Dried litchis exports falling in prices, Chinese control the market

The dried litchis market has been opened for the last two weeks, but the prices have halved from the beginning of the litchi crop. Vietnamese exporters complain that Chinese traders have been forcing the prices down.

Vietnamese exporters playing “game of chance”

For the last ten years, the dried litchis market began in June and finished in August. However, in 2011, due to the later harvesting, the dried litchi market has only opened since late July. The auxiliary border gates in Lang Son province and other border provinces are the places where Vietnamese and Chinese businessmen make trade.

The storehouses here also serve as the places for making transactions, while prompt payment in cash after deliveries is the main payment method. In some cases, the payment is made via Vietnamese or Chinese banks. In many cases, the payment currency is Chinese yuan. Sometimes Vietnamese accept deferred payment, but Chinese businessmen have “gone with the wind.”

The most bustling litchi markets are the areas at two auxiliary border gates in Lang Son province – Tinh Tam in Cao Loc district and Tham Keo in Van Lang. On Tinh Tam area alone, there are 30 houses and storehouses have been leased by traders to keep dried litchis.

Chinese authorities have set up new regulations about the border gates through which litchis can go. In 2010, litchis could be imported through both Tinh Tam and Coc Nam border gates, while Coc Nam has closed for litchis from Vietnam.

Chinese businessmen, who got used to trade at Coc Nam now have to leave for Trang Dinh border gate or Cao Bang province. Therefore, Vietnamese traders have to travel hundreds of kilometers more to carry litchis to the places required by Chinese businessmen.

A lot of Vietnamese businessmen complain that they have been pushed into a dilemma, because they have only heard about the new regulations after arriving in Coc Nam. What will happen if, in the next year, Chinese authorities, once again change the border gates for importing litchis? In all cases, Vietnamese businessmen are on the knife edge.

It seems that Vietnamese businessmen still have not learned any lessons from the last many years of doing business with Chinese. Experts have also pointed out that across-border trade is only suitable for the products with small output, no label and pack made by small private workshops, and this kind of trade only fits local residents.

Meanwhile, litchis come from far provinces (Bac Giang, Hung Yen, Hai Duong and the former province of Ha Tay), therefore, traders should not export litchis across the border, which is full of risks. The experts have warned that if Vietnamese continue exporting products in big quantities to China under the “pretty scale,” they would be at a disadvantage.

Vietnamese traders leave themselves open to attack

Since the beginning of July, tens of tons of dried litchis have been carried every day from the supply areas to border gates. Chinese businessmen check sample products, supervised the classification and packaging and negotiate prices.

Vietnamese traders complain that the export prices have been decreasing dramatically from 10 yuan per kilo to 4-5 yuan per kilo. Meanwhile, experts have pointed out that Chinese businessmen can control the expenses of all the links of the distribution chain. They well know the transport fee, packaging fee and drying costs. Especially, they well know the prices of fresh litchis Vietnamese traders purchase.

The problem lies in the fact that Vietnamese did not send offered prices or sign export contracts before the crops. However, even when they signed contracts before giving deliveries, the prices would still be adjusted, because it still depends on the volume of imports allowed by Chinese authorities.

TBKTSG

Tags: litchis