Vietnam's exports will not be affected much after the British voted to leave the European Union (EU). To take advantage of opportunities from this potential market, Vietnamese companies need to focus on branding and actively boosting trade promotion in the UK.
Trivial impacts from Brexit
Mr Tran Ngoc Quan, Deputy Director of the European Market Department under the Ministry of Industry and Trade, said, the UK is one of five largest export markets of Vietnam in the European Union (EU). In the latest five years, Vietnam enjoyed a surplus growth of 20-25 per cent in trade with the UK.
Vietnam took a trade surplus of US$3.9 billion in 2015 and US$1.7 billion in the first five months of 2016.
Vietnam’s exports to the UK mainly household goods such as telephone, computer and electronic devices. These items, however, depend on multinational manufacturers like Samsung and Sony rather than trade agreements in between Vietnam and the UK. Other important exports of Vietnam were apparels, footwear and woodworks. In general, Brexit will have no impact on exports from Vietnam.
Notably, footwear, apparels and household goods of Vietnam exported to the UK are subject to the value added tax (VAT). Prices may rise by 2.1 per cent while personal spending may decline 0.2 per cent. Furthermore, British consumers are very demanding and hard to be persuaded to change consumer habits.
Ms Nguyen Thi Hong Thuy, Commercial Counsellor of Vietnam in the UK, said, the UK has a large demand for commodities that Vietnam can supply, such as agricultural products (coffee, rice and pepper) and forest products, seafood, apparels, footwear and handicrafts. Nevertheless, Vietnamese companies have not unlocked all potential in this market. Vietnam’s exports meet only a small portion of the UK demand.
Focus on branding
Mr Pham Tuan Huy, Deputy Director of European Market Department, said, British people are keen on products that carry sustainable value standards (e.g. human health, environment and low carbon emission). This will be a hardship for Vietnamese exporters which stand out with low production costs and low labour costs.
The UK has an open economy and supports global free trade but exports to this market are imposed to rigorous technical standards and food safety requirements. Exports shipped to the UK are required to satisfy standard and specification requirements by the EU like Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), Illegal, Unreported, and Unregulated (IUU) Fishing, and upcoming Forest Law Enforcement, Governance and Trade (FLEGT), he added.
Mr Saby Mishra, CEO of J.Water Thompson Vietnam Company, said, exports to the UK must ensure at least standardisation, environmental and health requirements. This means that exporters must have well-reputed brand names and quality.
Exporters need to boost branding of exports to the UK because their brands are still vague here. British consumers know only Airline Vietnam, Saigon Beer and Buffalo Tours, while many other brands of high-quality products are ruled out in this market because of poor branding and marketing.
According to experts, companies will be stronger if they have successful brand strategies where "differentiation" plays a key role and profoundly affects the position of products in the minds of potential and current customers.
Mr Do Kim Lang, Deputy Director of Vietrade and Deputy Secretary General of the Secretariat of the Vietnam National Branding Programme, noted that, in the context of deeper integration into the world economy, having a strong brand image and reputation is a crucial goal of the State and the business community. The State does not do it for businesses but it will protect brands of well-reputed high-quality products, thus helping them to secure solid positions in domestic and international markets.
Hương Ly
