Vietnamese businesses must know how to “play” with China

VietNamNet Bridge – Vietnam and China are both WTO members, they are neighbors, they have developing economies and they have the need of trade exchange. There is no reason for Vietnamese businesses to keep away from this market while Chinese businesses enter narrow alleys in Vietnam. That is the wise direction that is supported by many people.

Identifying China as trade partner

Finding a sustainable path for Vietnam-China trade

However, first of all, Vietnamese businesses should firstly look on their own to adjust themselves and to have appropriate policies.

vietnam-china, trade relations, border trade, businesses 

Dr. Vu Kim Hanh.

The weaknesses and mistakes of Vietnamese businesses

Dr. Nguyen Thi Dung, Vice Chair of the Foreign Economics Faculty of the University of Foreign Trade, an expert of the Japan International Cooperation Agency (JAICA): We were supposed to have trade agreements with them for a long time. So far, the legal basis for trade relations between the two countries have not fully developed due to production goes faster than the demand of switching mechanisms and policies, resulted in problems in policies.

Meanwhile, China has taken advantage of our weakness and their forte. The border trade policy has been entirely detrimental to Vietnamese goods to China, but incredibly convenient for Chinese enterprises to sell unqualified and smuggled goods into Vietnam.

Ms. Vu Kim Hanh, Chair of the Association of High Quality Businesses, Director of the Business Research and Enterprise Support Center: We do business with China in the form of border trade exchange because the scale of our businesses is too small. China has preferred this form of trade because they use this policy to rehearse, to improve their economic strength in their border provinces.

Border trade is holding the knife blade. The good is that any goods can be sold, at any time. Many contracts were committed orally. When goods were transported to the border, they did not open the border gate. A lot of Vietnamese traders got heavy losses. This way of trade is very easy but it is very risky.

In this game, we accept to hold the knife blade and give them the handle. The knife cut our fingers many times but we still accept it.

I really do not understand our market control agency. There are a lot of problems about the management of the country, public order management, market management and economic policy. Chinese traders have cause many serious cases but why do not we manage them?

Consultant Moc Que, Deputy Director of the Micarcen Research and Consultancy Center: Doing business with China is not only doing business but cooperating for mutually benefit; thereby creating dialogue, not confrontation. That’s why they call the knowledge economy. Many countries around the world are unsatisfied with China but still have to organize the economic front very thoughtful, seriously. Because the buyers, i.e. "God", or Chinese people and entrepreneurs are the friends of the people of Vietnam.

We have not done research to see how the Chinese businessmen work in Vietnam. They usually make three business tricks as follows: Grasping supermarkets, wholesale markets, i.e. the output of Vietnam; carrying out cross-border trade, not through contracts to find ways to buy cheap; and stimulating greed. They advised Vietnamese firms to not open companies in China so that we are not active in information. As a result, our businesses know nothing about the Chinese market.

Ignoring the golden opportunity...

Dr. Nguyen Thi Dung: Politically, the European countries and the United States have always criticized China but in fact many European and American leaders often "visit" the China with big business delegations. It is necessary wisdom.

Vietnam also has many advantages in doing business with China. The two countries share a border, that helps shorten the distance and transportation costs. Vietnam and China have similar cultures so they are very easy to understand each other, easy for negotiation and transactions. The policies of Vietnam and China have disagreement but they are not force majeure as some other countries. It is also convenient for trade between the two countries.

China is an extremely attractive market, which accepts any kind of goods, with lower taxes. The policy of China is open for foreign goods. We and they are all WTO members, who share the same "playground", why do not we "play?"

It seems that many businesses of Vietnam are not concerned and do not exploit these advantages. The above advantages are the basis for us to cooperate with China to make products with high competitiveness that China or Vietnam alone cannot make. For example, the U.S. has Coca Cola as a world-wide product. If Vietnam and China together research and take advantage of the potential availability of raw materials, science and technology to produce a unique product, even more amazing than Coca-Cola is so good?

If we link with China wisely we can master our market and get rid of the tragedy of losing in our home.

Dr. Moc Que: We have to get to know all reasons to overcome our weaknesses and develop our existing advantages and at the same time learn from the Chinese to quickly build our strategy to enter China. It is illogical and unwise to "forget" our strategic location and turn this advantage into the golden opportunity.

Chinese consumers are similar to Vietnamese consumers. This is a great advantage for market research and marketing.

Many ASEAN countries that are away from China but they are successful in selling goods to China while Vietnam still do in the guerrilla style, which is outdated and inefficient.

Border trade between Vietnam and China is the trade between Vietnamese residents with Chinese people living in communes along the border, with every transaction valuing up to VND2 million ($100)/person/day in accordance with the laws of Vietnam.

Border trade is often characterized as (but not necessarily) the payment in cash and no purchase agreement. It is noted that this form of trade is not smuggling because it still requires permission and taxed. Goods transported across the border are still subject to inspection by customs, quarantine, border, immigration authorities, etc..

Border trade is said to have low stability. Because the value of every transaction is small, in many cases commodities are fruits. This makes the trade turnover can vary seasonally, depending on the weather, the change of quarantine policy. This form of trade is thought to be vulnerable to tax avoidance. Because the tax rate is usually lower than the official trade, the procedures is also more simply so businesses can hire people in the border area to make purchases to not have to pay more tax.

Duy Chien

To be continued…

vietnam-china, trade relations, border trade, businesses