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 Trade deficit with China up 44.5%; Securing market shares to compete with foreign retail outlets; EU remains Vietnam’s largest export market; Statistics department explains mistakes in January CPI calculation

Trade deficit with China up 44.5%

In 2013, Vietnam’s imports from China reached a staggering US$36.95 billion, making up 28% of the country’s total import value while exports to the market were estimated at US$13.26 billion, accounting for 10% of total export value.

China remains Vietnam’s largest trade partner with total import-export turnover fetching US$50.21 billion, up 22% in 2013.

Vietnam-China trade turnover aims to reach US$60 billion by 2015. However, Vietnam’s trade deficit with China tends to increase.

According to statistics from the Vietnam Customs, over the past year, Vietnam’s imports from China grew 28.4% while exports rose by just 7%. Therefore, Vietnam’s trade deficit with China was US$23.76 billion, up 44.5% compared to 2012’s figure.

In 2012, local businesses’ imports from China fell by 2% while FDI businesses’ import  soared by 43%. Last year, FDI businesses’ imports rose sharply 38.7% to US$20.59 billion while local businesses’ imports increased 17.4% to US$16.36 billion.

Securing market shares to compete with foreign retail outlets

Local businesses should devise proper strategies to avoid losing the home turf when opening the retail market.

Since joining the World Trade Organisation (WTO) six years ago, Vietnam’s retail market has developed rapidly. Almost all the world’s leading retail trademarks namely Metro, Big C, and Lotte are available in Vietnam. Recently, the US’ Walmart group – one of the world’s leading retail groups announced that it will establish a new retail system in Vietnam. To cope with tough competition, domestic businesses need to make greater efforts to expand this system and increase market shares.

Being one of the vanguard businesses in the field of supermarket, Nhat Nam Joint Stock Company (Fivimart) has opened 15 stores in Hanoi and aims to have 30 supermarkets nationwide. However, it is not easy for domestic retailers to break in to the market place.

Vu Thi Hau, deputy general director of Fivimart said over the next five years, Fivimart will develop and set up more supermarkets to meet consumer demands. Fivimart will attach importance to developing branches in provinces and cities on the outskirts of Hanoi, targeting middle-income customers.

A shocking statistic is that foreign supermarkets often achieve higher turnover than local businesses, often 20-30 times more. Therefore, experts advise that local retail businesses should strengthen cooperation and devise effective strategies to compete with strong rivals, particularly in terms of finance and human resource.

Four big companies in Vietnam’s retail market namely Hapro, Satra, Phu Thai and Sai Gon Co-op have cooperated to build a big trademark to compete with well-known foreign brand names. However, the cooperation has not yet gained positive results.

Dinh Thi My Loan, President of the Association of Vietnamese Retailers reports that there are still shortcomings in support policies as well as shortages in capital and human resources.

The Association of Vietnamese Retailers expressed their wish to devise proper policies and regulations to support associations and industries.

According to the Ministry of Industry and Trade (MoIT), by the end of 2012, the Vietnamese market had approximately 700 supermarkets, of which foreign groups made up 40 percent. Out of 125 trade centres, foreign groups accounted for 25 per cent.

According to Vo Van Quyen, head of the Market Department under the MoIT, it cannot be said that foreign businesses have conquered local market shares. Aswell as the modern retail system of local businesses, traditional distribution channels through local markets nationwide have accounted for 75 percent. In addition, there are more than one million retail establishments nationwide.

However, 2015 is predicted to be a booming year for the retail sector. Many people worry that the strong development of foreign retail distribution groups in Vietnam means that local retail businesses’ market shares will be reduced. To help these businesses, the government should issue incentive policies.

Mr Quyen said that there should be support policies in the distribution field in the future. Apart from policies to create an equal competitive environment, there should also be policies to implement the roadmap under the WTO commitments as well as policies to support Vietnamese businesses, especially SMEs in production, circulation and distribution, Quyen added.

Although foreign businesses made up just 3.5% of total retail sales in Vietnam, they have had more advantages and consequently developed strongly. Experts say that local businesses should heighten their vigilance over foreign rivals, especially in the trend of opening the retail market.

Bat Trang ceramic craft village: a Tet attraction

Located to Hanoi’s southeast, past the Chuong Duong Bridge and 10km along the Red River dyke, the traditional Bat Trang craft village is an ideal shopping destination for visitors on Tet holidays.

Festive season stockpiling can overwhelm Bat Trang village’s first time guests. The Lunar New Year adds holiday decorations to the traditional household ceramic products Bat Trang is famous for.

For those domestically inclined, sophisticated bowl sets and vases are available to buy.  Many people appreciate the stately elegance of porcelain relics and paintings. Younger visitors can admire wind-chimes, bracelets, and plaster horses.

Bat Trang artisans have augmented the traditional blue and white enamels with new shades and finishes matching modern styles.

Prices have not climbed in line with the village’s arriving tourists. A set of cups averages VND100,000–VND500,000. A vase can be bought for VND120,000–VND180,000, with specialty items selling for more.

Some factories in Bat Trang village are busy fulfilling hundreds of orders from shops across the country.

Nguyen Thi Hong Nhung, owner of the Tien Nhung factory, said Tet holiday demand translates to hard work and careful planning. All goods must be completed on time and to rigorous standards of quality.

The bustling to and fro of loaded trucks leaving Bat Trang and excited tourists entering its gates has become another evocative image of the build-up to Tet.

An Giang’s January export turnover up 20%

The export turnover of the Mekong Delta province of An Giang in the first month of the year is estimated at US$74.8 million, up 21.3% over last year, according to the provincial Department of Industry and Trade.

The two items seeing the highest increases are garment and textiles, reaching US$7.9 million, up 23.7%, and frozen vegetables and fruit, raking in US$ one million, up 21%.

The province plans to promote the development competitive food processing industries such as rice and aquatic products along with accelerating trade promotion to raise turnover for items of its strength.

The locality intends to pay attention to the industrialisation of agricultural production in parallel with focusing on potential and traditional markets as well as improving the quality control of commodities destined for export.

Some 30,200 tonnes of rice was shipped in the first month of 2014, valued at US$13.9 million, equal to 93% in volume and 94% in value of last year’s figure.

Frozen aquatic products saw a recovered turnover of US$32.9 million, equal to 98% of last year’s level.

EU remains Vietnam’s largest export market

Vietnam’s total export turnover to the EU climbed 19.8% last year to US$24.33 billion and accounted for 18% of the country’s total exports.

General Department of Customs statistics show key export commodities are telephones and spare parts (US$8.15 billion, up 43.9%), footwear (US$2.96 billion, up 11.8%), garments and textiles (US$2.73 billion, up 11.1%) and computer and components (US$2.4 billion, up 50.1%).

Eight countries saw export turnover of more than US$1 billion each, including Germany, the UK, the Netherlands, Italy, France, Spain, Austria, and Belgium.

Vietnam’s combined export value to those markets hit US$11.13 billion, representing 87.2% of the country’s export value to the EU.

Its import turnover from the EU was estimated at US$9.45 billion, a-year-on-year increase of 7.5%.

Key imports are machinery, equipment and spare parts (US$2.29 billion, up 11.7%), vehicles and spare parts (US$1.17 billion, down 7,5%), pharmaceuticals (US$930 million, up 6.2%), and computer, electronic products and components (US$928 million, up 47.3 %).

Tien Giang registers strong surge in exports

The Mekong Delta province of Tien Giang reached an export turnover of US$83 million in January this year, representing a year-on-year increase of 8.1%.

According to Dang Thanh Liem, Director of the provincial Department of Industry and Trade, the result indicates a bright prospect for the locality’s export activities in 2014.

The province has set a target of earning US$1.17 billion from exporting goods in the year. Its major exports, including garments, processed aquatic products and rice, saw stable growth in the reviewed period.

Local businesses exported 11,850 tonnes of processed aquatic products worth US$25 million. It also shipped abroad 1.9 million textile products for US$20 million and 8,900 tonnes of rice for US$4 million.

Exports to the Asian market account for 32.4% of Tien Giang’s total revenue, followed by the EU and the Americas with 32.2% and 30.7% respectively.

In the coming time, Tien Giang will pay attention trade promotion and market expansion. It will make every effort to solve difficulties facing exporters operating in the locality to help them broaden their production and business.

Hanoi sees poor sales in run up to Tet

Though the traditional Lunar New Year (Tet) is a few days away, wet markets and supermarkets across the capital city are seeing sluggish sales.

Strolling around O Cho Dua, Thai Ha, Kham Thien and Dong Xuan markets, a variety of goods for Tet are on offer but buyers are few in numbers. Some lay this on the domestic economic woes, resulting in their income staying the same or even being cut.

For this reason, they must weigh up how to spend reasonably so as to avoid wastefulness.

Mai Thao Trang from the outlying district of Ha Tay said her bonus is low this year, so she will only buy essential items instead of mass buying like last year.

In some wet markets, prices of several goods are inching up, especially vermicelli, dried shrimp and bamboo shoots, mushrooms, pork and beef. A kilogram of dried shrimps costs 600,000 – 900,000 VND (28 – 42 USD), prices of pork meat see a rise of 5,000 – 10,000 VND to over 200,000 VND (9 USD) per kilogram while that of premium beef and buffalo meats command up to 700,000 – 800,0000 VND (33 – 38 USD).

As the abundant supply of fresh vegetables outpaces demand, their prices are falling significantly and are expected to only move up a bit during the holiday.

More and more buyers are flocking to the Big C, Metro and Fivimart supermarkets. Turn-out over the weekend was double that of the week before.

Cashing in on the year-end purchasing power, the supermarkets have launched promotional campaigns. The Co.opmart offers 800 items at half price until Lunar New Year’s Eve, which falls on January 30 this year, largely cakes, jams and pork pies.

Meanwhile, the Big C supermarket also offers 5-45 percent discounts on over 2,000 items, including sweets, drinks, spring rolls, sausages, clothes, decorations and household appliances.

New Year gift baskets are now the best seller, each worth an average of 300,000 – 500,000 VND (14 - 23 USD).

Nguyen Thu Ha from the Big C said high-cost baskets are unpopular this year, but others priced at 300,000 – 1 million VND have proved attractive.

According to her, sales soared last weekend, especially drinks, sweet treats, jams, cooking oil and dried food like mushrooms, green beans and glutinous rice.

The sale of fruit and raw foods is expected to be strong in the next few days as Tet gets nearer, she said.-

Rice exports rise 16.4% in January

Viet Nam earned US$243 million from exporting 517,000 tons of rice in January, up 16.4% in volume and 19.5% in value compared to the same period in 2013.

In 2013, China is the largest rice importer of Viet Nam, making a turnover that accounted for 31.17% of total market share.

In the year, Viet Nam exported 2.15 million tons to the neighboring country, gaining US$901 million, up 3.2% in volume and 0.38% in value.

Exports to US up 21.4% in 2013

Viet Nam’s export turnover to the US increased 21.4% in 2013 and accounted for 18% of the nation’s total export turnover.

In 2013, Viet Nam earned US$23.87 billion from exporting to the US, according to the Viet Nam Customs.

The value of garment ranked first among Viet Nam’s items exported to the US with US$8.61 billion, up 15.5%, followed by footwear US$2.63 billion, up 17.3%, woodworks US$1.98 billion, up 12.2%, computers, electronics and accessories US$1.47 billion, up 57.6%, aquatic products US$1.46 billion, up 25.5%, machines and equipment US$1.01 billion, up 7.1%.

Viet Nam’s import turnover from the US reached US$5.23 billion, up 8.3%.

Statistics department explains mistakes in January CPI calculation

The General Statistics Office of Vietnam admitted and explained mistakes in the calculation of Vietnam’s consumer price index (CPI) in January.

On the morning of January 24, the office announced that the CPI grew 0.69% in January against December 2013 and rose 6.77% against January 2013.

However, on the afternoon of the same day, the figures were edited, with an increase of 5.54% compared to January 2013, instead of 6.77%.

A representative from the office explained on the Vietnamese government website that a staff member who was in charge of the calculation compared CPI calculations for January 2014 with December 2012, instead of January 2013, causing the mistake.

Earlier, several local experts raised concerns over the great disparity in announced statistics. Former deputy PM, Vu Khoan, said, “Honestly, I do not believe our own statistics. No one can know for sure the exact figure of bad debt. How can analysis take place if we do not have reliable figures?"

However, Deputy Head of the General Statistics Office, Nguyen Bich Lam, admitted the statistical disparity. He said that the disparity is not as serious as some experts claim.

Lam explained that the disparity is attributed to different information sources. Over recent years, Vietnam has seen a sharp rise in the number enterprises. Many companies have their business registration license in one locality, but in reality they operate in many different locations.

He added that many enterprises are not active in providing information in a effective ways, as required by statistical agencies. Additionally, there is still some disagreement about the application of statistical methods between the General Statistics Office and ministries and agencies in terms of the poverty rate, skilled labour rates and the number of enterprises.

Lam emphasised that the disparity in statistics is a problem that has been around for many years.

Potential helps bring investment to Vietnam from China

Dr. Alan Phan, a well-known overseas Vietnamese fund manager, said that it is Vietnam’s potential and favourable conditions that attracts foreign investors, including those who have decided to shift their business activities from China to Vietnam.

According to Dr. Alan Phan, despite the difficulties posed by the global economic slowdown, Vietnam offers favourable conditions and preferential policies for foreign investors.

For example, Samsung can earn a profit of USD6 billion in Vietnam annually, but pays only USD50 million in taxes, he said, adding that a similar situation is hard to find.

In the Chinese market, production costs and inflation have risen, causing difficulties for multi-national companies. In particular, South Korean and Japanese investors have to consider the relationship between their countries and China before making the investment decisions there.

Foreign investors expected to have good business in the emerging markets of Laos and Myanmar. However, these countries’ policies are less favourable than was hoped. They have turned to Vietnam, where they see big potential.

Vietnam has a good geographical position with many seaports, he added.

In 2010, Intel opened its USD1 billion chip plant in Vietnam. Three years later, Samsung built its third plant in the country.

Answering reporter’s questions about whether Samsung’s mobile phone plant, the largest in the world, being built in Vietnam would turn the country into “a giant mobile phone producer” or not, Dr. Alan Phan said, “The giant producer is Samsung, not Vietnam as the country. The brand still belongs to the group.”

He noted, however, that Samsung’s investment may have a good impact on the country as more mobile phone investors are expected to come to Vietnam.

Regarding the massive foreign investment in Vietnam, Dr. Alan Phan said that now foreign companies operating in Vietnam include the high-tech sector, not only labour-intensive areas such as footwear and garment production.

According to him, the biggest impact is that the domestic market will be dominated by foreign investors, adding pressure to domestic companies. “We must keep good policies to attract foreign investors to keep them doing business in our market,” he said.

Nonetheless, foreign investors will help to bring more jobs for Vietnam. 

Source: VNA/VNS/VOV/Dantri


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