Chinese businessmen join Vietnamese distribution chains

Chinese businessmen seem to get involved more deeply into Vietnamese distribution chains, which allows them to more effectively compete with Vietnamese enterprises in collecting farm produce, experts have warned.

Many Chinese businessmen now do not any longer act simply as the partners who import products from Vietnam, but they have joined more deeply into the chains with Vietnamese businessmen.

Thu, the owner of a private business which specializes in exporting fruits in Ben Tre province, has been rarely present at the packaging workshop. Thu has to regularly travel to neighboring provinces to seek to purchase fruits of different kinds.

After collecting fruits, she carries products to her workshop in Ben Tre province, where the fruits are packaged before they are carried to the HCM City’s ports, or to coach stations, from which the products are carried to the north. Here, in the north, someone would receive the goods and then deliver to Chinese businessmen at the Tan Thanh border gate in Lang Son province.

According to Thu, the demand is always very big, and the volume of goods she delivers a week “makes nothing”. After many years of doing business, now Thu has got some stable clients in China who place regular orders.

Thu said that the profits she earns from the providing to Chinese businessmen have helped her expand the workshop. Now she has a relatively modern processing workshop which can meet the demand for exporting products to many markets, including China.

Thu is not alone in Mekong Delta. Connecting Vietnamese merchants’ networks and Vietnamese private businessmen has become a method of doing business, which many Chinese businessmen now apply. The close connection with Vietnamese merchants allows Chinese businessmen to obtain stable supplies.

A recent report by the Ministry of Planning and Investment shows that the exports to China in the first six months of the year increased by 40 percent, in comparison with the same period of the last year. There is a wide range of export items, but the main export products are farm produce, food, rubber, pepper, cashew nuts, fruits, pork and sugar.

The bustling trade across the border in recent months has been confirmed by Nguyen Van Hoi, Deputy Director of the Department for Trade Policies for Mountainous Areas under the Ministry of Industry and Trade.

“All the Vietnamese farm produce carried to the border gates have been purchased by Chinese businessmen at relatively high prices. Therefore, the trade across the border has become bustling recently,” he said.

A new characteristic in the trade between Vietnamese and Chinese businessmen, according to Hoi, is the cooperation within distribution chains and the support to each other in the networks of distributing farm produce.

Under the cooperation, Chinese businessmen advance money to Vietnamese merchants, place orders and take responsibility for product consumption. When the crops come, the Vietnamese partners just need to package the products and carry to the border gates.

Vietnamese farmers have also belonged to the chains: they have been hired to process, take care and harvest farm produce. In return, they can be sure that they can sell products at high prices.

According to Hoi, in the past, businessmen usually scrambled for collecting goods and materials, thus causing deadlock at the border gates. However, the trade has been considerably improved recently.

“Especially, many Vietnamese merchants have come forward and acted as the representatives for the Chinese partners in placing orders and carrying goods,” he said.

A big volume of farm produce has been sold to China so far this year. In many cases, Chinese businessmen come directly to growing areas to collect materials. In other cases, it is Vietnamese merchants, who collect materials and deliver to Chinese businessmen across the border gates.

Tags: Chinese businessmen