Exporters urged to have strategies to take advantage of UKVFTA for expansion

Production at March 29 Textile Garment Joint Stock Company in Đà Nẵng. With radical tariff elimination, the UKVFTA has contributed to boost exports of Vietnamese products to the UK, including garments, footwear, agricultural and fisheries products. — VNA/VNS Photo Trần Lê Lâm

That was the message for exporters if they want to expand further into this market, an online conference held on Wednesday was told.

The conference, organised by the Công Thương (Industry and Trade) magazine, heard from Vũ Việt Thành from the European – American Market Department, under the Ministry of Industry and Trade, who said that the UKVFA has become an important impetus to leverage the bilateral economic, trade and investment to new highs since the trade deal took effect in May 2021.

Việt Nam’s exports to the UK benefitted significantly from the trade deal, he said, adding that the UK was the ninth largest export market of Việt Nam in the world and fourth in the EU in 2023.

Notably, the bilateral trade between Việt Nam and the UK is a spotlight in the context that Việt Nam’s exports to major markets in the UK saw unprecedented drops, even double digits, due to the impacts of geo-political tensions and global slowdown.

He cited statistics that showed bilateral trade increased 8.9 per cent per year on average during the past three years, in which Việt Nam’s exports to the UK rose by 9.4 per cent, much higher than the growth rate of Việt Nam’s export to the EU-27.

With radical tariff elimination, the UKVFTA has contributed to boost exports of Vietnamese products to the UK, including in garments, footwear, agricultural and fisheries products.

Thành pointed out that the UK’s exports to Việt Nam have also increased significantly, especially in terms of high-tech products and high-quality raw materials such as machineries, automobile, chemicals and pharmaceuticals, contributing to Việt Nam’s industrialisation and modernisation.

Regarding investment, the trade deal has promoted the capital flow from the UK and Việt Nam in recent years, with the number of UK-invested projects reaching 584 as of the end of September, worth $4.5 billion, from 380 projects as of the end of 2020.

The UKVFTA also promotes institutional reform in a number of sectors including trade, investment, services, public procurement and sustainable development in Việt Nam, which creates space and a solid legal foundation for the development of two countries in the future, Thành stressed.

Vietnamese enterprises are also taking advantage of the UKVFTA’s tariff preferences for expansion, he said, adding that a large number have been successfully expanding exports to the UK and met increasingly high requirements in terms of green consumption, sustainable development and producer responsibility for sustainable export to this market, he said.

The UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will also create new space for the bilateral relation between Việt Nam and the UK, Thành stressed.

Enhance market study

Coffee is among important export products of Việt Nam to the UK. Vietnamese producers and exporters must focus on enhancing competitiveness, establishing value chains to ensue origin traceability, food hygiene and safety in order to expand. — VNA/VNS Photo Vũ Sinh

However, according to the Việt Nam Trade Office in the UK, Việt Nam accounts for a very modest share in the UK’s total imports every year, estimated at just around one per cent. One of the reasons is that Việt Nam has not yet built its own brands in the UK market. in addition, producers and exporters have not focused on developing comprehensive and effective strategy for expansion into this market.

“The UK is very interested in sustainable development, labour issues, environmental protection and social responsibility. Therefore, when exporting to the UK, enterprises should be competitive not only in terms of price and quality, but also in meeting requirements related to sustainable development,” Ngô Chung Khanh, Deputy Director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade said.

According to Nguyễn Cảnh Cường, former Trade Counselor of Việt Nam to the UK, besides UKVFTA, Brexit also provided significant opportunities for Vietnamese firms.

After Brexit, trade between the UK and the EU dropped, up to 50 per cent for some industries, he said, adding that these gaps in the supply chains could bring new opportunities for Việt Nam. “It’s time Vietnamese firms develop strategies and enhance competitiveness to expand further in the UK market.

"With the rapid development of digital technology and new marketing methods, enterprises should be more attentive in searching for market information and studying the market’s requirements carefully for good preparations," he said.

There are various sources to search for and verify market information such as trade offices, industries associations, the Government of UK’s e-portals and export support centres.

He pointed out three factors of the UK market that Vietnamese firms must attach special attention to:

First, Vietnamese firms need to study the market requirements carefully, especially those developed by British Standards Institution (BSI), to make preparations and better take the opportunities arising from the trade pact.

The second factor is the trend of sustainable and environmentally - friendly consumption, emission reduction and climate change. These are already integrated into the UK’s trade policy, engraved in the awareness of importers and consumers.

The third factor is to ensure the transparency in the supply chain and origin traceability.

Agreeing with Cường, Thành said that companies need to study and verify the market information carefully via various official sources, including two e-portals of the Ministry of Industry and Trade at the addresses: https://goglobal.moit.gov.vn/ and http://connectviet.moit.gov.vn/.

Vietnamese producers and exporters must focus on enhancing the competitiveness, establishing value chains to ensue origin traceability, food hygiene and safety.

Increasing the application of science and technology is also important to create competitive advantage for Vietnamese products in the market, he said.

A radical strategy for market expansion should be developed based on market studies to be able to take advantages of the trade deal, expand exports and increase added value, he stressed. Enterprises also need to closely upgrade new regulations of the UK market to avoid problems and make appropriate preparations.

The ministry will continue to strengthen cooperation mechanisms to remove market barriers and reduce cost burdens on enterprises, as well as clarify regulations to help Vietnamese firms develop an appropriate strategy and roadmap for market expansion, Thành said.