Vietnam: produce export to China decreasing

In the context of strong development of China’s agriculture and the country’s WTO membership, Vietnam’s export turnover of fruit and vegetable products to China has been falling since year 2001. Export value of these products reached only US$20 million in year 2004, as much as only 14% and 29.65% of that in year 2001 and 2003 respectively.

In late March this year, there was bad news that hundreds of tons of water melon of Vietnam for export to China piled up in the Tan Thanh border pass.

The decrease is not because of China pushing down water melon prices or Vietnamese farmers producing the fruit in a too large quantity. So what is the reason here?

According to Adjunct Professor, Doctor Vu Manh Hai, Director of the Central Institute of Fruit and Vegetable Research, it is not fault of farmers but of scientific research bodies as they have not provided farmers with good knowledge for from choosing varieties to harvesting and reservation. As a result, quality Vietnam’s water melon is not high with different sizes and different colors.

Another reason for the decline in export turnover of Vietnam’s fruits and vegetables to China is that there has been no agreement on fruit and vegetable quarantine check between the two countries.

Most of those products are exported from Vietnam to China through border market. Since China joined the WTO, goods imported into this country have had to obey many regulations such as certification of origin Chinese, quality declaration, food sanitary, etc. Meanwhile, Vietnamese exporters seem not to attach importance to those matters.

According to the Ministry of Trade’s Asia Pacific Department, since application of the Early Harvest Program (EHP) within the framework the China – ASEAN comprehensive cooperation in January 2004, export of fruits and vegetable from Vietnam to China has hardly witnessed changes at all. Furthermore, products with preferential treatment are witnessing falling export values.

Statistics provided by the General Department of Vietnam Customs shows that fruit and vegetable export turnover of Vietnam to China totaled only US$29.4 million, reducing by 63% in compared with year 2003. Export turnover of these products in March this year reached US$34.66 million, 73% over 2004’s same period but mostly to new markets such as the US, Japan, and Russia. Exporters seemed to attach too much attention to new markets but ignore the traditional but huge and potential market of China. The Ministry warned that Vietnamese exporters have not made use of China’s preferential tariffs on agricultural products in general and fruits and vegetables in particular. While competent bodies talk much about EHP in order to push up official export, exporters like to do that unofficially through border markets despite of high level of risks.

To the contrary, General Director Nguyen Van Thanh of the Vietnam Vegetables and Fruits Corporation explained that decline in fruit and vegetable export turnover is caused by difficulties in terms of import duty. China imposes duty rates of between 12% - 14% on those products imported from Vietnam but just 0% on those imported from Thailand. With this great advantage, fruits and vegetables from Thailand can defeat those from Vietnam in the market of China. Vietnamese exporters cannot make use of the Certificate of Origin (CO) treatment that China offers them in the border markets of Mong Cai, Lao Cai, and Lang Son due to their small size as well as high fees of transport, higher oil and petrol prices etc.

Vietnam is one of the countries with most weaknesses in terms of plant protection.

That leads to the fact that China imports fruits and vegetables at low prices from Vietnam and then exports those to the US at much higher prices thank to its high technologies for reservation.

An official from the Ministry of Agriculture and Rural Development said: “We ourselves create the market”. What Vietnamese exporters should do now is to study the market of China more thoroughly and build up a proper strategy for penetrating into this market firmly and sustainably.

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