Shopping for international trade

Vietnamese exporters have already signed some lucrative export contracts early in the piece, but will need to maintain this momentum if export targets

The country’s largest dairy producer Vinamilk started the year by landing a lucrative contract valued at $21 million to export 12,000 tonnes of powdered milk to Iraq.
Vinamilk general director Mai Kieu Lien explained the dairy giant won the tender through a bidding process that pitted the corporation against many other foreign producers.
Vinamilk entered the Iraq market in 1998, and came to hold a dominant share of 50 to 70 per cent of the country’s dairy market for children and adults prior to the invasion in 2003.
“We won the contract because our products are high quality, lower cost and better taste,” said the general director.
She said the company had recently hired the Swiss quality accreditation organisation SGS to evaluate and certify the quality of Vinamilk’s factories in Vietnam.
To increase its reach in foreign markets, Lien herself carries out market surveys to test consumers’ tastes, often taking Vinamilk products with her during overseas trips.
“Vinamilk’s fruit juice is purer than the South Korean juice that sells in the US, and in Europe our soya yoghurt, unsweetened soya milk and yoghurt cream are unrivalled,” she said.
“We have a strong product range so why shouldn’t we compete directly with foreign counterparts?”
Vinamilk holds three-quarters of the Vietnamese market, and its products are currently exported to France, Germany, Russia, the Middle East, the United States, Australia and Southeast Asia.
In 2004, the company recorded a turnover of $242 million with more than a third obtained from exports. It has targeted $280 million turnover this year.
Besides Vinamilk, many other Ho Chi Minh City-based companies contacted by Vietnam Investment Review said they had made a healthy start with their export business and hoped to have a record year.
Director of wooden furniture exporter Khai Vy Ltd, Doan Van Trang, said his firm had already reached 40 per cent of its $50-million export target for 2005 by the end of the January.
Do Huu Trong, director of the listed joint-stock company Savimex, said the company is focusing on the EU market this year, after already gaining footholds in Japan and the US last year. Savimex has set an export target of $15 million for 2005.
In the first week of January, trading enterprise Wec Saigon won a $2-million contract to ship garments to the Middle East for the first three quarters of 2005, and a $1.5-million footwear contract to the EU for the first half of the year.
“This is a positive sign for local exporters and for us in particular,” said Wec Saigon director Diep Thanh Kiet.
“With these contracts, we have already hit 70 per cent of our target for the entire year.”
Kiet said several opportunities have opened up for the Vietnamese clothing industry, including a decision by China to levy a 5-8 per cent tax on each garment it exports, a move to pre-empt the US from imposing safeguard restrictions on Chinese exports this year.
China’s export tax should keep the price of its garments from dropping to a level that could make Vietnamese garments uncompetitive, he explained.
However, Vietnam still faces quotas on garment exports to the US and several other countries because it is not a member of the World Trade Organisation (WTO). Global quotas for WTO members were lifted on January 1.
Kiet noted several US investors had plans to produce high-quality garments in Vietnam because of the “skilfulness of Vietnamese workers”.
“To gain a firm grip on the world’s market, Vietnamese exporters must have well-planned promotion strategies and try hard to lift the competitiveness of their products,” he added.

We are the world
In an increasingly competitive global market, 35 key Vietnamese enterprises have taken drastic measures to enhance productivity and quality this year to ensure their market positions.
Food processing, mechanical engineering, electronics and software technology sectors all plan to invest a combined VND2 trillion ($136 million) toward growing their individual enterprises this year and many are undertaking product diversification.
An example is the Vietnam Food Industry (Vifon), which has boosted production of instant noodles and vermicelli for Russian and Eastern European clients this month to supply export orders valued at up to $2 million.
Vifon’s new products are finding niches in all markets, domestic and foreign, and include soups in crab, noodle, instant potato and rice varieties.
The Saigon Plastic Joint Stock Company is making similar efforts by increasing production at its new factory in Laos to get the $1.3-million factory functioning at 70 per cent of capacity in its first year of operations. The factory’s two water pipe production lines are already operational and peovide cater for UNICEF’s clean water programme in Laos.
The company has also branched out into plastic household utensils, furniture and plastic road barriers for domestic and overseas markets.
Employees at the Mechanical Engineering and Industrial Construction and Installation Company are busy fulfilling a $1.91-million order to supply structures to the Phu My Steel factory in the first quarter of 2005.
The company also intends to expand its fertiliser factory, electricity plant, production of LPG canisters, and plans to invest VND60 billion ($3.82 million) to upgrade equipment for a new brewery.
The brewery will be situated in Ho Chi Minh City’s Cu Chi urban district and will have a production capacity of 100 million litres a year.
Of the enterprises who joined the industrial production development project launched by the Ho Chi Minh City People’s Committee in early 2004, six companies – Vina Acecook (instant noodle), Vinamilk, Southern Rubber Company (Casumina), Saigon Mechanic Automobile Company (Samco), Viet Tien Garment Company and the Saigon Jewellery Company (SJC) – have posted turnover of more than VND1 trillion ($60 million) each.

Blowing its trumpet
The Ministry of Trade said Vietnam has set a target to reach a total export value of $30 billion this year, up 16 per cent over last year.
“To help realise this target, the country plans to disburse nearly $50 million for the national trade promotion programme this year,” said Ngo Van Thoan, director of Vietnam Trade Promotion Agency (Viettrade).
The funds will be chanelled into 150 programmes, primarily involving e-commerce applications and organisation of domestic and overseas fairs and exhibitions.
Trade promotions will focus on 18 key export categories, which include garments, footwear, handicrafts, furniture, plastics and electronics.
Besides new outlets in Africa and the Middle East, Thoan said Vietnam would also pay attention to major markets of Japan, the US, the EU and China.
“We still encourage trade promotion in existing markets so we don’t lose our clientele.
“These markets are huge and still have a lot of potential, so we must continue to develop all our markets,” he said.
Thoan said his agency would continue the “Vietnam Value Inside” programme this year, providing enterprises with support for brand design, development, import-export advice and overseas trademark registration.
Under the scheme, business beneficiaries also receive financial subsidies for media advertising at home and abroad.
“We believe the programme will boost Vietnamese exports as it has already been successful applied by Vietnam in many countries, such as Australia, New Zealand and Thailand,” the Viettrade director said.
This year a national brand for Vietnam Value Inside will be established with up to 100 outstanding local products selected and labelled with this brand and widely advertised overseas.
Thoan believed the scheme will significantly contribute to sustaining Vietnam’s export growth, adding the promotion push has already seen results, with Vietnamese exports becoming increasingly popular and available in international markets in just two years of Vietnam Value Inside operations.