According to Pham Quang Dieu, Managing Director of AgroMonitor, a market analysis firm, the fact that Chinese businessmen come to Vietnam to hunt for farm produce has led to the sharp increases of Vietnam’s farm produce exports to China.
“This shows that the Chinese demand for goods has been increasing, thus creating favorable conditions for Vietnam to boost sales to China,” Dieu said. However, he stressed that Vietnamese enterprises need to build up long term strategies on exporting goods to China, instead of seeking short term business deals.
Coming to China to learn about demand
In early 2010, jackfruit was collected by domestic processing companies at 3000 dong per kilo. Meanwhile, at the same time, Chinese businessmen accepted to pay 12,000 dong for every kilo.
Vinamit JSC, one of the processing companies, immediately tried to find out why the Chinese businessmen accepted such a high price, what the businessmen did with the collected jackfruit, and where they sold the products.
Vinamit finally found out that the products were sold in China at 150,000 dong per kilo. Therefore, it decided to raise the prices at which it purchased from farmers in order to compete with Chinese businessmen, and then brought products to China to sell there.
“They sell products in China at such high prices, why don’t we try, then?” said Nguyen Lam Vien, Chair of Vinamit. “Vietnamese enterprises need to use this method to expand business.”
Therefore, while the business of Vinamit seems to decrease by 20-30 percent in the domestic market, it has been developing well in China. Eighty percent of Vinamit’s products are selling in China, while its products have been cementing a firm position at Chinese supermarkets.
Dieu believes that instead of sitting at the office in Vietnam and complaining about the scrambling of Chinese businessmen for farm produce, Vietnamese enterprises should make trade right on the Chinese market.
Vien believes that in order to well understand the demand of the Chinese market, businessmen should learn Chinese and come to work directly with Chinese partners. “The language barrier may make it difficult to access the market,” he said.
Drawing up long term strategies
China should be considered as a potential and important market; therefore, it is necessary to draw up long term strategies on developing the market. “It is necessary to have the specialists who have good knowledge about Chinese market in your companies, who can help you take initiative in doing business with Chinese partners,” Vien said.
He has suggesting hiring Chinese students, who are studying in Vietnam, to work as the distributors of Vietnamese goods on the Chinese market. Registering brands is also a very necessary thing when doing business in China. Vietnamese businesses should also have deep knowledge about the food hygiene measures applied by Chinese authorities.
“In an effort to set barriers to restrict food imports, China regularly changes the policies, therefore, it is necessary to update the information about new policies, or you will get your exports back,” Vien said.
Dr Vu Minh Khuong, a lecturer of the Singaporean National University, said that Vietnamese manufacturers should avoid the manufacturing fields that China has advantages, or they should only target niche markets. These include garment, wooden furniture, telecom equipments, leather, computer and non-metal minerals. Meanwhile, Vietnamese enterprises can exploit the Chinese markets of transport equipments, rubber, plastics, machines and equipments, paper, chemical and seafood products.
Also according to Khuong, in the ASEAN-China trade, ASEAN imports more from China than exports to China. However, recently, when ASEAN countries have been trying to penetrate the Chinese market, Vietnam tends to go away and seek other alternative markets.
Khuong said that Vietnamese enterprises should build up the strategies on promoting trade exchange for the next five years at least.
Source: TBKTSG
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