Strategy for the development of Vietnam’s foreign trade market.
1. What products are easy to export to Vietnam
Vietnam’s trade with neighboring countries is very developed, and it has close economic relations with China, South Korea, Japan, the United States, Thailand and other countries, and its annual import and export volume is also increasing. According to data released by the General Statistics Office of Vietnam, from January to July 2019, Vietnam’s exports were US$145.13 billion, a year-on-year increase of 7.5%; imports were US$143.34 billion, a year-on-year increase of 8.3%. The total value of imports and exports for the 7 months was 288.47 billion US dollars. From January to July 2019, the United States was Vietnam’s largest export market, with a total export of 32.5 billion US dollars, a year-on-year increase of 25.4%; Vietnam’s exports to the EU were 24.32 billion US dollars, a year-on-year increase of 0.4%; Vietnam’s exports to China were 20 billion US dollars, a year-on-year increase of 0.1% . my country is Vietnam’s largest source of imports. From January to July, Vietnam imported US$42 billion from China, a year-on-year increase of 16.9%. South Korea’s exports to Vietnam were US$26.6 billion, a year-on-year decrease of 0.8%; ASEAN’s exports to Vietnam were US$18.8 billion, a year-on-year increase of 5.2%.Vietnam’s imports mainly include three categories: capital goods (accounting for 30% of imports), intermediate products (accounting for 60%) and consumer goods (accounting for 10%). China is the largest supplier of capital and intermediate products to Vietnam. The weak competitiveness of Vietnam’s domestic industrial sector has forced many private companies and even Vietnamese state-owned companies to import machinery and equipment from China. Vietnam mainly imports machinery, equipment accessories, computer electronic parts, textiles, raw materials for leather shoes, telephone and electronic parts, and transport vehicles from China. In addition to China, Japan and South Korea are also the two main sources of Vietnam’s imports of machinery, equipment, tools and accessories.
2. Instructions for exporting to Vietnam
01 Certificate of origin If requested by Vietnamese customers, general certificate of origin CO or China-ASEAN certificate of origin FORM E can be applied, and FORM E can only be used in specific countries of China-ASEAN free trade, such as exporting to Brunei, Cambodia, Indonesia , Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam 10 countries can enjoy preferential tariff treatment if they apply for the certificate of origin FORM E. This type of certificate of origin can be issued by the Commodity Inspection Bureau or the China Council for the Promotion of International Trade, but it needs to be filed first; if there is no record, you can also find an agent to issue it, just provide the packing list and invoice, and the certificate will be issued in about one working day.
In addition, you should pay attention to doing FORM E recently, the requirements will be stricter. If you are looking for an agent, then all customs clearance documents (bill of lading, contract, FE) must have the same header. If the exporter is the manufacturer, the cargo description will display the word MANUFACTURE, and then add the header and address of the exporter. If there is an offshore company, then the offshore company is displayed under the description in the seventh column, and then the 13th third-party invoice is ticked, and the Chinese mainland company entrusts an agent to issue the certificate, and the 13th item cannot be ticked. It is best to choose Vietnamese customers with strong customs clearance capabilities to avoid unnecessary troubles.
02 Payment method The payment method commonly used by Vietnamese customers is T/T or L/C. If it is OEM, it is better to make a combination of T/T and L/C, which is safer.
Pay attention to T/T: under normal circumstances, 30% is paid in advance, and 70% is paid before loading, but new customers have a higher probability of disagreement. When doing L/C, you need to pay attention: Vietnam’s shipping schedule is relatively short, and the delivery period of L/C will be relatively short, so you must control the delivery time; some Vietnamese customers will artificially create discrepancies in the letter of credit, so you must fully follow the letter of credit The information on the website is exactly the same as the document. Don’t ask the customer how to modify it, just follow the modification.
03 Customs clearance procedure
In August 2017, the third point of Article 25 of Decree No. 8 promulgated by the Vietnamese government stipulates that the customs declarer must provide sufficient and accurate commodity information so that the goods can be cleared in time. This means: Poor/incomplete commodity descriptions and underdeclared shipments may be rejected by local customs. Therefore, a complete description of the goods should be provided on the invoice, including brand, product name, model, material, quantity, value, unit price and other information. The customer needs to ensure that the weight on the waybill is consistent with the weight declared by the customer to the customs. The discrepancy between the forecasted weight (customer at origin) and the actual weighed weight may cause delays in customs clearance. Customers must ensure that all information on the waybill, including weight, is accurate.
04 language
The official language of Vietnam is Vietnamese. In addition, French is also very popular. Vietnamese businessmen generally have poor English.
05 Networks If you want to do business in Vietnam, you can make more emotional investment with your partners, that is, have more contacts with decision-makers to build relationships and dredge relationships. Business dealings in Vietnam place a lot of emphasis on personal relationships. For the Vietnamese, being “one of our own” or being considered “one of our own” has absolute benefits, and can even be said to be the key to success or failure. It doesn’t cost millions or fame to be one of Vietnam’s own. Do business first talk about feelings. Vietnamese are happy to meet new people, but never do business with strangers. When doing business in Vietnam, interpersonal relationships are very important, and it is difficult to move forward without them. Vietnamese usually don’t do business with people they don’t know. They always deal with the same people. In a very narrow business circle, everyone knows each other, and many of them are relatives by blood or marriage. Vietnamese people pay great attention to etiquette. Whether it is a government department, a partner, or a distributor that has an important relationship with your company, you need to treat them as friends, and you must move around every festival.
06 Decision making is slow
Vietnam follows the traditional Asian model of collective decision-making. Vietnamese businessmen value group harmony, and foreigners are usually ignorant of the disputes among Vietnamese partners, and their internal information is rarely disclosed to outsiders. In Vietnam, the entire corporate system emphasizes consistency. From a cultural perspective, Vietnam follows the traditional Asian collective decision-making model. Vietnamese businessmen value group harmony, and foreigners are usually ignorant of the disputes among Vietnamese partners, and their internal information is rarely disclosed to outsiders. In Vietnam, the entire corporate system emphasizes consistency.
07 Don’t pay attention to the plan, just act rashly
While many Westerners like to make a plan and act on it, the Vietnamese prefer to let nature take its course and see what happens. They appreciate the positive style of Westerners, but they have no intention of emulating them. Foreign businessmen doing business in Vietnam, remember to maintain a relaxed attitude and calm patience. Experienced businessmen believe that if 75% of the itinerary to Vietnam can be carried out as planned, it will be considered a success.
08 Customs
Vietnamese people love red very much, and regard red as an auspicious and festive color. I like dogs very much and think dogs are loyal, reliable and brave. I love peach blossoms, think peach blossoms are bright and beautiful, and are auspicious flowers, and call them national flowers.
They refrain from being patted on their shoulders or yelling at them with their fingers, which is considered impolite;
3. Advantages and potential for development
Vietnam has good natural conditions, with a coastline of more than 3,200 kilometers (second only to Indonesia and the Philippines in Southeast Asia), the Red River (originated in Yunnan Province) delta in the north, and the Mekong River (originated in Qinghai Province) delta in the south. It has reached 7 world heritage sites (ranked first in Southeast Asia). Vietnam is currently at the best stage in the history of the “golden population structure”. 70% of Vietnamese are under the age of 35, which provides labor security for Vietnam’s economic development, and at the same time, due to the current low proportion of the elderly population, it also reduces the burden on Vietnam’s social development. Moreover, Vietnam’s urbanization level is very low, and most of the labor force’s salary requirements are very low (400 US dollars can hire a high-level skilled worker), which is very suitable for the development of manufacturing industry. Like China, Vietnam implements a socialist market economic system. It has a stable and powerful social management machine that can concentrate its efforts on major tasks.There are 54 ethnic groups in Vietnam, but all ethnic groups can live in harmony. Vietnamese people have the freedom of religious belief, and there is no religious war in the Middle East. The Communist Party of Vietnam also initiated political reforms that allowed different factions to engage in intense political and economic debate. The Vietnamese government actively embraces the global market. It joined the Association of Southeast Asian Nations (ASEAN) in 1995 and the World Trade Organization (WTO) in 2006. The 2017 Asia-Pacific Economic Cooperation (APEC) summit was held in Da Nang, Vietnam. Westerners are unanimously optimistic about Vietnam’s development prospects. The World Bank said that “Vietnam is a typical example of successful development”, and “The Economist” magazine said that “Vietnam will become another Asian tiger”. The Peterson Institute for International Economics predicts that Vietnam’s economic growth will reach around 10% by 2025. To sum it up in one sentence: Vietnam today is China more than ten years ago. All walks of life are in the stage of explosion, and it is the most exciting market in Asia.
4. The future of “Made in Vietnam
After Vietnam joined RCEP, with the assistance of the United States, Japan and other developed countries, many Southeast Asian countries are systematically “poaching” Chinese manufacturing through various strategies such as trade, taxation and land incentives. Today, not only Japanese companies have increased their investment in Vietnam, but many Chinese companies are also moving their production capacity to Vietnam. Vietnam’s biggest advantage lies in its cheap labor force. In addition, Vietnam’s population structure is relatively younger. The elderly over 65 years old only account for 6% of the total population, while the proportions in China and South Korea are 10% and 13% respectively. Of course, Vietnam’s manufacturing industry is currently still mainly in relatively low-end industries, such as textiles, clothing, furniture and electronic products. However, this situation may change in the future as major companies increase investment, improve training levels, and change research and development strategies. The labor dispute is the risk of Vietnam’s manufacturing industry. How to deal with labor-capital relations is a problem that must be solved in the process of the rise of Vietnam’s manufacturing industry.
5. Vietnam will give priority to the development of the following industries
1. Machinery and metallurgical industry By 2025, give priority to the development of machinery and equipment for industrial production, automobiles and spare parts, and steel; after 2025, give priority to the development of shipbuilding, non-ferrous metals, and new materials.
2. In the chemical industry, by 2025, give priority to the development of basic chemical industry, oil and gas chemical industry, plastic and rubber spare parts chemical industry; after 2025, give priority to the development of pharmaceutical chemical industry.
3. Agriculture, forestry and aquatic product processing industry By 2025, priority will be given to increasing the processing ratio of major agricultural products, aquatic products and wood products in accordance with the direction of agricultural industrial structure adjustment. Adopt international standards in production and processing to build the brand and competitiveness of Vietnamese agricultural products.
4. Textile and footwear industry By 2025, give priority to the development of textile and footwear raw materials for domestic production and export; after 2025, give priority to the development of high-end fashion and footwear.
5. In the electronic communication industry, by 2025, give priority to the development of computers, telephones and spare parts; after 2025, give priority to the development of software, digital services, communication technology services and medical electronics. 6. New energy and renewable energy By 2025, vigorously develop new energy and renewable energy, such as wind energy, solar energy, and biomass capacity; after 2025, vigorously develop nuclear energy, geothermal energy, and tidal energy.
6. New regulations on “Made in Vietnam” (origin) standards
In August 2019, the Ministry of Industry and Trade of Vietnam issued new standards for “Made in Vietnam” (origin). Made in Vietnam can be: agricultural products and resources originating in Vietnam; products that are finally completed in Vietnam must include at least 30% of Vietnam’s local added value according to the international HS code standard. In other words, 100% raw materials imported from overseas must add 30% added value in Vietnam before they can be exported with the label Made in Vietnam.
Post time: Feb-10-2023