Challenges remain for Vietnamese exporters in UK market after UKVFTA

VIETNAM, August 31 – The UK-Việt Nam Free Trade Agreement (UKVFTA), which officially entered into force on May 1, 2021, has opened up many export opportunities for Vietnamese businesses. However, taking full advantage of these opportunities and effectively tapping into this lucrative market is no easy task for most local businesses. News from Việt Nam spoke with Nguyễn Cảnh Cường, Commercial Counselor at the Việt Nam Embassy in the UK, about the challenges faced by Vietnamese companies when exporting goods to the UK.

Can you tell us about the UK market?

Every year, UK businesses import around $7 trillion worth of goods from around the world. Import demand from the UK market is quite stable and has tended to increase except during the COVID-19 pandemic.

Goods imported into the UK with a large turnover include automobiles, iron and steel, precious metals, oil, gas, medical equipment and supplies, electronics, textiles, footwear , furniture, food, tea, coffee and vegetables.

So far, some Vietnamese companies have entered the UK market, but the market share is still small. Prior to the pandemic, Việt Nam shipped $5 billion worth of goods to the UK each year, representing less than 1% of the country’s total import turnover.

But I think there are still many untapped opportunities for Vietnamese businesses in the UK market, especially now that the UKVFTA came into force in early 2021.

What the challenges make Vietnamese companies are faced when they or they export goods to UK?

The first challenge I want to mention is skyrocketing shipping costs (about $12,000 per 40ft container) and irregular ship arrivals.

In addition, the high cost of attending trade shows in the UK poses a challenge for Vietnamese companies, even though these events help them showcase products, meet potential customers and grasp market taste trends. consumers.

Administrative procedures also bring headaches to companies. For example, the process for applying for a rice variety certification in Việt Nam and for a rice import license in the UK are neither timely nor practical. This sometimes makes some UK companies reluctant to buy Vietnamese rice as they fear that Vietnamese exporters may not be able to send the necessary certificates before the vessel arrives in port.

Meanwhile, Vietnamese businesses do not fully understand business practices in the UK. Their payment tools and payment practices have not kept pace with those of UK businesses.

The digital technology skills of many Vietnamese companies have also not reached the level of UK businesses and consumers, resulting in low e-marketing effectiveness.

Due to a poor understanding of UK business law and insufficient risk prevention measures, Vietnamese companies are often at a disadvantage when having a dispute with UK customers.

What suggestions do you have to help Vietnamese companies overcome the obstacles mentioned above?

I believe that the Ministry of Transport should develop effective measures to reduce logistics costs while the Ministry of Industry and Trade (MoIT) should provide companies with additional support to attend major international fairs in Europe.

The MoIT is also expected to partner with the University of Foreign Trade to organize short-term training courses for local businesses on effective market access methods, business culture, business law and marketing. digital technology in target export markets.

In addition, Vietnamese banks should expand their cooperation with British banks and companies to provide Vietnamese companies with loan packages at more reasonable interest rates.

A database of Vietnamese companies in English should also be added by the Việt Nam Chamber of Commerce to its official website so that foreign companies can easily verify their Vietnamese partners and thus do business with local companies.

For the companies themselves, they must meet quality requirements and production processes according to European standards or British standards. The Trade Promotion Agency and industry associations can coordinate with the Việt Nam Trade Office in the UK and the British Standards Institute (BSI) to provide the necessary standards for businesses.

Vietnamese companies can also improve their competitiveness by learning from their competitors through their websites or through large e-commerce platforms such as Where Where

In which industries can Việt Nam strengthen itself bilateral cooperation with the UK?

There are five major UK industries with which Việt Nam can strengthen its cooperation.

The first industry is the production of high quality steel using decarbonization technology. It is a technology with lower energy consumption and carbon emissions than traditional production.

The second is the production of engines used for airplanes, ships, trains and cars.

Information and communication technologies (ICT) are also part of it. Currently, the ICT sector in the UK is investing in high-speed transmission lines and attracting talent from other countries. ICT is also considered one of the important components of Industry 4.0 and can be considered a fundamental industry for many other economic sectors.

The last industry is wind power generation and wind power equipment production. The United Kingdom is one of the pioneers in this field and wants to help Việt Nam develop wind power to gradually replace coal and reach the goal of neutralizing emissions by 2050.

What should Việt Nam do to cooperate with the UK in these five industries?

We can source investors or manufacturers who wish to move factories overseas through major banks such as HSBC, Standard Chartered Bank, Lloyds and Natwest. These banks have sufficient financial and management capacity and the ability to find technology experts.

Meanwhile, we can also cooperate in R&D with UK universities and research centers in the network of “High Value Manufacturing Catapult”. It is a network of world-renowned research, development and innovation centers whose mission is to transform British manufacturing according to market needs.

The government may consider giving scholarships to students studying metallurgy, engine manufacturing, ICT, robotics and renewable energy at UK universities.

I think Việt Nam can coordinate with the British side, especially in attracting foreign investment and training human resources for the aforementioned industries. —VNS