E-commerce, e-logistics – the key to success for exporters

Minister of Agriculture and Rural Development Nguyen Xuan Cuong speaking at the conference

At a conference held on September 13 by the Ministry of Industry and Trade (MoIT) and the Ministry of Agriculture and Rural Development, leaders of government agencies and experts discussed ways to help Vietnamese exporters of agricultural produce and seafood adapt to new requirements by China and other international markets.

Challenges have been growing more serious as Vietnam’s agro-fisheries exports to China shrank 9.2 per cent on-year, reaching over $3.8 billion in the first seven months of 2019. Of the export items, rice saw the highest drop with a decrease of 67.5 per cent, hitting over $159.4 million. The runners-up were fruits and vegetables with $1.6 billion in export turnover, down more than 8 per cent and cassava which dropped 10 per cent to $466 million, according to statistics from the Ministry of Industry and Trade (MoIT).

US-China trade tensions are partly to blame, along with China’s stricter regulations on the import of agricultural and aquatic products through its land borders which include stricter measures to supervise traceability, packaging, and food safety and hygiene. In fact, China had announced the requirements in mid-2018, however, few Vietnamese companies were aware of the coming changes.

"This is an inevitable trend and aligns with international practices. Not only China, many other countries are applying stricter requirements for imported products," said Tran Thanh Hai, deputy director of the Agency of Foreign Trade under the MoIT.

According to Minister of Agriculture and Rural Development Nguyen Xuan Cuong, if businesses do not catch up and transform in time, they will end up in an embarrassing situation.

Sharing his views, many logistics firms and technology companies have introduced new solutions to help Vietnamese exporters ease possible risks and benefit from a global boom in cross-border e-commerce. This is adopting emerging technology into their business.

IMG Group is one such example. IMG has been working closely with the Foreign Trade Agency since the 1990s, particularly in the early days of foreign trade, and brought in billions of dollars in foreign direct investment (FDI). Addressing the conference, Nguyen Thi Thu Hien, chairwoman of IMG Group, IMG Alliance, and IMG Club, highlighted the efficiencies of e-trade and e-logistics that IMG have planned to serve as global trade-logistics linkages.

“This time with an ‘Offline-to-Online’ strategy, the group promises to provide great support for Vietnamese businesses of all sizes who want to enter the Chinese market faster and cheaper. This is one of the important activities among IMG’s global initiative to support local companies and enable them to join major value chains effectively,” she told VIR.

To this end, IMG Logistics has signed a co-operation agreement with Singapore’s V-Cargo Cloud, which is one of the leading Singaporean in e-commerce logistics platforms and has had great success in over 40 countries including the key regions of the Asia-Pacific, China, the Middle East, Central Asia, Latin America, and the African continent. With this agreement, the two sides will co-operate for the digitalisation of logistics and cross-border e-commerce (CBE) in Vietnam.

“We plan to develop the e-commerce logistics platform step by step, with the first moves to be made within the year. The platform will work as an information and database hub, enabling international logistics firms to enter the Vietnamese market, and helping Vietnamese firms venture further into international markets in order to benefit from a boom in e-commerce driven by growing regional and international trade,” Hien said.

The platform, which will be based in Vietnam, will support firms in administrative procedures, management of the flow of goods, insurance, financing, and shipping services. This will help them to reach higher service standards while also saving time and reducing costs, thus increasing their competitiveness.

Vietnam has signed a lot of free trade agreements with countries worldwide. If local exporters have the proper approach, they can gain huge benefits from these agreements, otherwise they will lose out.

CBE is now a key trend globally and is forecast to continue its growth momentum in the years to come. DHL’s recent report showed that CBE globally will maintain average growth at 25 per cent in the next three years. Accordingly, the total transaction value is projected to rise from $300 billion in 2015 to $900 billion next year. In Southeast Asia, even though CBE is still in the early stages of development in some areas, it is nonetheless reporting positive growth.

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