China - Potential Market for Vietnamese Exports

8:36:56 AM | 5/17/2023

To Vietnam, China is the largest trade partner and the second largest export market only after the United States. As Vietnam's exports are facing a lot of difficulties due to slowing global economic recovery and shrinking consumer demand in the EU and the US, China is still a potential market.

In 2022, China's GDP reached over US$19,605 billion, ranking second in the world, only after the United States with US$23 trillion. Not only having an enormous market with the world's leading population, China also has the advantages of geographic location, similar consumer habits and long-standing economic and trade relations with Vietnam.

China also has bilateral cooperation agreements with Vietnam as well as multilateral agreements to which Vietnam and China are signatory, like the ASEAN-China Free Trade Agreement (ACFTA) and the Regional Comprehensive Economic Partnership (RCEP). In the coming period, China will also step up its participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Economic and trade relations with China is one of the priority goals in Vietnam's foreign economic policy.

However, with many new guidelines and policies in the current context, especially since China lifted the "Zero-COVID" policy early this year after a long time of restrictions, the market of nearly 1.5 billion people is no longer "easy-going". According to the Ministry of Industry and Trade, Vietnam's total import and export value with China was over US$45 billion in the first three months of 2023, of which Vietnam's exports to China valued at US$11.5 billion, down 13.8% year on year, while its imports from China reached over US$23.5 billion, down 14.6 %.

Besides, exporters and traders from many other countries have focused on the Chinese market after its reopening and this generates strong competitive pressures. This requires Vietnamese competent agencies and businesses to clearly grasp information and adopt consistent solutions to facilitate exports to this market.

Regarding timely information about the latest developments from the Chinese market, Mr. Luong Van Tai, representative of the Vietnam Trade Office in Beijing, said that, in April, the State Council of China issued its "Opinions on promoting and stabilizing the foreign trade scale and structure", in which notably state amendments to "Measures to manage trade in border markets" in order to diversify trade in border markets and increase imports from neighboring countries. In addition, China regulates the registration of foreign food producers on the China Import Food Enterprise Registration (CIFER) system.

In addition, he added that China is now taking action to tighten the management and control of avian influenza, African swine fever and monkeypox. Therefore, business associations need to actively grasp epidemic information and developments in the world and domestic communication risks to promptly warn producers to take measures to avoid infections and enhance good food hygiene and safety.

Sharing experiences about strong exports to this market such as vegetables, fruits, seafood, machinery and equipment, Mr. Tai noted that seafood businesses need to actively register export extensions on the CIFER system and avoid doing this near the date of expiration. Fruit exporters need to manage growing areas, especially controlling harmful organisms on products.

Updating new information on potential exports to Chongqing, Ms. Trieu Thuy Nga, Chief Representative of the Vietnam Trade Promotion Office in Chongqing, introduced the Guoyuangang Border Gate in Chongqing city which has been accepted to meet warehousing, supervision and management conditions for food import in March 2023. This port operation area connects three types of waterway, railway and road transport and it takes only about 4-5 days to transport from Vietnam. Goods exported from Vietnam can also go to Chongqing and connect with China-Europe freight trains, from Chongqing to Europe (via Kazakhstan, Russia, Belarus, Poland and Germany, and from Germany to other European countries) where it takes about 20-25 days of transport (twice a week). This is an opportunity for Vietnamese goods to access new markets.

Vietnam's export value to China is expected to improve in the second quarter of 2023. Vietnam's key exports to China include processed and manufactured goods (US$US$9.5 billion, down 11.26%) and agricultural and aquatic products (US$1.8 billion, up 2.39%).

By Huong Ly, Vietnam Business Forum