RoK ranks third among Vietnam’s trading partners

09:00 | 30/08/2017 Trade

(VEN) - Vietnam holds an increasingly important position in the Republic of Korea’s (RoK) export growth strategy. Trade between the two countries has grown and reached US$43.4 billion in 2016, making the RoK Vietnam’s third largest trading partner, after China and the US. 

rok ranks third among vietnams trading partners

Vietnam’s position

The RoK currently is Vietnam’s fourth largest export market and second largest import market. Among the RoK’s export markets, Vietnam moved up from the 26th position in 1998 to fourth in 2015 and third in 2016. Exports to Vietnam accounted for one percent of the RoK’s total export value in 1998, which increased to nearly four percent in 2015 and 6.6 percent in 2016.

Vietnam imports from this market computers, electronic products and spare parts, machinery, equipment and instruments necessary for manufacturing and processing activities.

rok ranks third among vietnams trading partners
Vietnam’s ranking and percentage of the RoK’s export value (Source: Korea International Trade Association)

Vietnamese exports to the RoK have shown positive changes. From the 44th position in 1998, Vietnam became the 10th largest exporter to this market in 2015, accounting for 1.54 percent of the RoK’s total import value. In 2016, with the entering into force of the Republic of Korea-Vietnam Free Trade Agreement (KVFTA), Vietnam moved up to become the eighth largest exporter to South Korea.

rok ranks third among vietnams trading partners
Vietnam’s ranking and percentage of the RoK’s import value (Source: Korea International Trade Association)

Expanding market share

According to the Ministry of Industry and Trade’s Asia-Pacific Market Department, trade between Vietnam and the RoK grew steadily in the first half of this year, especially the exchange of goods that enjoy tariff cuts under KVFTA. Vietnam’s imports from the RoK grew at a higher rate compared with its exports to this market. However, this is not a big concern because in the opinion of experts, goods that Vietnam imports from the RoK do not compete directly with domestic products.

Vietnamese products, such as textiles and garments, leather and footwear, telephones, computers, electronic products and components, seafood, timber and wood products have carved niches in the South Korean market. These products accounted for 55.4 percent of the total value of Vietnamese exports to the RoK in 2015.

Agricultural products, seafood and processed food enjoy tariff preferences and therefore are highly competitive. Pham Binh An, Director of the Ho Chi Minh City Support Center for WTO Integration, believes that to make the most of preferences to boost exports to the RoK, Vietnamese businesses need to invest in specialized farming and apply high technology in agricultural production to ensure the stable quality of their products. State management authorities are actively supporting businesses in seeking information about the South Korean market and access to its distribution channels. South Korea mostly imports non-refined farm products and processed consumer goods.

In 2013, the RoK was ranked at the bottom of the list of Organization for Economic Cooperation and Development (OECD) member states on the food-grain self-sufficiency index, with 23.1 percent. This promises Vietnam opportunities to boost food-grain exports to the RoK.

In 2015, textiles and garments topped the list of Vietnamese exports to the RoK with value reaching US$2.3 billion, accounting for 20 percent of the total. In 2016, however, this top position was captured by computers and components, with US$2.7 billion, accounting for 23.9 percent of the total. This change is in line with the evolving trend of South Korean foreign direct investment in Vietnam. Its electronic giants, such as Samsung and LG, have achieved stable operations of their telephone manufacturing facilities in Vietnam.

Ngoc Han