Opportunities opened for food processing industry

According to Vietnamese trade counselors, in 2021, Vietnamese goods, in general, have a great opportunity to export to Europe, Northern Europe, the US, the Eurasian Economic Union, Japan, South Korea, and China.
Dairy products of Vietnam Dairy Products Joint Stock Company (Vinamilk) are exported to many fastidious markets around the world. (Photo: SGGP)
Dairy products of Vietnam Dairy Products Joint Stock Company (Vinamilk) are exported to many fastidious markets around the world. (Photo: SGGP)

The disruption of many global supply chains from the beginning of last year until now because of the Covid-19 pandemic has created gaps in foreign markets. Meanwhile, Vietnamese products have regained their advantage on the home ground when 76 percent of surveyed consumers said that they preferred to use Vietnamese goods due to their high reliability. It has also created opportunities for Vietnamese products to not only expand their export market shares but also to secure their footholds in the domestic market.

Competitiveness in terms of price and quality

According to Vietnamese trade counselors, in 2021, Vietnamese goods, in general, have a great opportunity to export to Europe, Northern Europe, the US, the Eurasian Economic Union (EAEU), Japan, South Korea, and China. Especially branded agricultural, aquatic, seafood, deep-processed food products that meet food safety and hygiene standards. Currently, Vietnam's export turnover in major markets, namely the US, Europe, Northern Europe, and the EAEU, merely accounts for 2 percent of the total import turnover from other countries and territories.

Mr. Bui Vuong Anh, Vietnam Trade Counselor in Germany, said that earlier, Vietnamese export products were often imposed high import tariffs of about 7-12 percent. Even in some product categories, the export tax was up to 22 percent. In comparison with the same product group of countries enjoying preferential tax, Vietnamese goods cannot compete on price. However, with the free trade agreements (FTAs) that Vietnam has signed and come into effect with the EU, the EAEU, Japan, and South Korea, Vietnamese products are no longer concerned about price competitiveness, so export advantages will also be better.

Agreeing with this point of view, Mr. Nguyen Manh Hung, CEO of Nafoods Joint Stock Company, affirmed that the price difference due to tariffs had made Vietnamese goods suffer in terms of competitiveness. Now with the preferential tax rate of zero percent, barriers, such as quality, and food safety and hygiene standards, are no longer a concern. In recent years, to grasp opportunities from FTAs, many domestic enterprises have quickly changed their production technologies and even boldly apply production technology from Europe and the US. As a result, their products meet the most stringent technical barriers of these fastidious markets.

Another factor that Vietnamese export products are considered to have potentials is that consumers around the world have favored Vietnamese goods more. Enterprises investing in the export of processed products have paid more attention to branding. Therefore, consumers around the world also have the opportunity to directly access Vietnamese products selling in foreign distribution networks, and hence, the position of Vietnamese products has also raised significantly.

In the opposite direction, the domestic market has also been opening up many opportunities for Vietnamese products to regain market coverage. Research by the Blue Ocean Business Consulting Company shows that the outbreak of Covid-19 has significantly changed consumer trends. In Vietnam, up to 76 percent of surveyed consumers said that they prioritize consuming domestic goods, especially long-standing branded products with easy traceability.

Enterprises actively change their thinking

Mr. Do Thang Hai, Deputy Minister of the Ministry of Industry and Trade (MoIT), emphasized that the food production industry has always been one of the important economic sectors with great potential for development in Vietnam. The country has gradually become an important and rich source of supply of agricultural products and foodstuffs for many countries.

However, this year, the shock of Covid-19 will more or less continue to happen, causing disturbance to the production activities of enterprises. The issues will focus on broken raw material supply chains, delayed logistics activities and freight transportation, congestion at ports, a shortage of goods and capital, or high inventory. Consumer trends will shift towards prioritizing health-enhancing products, foods that strengthen resistance and immunity, natural and organic foods, and clean and healthy foods. This fact will require enterprises to have appropriate strategies to change and respond.

Facing difficulties that may arise, domestic food and foodstuff producers have actively changed their thinking of production and business in the new context by investing in modern machinery, equipment, and technology, and paying attention to quality and product designs to conquer the global market, while firmly keeping domestic market share.

The MoIT would directly support enterprises to improve the quality of trade promotion and coordinate with industries to guide and improve product quality. Thereby, they would increase the value of export products, the export turnover, and market share, then gradually affirm the position of Vietnam in the global value chain. The goal of this year is to maintain the export growth rate at 5-10 percent for key commodities, Mr. Vu Ba Phu, Director of the Trade Promotion Agency under the MoIT, confirmed.

From the perspective of enterprises, Mr. Chu Tien Dung, Chairman of Ho Chi Minh City Union of Business Associations, suggested that the Government and relevant authorities should soon disburse financial packages to support enterprises. At the same time, they should accelerate procedures to guide tax exemption and reduction, debt freeze, and debt rescheduling for enterprises, creating conditions for them to restore production capacity, regain growth momentum and develop after having struggled for a year by the pandemic. As for key export products, the strategy to support enterprises in building national brands should be implemented more quickly and effectively. This is also an opportunity to create resilience for enterprises to deeply participate in the export market, especially during the golden time brought by the FTAs.