Companies fear losing export momentum | Company
According to Mr. Ngo Xuan Nam, Deputy Director of the Vietnam Sanitary and Phytosanitary Notification Authority and Inquiry Point (Vietnam SPS) under the Ministry of Agriculture and Rural Development (MARD), technical barriers are increasing on export markets and domestic exporters are struggling to cope with them. For example, from July 21 to today, the office has received and sent 37 notices of new food safety and hygiene regulations to businesses.
In addition, 68 other draft opinions are being sent for opinion to the members of the World Trade Organization (WTO). Since the beginning of the year, hundreds of new technical barriers, mainly related to food safety and hygiene issues, have been enacted by many countries and territories. These include the Thai government’s most recent decree on the temporary suspension of imports of live poultry and poultry meat from Vietnam to prevent the spread of highly pathogenic avian influenza (sub-variant H5N1). This also explains why several export orders of this commodity from Vietnamese companies are almost banned or must be returned.
Previously, due to the many potential health risks for consumers when importing products from third countries, the European Union had drawn up a list of foods from third countries, including Vietnam, subject to special inspection measures.
Specifically, the EU will increase the frequency of testing for coriander, sweet basil, mint, parsley, okra and capsicum to 50% for dithiocarbamates, phenthoate and quinalphos content. At the same time, it will increase testing frequency to 20% for dragon fruit for dithiocarbamate content and instant noodles for ethylene oxide residue. This has significantly limited the export market share of Vietnamese companies in these countries.
On the other hand, Mr. Nguyen Chanh Phuong, Director of aKa Furniture Company, Vice President of HCMC Wood Crafts and Industry Association, expressed concern that companies would not only face to strict technical barriers, but also to the risk of order cancellation due to a sharp decline in purchasing power in certain key export markets, such as the United States and Europe. Feedback from member companies shows that most of them are asked to delay delivery of export orders or cancel export orders. Meanwhile, it is not enough to cover the cost of the volume of goods produced with a 10-15% deposit fee for export orders. Currently, the inventory of companies is quite high because their partners delay or cancel the receipt of goods, resulting in quite large losses.
No more loopholes
This is the assertion of companies, as well as economic experts when talking about the current export market. Ms. Tran Thi Thu Thuy, Deputy Director of the Export Support Center under the Ministry of Industry and Trade, said that technical barriers in general and food safety and hygiene standards in particular, are mandatory requirements of vital value for companies if they want to maintain their export market share. Even China – the biggest and easiest market – has adopted many standards to strengthen food safety and hygiene control, including the Zero Covid policy that this country still applies. Thus, companies will have no other workaround or loophole than the conversion of production to ensure that they meet the quality, food safety and hygiene standards required by export markets.
In another aspect, Mr. Ngo Xuan Nam pointed out that instead of panicking when markets tighten control of product standards and quality, companies should understand the characteristics of each export market to have appropriate solutions. . For example, for the Chinese market, if an exporting company commits violations, its goods will be prohibited from importing. However, the European market will prohibit or increase the frequency of inspection on the products of the same type of all Vietnamese exporting companies. Therefore, in demanding markets, such as the EU, the role of associations is extremely important in linking support, as well as in cross-checking the quality of products of companies in the same field.
As for postponing or canceling export orders, many companies said the authorities should soon help them gain more diversified and broader access to new markets, especially those that have been little affected by geopolitical situations and conflicts between nations around the world. Regarding this issue, according to Ms. Tran Thi Thu Thuy, the Ministry of Industry and Trade has ordered Vietnam’s trade advisers and overseas trade offices to strengthen online promotion activities in the form of business-to-business exchanges. to increase export opportunities. At the same time, they should establish a list of product categories that other countries need to import to send to national associations, creating the conditions for companies to shorten the access time. If companies have difficulty assessing partner capacity, business advisors will directly help companies deploy.
In addition, the Ministry of Industry and Trade has coordinated with foreign distribution systems in Vietnam to increase the possibility of indirect export for companies directly in the domestic market. Mr. Pham Xuan Hong, Chairman of the Board of Saigon Garment No.3 Joint Stock Company, said that instead of exporting to Japan, from the beginning of 2022, the company signed a contract for local export supply via Uniqlo. system in Vietnam. By the end of the year, the company no longer has to worry about finding orders but only focuses on preparing to re-sign orders for 2023.
Ms. Tran Thi Thu Thuy said that ensuring quality and proactively approaching new markets is a strategic solution for companies not to lose export momentum.