Vietnam 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 besides traditional markets like the United States, European Union and Japan. In this market, there are huge purchasing power and less demanding consumers, which would make it easy for Vietnamese firms to satisfy the market’s standards.
But there are some 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. 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.
Mr Lê Thái Hòa, 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. The ministry was working to issue an action plan to implement the project.
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 Việt Nam and the Middle East reached US$12.8 billion in 2017, up 17.4 per cent from 2016. Of this, Việt 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.
Việt 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.
Source: Vietnam News