Export opportunities abound for Việt Nam

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VIETNAM, January 26 –

Visitors to a Vietnamese pavilion at one of Hong Kong’s biggest fashion shows in 2019 before the onset of the COVID-19 pandemic. VNS Photo Bồ Xuân Hiệp

Bồ Xuân Hiệp

HCM CITY – Vestel Electronics Vietnam Chief Representative Erkut Duranoglu said he did not expect the global pandemic to give his company a practical lesson in risk management.

But teaching it did.

His company was considering an alternative supply chain in Asia to take advantage of cost reduction opportunities arising from the ever-changing supply chain amid the pandemic.

Turkey-based Vestel Electronics, Europe’s largest consumer electronics factory, which supplies more than 500 brands worldwide, wanted to explore Việt Nam and its neighboring markets to “mitigate the geographic risk of China”.

“We have reviewed and analyzed various countries such as Việt Nam, India, Indonesia, Malaysia and Thailand.

“We chose Việt Nam for good reasons. It was becoming the most suitable country as an alternative production center for the world, next to China,” Duranoglu said. News from Việt Nam in a telephone interview.

“Overall, this is how we decided to establish our representative office in HCM City in February 2021, in addition to our existing offices in China (Mainland) and Taiwan.”

Experts said the U.S.-China trade war and the pandemic have pushed companies to diversify their supply chains away from China, resulting in the “China plus one” strategy in which multinational companies move to other countries.

Sam Hui, managing director of Global Sources, a Hong Kong-based international B2B sourcing platform company, said News from Việt Nam“Việt Nam has become the most popular destination for the strategy, due to its low costs, proximity to China and multiple trade agreements.

“Under this policy, as the demand for Vietnamese products increases, we expect an overall improvement in manufacturing capacity, product design, quality control and export volumes.”

Nguyễn Văn Thân, President of the Association of Small and Medium Enterprises of Việt Nam, said: “Việt Nam, with a population of 100 million, has a strategic location, affordable labor but well formed and an environment conducive to foreign investment.

The country has achieved impressive results in its COVID-19 vaccination campaign, boasting one of the highest vaccination rates in the world, he said.

The free trade agreements it has signed with India, the EU and other Southeast Asian countries have enabled Vietnam to outperform other countries in attracting FDI, said he added.

A 2030 master plan for transport infrastructure includes the construction of 5,000 km of highways, a deep-water port, high-speed railways and the completion of Long Thành International Airport in Đồng province Nai near Ho Chi Minh City.

These have added to the attraction it holds for foreign investment, according to Thân.

Recently, Danish toy production company Lego signed a memorandum of understanding with Vietnam-Singapore Industrial Park Joint Stock Company to build a new factory worth $1 billion in the southern province of Bình Dương.

LG Electronics has decided to expand its production facilities in the north.

According to the European Business Review, Việt Nam will be one of the leaders in 2022 for companies to source, manufacture and export from.

Most Wanted Supply Destination

Hui, Managing Director of Global Sources, said, “Việt Nam has the potential to be one of the most sought-after sourcing destinations for buyers around the world.

A 2021 survey by the company said, “Việt Nam has consistently ranked the top destination from which buyers plan to source from in Asia, outside of China, over the next 12 months, followed by China. India, Cambodia and Bangladesh.

Buyers said their top three sourcing issues in Việt Nam were product quality, choice of suppliers and delivery time.

Electronic products, clothing, fashion accessories, tableware and kitchen utensils, household appliances and hardware products are the main products sought by buyers.

At a recent conference to connect supply and demand organized by Global Sources in cooperation with the authorities of Bình Dương province, major international buyers like Target Australia Sourcing Group (Australia), AEON TopValu (Hong Kong), WH Smith (UK), Metro Sourcing (Hong Kong) and Walgreens (US) said Việt Nam was their preferred sourcing destination.

“It shows that there is a strong demand for supplies from Việt Nam among buyers around the world,” Hui said.

“With such strong demand, Vietnamese suppliers should act quickly to seize the opportunity and promote their businesses and products to buyers around the world.”

The company surveyed more than 1,200 respondents across all regions, including the United States, India, Mainland China, Australia, United Kingdom, Hong Kong and South Africa.

“Supply at home”

A screenshot of an Australian buyer speaking with a kitchenware supplier in HCM City during an online sourcing tour facilitated by a B2B online platform. Photo courtesy of Global Sources

Nguyễn Văn Thân, President of the Small and Medium Enterprises Association of Việt Nam, said: “Companies should be aware that buyers have shifted from their traditional sourcing channels like trade shows to a new online model, “home supply”.

“The model has proven to be practical, safe and effective during the pandemic.”

Buyers want to source directly from manufacturers and are looking for Vietnamese suppliers who are digitally ready to meet their sourcing needs, he said.

“As the procurement process becomes digital, it is inevitable that Vietnamese suppliers will embrace digital transformation.”

In 2020, the association launched a program to promote 40 export-oriented suppliers of products ranging from clothing and furniture to handicrafts on a B2B platform and connect them with global buyers, it said. -he declares.

The survey showed that 90% of respondents who wish to source directly from Việt Nam do not have an office in the country.

Due to the pandemic, 60% plan to use the online marketplace and 35% will appoint sourcing agents in Việt Nam.

While international trade shows are still very popular among buyers, the online marketplace remains the preferred option, according to the survey.

Quách Kiến Lân, CEO and founder of GreenYarn Bảo Lân Company, which manufactures eco-friendly fabrics for export, said the pandemic has put companies in a difficult situation, which forces them to constantly seek solutions. to survive.

The fashion and textile industry is under pressure due to the pandemic, he said.

“The good news is that global buyers are now watching Việt Nam closely to see how well the country is recovering from the pandemic.”

They see the need to move their production to Việt Nam.

However, the uncertainty and lack of information about local suppliers often leaves buyers disappointed when looking for the right producers in Việt Nam as they don’t know where to look.

Meanwhile, most suppliers in the textile industry are still using traditional methods such as face-to-face meetings and trade shows to find buyers, but the pandemic has made that impractical, Lân said.

“To find new customers and diversify markets during the pandemic, we have moved from traditional platforms such as trade shows to online tools.

“Moving to online channels may require businesses to adapt, but it’s management and mindset that makes the process successful.”

Supply chain crisis

The pandemic has caused a supply chain crisis not only in Việt Nam but worldwide.

Experts have said the country’s production will not normalize until the middle of this year.

Duranoglu said his office only started operations last November due to the latest COVID outbreak which started in April last year.

Although global supply chain disruptions have caused uncertainty for businesses, Việt Nam has quickly adapted by changing laws to improve its business climate, he said.

“Việt Nam’s notable strength is its stable economy, which has grown despite the impact of the current epidemic. Although I’m fairly new to the country, I have personal experience that Vietnamese people are likely to deliver on their promises.

“I believe that Việt Nam has a concrete basis to bounce back much stronger in 2022.”

Experts said that to meet the demands of global buyers, manufacturers should study prices, consumer tastes and trends in those markets, and have labels and packaging in English as well as the local language.

In tough markets like the US, EU, Japan and South Korea, exporters must be prepared for technical hurdles that could change without warning, they said.

Duranoglu said: “We export to 157 countries, our main market being Europe. But now we are looking for alternative regions to develop. Việt Nam is one of them. It is not only a strategic location to develop an alternative supply chain, but also an attractive market for our products.

“The pandemic has taught us all a lesson about the importance of not putting all your eggs in one basket.” —VNS

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