Vietnam-Japan trade needs long term strategy: Govt

ME - After two enforcement years of Vietnam-Japan Economic Partnership Agreement (VJEPA), the bilateral trade has increased continuously despite the global economy was facing difficulties, showing that Japan's demand remains high. Therefore, Vietnamese enterprises need to have long-term accession strategy to the foreign partner, the government said in its website.

The statement was made in the seminar held recently in HCM City by Bui Huy Son, Head of Asia-Pacific Market Department, Ministry of Industry and Trade.

Reportedly, Vietnam earned $8.54 billion from exports to Japan and spent $8.4 billion importing goods from with the market during the first 10 months of 2011. Thus, despite low, Vietnam did a small trade surplus with Japan partner.

The longer list of Vietnamese categories subject to Japan's tariff incentives is creating many opportunities for Vietnamese firms. A lot of Vietnam's agro-fisheries commodities benefit in Japan thanks to the tariff of 0 percent after VJEPA took effect. Up to 23/30 Vietnam's the largest valuable agricultural products enjoy the zero percent tariff. Especially shrimp products are levied with the tariff of 0 percent right after VJEPA was effective; squid and octopus will be subject to the special tariff in 5 years later.

Vietnam's goods exported to Japan also have the low tariffs of between 0 percent and 5 percent. In which, garment, footwear, wooden products and machinery have incentives. Notably, machinery, electronic cable, computers and accessories carry the tariff of 0 percent.

According to Truong Dinh Hoe, general Secretary of Vietnam Association for Seafood Exporters and Producers, Vietnamese firms are taking good use of incentives in the agriculture to export to Japan. A lot of Japanese firms who built plants in China are eyeing to shift to Vietnam if the sector infrastructure is able to meet the requirements. Currently, Japan is the big seafood consumption market accounting for 40 percent of the world's annum demand.

Huynh Khanh Hiep, vice director of HCM City Department of Industry and Trade reported that the city's export import turnover with Japan last year reached $3.87 billion, a year-on-year growth of 2009. In which, its export to US earned $1.81 billion, up 21.6 percent.

The city's many major export items to Japan had an on-year high growth such as garment $44.9 million, +6.2 percent; electricity and electrical cable $213.9 million, +43.3 percent; seafood $134.3 million, +20.5 percent; footwear $60 million, +69.4 percent, vegetable and fruits $22.8 million, +132.6 percent.

But the growth rates have not been matched with the expectation of two governments. Domestic firms are not taking maximum use of VJEPA yet.

From May 2006, Japan promulgated the amended Law on Food Hygiene Safety to tighten up regulations and supplement some chemicals forbidden in good and reduce the allowable chemical content in food, Hiep added.

Japan Industrial Standards or JIS includes many differences from international criteria; meanwhile most Vietnamese companies (except joint ventures or Japanese wholly-invested firms) so far have focused on international standards only, so they find it difficult as meeting JIS.

Factually, the production for export to Japan is costly because local firms have to pay more attention to design, technique, preservation, delivery. Japanese consumers are very tough in examining quality, solidity, utilities and post-sale services.

Distribution system in Japan is quite complex, goods are undergoing through intermediary phases before going to consumers with high prices compared with import prices, so enterprises have to suffer price pressure to requests of importers whereas most input costs are increased.

Vietnamese enterprises, especially SMEs, still lack information on market and business experience with Japanese partners for which accessing and surveying Japan market is a big matter.

At the recent seminar, Tadashi Kikuchi-Economic Attache of Japanese general Counsellor in HCM City said that three successful factors in Japan market is the collection of information, activeness in joining the market-related seminars and conferences, and awareness of business culture of Japanese firms.

In the coming time, a lot of Japanese firms will pay visits and surveys to Vietnam, which will be great opportunities for Vietnamese businesses to access them.