In recent years there has been a lot of stress on search for new markets for Vietnam’s exports, but according to analysts and many enterprises, the US market remains a potential market for Vietnamese exporters to further develop.
Nguyen Duy Khien, head of the American Market Department under the Ministry of Industry and Trade, has reiterated export potential and opportunities for Vietnamese products in the US market many times. As a highly populated country with lavish spending habits, the US imports more than US$2 trillion worth of goods annually. However, Vietnamese products only account for 1 percent of US imports, though it is currently one of two biggest importers of Vietnam.
|The US market currently is the largest furniture importer of Vietnamese wooden products (Photo: SGGP)|
Vo Truong Thanh, chairman cum CEO of Truong Thanh Furniture Corporation, also reckoned that furniture industry and other export industries of Vietnam should promote exports to the US market. To lessen concerns about ‘putting all eggs in one basket’, he explained that during the economic recession there was a slump in consumer demand in the US, but not very much, and many Vietnamese export products still maintained growth in the past year.
For instance, garment and textile exports still posted a growth of 9.2 percent last year and were expected to keep growing this year as among $100 billion worth garment and textile imports in the US, Vietnamese products merely account for a modest $7.6 billion.
Similarly, the US market currently was the largest furniture importer with more than 40 percent of market share but Vietnamese wooden products just account for a small portion of this market.
In addition, the fact that Vietnamese products remained of poor quantity because the country only concentrated on exporting traditional merchandise such as garment and textile, footwear and furniture, which all lack diversity. This has lowered export value and once the advantage of low labor cost vanishes, Vietnam will lose its strong point when exporting such merchandise.
With huge potential, the US market is waiting for Vietnamese enterprises to discover the potential. However, opportunities come with challenges.
Because of the high demand, many countries will want to bring their products to the US market; hence, fierce competition is inevitable. Especially, Chinese products have become a big challenge for Vietnam.
Plus, in order to make US importers switch from buying goods from their regular partners to buying goods from Vietnamese exporters, the latter have to offer high-quality products at lower price or more unique than others. Nevertheless, due to its geographic distance, Vietnamese enterprises have to bear higher shipping costs. Vietnam has not received preferential duties, and in addition, trade barriers put up by the US Government against import products from some countries, including Vietnam also have been causing headaches for businesses.
Among trade barriers, anti-dumping duty was imposed on many Vietnamese export products. Of late, the US Coalition of Gulf Shrimp Industries has continuously proceeded against Vietnamese frozen shrimps. Food industry also worries about new regulations of the US Government.
Accordingly, Vietnamese food exporters not only have to register again on food facilities with the US Food and Drugs Administration (FDA) in order to be able to export products to the US market since January 1, 2013 but also have to maintain contact all day with their US partner. This means that each business has to have a representative, who can be an individual, a company, or an organization whose headquarter is located in the States and register with the FDA. This representative will play an on-site contact role and maintain constant interaction with the FDA.
Moreover, importers usually order big contracts while most Vietnamese companies fail to fulfill this requirement as for larger orders they must use intermediaries.