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| Vietnamese vegetable stall at Amazing ASEAN Week 2023 at Lulu supermarket, September 2023. (Source: Vietnamese Embassy in Saudi Arabia) |
How do you evaluate the export potential of Vietnamese products in the Saudi Arabian market? What will be the key products that Vietnamese enterprises can focus on promoting exports in the coming time?
Recently, the Middle East region in general and Saudi Arabia in particular have been receiving attention and export promotion from Vietnam. With a population and immigrant workers of over 34 million people, the potential for exporting goods to the market still has great room.
With a desert climate, difficulties in agricultural production, and lack of raw materials to produce most consumer goods, Saudi Arabia has to import over 95% of its goods from all over the world. From a market perspective and assessment, Vietnam can boost the export of agricultural products (rice, cashew nuts, pepper, cinnamon, star anise, fresh fruit, etc.) , seafood, food (canned fish, spices, sauces, etc.) , furniture, decoration, construction materials (tiles, sanitary equipment, marbles, etc.), garments, footwear, charcoal, agarwood, agarwood essential oil.
Recently, some Vietnamese agricultural products when exported to Dubai, United Arab Emirates (UAE) have been suspected of commercial fraud. To avoid risks in trade, what recommendations do you have for Vietnamese enterprises to recognize and avoid such risks in the Middle East market in general, as well as the Saudi Arabian market in particular?
In the face of increasing fraud and commercial fraud in the Middle East and Saudi Arabia, when conducting transactions, businesses need to carefully verify their partners through the Trade Office of the Vietnamese Embassy and pay attention to some of the following behaviors that scammers and brokers often apply to avoid unnecessary risks.
Firstly , accept to sign the contract as soon as the business offers the goods without negotiating the price, request the business to pack and ship the goods quickly with the reason that it is necessary to serve the large project of the agency or organization...
Second , placing large orders worth millions of USD requires exporting enterprises to pay in advance contract issuance fees, lawyer fees, brokerage fees, etc.
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| Mr. Tran Trong Kim, First Secretary, in charge of the Vietnam Trade Office in Saudi Arabia. (Photo: NVCC) |
Third, impersonating representatives of organizations to place large orders and then appropriating goods. In the Middle East, socio-political organizations do not have commercial functions so they cannot import, and businesses do not transact with people who claim to be representatives of an organization. These are the behaviors that scammers often use to appropriate money and goods from businesses.
To avoid risks, the Trade Office recommends that businesses comply with regulations on international trade transactions: Sign payment contracts in the form of irrevocable letters of credit (LC), with a deposit as security; Do not transact with partners or brokers that require the company to transfer brokerage fees, lawyer fees, contract approval fees, etc. in advance.
Do not send documents and bills of lading related to the shipment directly to partners. Enterprises should pay attention to understanding international principles and practices to clearly understand the roles and responsibilities of the parties involved, thereby considering and choosing reasonable payment methods and conditions to ensure benefits for the enterprise.
Because the sales contract is always the basis for resolving disputes between parties, businesses need to strictly stipulate terms to protect their rights (especially terms on dispute resolution and complaints agencies) , avoiding unfavorable situations for businesses when disputes arise.
Enterprises can consider using banking services such as: letter of credit confirmation, non-recourse discounting, export factoring, etc. to have more assurance for the ability to collect money from the service provider bank, as well as support enterprises in finding and evaluating information about import partners and letter of credit issuers.
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| Sample display at the Jordan Chamber of Commerce and Industry in August 2023. (Source: Vietnamese Embassy in Saudi Arabia) |
Looking more broadly, what do you think Vietnamese businesses doing business with Saudi Arabia need to pay attention to in order to achieve the best results?
In my opinion, to achieve the best results in the Saudi Arabian market, businesses need to visit partners, survey and research the market, consumer tastes, business culture, evaluate capacity, customer reputation... from which to develop appropriate business strategies. In addition, it is necessary to analyze the market more deeply to make appropriate improvements to the business's products, meeting local trends and needs.
We know that the market is constantly changing. Competitors will take advantage of digital transformation of businesses, as well as constantly innovate to satisfy the needs and behaviors of customers. Therefore, businesses are forced to change to compete (change packaging designs, improve product quality, change according to green, clean, nutritious, safe and energy-saving trends...).
Besides, businesses and managers also need to be sensitive in detecting new trends that can be applied to their business model in this market, otherwise they will be eliminated.
In the coming time, what measures will the trade office take to better support Vietnamese businesses?
The Trade Office will continue to support businesses in receiving samples for display at the Embassy and promotion at economic diplomacy events, and at the same time provide business information to local chambers of commerce to connect with customers; participate in trade fairs to promote goods for businesses, specifically from September 17 to 20, 2023, the Trade Office will directly participate in the largest Food Fair - Foodex Saudi in Riyadh.
In parallel with the direct location, the Trade Office will organize events to display and promote our company's sample products in concurrent locations such as Bahrain, Jordan, and Oman.
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| Sample display, B2B connection in Al Kharj province in August 2023. (Source: Vietnamese Embassy in Saudi Arabia) |
In recent times, the Vietnam Trade Office in Saudi Arabia has closely coordinated with local Chambers of Commerce, major supermarket chains such as Lulu, Carrefour, Al Othaim, regularly connecting with local importers... to support the promotion of finding outlets for products to help businesses.
As of July 2023, export turnover from Vietnam to Saudi Arabia reached 608.3 million USD, an increase of 60.1% over the same period in 2022. This is also the most impressive export turnover index ever, contributing to the country's overall economic growth.
Thank you very much!
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