Vietnamese goods secure firm foothold in China

08:30 | 06/02/2014 Trade

(VEN) - It is undeniable that until now, Vietnamese exports to China have become increasingly diverse in terms of commodity structure and earned more export revenues, gradually developing brand names and gaining the trust of Chinese consumers. Many high quality Vietnamese products can be found on the shelves of China’s supermarkets with increased revenues.

G7 Coffee is a strong export to the Chinese market

Ceaseless efforts

There are already many successful Vietnamese brands in China, including the Thien Long Group. Exporting pens and office stationary to China could be regarded as “sending coals back to Newcastle” but it is an exceptional case for Thien Long Group. Chairman of the group Co Gia Tho said “If we can conquer the Chinese market that will raise export revenue, enrich our enterprises and our country”. Thus, after Thailand, Cambodia, Laos and Myanmar, Thien Long’s products came onto the Chinese market and were welcomed by the local consumers.

Previously, Biti’s also entered Chinese market with growing sale revenue year after year. Few people expected that Vietnamese footwear products could compete with Chinese goods. However, the management board of Biti’s was happy to seek opportunities in this market and even set targets to put Biti’s products on the shelves of Chinese upmarket supermarkets. There’s a proverb saying “diligence is the mother of success”, now the annual revenues of Biti’s in China have posted an average growth of 10 percent. Apart from its major market Yunnan, the company is expanding markets into other provinces and cities such as Beijing, Dong Xìng and Kunming.

In reality, a number of Vietnamese enterprises have been present in China for years and even built their plants there, with Nhon Hoa Scale Company Ltd a perfect example. Established in 2008 the plant in Quang Xi officially became operational in 2010 with initial investment of US$6 million, it specialized in producing spring dial scales. Deputy Director of Nhon Hoa Scale Company Ltd Nguyen Cong Viet said its plant in China became profitable just a year after operation and now Nhon Hoa Scale is famous in China thanks to its early market entry and high quality.

Dozens of other Vietnamese brands have also actively exploited the Chinese market such as Vinamit’s dried fruits and Masan’s instant noodles of. According to Chairwoman of the High-Quality Vietnamese Product Business Association Vu Kim Hanh, more than 30 Vietnamese enterprises have successfully entered the Chinese market, which has strengthened the position of Vietnamese goods in China.

“Brave” export via border crossings

Many years ago, Vietnamese goods were mainly exported to China in small volumes at border markets. Following this path, Vietnamese goods could only be traded by small businessmen and faced many disadvantages. Firstly, they are considered smuggled goods in China for not making tax and custom declarations. Secondly, they could easily be imitated. Therefore, those enterprises that want to develop their brands needed to export products via border crossings.

Nguyen Cong Viet said Vietnamese enterprises could only do business in China by going through the front door. If they want to gain a niche in the Chinese market, they must invest in distribution systems, agents and staff as the supermarket system in China is very developed, accounting for 60-65 percent of the total market volume and Chinese consumers are more and more inclined to trust supermarkets.

In addition, Vietnamese enterprises must change their ways to access the market by selling goods at reasonable prices, improving quality and using supermarket channels for doing long term businesses.

Vice President of the Central Institute for Economic Management Vo Tri Thanh commented that China’s purchasing power is now four times higher than Vietnam at about US$12.4 billion. Furthermore, China is becoming a very strong consumption market as 36 percent of GDP is for private consumption and 13 percent of GDP is for state consumption. With a broad market like China, the best way to secures firm foothold is to enter by official channels and enterprises also have to unite when negotiating with Chinese partners to create collective strength.

Deputy Minister of Industry and Trade Nguyen Cam Tu said since 2004, China has been one of Vietnam’s largest trade partners. The two-way trade revenue between two sides was estimated at nearly US$50 billion. By 2015, Vietnam targets to raise this trade revenue figure to US$60 billion and tackle Vietnam’s trade deficit from China./.

By Lan Anh