Why is the Vietnamese market interesting for Belarus? NCM on the prospects for promoting products and the specifics of doing business

In anticipation of the start of the collective exposition of Belarus (December 7-9) and the Belarusian-Vietnamese business forum (December 7), organized by the National Marketing Center (NMC) in Ho Chi Minh City, the center's experts told a BELTA correspondent about how trade and economic relations between Belarus and Vietnam are being built, why this market is interesting for our country, what domestic products may be in demand there, as well as the prospects for their promotion.

Vietnam has one of the fastest growing economies in Asia. According to the IMF , in 2022, the country's real GDP growth was 8%, bringing GDP to $406.5 billion, making the country the 35th largest economy in the world and the 4th largest economy in the Association of Southeast Asian Nations (ASEAN) after Thailand, Singapore and Malaysia. According to experts, by the end of 2023, Vietnam's real GDP growth will be 4.7% (GDP - $433.4 billion), in 2028 - 6.8% (GDP - $657.3 billion).

The service sector dominates the structure of the Vietnamese economy. According to the country's General Statistics Office, services accounted for 41.3% of GDP in 2022. Next came industry and construction (38.2%), then agriculture, forestry and fisheries (11.9%).

"According to the International Trade Center (ITC), Vietnam was among the top twenty largest importers of goods in the world at the end of 2022. The country's share in the world import volume in value terms was 1.4%. In 2022, imports of goods to Vietnam increased by 8.5% compared to 2021 and amounted to $ 358.7 billion. The top ten import items (in addition to refined petroleum products ) of Vietnam in 2022 included the following categories of goods: electrical machinery and equipment (of which 58.5% are electronic integrated circuits), equipment and mechanical devices (17.5% are computing machines and their units), plastics and products made of them, ferrous metals, land transport vehicles (35.4% are passenger cars), optical, photographic, cinematographic, measuring instruments and apparatus, knitted fabrics, organic chemical compounds, cotton," the ITC said.

Vietnam's service imports increased by more than 30% last year compared to the previous year, amounting to $25.6 billion. The main types of imported services were transportation services and travel (48.9%), including tourism services (18.8%).

"In October 2016, the agreement on a free trade zone between the EAEU member states and Vietnam came into force, which contributes to the formation of a favorable environment for the development of bilateral trade. Issues of trade, economic, scientific and technical cooperation are considered during meetings of the Belarusian-Vietnamese intergovernmental commission, the 15th meeting of which was held on March 23, 2022 in the format of a video conference," the center reported.

In order to mutually familiarize themselves with the capabilities and needs of the two countries, business forums, exhibitions and fairs, and visits are organized. "Thus, in 2009-2018, 12 major Belarusian-Vietnamese business forums were held (six in Belarus, six in Vietnam). In 2011-2022, six national expositions of Belarus were organized in Hanoi and Ho Chi Minh City," the center's experts added.

This year, on December 7, a Belarusian-Vietnamese business forum is planned to be held in Ho Chi Minh City as part of the collective exposition of Belarus at the International Exhibition Vietnam Expo - 2023, organized by the NCM.

Vietnam is one of Belarus' key partners in Southeast Asia. "Belarus views the country as a springboard for gaining a foothold in the market of the entire region and seeks to develop relations in all areas of interaction," the NCM noted.

According to ITC data, trade turnover between the countries amounted to $70.8 million in 2022. "At the same time, Belarus' exports significantly exceed imports: $53.8 million and $17 million, respectively. The balance of bilateral trade was traditionally positive for Belarus at $36.8 million," the center reported.

According to the NATIONAL BANK of Belarus, bilateral trade turnover of services with Vietnam in 2021 amounted to $20.9 million (an increase of more than 55% compared to 2020), including exports - $20.3 million (an increase of almost 70%), imports - $0.7 million (an increase of more than two times). The positive balance amounted to $19.6 million.

Vietnam ranks 42nd among the countries that are markets for goods exported by Belarus. In 2022, the volume of Belarusian exports to Vietnam amounted to $53.8 million. "More than 60% of the total volume of Belarus' exports to the country in value terms are potash fertilizers. Also, the top ten types of products in 2022 included: MILK and cream, whey, medicines, measuring or control devices (the first major delivery in a five-year period), soap, carbon, electrical machinery and equipment, tractors, parts and accessories of motor vehicles, tools and devices made of base metals, nuts and fruits," the National Marketing Center said.

According to the ITC Export Potential Map , the total export potential of Belarus on the Vietnamese goods market is $42 million, with 85% of the potential not being realized ($36 million).

Currently, the list of products with the greatest unrealized export potential for Belarus on the Vietnamese goods market includes: softwood timber, sawn or split lengthwise, with a thickness of more than 6 mm ($1.8 million), parts of carcasses and offal of frozen domestic chickens ($1.6 million), soybean oil cakes ($1.4 million), dry skim milk ($0.8 million), electrical conductors ($0.8 million), hollow profiles made of aluminum alloys ($0.7 million), etc.

"Employing an agent or distributor is one of the most popular ways for a foreign company to do business in Vietnam, due to the ease of regulating relations with the intermediary and the low administrative burden on the exporter. Participating in local trade shows and fairs is also an effective way to establish local connections and get to know the market," the NCM said.

The country has a rapidly growing e-commerce market, particularly in the business-to-consumer (B2C) segment, and is one of the leaders in Southeast Asia in terms of the size of its internet economy.

Vietnam's territory is significantly differentiated: the political center is in the north of the country in Hanoi, the industrial hub with the center in Ho Chi Minh City is located in the south of the country. After Vietnam joined the WTO and assumed obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights, the state took additional measures to protect rights in this area, in particular, it developed the National Strategy for Intellectual Property until 2030.

"In a business environment, it is recommended to avoid direct disputes with the interlocutor, and also to adhere to a calm, balanced manner of conducting negotiations. To support the transaction, it is recommended to involve a specialist with knowledge of the Vietnamese language, as well as the history and mentality of the country," the center noted.

Vietnam has one of the most stable economies in the Southeast Asian region. The country's strategic location, as well as its membership in one of the largest integration associations, ASEAN, provides exporters with access to large markets in the Asia-Pacific region.

"Considering the stable growth and improvement of the population's well-being, Vietnam is a large market in terms of domestic demand. Favorable investment conditions, access to skilled labor, and most importantly, low production costs make Vietnam a promising place for foreign companies to transfer their production. The existence of a concluded agreement on a free trade zone for goods makes Vietnam more open to the EAEU member states," the NCM experts stated.

BELTA.