Weighing up advantages and disadvantages

Small businesses find it difficult to seek US partners as their methods of manufacturing goods for export are not incommensurate with this market.

Large market, tough competition

There is no denying that the US is a major and potential market in the world which requires tough competition from small businesses. Therefore, many countries have come up with their own strategies to achieve deeper US market penetration.

Over the past years, the US has continued to be Vietnam’s largest export market.

Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), Hoang Van Dung, says last year’s two-way trade between Vietnam and the US reached more than US$18 billion, in which Vietnam exported US$14 billion worth of goods, accounting for 24 percent of its total export turnover.

Garments and textiles still knock spots off with US$6 billion in export revenue, followed by seafood, footwear, wood product, coffee and crude oil. However, Vietnam’s exports make up just less than 0.4 percent of the US’s total imports.

Vietnam’s stable export products mainly depend on imported material resources and face stiff competition from China and India.

According to Nguyen Duy Kien, Head of the VCCI’s American Market Department, many countries had long set up their business relations with the US before Vietnam started its normal trade exchange with the US after the signing of the Vietnam- US Bilateral Trade Agreement (BTA) in 2001.

Vietnam also faces a stumbling block from other major exporters, including China which has already earned US$300 billion from this major market.

As a point of fact, due to their small-scale production, outdated technology and low capacity, Vietnamese businesses can only export their products via an intermediary, let alone do it directly.

Normally, US businesses want to seek major partners that can ensure the quality and quantity of products as well as the time for delivery but Vietnamese partners often fail to meet their requirements, Mr Khien noted.

Pulling their weight

With a dense population of different races and per capita income of US$47,000/year, the US is really a lucrative market.

In recent years, the US has scaled down its production while giving a boost to its imports. To avoid risks, the country has diversified its supply sources by letting Vietnamese businesses enter the fray.

However, to penetrate this giant market, they need to focus on highly competitive products. Small and medium businesses should team up with bigger ones to increase their export volume to the US.

In addition, State groups and corporation should play a leading role in helping these businesses approach the US market and take part in fairs, exhibitions and e-commerce floors to promote their products to US partners. – VOV

Tags: Vietnam business