Local firms encouraged to seek Middle East trade
Local firms encouraged to seek Middle East trade
The Department of Asia-Africa Markets under the Ministry of Industry and Trade has encouraged local businesses to promote trade with their Middle East counterparts.
Nguyen Minh Phuong, a representative of the department, said Vietnamese enterprises have long focused on traditional markets like the United States, European Union and Japan and have overlooked Middle East, which she believes is a strategic market in the long-term, with the traditional markets almost being saturated.
She highlighted the potential of the Middle East market, saying it boasts huge purchasing power and less demanding consumers, which would make it easy for Vietnamese firms to satisfy the market’s standards.
But she also underlined obstacles hindering Vietnamese exporters from entering the Middle East market, including an unstable political situation and cultural and language differences between Vietnamese enterprises and the region.
Phuong said Vietnamese firms were hesitant in studying and seeking partners from the region, as well as lacked a strategic and long-term plan to penetrate the market.
Le Thai Hoa, deputy director of the department, urged local businesses to develop long-term plans to enter the Middle East market by investing in a competent workforce specialising in trade, with a good understanding of the region’s culture, language and trading customs.
He said in order to facilitate Vietnamese exports to the market, the government has approved a project on the development of Viet Nam-Middle East relationship by 2025.
Hoa also said the ministry was working to issue an action plan to implement the project.
In the past, the ministry has regularly hosted trade promotion events to help domestic firms approach the Middle East market, while instructing its trade offices in the region to keep Vietnamese exporters updated on the market situation and opportunities, Hoa said.
He added that publicity campaigns have been conducted to introduce Vietnamese goods to several supermarket chains in the Middle East with the hope of entering its retailer network.
As advised by trade experts, when working with Middle East businesses, Vietnamese firms must pay attention to the terms of payment in their contracts. Vietnamese enterprises require a deposit rate of at least 30 per cent of the contract value to avoid payment risks.
In addition to this, Vietnamese businesses should also request partners to use the irrevocable Letter of Credit payment method while discouraging customers from late payment. Vietnamese companies should not use the Documents against Acceptance (D/A) payment method, or accept money transfer via Western Union for payment.
According to the ministry, the bilateral trade value between Viet Nam and the Middle East reached US$12.8 billion in 2017, up 17.4 per cent from 2016. Of this, Viet Nam’s export to the market in the whole year was recorded at $9.6 billion, which helped maintain the country’s trade surplus at $6.4 billion.
Viet Nam’s main export goods are mobile phones, computers and accessories, seafood, footwear, garment and textiles, fibre, rice, pepper, wood products, cashew nuts, natural rubber, vegetables and fruit and coffee beans.
The country mostly imported raw material from the Middle East for domestic production, such as plastic, liquefied gas, electronic spare parts, machines and animal feed.
