Find ways to export to Eastern Europe

The potential market

According to experts, associations and enterprises at the Vietnam-Eastern Europe Trade Forum organized by the Ministry of Industry and Trade in Ho Chi Minh City, the Eastern European market has great potential because it used to be a traditional market of Vietnam. This area is also home many Vietnamese people so there are reliable channels to bring goods into this market. In 2018, the statistics showed good growth. Particularly, exports to Hungary and Poland grew strongly at 93.8% and 71.9%, respectively.

Some Vietnamese products saw favorable exports to this market, such as coffee, rattan and bamboo products and sedge mats. Of those, exported coffee to Russia accounted for 5.25% of Vietnam's total coffee export turnover. This was also the highest proportion this item achieved in the Eastern European market.

Exports of electronic products such as computers and components experienced good growth (for example, exports to Poland increased by over 264%, exports to Hungary increased by 117.7% in 2018 compared to 2017). Iron and steel exports to Russia and Ukraine increased strongly (by 75% and 84%, respectively). Exports of timber and wood products to the Czech Republic also increased sharply (increasing by 117%). Exports of pepper and rice experienced good growth in volume to Poland.

Statistics from the General Department of Vietnam Customs also showed that in 2018, the total trade turnover between Vietnam and Eastern European countries reached US$10.1 billion. Although it accounted for only 2.65% of the total export turnover of Vietnam, the growth rate increased by 30.53% compared to 2017, in that exports reached US$6.5 billion (an increase of 28.67%) and imports reached US$3.6 billion (an increase of nearly 33.97%).

Evaluating the capacity of the Eastern European market, Ms. Nguyen Khanh Ngoc, Deputy Director of the European-American Market Department said that the markets of Eastern European countries still have great potential, with a relatively moderate development of GDP. Consumer goods did not face strict standards as in Western European countries.

For example, in the Russian market, in the first 3 months of 2019, the trade turnover between Vietnam and the Russian Federation reached US $1.13 billion, increasing by 10.65% compared to the same period in 2018. In particular, exports from Vietnam to Russia reached US $680.9 million, an increase of 25.3% over the same period in 2018.

Similarly, the key export products of Vietnam to Slovakia were still traditional export items such as footwear, garments, seafood, industrial machines, machine spare parts and electrical equipment. Although the export turnover to Slovakia was not high compared to other big markets in the world, it always has an important position and been an appropriate springboard to the market of Visegrad and Eastern Europe.

As a locality with many export products to Eastern Europe, Mr. Pham Thien Nghia, Vice Chairman of People's Committee of Dong Thap said that many enterprises in Dong Thap have established trade relations with this potential market. In 2018, the total export turnover of the province to Eastern Europe reached more than US$27 million, double compared to 2017.

Many challenges

Although there is potential, according to the evaluation of experts and businesses, Eastern Europe’s market only accounted for a very small proportion in the export of Vietnam's goods. The reason was that the market capacity was still smaller than other market areas; the orders were still small, there were not many large orders; Vietnamese enterprises still have not understood clearly some regulations about importing into Eastern Europe countries, causing difficulties in the trading process. Moreover, the logistics system serving Eastern Europe was not good; the distribution system for Vietnamese goods into Eastern Europe has not been effective, it needs to be renovated. Therefore, many export products of Vietnam have not increased export revenue to this market. Some items even had lower turnover such as exporting rice to Russia and Ukraine fell sharply, seafood export to Czech and Russia decreased, rubber export to the Czech Republic was reduced in both quantity and value.

Therefore, in order to exploit this market well, representatives of associations and businesses proposed that there should be connections between the two sides so that Vietnamese enterprises would know what products are needed and how to make them and plan properly for production. In addition, the Ministry of Industry and Trade needed to support the construction of product introduction centers, according to each category of industry sectors.

Specifically, in the opinion of the Vietnam Leather, Footwear and Handbags Association, Vietnam has an FTA with the Eurasian Economic Union (FTA EAEU) and many Eastern European countries have joined the EU, so trade policies and legal issues, technical barriers, import and export procedures would follow FTA regulations of EAEU and EVFTA. However, particularly for Eastern European countries, it should be selected appropriate export products, avoid products that were manufactured and protected in Eastern European countries. Encouraging using network of Vietnamese businesses operating in Eastern European countries. Supporting trade promotion and other market development activities at a higher level than developed Western European countries.