Opportunities for Vietnamese Businesses

Since Vietnam and the United States signed the Free Trade Agreement (FTA) in 2001, the US has become the largest and most potential export market for Vietnam. But, it is also the most challenging market for Vietnam’s major exports. American businesses are paying increasing attention to Vietnam. Vietnamese goods are brought to the United States not only by US importers but also by wholesalers, retailers and manufacturers. According to the website of the General Department of Customs, the United States remained the largest importer of Vietnamese goods in 2011, with US$16.93 billion. Garment and textile was the biggest cash earning sector for Vietnam with US$6.88 billion in the year, accounting for 40.6 percent of the total export turnover with the world’s largest economy and representing a year on year rise of 12.5 percent, adding more than US$766 million. Footwear followed step, with US$1.91 billion, up 35.5 percent year on year, adding more than US$500 million. Timber and woodwork brought in US$1.44 billion, up 3.1 percent; and seafood earned US$1.16 billion, up 21.3 percent.

 

Mr Nguyen Duy Khien, Director of American Department under the Ministry of Industry and Trade, said: The United States is a huge market where there is a diverse demand for commodities. This market is not as demanding as Japan and Western Europe. Vietnamese businesses have expanded exports to the US market and this tendency will keep going up in the future.

 

Mr Le Xuan Duong, Director of Export Support Centre under Vietrade, said there is great opportunity for Vietnamese products in the US due to a high demand from the substantial Vietnamese community living in the country. This force serves as a bridge bringing Vietnamese commodities into this market. According to a survey by the US government, there are now some 1.3 million Vietnamese-originated people living in the US, accounting for about 10.5 percent of the Asian American community, standing just behind China, India and the Philippines. If Vietnamese businesses can tap the market for Vietnamese-originated people in the US in particular and for Asian commodities in general, this is a huge market for Vietnamese foodstuffs. This does not mention markets for other American ethnic groups.

 

According to participating experts, all companies want to establish a presence in the US because it is a huge and attractive market. Vietnam has faced numerous difficulties in approaching this market because Vietnam - US trade ties were not normalised until December 2001 when Vietnamese goods were granted most-favoured-nation (MFN) treatment. Vietnam started exporting to this market when its competitors had already had a strong foothold there. It is not so easy to convince US importers to change to Vietnamese goods. That is the initial hardship for any businesses starting to set foot in this market.

 

Mr Khien said although export turnover with this market increases, there is hardly any change in exports. Key exports remain apparels, footwear, furniture and crude oil. He added that the US now mainly produces ultra-high-tech products; thus, it needs labour-intensive products like apparels, footwear and toys as high production costs cannot compete with imported items. He warned Vietnamese companies of stiff competition from Chinese rivals. According to the ITC report, Vietnam is the only country in Southeast Asia capable of competing with China in exporting garments to the US because Vietnamese workers are skilful.