietnam’s goods exported to the USSR will be offered a low import tariff (down by 30-50 percent of the current rate). On the other hand, as well as being a WTO member, the USSR has membership in the Russia – Belarus – Kazakhstan Customs Federation. Vietnam is now enthusiastically participating in the negotiation process for a Free Trade Agreement (FTA). Once the FTA is inked, commodities of Vietnam will be entitled to 100 percent tax exemption or the minimum tax rate. This will be critical for Vietnam’s goods to be in equal competition in terms of price and quality.
The two nations’ markets also have lots of potential; Vietnam and Russia’s economies continue to maintain a rapid growth pace. Russia currently has a population of 140 million with ever higher living standard and consuming power. The Russia market has special interest in goods Vietnam has strength in, including marine, agricultural, garment and textile products, as well as new ones such as mobile phones, computers and electronic products. Meanwhile, Vietnam has great demand for raw materials, fuel and machinery imported from Russia to meet its industrialization and modernization demand.
It is worth mentioning that 60,000 Vietnamese people have lived and worked in Russia (mainly in Moscow), have good experience with and understanding of Russia, and relationships here. This is an effective investment – trade promotion channel that Vietnamese enterprises should utilize.
What do you think of specific projects being deployed by Hanoi and Moscow?
There are currently a relatively large number of Vietnamese enterprises exporting goods to Russia. However, most of them do not have stable focal points to help them facilitate transactions. The number of enterprises with representative offices or branches in Russia is very modest. The collaboration in investment and construction of Hanoi – Moscow Trade and Culture Centre Complex and Hotel, with total investment amounting to US$200 million, is evidence of comprehensive cooperation. The Hanoi Centre in Moscow will be a ‘trading floor’ and a focal point for enterprises of the two countries to find information and partners. This will also be a perfect place for companies and enterprises to open representative offices or showrooms to exhibit and introduce goods to the Russian market. Hanoi – Moscow Centre is the biggest centre which has been invested by Vietnam in Russia. The construction progress is being accelerated and it is planned to be completed by May 2013.
However, there still exist a number of difficulties in Vietnam – Russia transactions. What ‘bottlenecks” do you think need to be tackled?
When operating in the Russian market, the biggest obstacles for Vietnamese enterprises are inconvenient payment procedures and lack of market information. It is necessary that enterprises of Vietnam further boost promotion and advertisement of their products. Vietnam has not gained the market share that its enterprises deserve, although it has been present in such large markets as the EU, Japan and the USA. The competition is very fierce amongst products of the same type imported to Russia from different origins. As such, Vietnamese enterprises need to pay more attention to advertisement and promotion, as well as to participate more enthusiastically in exhibitions and set up representative offices in Russia with a view to establishing export focal points.
An official provision recently announced by the Russian Government stipulates that all enterprises operating in Russia have to use Russian, which causes further difficulties for Vietnamese enterprises wishing to conduct business transactions with Russian partners.
Vietnamese enterprises previously did not pay due attention to quality and design of goods exported to Russia, due to the belief that Russian customers were easily satisfied. However, given the fact that Russian living standards have kept improving, consumer demand here is getting higher. Therefore, it is pivotal that quality and design of products exported to this market be improved.
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