| Viet Nam International Sourcing: Supporting businesses to participate deeply in the global supply chain Opportunities for Vietnamese businesses to participate in the aviation industry supply chain |
This is the content presented at the Vietnam - EU Trade Forum organized by the Ministry of Industry and Trade in coordination with the People's Committee of Ho Chi Minh City within the framework of the event series "Connecting international supply chains" (Vietnam International Sourcing 2023).
Vietnam ranks 11th among countries supplying goods to the EU.
In her opening speech, Ms. Nguyen Thao Hien - Deputy Director of the European - American Market Department (Ministry of Industry and Trade) - said that in recent years, despite market instability, supply chains, trade and the EU economy facing many difficulties, the two-way trade turnover between Vietnam and the EU still recorded good recovery and growth, with significant support from the Vietnam - EU Free Trade Agreement (EVFTA).
Currently, the EU is one of Vietnam's leading trading partners and the third largest export market and the fifth largest import market. On the other hand, Vietnam is the 16th largest trading partner of the EU and the largest trading partner of the EU in the ASEAN bloc. In terms of exports alone, Vietnam ranks 11th among the largest suppliers of goods to the EU.
Statistics from the General Department of Customs show that in 2022, two-way trade turnover between Vietnam and the EU reached 62.24 billion USD, up 9.2% compared to 2021, and accounting for 8.5% of the country's total import-export turnover. The trade surplus is in Vietnam's favor.
In 2022, exports to most markets in the EU increased sharply. Notably, many markets achieved double-digit growth such as Ireland (up 45.9%), Denmark (up 40.0%); the Netherlands (up 35.8%); Germany (up 23.1%).
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| There is still much potential to expand exports to the EU market. |
The market structure also witnessed a positive shift when not only maintaining and developing exports to large markets, gateways in the Bloc such as the Netherlands, Germany, Belgium, France, but also gradually expanding to smaller markets, niche markets such as in Eastern Europe, Northern Europe, Southern Europe with impressive growth rates (typically Poland, Sweden, Czech Republic, Slovenia, Ireland, Denmark, Romania...).
According to calculations from the General Department of Customs, 2022 recorded 9 items with a turnover of over 1 billion USD, of which many items grew by double digits. The structure of items is also increasingly diverse. Not only focusing on key items such as: All kinds of phones & components; computers, electronic products; machinery, spare parts; footwear; textiles and garments but also promoting the export of many agricultural, forestry and fishery products to the EU.
Entering 2023, the risk of economic recession, inflation and interest rates remain high, causing a decrease in demand for consumption and import of goods in the EU, which has significantly affected trade between Vietnam and this market area. According to statistics from the General Department of Customs, in the first 8 months of 2023, two-way trade turnover between Vietnam and the EU reached 38.8 billion USD, down 8.6% over the same period in 2022, of which exports to the EU reached 29 billion USD, down 9.5% over the same period in 2022. However, the rate of decline has shown signs of slowing down.
At the same time, the inflation rate in the EU continues to be adjusted positively, which will be a factor supporting the consumption of goods in the region in the coming time; goods imports will also gradually improve when inventories decrease and shopping demand increases at the end of the year. Therefore, Vietnam's goods exports to the EU are expected to recover from the fourth quarter of 2023.
In addition, the trend of shifting supply chains and investment flows brings great opportunities for Vietnam to increase competition in attracting investment and transferring technology from EU partners to deeply participate in sustainable supply chains that are mutually beneficial to the EU. In particular, with advantages in capital and technology, along with the EU's priorities on "green and digital" transformation, it will support Vietnam in transforming into a green and circular production model, helping Vietnamese goods have an advantage in quality, meeting EU regulations and standards and also in line with the current trend of sustainable development.
What opportunities for business?
Mr. Jean Jacques Bouflet - Vice President in charge of Policy of the European Chamber of Commerce in Vietnam (EuroCham) said that Vietnam is emerging as a more important destination in the global supply chain. With the advantage of strategic geographical location, stable economy, young workforce and reasonable policies, these factors converge to make Vietnam a top destination for European Union companies.
“The Free Trade Agreement between the European Union and Vietnam (EVFTA) together with effective anti-epidemic work has increased Vietnam's reputation as a reliable destination in the process of shifting global supply chains,” Mr. Jean Jacques Bouflet emphasized.
According to Mr. Jean Jacques Bouflet, since the EVFTA was signed, companies from the European Union have invested more than 26 billion USD in about 2,250 projects in Vietnam. Among them, the Danish Lego Group has invested more than 1 billion USD in a green, sustainable and environmentally friendly factory with a scale of 44 hectares in Binh Duong. Or the German Adidas Group has cooperated with 51 suppliers in Vietnam. This is a testament to the rapid and profound development in the relationship between EU and Vietnamese enterprises, stemming from geopolitical factors and the need to expand the market to Asia.
However, the EuroCham Vice Chairman added that global consumers increasingly prefer environmentally friendly products and companies are focusing and investing more in green logistics. In that context, Vietnam is facing challenges related to green transformation and sustainable development.
“Vietnam faces a double challenge of not only integrating into these global supply chains but also transforming its model into a green supply chain,” EuroCham Vice President shared.
To address these difficulties, Mr. Jean Jacques Bouflet said that Vietnamese enterprises need to ensure compliance with green standards by applying stricter environmental regulations; investing heavily in research, development and infrastructure improvement; improving logistics capacity and training human resources.
On EuroCham’s part, Mr. Jean Jacques Bouflet said that EuroCham is committed to contributing to exploiting the potential of EVFTA by implementing campaigns to raise awareness of the benefits of the agreement. At the same time, organizing workshops to help promote direct links between Vietnamese suppliers and consumers from Europe. In particular, focusing on capacity building, training to raise awareness of the EVFTA for members, along with knowledge sharing platforms, ensuring they are fully equipped to take advantage of the benefits of this agreement.
In a strategic alliance, EuroCham is working closely with various partners to promote the Sustainable Development Goals (SDGs) in the region. “EuroCham acts as a bridge between the Vietnamese Government and European businesses in open policy dialogues and together builds policies that promote mutual benefits. In particular, promoting digital transformation in the implementation of administrative procedures plays a very important role, ensuring that commercial activities take place efficiently and transparently,” Mr. Jean Jacques Bouflet emphasized.
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