The ‘dragon fish’ threat

While Vietnam has seen a ‘whirlwind’ of goods from ASEAN countries and China, Vietnamese enterprises still have not found effective solutions to conquer the vast ASEAN market of 1.9 billion consumers.

An image of dragon fish is used to describe the situation of the ASEAN-China FTA (ACFTA) because of the characteristic of the fish. Each fish is peaceful and gentle in a separate area, but it will become aggressive and try to fight if it is paired with another dragon fish.

The government has released a list of products that will receive preferential tariffs under ACFTA. These include farm produce, meat and seafood.

As such, Vietnam’s farm produce would face stiff competition. Chinese goods, with low prices, would reach every corner of the Vietnamese market.

It is expected that the liberalization rate that Vietnam will offer to China and ASEAN is 86 percent by 2020. This means pressure on the domestic market.

An analyst commented that Chinese have taken action to take full advantage of FTAs. Miniso has signed a franchise contract to enter the Vietnamese market, announcing a plan to open 12 branches in large cities this year.

Some months ago, Alibaba took over Lazada in a step to more quickly penetrate the SE Asian market. Lazada could be a channel through which Alibaba brings Chinese goods to Vietnam.

A report of the General Department of Customs (GDC) showed that China remains the biggest exporter to Vietnam with $40.3 billion worth of export turnover to Vietnam in the first 10 months of the year.

Meanwhile, Vietnam could only export $17.3 billion worth of products to China, which means the large trade gap of $23 billion.

Vietnam also imports products in large quantities from regional countries, including Thailand ($6.27 billion), Malaysia ($3.7 billion) and Singapore ($3.59 billion).

As for the Thai market, Vietnam spent $289.6 million to import fruits and consumer goods, many of which can be produced domestically.

Le Dang Doanh, a renowned economist, said that Vietnam’s 10 percent reduction in exports to ASEAN and the increased trade deficit show the weak competitiveness of Vietnamese enterprises.

“Vietnam may become a depressed area in ASEAN in the years to come,” he said.

Nguyen Van Khanh from the HCMC Leather and Footwear Association noted that in previous years, Chinese goods were a threat to Vietnamese products, but now, Thailand is the biggest rival.

In such fierce competition, Vietnamese enterprises show signs of a shortness of breath.

Vietnam’s exports to Cambodia have decreased by 30-40 percent as the neighboring country has increased imports from China and Thailand.

Kim Chi / vietnamnet