Vietnamese brands need to get creative for higher consumption in ROK

The Republic of Korea is one of the largest trade partners of Vietnam, but Vietnamese brand names lack a significant presence in the Korean market.

Two-way trade between the two countries has seen a 87 fold increase over more than past two decades from US$0.5 billion in 1992 to US$43.4 billion in 2016. That figure has already been surpassed in the first three quarters of this year, rising to US$45.09 billion. The ROK is Vietnam’s third largest trade partner, followed by the US and China.

Le An Hai, deputy head of the Asia-Africa Market Department under the Ministry of Industry and Trade, says mutually supplementary import-export products, basically without direct competition are a key point of Vietnam –RoK trade ties over the past 25 years.

So far, just a few Vietnamese brands have been known in the Korean market, such as Trung Nguyen Coffee hitting major distribution networks, and noodles (Pho xua va nay), Trung Thanh chili sauce and Nam Ngu fish sauce being sold through unofficial and smaller distribution networks.

The fact shows that made in Vietnam products labeled as foreign brands are more favoured by Korean customers, says Mr Hai, noting that Vietnam sometime was among top three coffee suppliers for the ROK, constituting up to 34% of its market shares. But Korean customers know just G7 coffee of Vietnam. Similarly, despite Vietnamese Pho being widely known by many Korean people, most Pho restaurants in the market are run by local residents.

Explaining the aforesaid reasons, Hai says that numerous domestic exporters are facing huge challenges such as stringent food hygiene and safety, product quality and brand name registration when gaining entry into the potential market.

On the other hand, Korean consumers have keen interest in the designs of the products. Many Vietnamese agricultural products, which are consistently evaluated as being of good quality by ASEAN customers but are no of interest to Korean people due to lackluster packaging designs.

The biggest challenge posed to Vietnamese businesses and products in the ROK is a difference in development level of consumer goods production that is not easy to bridge, says Mr Hai.

Do Kim Lang, deputy director of the Trade Promotion Agency, suggests says that before shipping goods to the ROK, domestic businesses should pay attention to several important issues such as the quality of products, labels, designs and packaging. A successful rebranding of these goods will help to combat the preconception held by many Koreans that Vietnamese products are substandard and not in line with regulations for food hygiene and safety. Meanwhile, Korean products remain the nation’s favourites.

All of these efforts are further complicated by the large distribution in place in Korea. With innumerable kinds of supermarkets, convenient stores, and household shops, it is essential for Vietnamese businesses to connect with ROK distributors to bring their products to their chains.

At present, the Ministry of Industry and Trade is providing the best possible support for businesses attempting to penetrate the ROK through supermarket systems like Motte Mart, Seven Eleven and E-mart. This new way sending Vietnamese products to the ROK chains for consumption aims to fully utilize the Vietnam-ROK Free trade Agreement to bolster exports of Vietnamese products to the vast market.

In addition to following regulations on the quality of products, Mr Hai underscores the necessity of producing primary quality products with eye-catching packaging .This can be achieved by paying attention to the consumption culture of Korean people. To be successful, businesses must sell products that fill a gap in the market rather than supplying goods that are already widely available.

Yoon Sang Ho, director of the Korea Association of Small-and Medium Sized Enterprises says Korean customers often stick to popular brands and choose products familiar to them. A recognizable and reputable Vietnamese brand will help other businesses to secure their market share in both domestic and foreign markets.

He advised Vietnamese businesses to full grasp Korean tastes and tailor their products to meet demand. By doing this, Vietnamese brands stand a higher chance of being chosen by local customers.