Finding momentum to expand markets for the processing and manufacturing industry

	The processing and manufacturing industry increased by 6.3% in 4 months
	The processing and manufacturing industry increased by 6.3% in four months
	Consumption index of the entire processing and manufacturing industry increased by 10.8%

Recovery of industrial production boosts export growth. Photo: contributor

Accounts for 84% of export turnover structure

On July 29, 2024, the Ministry of Industry and Trade (MoIT) held a trade promotion conference with the Vietnamese Trade Office system abroad under the theme "Trade promotion for market development of processing and manufacturing products."

According to the MoIT, following the recovery trend from late 2023 and the early months of 2024, industrial production has shown signs of revival and made positive contributions to the overall economic growth. The added value of the entire industry in the first six months of 2024 was estimated to have increased by 7.54% compared to the same period last year; within this, the processing and manufacturing industry led the way with an 8.67% growth rate, contributing 2.14 percentage points to the total added value growth of the entire economy.

Notably, the export value of processed and manufactured industrial goods was estimated to reach US$160.3 billion, a 14.1% increase compared to the same period in 2023, and continues to account for the majority (84.3%) of export turnover.

However, Pham Tuan Anh, Deputy Director of the Industrial Department (MoIT), highlighted challenges in developing markets for processed and manufactured industrial products. Most of Vietnam's supporting industry enterprises are small or micro-sized, often with low levels of technology and management, limited human resources, and thus struggle to meet increasingly stringent partner requirements regarding standards, quality, costs, and delivery times.

Moreover, the lack of connection between businesses hampers the development of supporting technology. As a result, domestic enterprises have not deeply integrated into the ecosystem and value chain of leading and foreign enterprises. Additionally, the majority of supporting industry enterprises are small and medium-sized (88%), lacking market information and opportunities to reach customers.

Increasing competitiveness for businesses

According to Tuan Anh, the forecast for 2024 indicated that the recovery of industrial production would still face challenges, necessitating proactive measures to support production and stimulate consumer demand to clear inventory. To regain growth momentum, support and facilitation from the government, ministries, sectors, the banking system, and local authorities are crucial. This includes implementing more effective measures to support industrial production, particularly in creating market outlets through consumer demand stimulation, enhancing trade promotion to expand export orders, and clearing inventory.

In terms of markets, representatives from the Vietnamese Trade Office abroad provided updates on market trends and new policies affecting Vietnamese exports.

The Vietnamese Trade Office in Germany advised businesses on the EU's technical standards for products like furniture, textiles, and footwear, which include regulations on product safety, restrictions on the use of certain chemicals, labeling requirements, and especially corporate social responsibility requirements.

For instance, Germany's corporate due diligence in supply chains act indirectly affects Vietnamese exporters, requiring them to provide certifications related to product origins, labor conditions, wages, and waste treatment practices.

Additionally, businesses should pay attention to rules of origin to benefit from tariff preferences under the EVFTA. If there are doubts about the origin, German customs will require the importer to pay a guarantee tax, which will be refunded once the accuracy of the documents regarding the rules of origin is verified according to EVFTA regulations.

Nguyen Phu Hoa, the Commercial Counselor of Vietnam in Australia, stated that products in the manufacturing sector were always key export items from Vietnam to Australia. Specifically, four categories—machinery, equipment, other accessories; all types of phones and parts; computers, electronic products and components; and transport vehicles and parts—constitute 42% of Vietnam's total export turnover to Australia in the first six months of the year. This figure did not include other products in the same sector with smaller export values, such as cameras, camcorders, and their components.

In Australia, processed and manufactured products from Vietnam (phones, computers, washing machines, dryers, and refrigerators) are common and easily found in major electronics retail chains like JB-HiFi, Harvey Norman, and IKEA.

Hoa also highlighted the significant market demand for processed and manufactured industrial products. In 2023, Australia imported over US$130 billion in electronic products, components, machinery, and transport equipment, presenting a substantial opportunity for Vietnamese exporters.

"Australian consumers prioritize product quality, with a notable trend toward valuing “value for money” over mere price considerations. Therefore, Vietnamese exporters looking to succeed in the Australian market should prioritize product quality," the Vietnamese Trade Office in Australia emphasized.

Besides, to develop the market, businesses should actively invest resources in trade promotion activities, particularly by participating in prestigious Australian fairs related to processed and manufactured industrial products, such as furniture fairs and electronics and technology fairs. Participation in these fairs offers opportunities to engage with thousands of partners and importers, and to understand market trends and consumer preferences.