U.S. firms seek more Vietnamese supplies: Experts
U.S. firms seek more Vietnamese supplies: Experts
Trade conflicts, especially the U.S.-Sino trade war, have disrupted global supply chains, forcing more American firms to look for alternative sources of supplies, including those from Vietnam, according to speakers at the Vietnam-U.S. Trade Forum 2019, held in HCMC yesterday, September 6.
The forum was aimed at giving participants insight into the trends of the global supply chain movement and information on emerging opportunities to promote bilateral trade and investment, reported the local media.
The event was held by the European-American Market Department, under the Ministry of Industry and Trade, and the American Chamber of Commerce in Vietnam (AmCham Vietnam).
Since the U.S.-Vietnam Bilateral Trade Agreement (BTA) took effect, the export turnover between the two countries has grown at sustainably high levels, according to Deputy Minister of Industry and Trade Do Thang Hai.
Hai cited data as indicating that bilateral trade rose from US$1.4 billion in 2001 – before the BTA became effective – to a staggering US$58.8 billion in late 2018. The figure totaled US$35.4 billion in the first half of this year alone.
The significant shift in global supply chains has helped Vietnam make the leap from 12th place in 2018 to 9th place in early 2019 as one of the largest exporters to the United States.
In addition, the Southeast Asian nation has become the 27th major market and the 16th trading partner of the world’s largest economy.
Hai noted that opportunities arise when trade conflicts around the world force conglomerates, including those from the United States, to rethink their supply strategies.
As a result, many countries with a strong capacity for supply will be able to expand their investment, manufacturing and export activities.
However, most Vietnamese exporters have little understanding of legal systems in the United States, he stressed.
He expressed concern over the increasing use of protectionist measures through the issuance of new regulations and standards on food quality, safety and origins.
Mary Tarnowka, executive director of AmCham Vietnam, stated that the trade war between China and the United States has disrupted global supply chains but has also created opportunities for Vietnam as major firms are now compelled to diversify their sources of supply.
American firms based in China are suffering the most from the escalating trade war, Tarnowka explained.
The situation has forced them to seek alternative sources of supply in Vietnam, due to the shortage of supplies in China. They may also shift their manufacturing chains from China to Vietnam.
Tarnowka stressed that Vietnam is still at an advantage because of its low-cost labor. Furthermore, the favorable business environment and education reforms generally address the demand for workers among international firms.
Also, trade agreements between Vietnam and other countries are resulting from the increase in business activities. The country has gradually created a competitive edge, and its modernization process has helped cut costs in trading, thereby enabling it to penetrate more markets.
Tarnowka urged local firms to change the way they do business in the American market over both the long and short terms. They should also find ways to improve their supply capacity.
Other experts voiced concern that a growing number of Chinese firms are moving their plants to Vietnam to seek tariff incentives.
Others have fraudulently labeled their products as being produced in Vietnam and have shown signs of attempting to circumvent trade remedies and commit origin fraud.
To safeguard the rights and interests of local firms, the Vietnamese Government aims to collaborate more closely with foreign investigators, streamline the concerned regulations and enhance its management of import and export activities and foreign investment.
