7 difficulties in exporting to China

China also has a large demand for exported goods by Vietnam such as seafood. Photo: Nguyễn Huế

From 2014 till now, China has passed Japan to be the second largest exporting market of Vietnam after US. Also, the relations for Vietnam-China trade have many geographical advantages, reducing cost, diversity in form of trade etc.

Not only an advantage in trade, but China also has a huge demand for Vietnam goods. In the conference "Market information and opportunities for exporting commodity in the China market", on November 9^th 2016 Mr. Dao Viet Anh, Representative Office of Vietnam Trade Promotion in Chongqing, China stated that: “China also has a large demand for goods exported by Vietnam such as agricultural products (rice, cassava, rubber, vegetables, and tea) and seafood (shrimp and catfish).

However, when exporting goods to this market, Vietnam enterprises have encountered difficulties. According to Mr. Dao Viet Anh, there are 7 existing difficulties.

Firstly, when Vietnam goods are exported to China, it enjoys preferential tax rates under the Agreement on Free Trade Area China-ASEAN (CAFTA). However China's current tax rate of VAT from 13-17%, this invisible tariff reduces the level of competition on prices of imported products sold in the Chinese market.

Secondly, China promulgated the new Law on Food Safety. Accordingly, all food products being exported to China must be accompanied by certificates from the exporting country.

Thirdly, agricultural and aquatic products exported to China are subject to intense competition from similar products of ASEAN countries.

Fourthly, exchange, purchase and sale of goods in the form of border trade also pose a risk.

Fifthly is the capacity of businesses to verify the Chinese partner has not been focused and limited.

Last but not least, the overall lack of information about the Chinese market, such as export-import policy, market demand, connection in China business network. The final reason is about language barriers in dealing with Chinese businesses, some enterprises are not prepared to understand the Chinese team to serve the contact, connect with Chinese businesses .

With these difficulties, Mr. Dao Viet Anh noted that: “when doing the transaction, trading in China, Vietnam enterprises need to verify the power and prestige of Chinese business partners, especially connecting to an online partner via website. All transactions must be made in the form of a contract under the rules of international trade, the terms of the transaction and dispute resolution are closely united and highly binding.

In addition, enterprises should learn about the import regulations of the Chinese government with goods that the business plans to export, dealing with Chinese partners, especially about products such as food, agriculture and aquatic products, as these are subject to strict controls on quarantine.

There are now a number of organisations which now provide support for trade with China, such as the Vietnam Trade Office in Beijing, the Trade Promotion Department at Chongqing Vietnam, the Vietnam busines branch in Kunming , Guangzhou, Nanning and China Division, Department of Asian markets, and the Pacific under the Ministry of Industry and Trade.

In 2015, according to statistics of Vietnam Customs, the total turnover of Vietnam-China trade reached $US 66.6 billion, up 13.4% compared to 2014; in which Vietnam exports reached $US 17.1 billion, up 14.8%; imported $US 49.5 billion, up 13.3%; trade deficit of $US 32.4 billion s, up 12.5%.