How to export directly through foreign distribution systems

Potential to increase exports

Dang Hoang Hai, director of the Ministry of Industry and Trade’s European Market Department, said the program aims to help Vietnamese enterprises access global distribution networks. This would contribute to increasing direct exports of garments and textiles, leather and footwear, agricultural products, coffee, tea and seafood by 10-15 percent and develop new export channels to consumers in foreign countries.

The department has coordinated with Asian and European distributors like Italy’s Coop Italia and Conad, France’s Auchan and Casino, Czech Republic’s Makro, Thailand’s Central Group and Japan’s Aeon to organize seminars and forums in order to learn about the requirements and barriers to Vietnamese goods.

These activities have yielded encouraging results. For example, export turnover of Vietnamese goods via Japan’s Aeon distribution chain increased from JPY18.2 billion in 2013 to around JPY23.4 billion in 2014, and sharply increased through France’s Casino distribution network to US$27 million in 2014 and US$30 million in 2015.

Nishitoghe Yasuo, general director of Aeon Vietnam, said Vietnamese suppliers were constantly improving their product quality and 1,675 of them were supplying his company. Aeon has been active in exporting Vietnamese goods through its 14,000 stores in Asia, including Japan. Last year, Aeon exported US$200 million worth of Vietnamese goods, with Tra fish accounting for US$9 million of that.

Albin Bertrand, the food market manager of Auchan Retail in Vietnam, said customers prioritized product price and quality. Besides focusing on quality assurance, Vietnamese producers need research trends in potential markets to identify the right strategy for each market.

Tran Thanh Hai, deputy general director of Central Group Vietnam and Big C Vietnam, said opportunities for Vietnamese enterprises selling their goods through the Big C distribution system are huge. Since Central Group acquired Big C, Central Group Vietnam and Big C have continued to implement many programs to promote and take Vietnamese products to overseas markets. Export turnover of Vietnamese goods through the Central Group system increased to US$50 million in 2016 and is expected to increase to US$75 million this year.

Vietnamese enterprises have actively met standards to increase exports through foreign distribution networks

Strict standards

To increase exports through foreign distribution networks, Vietnamese enterprises must meet the standards and certification of the quality of each market.

Vu Kim Hanh, chairwoman of the Vietnamese High Quality Product Business Association, said the key factors for Vietnamese products to enter modern trade channels were quality and origin traceability. For example, food must meet the standards under the Food Safety Modernization Act (FSMA) in exporting to the US market. In the first four months of this year, there were 23 import warnings for Vietnamese enterprises posted on the website of the US Food and Drug Administration (FDA). Therefore, the US required an independent third party in conjunction with the FDA to supervise Vietnamese enterprises in exporting their goods to the country. The Vietnamese High Quality Product Business Association is seeking to become a third party.

Nishitoghe Yasuo said that Aeon has its own standards, including the Supplier Code of Conduct and Factory Audit. It normally takes three to six months to test these processes. After being completed, Aeon will officially import goods to its system.

To be imported to Auchan’s 4,000 stores around the world, Vietnamese suppliers need to focus on quality and build consumer confidence, especially origin traceability.

Solutions

At a meeting, representatives of the Ministry of Industry and Trade and distribution channels answered a series of questions of Vietnamese enterprises on supporting payments, promoting branding and implementing quality standards, and suggested solutions for enterprises.

Tran Thanh Hai said that understanding the difficulties of Vietnamese small and medium-sized enterprises, the Central Group is implementing the establishment of trading and supporting centers. “We usually sign long-term contracts with small suppliers, or cooperate with banks to make it easier for small and medium-sized enterprises in selling their goods to our system,” Tran Thanh Hai said.