Vietnam needs improved marketing strategy

The global outbreak of the Covid-19 pandemic has made the world realize the limitations in the current supply chain, which shows an over reliance on just one link, which is a plausible reason for the collapse of the system. 

Vietnam needs improved marketing strategy
Fig.1: Exports & Imports of countries (%), August 2018-February 2121. Source: Haver Analytics

The current ongoing pandemic is also providing the time to ease pressure on Vietnamese trade as restructuring of the Global Supply Chain is being dealt with. Only those countries that are well-prepared and have successfully controlled and contained the pandemic will be able to see a good outcome and macroeconomic stability in the future by an improved marketing strategy. 

Break in supply chain

The repeated closure of the border, and immigration restrictions during the current pandemic have caused trade activities and global value chains to be disrupted or broken, especially the important supply chains to the US, China, Japan, Germany, and the European Union (EU). All these countries are reeling under the havoc being caused by the Covid-19 pandemic. At the same time, manufacturing and business facilities of 1,000 of the world's largest suppliers have upto 12,000 units in Covid-19 quarantined areas, most of which are located in China.

This explains why there is a breakdown in the Global Value Chain (GVC) that is seriously affecting trade activities for almost 50% of international trade. In addition, the application of digital transformation in manufacturing and business activities has made countries increase automation, in order to improve production capacity and withdraw from the GVC, so as to localize the economy. The disruption of Global Supply Chains is also due to sanctions inflicted during the US-China trade war, along with rise of protectionism. The industries in the world are overly dependent on China, so the leading countries tend to withdraw from what is considered the factory of the world.

Closer linking of the supply chain with the value chain is essential for ease of control. The US-China trade war had partially initiated and spurred this process when China thought it needed a strategy to undermine America's leading role in global trade. The pandemic is not the only reason that has caused a change in the structure of the Global Value Chain, though it may perhaps have been the catalyst to speed up the process. Since the 2008 global financial crisis, intensive production of imported raw materials for exports has decreased sharply. Looking back over the last 30 years, the decentralized production system has been effective and has made a great contribution to GVC, but it still depends on the ability to trade, transport, and implement different trade policies of each country.

At the same time, a new form of production in the Global Value Chain is gradually emerging. With the development of digital technology, multinational companies are moving closer to consumer markets to reduce transportation costs, and increase sales. The production activities of supply chain units will have to be restructured, forcing companies to consider strategies to reduce production fragmentation where cheap labor is available. 

Raising Vietnamese trade

 

Vietnam had a record trade surplus of USD 19.1 bn in 2020, although the US remains the largest export market with a trade surplus of USD 62.7 bn. Meanwhile, the trade deficit with the largest importer of China was at USD 35.4 bn. When looking at the trade activities of East Asia and the Pacific (EAP) countries, it is easy to see that Vietnam has the highest growth in import and export value (Fig. 1). In exports, ASEAN-5 countries export more goods and services to the US than China and other major trading partners, while importing the most from China (Fig. 2). These trends are similar to the trade statistics of Vietnam in 2020.

Vietnam needs improved marketing strategy
Fig. 2: Exports & Imports of ASEAN-5 with selected partners (%), 2019-2020. Source: To Cong Nguyen Bao et al (2021), data extracted from WB (ASEAN-5 countries Indonesia, Malaysia, Philippines, Thailand, Vietnam).

The Covid-19 pandemic has also created an opportunity for Vietnam to access and thereby participate more strongly in the Global Supply Chain, so that it can become a new nucleus in the Global Value Chain. There are some factors that can contribute to this process. First, Vietnamese exports have now risen to approximately 53.4%. Second, labor costs in Vietnam are lower than in China. Third, the business environment and competitiveness in Vietnam has improved since 2020, ranking the country at 70th place, up 23 places compared to 2010.

However, raising Vietnamese trade to new levels will not occur overnight, but will require systematic planning in preparing the right solutions as well as resources. As the world is facing a multitude of challenges in unforeseen and uncertain ways, such as the ongoing Covid-19 pandemic, the rise of unilateralism, growing geopolitical rivalry between major countries, and the coming of the digital age, many factors need careful consideration.

There are now five basic principles that can shape the strategy for Vietnamese trade. First, we need to improve the business environment and enhance competitiveness. Second, we need to enhance our involvement in the global supply chains. Third, we must improve out value-added products for exports in the value chain. Fourth, we must apply digital technology to all our economic activities. Fifth, we need to make cognitive changes so as to adapt better to the world markets.

SGGP

Value sharing and opportunities for Vietnamese suppliers in global value chain

Value sharing and opportunities for Vietnamese suppliers in global value chain

Multinationals corporations and foreign-invested enterprises increasingly focus on sustainability in their cooperation with local suppliers, 

Determination and action to propel socioeconomic march

Determination and action to propel socioeconomic march

The 13th National Party Congress has set a new direction for the country’s development for the next 10 years.

 
 

Other News

.
FDI supports Vietnam climb the global value chain
FDI supports Vietnam climb the global value chain
BUSINESSicon  09/06/2021 

Vietnam has successfully transformed into a manufacturing-oriented economy,
supported by stronger global value chain (GVC) participation thanks to a rise in foreign direct investment (FDI), especially in the manufacturing industry.

Expanding action to weed out pandemic
Expanding action to weed out pandemic
BUSINESSicon  08/06/2021 

The prime minister has ordered a series of sturdy actions to fight against COVID-19 and spur on local production, as people look to the government for protection with the spectre of the pandemic looming yet again.

Vietnam a bright spot for foreign investors: experts
Vietnam a bright spot for foreign investors: experts
BUSINESSicon  08/06/2021 

Vietnam has been chosen among leading destinations in Southeast Asia by Japanese investors, Nakajima Takeo, Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi, has said.

FDI inflows remains spotlight of Vietnam's economy
FDI inflows remains spotlight of Vietnam's economy
BUSINESSicon  09/06/2021 

The government has set up an FDI task force to support multinationals and foreign businesses grasping investment opportunities in Vietnam.

Businesses need more effective support amid COVID-19
Businesses need more effective support amid COVID-19
BUSINESSicon  08/06/2021 

Like many countries, Vietnam may have to depend on vaccines to achieve herd immunity and be virus-free, but enterprises may not be able to wait. They are in dire need of help and are craving new momentum to return to a “real normal” situation.

Vietnam expects to see export growth in rising global demand
Vietnam expects to see export growth in rising global demand
BUSINESSicon  08/06/2021 

Global demand for goods is recovering and this is an opportunity for Vietnam to boost its exports of consumer and industrial products, according to the Ministry of Industry and Trade (MoIT).

Stock market an attractive investment channel for local players
Stock market an attractive investment channel for local players
BUSINESSicon  08/06/2021 

The stock market is still an attractive investment channel for investors in the near future. However, it also poses many challenges for regulators and market members, said experts.

Vietnam calls for initiatives to ensure efficient functioning of APEC supply chains
Vietnam calls for initiatives to ensure efficient functioning of APEC supply chains
VIETNAM & WORLDicon  07/06/2021 

Asia-Pacific Economic Cooperation (APEC) economies needs to continue promoting free and open trade and investment, undertake initiatives to ensure regional supply chains to function smoothly and efficiently,

Small tourism businesses struggle to adapt to COVID-19
Small tourism businesses struggle to adapt to COVID-19
BUSINESSicon  07/06/2021 

The fourth wave of COVID-19 infections in Vietnam has caused disruptions to most sectors once again as the country was preparing for the tourism season.

Drawing up plans to buttress recovery
Drawing up plans to buttress recovery
BUSINESSicon  07/06/2021 

The ongoing fight against the COVID-19 pandemic has led to huge demands for capital for Vietnam to support local production. 

Solar PV market under duress from dependence on imports
Solar PV market under duress from dependence on imports
BUSINESSicon  07/06/2021 

As one of the fastest-developing countries in solar thanks to the current feed-in tariff, Vietnam’s billion-dollar solar panel market is mostly dominated by foreign investors and depending on imports.

VN game industry can become big exporter: experts
VN game industry can become big exporter: experts
BUSINESSicon  07/06/2021 

Vietnam’s mobile game market has huge potential and games can become one of the country’s major exports, experts have said.

VIETNAM BUSINESS NEWS JUNE 8
VIETNAM BUSINESS NEWS JUNE 8
BUSINESSicon  08/06/2021 

Vingroup to produce Covid-19 vaccine

Trade with China: $20 billion in exports, $43 billion in imports
Trade with China: $20 billion in exports, $43 billion in imports
BUSINESSicon  08/06/2021 

Vietnam’s import and export activities in May were affected by the fourth Covid-19 wave, but they still increased generally.

Record hot weather in North, power shortages could occur
Record hot weather in North, power shortages could occur
BUSINESSicon  08/06/2021 

In the most recent heat wave in northern Vietnam, electricity consumption has set "historic peaks".

Ministry denies proposing price stabilisation fund for steel
Ministry denies proposing price stabilisation fund for steel
BUSINESSicon  07/06/2021 

The Ministry of Industry and Trade (MoIT) has denied rumours that it proposed the establishment of a State stabilisation fund to cope with the sudden increase in steel prices that has impacted many businesses.

Amid crisis, airlines seek ways to prosper
Amid crisis, airlines seek ways to prosper
BUSINESSicon  07/06/2021 

Suffering heavy losses due to the drop in passenger numbers under the impact of the Covid-19 pandemic, some airlines have boosted cargo transport services and made a profit. 

VN auto manufacturers hit hard for last two years
VN auto manufacturers hit hard for last two years
FEATUREicon  07/06/2021 

The Vietnamese auto market prospered for a few years before being affected by the Covid-19 pandemic, but sales of locally assembled cars have fallen.

E-commerce sales boom during pandemic
E-commerce sales boom during pandemic
BUSINESSicon  07/06/2021 

E-commerce platforms in Vietnam have seen the number of new users grow by 41% since the outbreak of the Covid-19 pandemic. Most of the new users said they would continue to use the new form of shopping even after the epidemic ends.

Supermarkets report dramatic increase in online orders these days
Supermarkets report dramatic increase in online orders these days
BUSINESSicon  06/06/2021 

Some supermarkets and fast food stores in districts 12, Tan Binh, Hoc Mon yesterday announced a dramatic increase in online orders, up by 3-5 times compared to prior days.

 
 
 
Leave your comment on an article

OR QUICK LOGIN