Making Inroads into US Market Retail Channels

The bilateral relations between Vietnam and the United States have expanded and diversified in many aspects in the past years, particularly in trade. Currently, Vietnam’s main exports to the United States include garments, textiles, footwear, furniture, seafood and agricultural products. Vietnam’s export growth to the US has kept rising in the past time, especially since Vietnam officially joined the World Trade Organisation (WTO). In 2012, Vietnam earned a record US$20 billion, up 17.6 percent over 2011. Its export turnover expanded 16.7 percent year on year in the first quarter of this year and was expected to top US$27 billion in the year.

 

However, Ms Bui Thi Thanh An, Deputy Director of Vietrade Representative Office in HCM City, said although Vietnam's exports to the US have increased steadily, Vietnamese firms are seeing a lot of difficulties in reaching this potential market. For instance, a majority of exports are low-valued crude commodities; many companies have not created their brand names or accessed retail channels while their products have weak competitiveness and instable quality.

 

Mr Nguyen Thang Vuong from the Vietnam Trade Office in the US, said the US has a high demand for a variety of goods but it is not an "easy" market. Therefore, Vietnamese firms must identify the market needs to work out appropriate directions. For each kind of commodity, the US has peculiar sophisticated technical barriers; hence, Vietnamese companies must guarantee high quality standards. They also use intermediary trade companies or retail channels and distribution agents to access this market.

At the conference, Kroger, the second biggest retailer in the US in terms of revenue, said it is looking for Vietnamese suppliers to provide products to supermarket chains stateside as well as crude materials to plants under its management. Kroger’s interested items include coffee, cashew, vegetables and fruits, seafood, coconut, pets, spices, black pepper and rice.

 

Mr Nguyen Hong Duong said the shortest way to effectively penetrate into the US market is going through its retail channels because they understand market demands and consumer tastes in this market. Therefore, apart from direct exportation, Vietnamese goods can enter the US market by means of indirect methods like passing through brokers, distributors, dealers, alliances and associations. He noted that businesses wanting to approach the US market must take notice of such specific competitive conditions as quality, price, safety, mode of transport, and business governance.

 

Mr Nguyen Ngoc Hung, CEO of D&B Company, said the current prospect of distributing goods through US retail channels is very promising. In the first three months of 2013, goods of Vietnamese companies distributed through US retail supermarkets increased 28 percent over the same period of 2012. Given economic volatility, import and export activities are running into difficulty because of tariff and technical barriers imposed host countries, importation and exportation through retail supermarket channels is a new way to help Vietnamese enterprises to reach and penetrate into the huge US market.