Vietnamese products exported under foreign brands

A brand is a soft power for the development of Vietnamese enterprises. Building a Vietnamese brand not only focuses on creating high-quality products and creative designs but also affirms the identity and position of a local enterprise in the world.

Furthermore, the development of each business will be a piece of the national brand ecosystem, contributing to promoting national brands in the global market.

According to a sad reality that has been occurring for many years, most Vietnamese products, especially agricultural products, have to borrow brands from other businesses for export. It puts Vietnamese goods at risk of unstable market share, dependency on export partners, and vulnerability due to global market fluctuations.

Raw export accounts for 70-80 percent

Duy Khanh Mechanical Company Limited located in the Saigon Hi-Tech Park in HCMC manufactures components for large companies. (Photo: SGGP)

Vietnam is among the top 10 exporting countries. In the first five months of 2024, the export turnover was estimated at US$156.77 billion, an increase of 15.2 percent over the same period last year.

Of the total export earnings, the domestic economic sector reached US$43.69 billion, showing an increase of 20.5 percent, and accounting for 27.9 percent of total export turnover. The foreign-invested sector, including crude oil, got US$113.09 billion, rising 13.3 percent and accounting for 72.1 percent. The processing sector identified as the key export sector contributed some US$137.39 billion, accounting for 87.7 percent.

According to Deputy Minister of Industry and Trade Phan Thi Thang, Vietnam's export turnover has continuously increased in recent years.

Total import-export turnover in 2023 was estimated to reach more than US$681 billion, of which exports accounted for US$354 billion. Notably, 35 commodities earned over 1 US$ billion from exports. Among them, seven raked in more than US$10 billion.

The group of products that saw the highest export value include phones and components; electronics, machines and components, machinery, equipment and other, tools, textiles, garments, and footwear, wood and wood products, vehicles and tools, seafood, rice, coffee, fruits and vegetables.

High-value export items are phones and components; electronics, and machines include foreign direct investment (FDI) companies.

In the electronics, accessories, and machinery sectors, Samsung Vietnam's export turnover exceeded US$55 billion in 2023, US$10 billion higher than the previous year.

Additionally, the group of valuable brands with sharp export turnover growth consists of leading technology groups from the US, Europe, Japan, South Korea, Singapore, and China.

The group of items including agricultural products, food, wood products, and garment and textile products with remarkable export turnover includes Vietnamese enterprises. Of these, The total export value of the textile-garment sector reached over US$40 billion a year. The export turnover of wood and wood products gained more than US$12 billion a year. The total export turnover of agro-forestry-fishery products amounted to US$53 billion a year.

However, very few products in these sectors have been distributed domestically and internationally under their brands. Instead, they are often displayed under foreign brands labeled "Made in Vietnam."

At the 2024 export forum held by the Ministry of Industry and Trade in HCMC in June, Operation Manager and Finance Director at Uniqlo Vietnam Akiyama Naoki said that Fast Retailing, Uniqlo's parent company, has outsourced manufacturing to Vietnam for more than 20 years. Uniqlo’s products made in Vietnam are distributed to 23 stores in the country and over 2,400 stores worldwide. As of 2024, 'Made in Vietnam' products have accounted for 60 percent of the group’s items sold at domestic stores. The figure is expected to be further increased in the coming time.

Meanwhile, according to Chairwoman of the Vietnam Pepper and Spice Association (VPSA) Hoang Thi Lien, Vietnam has become the world's leading producer of pepper, cashew nuts, cinnamon, star anise, and many high-value spices. Currently, Vietnam has become the country with the largest cinnamon area in the world, with an annual output of 72,000 tons of dried cinnamon bark, earning over US$260 million in 2023, dropped 10.7 percent compared to 2022 due to the unstable prices of raw export and vulnerability due to global market fluctuations.

Vietnamese products are sold under foreign brands

Cat Thai Manufacturing and Trading Company in Thu Duc City, HCMC processes plastic parts for large businesses. (Photo: SGGP)

Vietnamese commodities that have been exported to markets under the Vietnam-EU Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP) are still under foreign brands.

Many best-selling “Made in Vietnam” products are sold in supermarkets and convenience store chains, such as Aeonmall, Familymart, Lawson, and others in Japan’s major cities including Narita, Tokyo, Yamanashi, Nagoya, Kyoto, Osaka under brands of Japanese businesses.

In addition, many cosmetic products with natural ingredients produced in Vietnam such as coconut, turmeric, and honey that are sold in popular shopping malls in Thailand's Bangkok, Singapore, South Korea’s Seoul are labeled with Korean brands.

According to the Vietnam Institute of Agricultural Engineering and Post-Harvest Technology, Vietnam's rate of processed agricultural products meeting international standards has only reached 10 percent due to the low development and investment in processing industries. Additionally, the number of agricultural processing enterprises registered for product quality certification is approximately 15 percent.

According to a practical survey, supermarket chains serving Asian and Latin American communities, professional buyers likely Aeon and Uniqlo of Japan, Walmart, Amazon, Safeway of the US, Falabella of Chile, Carrefour and Decathlon of France, Central Group of Thailand, Coppel of Mexico, IKEA of Sweden and LuLu of UAE are seeking supply sources from Vietnam, especially in the sectors of food and beverages, apparel and fashion, footwear, bags, accessories, sports goods, household items, and furniture. Vietnam's export turnover of goods has increased annually from 17 to 43.6 percent based on the groups of products and markets, such as Europe, the US, Canada, Mexico, and Russia.

Regrettably, Vietnamese products have been primarily distributed as outsourced items with low value-added and exported to foreign markets via intermediaries.

Former Minister of Agriculture and Rural Development Cao Duc Phat said that in the agricultural value chain, the lowest-profit stage is cultivation and production, accounting for only about 12 -13 percent of the total value added to agricultural products. Over 80 percent of the remaining value is found in processing, brand development, and sale. According to global research, coffee growers receive only US$15 billion out of the total value of US$100 billion of coffee consumption worldwide.

Vietnamese businesses need to enhance their production capacity and comply with regulations, quality standards, social responsibilities, and environmental requirements, such as the origin of the goods, sustainable development, carbon emission reduction, and environmental protection to promote their products and expand international markets, Deputy Minister of the Ministry of Industry and Trade Phan Thi Thang said.

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