Vietnam’s goods are successfully entering many European and Asian markets through foreign retailers. Direct exports to overseas distribution systems are considered an efficient and sustainable method, which many Vietnamese exporters are aggressively pursuing. 

The MoIT aims to promote direct export of Vietnamese goods to the distribution systems of multinational corporations

In recent years, the ­Ministry of Industry and Trade (MoIT) has been making efforts to develop a new export channel to shorten intermediaries and bring Vietnamese goods ­directly to consumers in foreign countries. Specifically, the MoIT has implemented a project to help Vietnamese enterprises join foreign distribution systems by 2020.

A section on key importers of Vietnamese goods in foreign distribution systems has been created on the e-portal of the MoIT for search and exploitation by Vietnamese enterprises, which can be utilised to collect and build accurate databases on foreign distribution systems across the world.

For the likes of Nguyen Thi My Hiep from The Fruit Republic, a big fresh produce exporter of Vietnam, this is a positive change from the norm. Previously, for Vietnamese products to be present in distribution systems around the world, enterprises had to go through many intermediaries, accompanied by complex export forms that increase product prices when reaching consumers.

Hiep said, “The chance to sell directly to foreign retailers is a great one. The growth of major retail chains in both European and Asian markets has created new opportunities for this type of direct sale.”

More than 100 tonnes of local agricultural products including sweet potatoes, dragon fruit, dried fruits, and rice paper have been exported by MM Mega Market Vietnam to 700 Big C supermarkets in Thailand.

These are the first agricultural products successfully exported to Thailand’s supermarket chain after Mega Market was granted an export licence at the end of 2017. Thai consumers are interested in Vietnamese goods, in particular agricultural and aquatic products such as dragon fruit, sweet potatoes, and basa fish.

Along with MM Mega Market, retail brands such as Lotte Mart, AEON, Emart, and Saigon Co.op have actively participated in the project, supporting Vietnamese enterprises to bring goods into their distribution systems.

The total value of direct export goods through these global businesses has reached hundreds of millions of USD, focusing on strong Vietnamese commodities such as agriculture-forestry-fishery, processed foods, and consumer goods.

In 2016, Lotte Mart exported $56.5 million worth of goods through supermarkets, with the figure reaching around $87 million the following year. In the Singaporean market alone, from 2016 to the first six months of 2018, Saigon Co.op exported a value of more than $6 million through its partner NTUC FairPrice.

Increasing presence

Japanese group AEON, meanwhile, aims to help Vietnam export $500 million in goods by 2020. The move is part of a series of commitments signed in memorandums of understanding between the group and the MoIT. Accordingly, AEON would increase the presence of Vietnamese goods in its shopping centres globally, taking Vietnam’s export turnover through AEON to $500 million in 2020 and $1 billion in 2025.

Nguyen The Tan, director of Tam Lan Tea Company, said, “Thanks to the introduction of the MoIT’s European Market Department, we have easier access to the market there and our products have, for example, entered France through the Thanh Binh supermarket system.”

Paul Le from Central Group Vietnam said that Big C and Central Group launched the Supporting Small and Medium Enterprises programme in 2016, to help local businesses understand modern trade, expand markets, and contribute to the development of Vietnamese brands.

Participants in the programme receive full support via training for modern trade integration, packaging, merchandising, financial advantages in terms of payments, logistics, and capital for investment through Central Group’s banking partners.

“We strongly believe in Vietnamese products and we will contribute to including domestic brands in our network in Vietnam and help brands be ready for international expansion,” Le said.

Joining supply chains

At a recent forum, Yuichiro Shiotani, director general of AEON TopValu Co., Ltd., said that local companies should add more value to their products. “To sell their products to foreign distribution channels, Vietnamese businesses need to pay more attention to product design, quality assurance, and after-sales services,” he said.

Cao Thi Phi Van, deputy director of the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC), said, “Besides product quality, nice design, competitive prices, and good financial capacity, local businesses need to understand the export process and norms set by foreign distribution systems.”

The ITPC reported that last year it helped more than 30 Vietnamese companies enter the AEON Vietnam supermarket system.

Meanwhile, Vu Kim Hanh, chairwoman of the Vietnamese High-Quality Product Business Association, said that the key factors for Vietnamese products to enter modern trade channels were quality and origin traceability. For example, food must meet the standards under the Food Safety Modernization Act in exporting to the US market.

In the first four months of last year, there were 23 import warnings for Vietnamese enterprises posted on the website of the US Food and Drug Administration (FDA). Therefore, the US required an independent third party in conjunction with the FDA to supervise Vietnamese enterprises in exporting goods to the country. The Vietnamese High Quality Product Business Association is seeking to become a third party.

According to the MoIT, there are several important tasks to carry out in order to step up trade promotion and connection with foreign distribution systems.

These include supporting enterprises in developing brands to satisfy overseas requirements; prioritising promotion within the framework of the National Trade Promotion Programme; and increasing activities of overseas trade bureaus and trade promotion offices to assist Vietnamese enterprises in connectivity.

Besides, the tasks also include supporting domestic enterprises to display and introduce products in Vietnamese Goods Week programmes; and intensifying brand awareness, attaching special importance to international communication activities and direct advertising within international communication channels.

With the hard work of the government, in tandem with major and local businesses, the objectives to increase the value of goods exported to international ­distribution systems can be achieved. By 2020, Vietnamese goods will be exported directly to large distribution systems in Europe, North America, and Southeast and Northeast Asia, as well as to countries that have signed free trade agreements with Vietnam.

VIR