Vietnam buys Chinese goods, from onions to cars, why?
VietNamNet Bridge - The majority of Vietnamese say they don’t want imports from China, but Chinese goods still flood the Vietnamese market.
China remains the largest import market for Vietnam in 2015. The General Statistics Office (GSO) estimated that Vietnam’s trade deficit with China reached $32.3 billion in the year, an increase of 12.5 percent, the sharpest increase so far.
“All Chinese farm produce can be found in the Vietnamese market, from fruits to spices. They look very attractive to housewives and they are dirt cheap,” a reader commented.
The reader affirmed that she would not buy Chinese farm produce if she could find Vietnamese products of the same kind with the same price or a little bit more expensive.
The General Statistics Office stimated that Vietnam’s trade deficit with China reached $32.3 billion in the year, an increase of 12.5 percent, the sharpest increase so far.
Ngo Tri Long, a renowned pricing expert, commented that the high trade deficit showed Vietnam’s low production capability.
According to Long, there are three major factors for products to be competitive – price, quality and marketing service.
Vietnam’s products are less competitive than Chinese in terms of price. In terms of quality, Vietnam’s products are less diverse. Therefore, Chinese products have been squeezing into every corner of the domestic market.
Long noted that China has succeeded with its border trade policy, especially with its infrastructure items in border areas. These make it easy to export products to Vietnam via border gates.
However, the increasingly high trade deficit with China not only shows Vietnam’s weak production capability, but also its bad market management.
“A lot of Chinese farm produce has been sold as Vietnamese products in order to swindle customers,” he explained.
Long, while believing that Vietnam would still have to rely on Chinese imports, thinks it would be able to ease the reliance in the future as the free trade agreements Vietnam has signed with other countries and economic blocs would bring opportunities for Vietnam to approach non-China markets.
Huynh The Du, a lecturer of the Fulbright Economics Teaching Program (FETP), believes that the problem also lies in the exchange rate policy.
“Vietnam has been following an unreasonable exchange rate policy. Government agencies thought a strong currency would benefit the economy. But they were wrong,” he said.
“The currency appreciation not only brought disadvantages to export products, but also harmed domestic production and encouraged the import,” he said.
“Vietnam’s forex policy made Chinese products, which are very cheap, become even cheaper,” he said.
When asked about the future, Du said the high trade deficit would continue if inflation was high and foreign policy rigid.