Opening the border - an opportunity for exports

Vietnam's import and export turnover in 2022 reached a record of 732 billion USD, up 10% compared to 2021. This is an impressive bright spot of the economy last year amid the general difficulties of the global economy. More specifically, Vietnam has a trade surplus exceeding 11 billion USD. In particular, agricultural, forestry and fishery products are really a highlight when the trade surplus accounts for 2/3 of the total export value of the country.

For the first time after more than 20 years of participating in the export market, seafood has officially joined the export "club" of over 10 billion USD. Most of exports to markets such as the US, Europe, Japan, China... all grew by double digits or more.

In 2022, China is the country with the largest import-export turnover with Vietnam with 177.7 billion USD. Thus, China's import and export accounts for nearly 25% of Vietnam's total import and export turnover.

Notably, this is the main consumption market of many export industries of Vietnam. Therefore, the reopening of China's market from the beginning of 2023 brings great expectations for businesses and industries, especially vegetables and fruits, seafood, fiber, cement, rubber, steel, and textiles. ...

From January 8, international border gates bordering China will be fully open for operations, after nearly 3 years of hiatus due to the Covid-19 epidemic.

Seafood is considered a great benefit industry when China opens its market. This assessment is made from the fact that exports to China have still grown during the 2 years affected by the epidemic and the policy of tightening quarantine. Therefore, the Vietnam Association of Seafood Exporters and Producers (VASEP) assessed that China's consumption demand will continue to increase when travel in the country is also eased. The turnover is forecasted to increase further next year.

"We have ordered a number of experts who will enter China at that time to have an assessment and forecast for this market. We hope this year, this market reaches $ 1.6 billion, then next year next year. could be higher," said Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers.

Not only is China the largest consumption market, China is also an important link in the world's supply chain. Therefore, market opening information is also expected to help solve bottlenecks in the supply of raw materials in the production chain, especially components, machinery and equipment and textiles.

"Covid-19 has put a strain on raw material prices because of bottlenecks in the supply chain. Anyway, China is still the source of materials for many factories around the world, meeting the quantity criteria, quality and price. When the price of raw materials is better, the price is also more competitive," said Mr. Yutaka Watanabe, General Director of Towa Industry Vietnam Company.

Meanwhile, Agribank Securities Joint Stock Company (Agriseco) assessed that Vietnamese enterprises forecast that Vietnam's seafood exports would grow strongly after China opened its border from January 8, 2023. In which, products are forecast to increase sharply, including: Lobster, white-leg shrimp, tiger shrimp, crab... In 2022, many high-value aquatic products will be blocked by sea, most of which will be transported by road. Therefore, when China reopens land border gates, Vietnam's seafood exports will be very convenient, shortening time and costs.

Accordingly, groups of businesses that can benefit include: Mechanical engineering, textiles, footwear, electronics, and automobiles. On the other hand, the prices of some input materials may increase again when demand recovers such as iron and steel, cement, and base metals, which will also improve output for businesses.

Challenges and opportunities

The opening of the Chinese economy, besides making it easier for businesses to buy goods, on the other hand, it also puts businesses in Vietnam's supply chain under a stronger competitive challenge in the coming time.

Data from the General Department of Customs shows that, in 2022, China is Vietnam's largest import market. In which, computers, components, machinery and spare parts are the groups that Vietnam imports the most from this market. Therefore, the challenge will also be not small for businesses in Vietnam's supply chain to realize the target of 65-70% localization in the coming years. There are also other challenges when Vietnam is importing too much input.

The reopening of China will facilitate many import and export industries, but also put businesses in Vietnam's supply chain more competitive.

Changes and shifts in the supply chain after the Covid-19 pandemic have led Towa Industry Vietnam to develop a plan to increase domestic purchases. However, this is hindered when the ability of domestic enterprises to meet both quality and quantity is limited.

"When working with Vietnamese suppliers, for example, when asked, they can supply 100 units, but we want about 100 times more, they won't have enough equipment," said Mr. Yutaka Watanabe. , General Director of Towa Industry Vietnam Company, said.

Commenting on export prospects, Deputy Director of the Import-Export Department (Ministry of Industry and Trade) Tran Thanh Hai forecast that, right in December 2022 and January 2023, import and export activities between Vietnam and China will drastic improvement. For example, Vietnam's exports of vegetables, fruits, seafood, rice, etc. to China increased thanks to increased demand during the Lunar New Year holiday and the increasing number of vehicles carrying out customs clearance procedures for export to China.

In fact, from the beginning of December 2022, China has begun to gradually relax measures to prevent and control Covid-19 and is expected to fully open the economy in the second quarter of 2023. In general, this will have a positive impact on the activities of many Vietnamese enterprises," emphasized Mr. Tran Thanh Hai.

Recently, the Department of Domestic Market (Ministry of Industry and Trade) has announced to update the latest information from the General Department of Customs of China to Vietnamese enterprises exporting to this country. Specifically, the General Administration of Customs of China announced that, starting from January 8, 2023, China will remove all nucleic acid testing measures for Covid-19 prevention and control at border gates for imported goods. imports into the country, including frozen goods.