Some of the most important questions for small and medium-sized enterprises in structuring their supply chain are: How do we reduce the costs of inputs for our business at minimum risks and best possible level of quality? And where shall we find those export suppliers from Vietnam? What do we need to take into consideration to import goods, especially in consideration of the EU-Vietnam FTA?
The answers to these questions are as individual as is the setup of your business. However, as Asia and Vietnam in particular are the focus of this article, our answers will be evidently regionally biased. Nonetheless, we will also underline specific peculiarities of importing Vietnamese goods.
The European Union is the second largest export market for Vietnam, i.e. exports to the EU account for about 19 % of Vietnam’s total exports in 2015. In this respect, the 5 most common Vietnamese imports into EU were telephone sets & components (9.76 %), footwear (4.6 %), textiles & garments (3.42 %), electronics-computers accessories (2.78 %) and coffee (1.15 %). Hence, Vietnam’s export commodities are increasingly replaced by more advanced technical equipment. That shift in the Vietnamese manufacturing sector has been supported by a continuous inflow of foreign direct investments (FDI) at 1.545 bn USD with regard to the EU, i.e. the third largest FDI inflow only behind ASEAN and Korea in 2015. These levels of investments, for example by Samsung, to build production capacities and manufacturing efficiency have contributed to its changing export structure. Through the exchange of technical know-how and the implementation of advanced manufacturing controls and quality-assurance mechanisms, Vietnam has been able to maintain international standards at relatively moderate labour costs in order to make it a viable, stable and cost-reductive source of procurement for various sectors.
The risks are diminishing since the EU and Vietnam have decided to introduce a EU-Vietnam Free Trade Agreement (FTA) that will likely be in force by 2018. That means a whole new set of import opportunities will arise for EU companies or Vietnamese companies targeting their exports into the European Union, especially lower barriers of trade such as tariffs and improved legal compliance will make Vietnamese imports a reliable source of supply.
