Leveraging Trade Agreements: Opportunities for Vietnamese Importers
Recently, Vietnamese importers have gathered at a meeting hosted by the British Consulate General in Ho Chi Minh City to explore how they can capitalize on significant trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the UK-Vietnam Free Trade Agreement (UKFTA). Key voices in the room, such as Duong Quoc Quan from Vatico Retail, highlighted the transformative effects these agreements are having on the importation of British goods.
Streamlined Import Processes
One of the most significant benefits stemming from the CPTPP and UKFTA is the enhancement of the importation process. Traditionally, businesses faced a cumbersome array of procedures, often taking months to complete. However, Duong Quoc Quan shared insights that illustrate a stark contrast: “A typical example is that previously, it could take a business a few months to receive a shipment in Vietnam, but now it only takes a few days to two weeks maximum.” This abbreviated timeline is complemented by a reduction in costs for procedures and licenses, reportedly slashed by over 50%.
Anticipated Growth in Sales and Profits
The enthusiasm for these trade agreements is reflected in Vatico Retail’s optimistic forecasts. The company is projecting an increase in sales from $1.5 million to $2 million by 2025, with expected profits to rise by 30-50% compared to the previous year. This forecast embodies the potential that Vietnamese importers see in tapping into British markets.
Expanding Choices for Consumers
Phan Vu Thuy Dung, representing Menas, an importer specializing in products from multiple countries, highlighted another aspect: consumer choice. With the enhanced provisions of the CPTPP and UKFTA, Vietnamese consumers are gaining access to a broader array of high-quality British products. Menas is now pivoting to build direct relationships with brands and suppliers in the UK, moving away from reliance on agency imports. They plan to bring in an assortment of goods, including cakes, chocolate, wine, and cosmetics, all promising high potential in the local market.
The Impact of Zero Tariffs
According to the British Consulate-General, a staggering 99% of UK exports to Vietnam now enjoy zero tariffs, particularly benefiting sectors like fast-moving consumer goods and health products. This accessibility not only enhances competition but also enriches the choices available to consumers in Vietnam.
Non-Tariff Benefits: A Game Changer
Beyond tariff reductions, the CPTPP offers substantial non-tariff benefits. The agreement has streamlined the customs process, allowing standard trade releases to occur within 48 hours and express shipments to be cleared in just six hours. For the cosmetic industry, the CPTPP is simplifying registration procedures, removing the need for a Certificate of Free Sale. This efficiency is a welcomed change for businesses that often navigate a maze of administrative layers.
Self-Certification and Economic Relief
Furthermore, UK exporters can benefit from the self-certification of goods’ origin under the CPTPP, eliminating the need for third-party validation. This shift is anticipated to lower costs and reduce administrative burdens, further facilitating the entry of British goods into the Vietnamese market.
Quality Assurance and Consumer Trust
Alexandra Smith, the British Consul-General, emphasized that British products are recognized globally for their quality and safety. With an array of offerings—from tea to cosmetics—Vietnamese consumers are increasingly enjoying these premium products. Brands like Jo Malone, Lush, and Unilever are already establishing a foothold in Vietnam, aided by the UK government’s trade policies.
Growth Trends in Agriculture and Food Exports
The UK-Vietnam Free Trade Agreement, effective since 2019, has played a pivotal role in boosting bilateral trade, especially in agricultural sectors. A report by Edelman Public & Government Affairs noted a remarkable 97% surge in UK food and drink exports to Vietnam from 2020 to 2023, reaching $154 million. Such figures illustrate the significant impact of trade agreements on economic partnerships.
Future Opportunities and Projections
As David Johnstone from the UK’s Free Trade Agreement Utilisation remarked, the recent UK accession to the CPTPP in late 2024 is expected to open up new avenues for Vietnamese businesses. With continued tariff reductions on food, cosmetics, and consumer goods, the trade landscape is becoming increasingly favorable for Vietnamese importers.
New initiatives aim to sustain growth, and with an increase of 9.9% in UK exports to Vietnam recorded in 2024, projections for 2025 indicate a blossoming relationship underpinned by these trade agreements.
The evolving dynamics in trade agreements like the CPTPP and UKFTA not only promise to enhance the Vietnamese market but also reflect the deepening of international trade partnerships, bringing a wealth of opportunities for businesses and consumers alike.