Making good use of UKVFTA: "Stepping out of the comfort zone" and accessing the big market

Iron and steel is one of the commodities with high export turnover to the UK since the beginning of the year. Photo: N.Thanh

Import and export increased sharply

The UKVFTA took effect temporarily from January 1, 2021 and officially took effect from May 1, 2021. Mr. Luong Hoang Thai, Director of the Multilateral Trade Policy Department (Ministry of Industry and Trade), said that in the first 10 months of 2021, two-way trade between Vietnam and the UK reached US$5.5 billion, the value of both imports and exports saw double-digit increases.

Specifically, the value of Vietnam's goods exports to the UK reached $4.7 billion, up 15% over the same period last year. In the opposite direction, the value of goods imported from the UK into Vietnam reached US$706 million, up 25.3% over the same period last year. The main export items of Vietnam to the UK are: telephones, textiles, footwear, iron and steel, seafood, vegetables, etc. Meanwhile, Vietnam mainly imports: machinery, pharmaceuticals, textile raw materials and chemical products.

Ms. Emily Hamblin, Consul General and Commercial Director of the UK in Vietnam, assessed that, before the UKVFTA, Vietnam was one of the UK's important trading partners. In recent years, bilateral trade has tripled compared to before.

"Especially, even in 2021, despite facing many challenges, the two sides' trade still grows significantly. Hopefully, this growth momentum will be maintained," said Ms. Emily Hamblin.

Thanks to the UKVFTA, both sides saw impressive growth in their two-way trade even though exports faced formidable challenges caused by the COVID-19 pandemic.

However, Mr. Luong Hoang Thai also noted that the value of Vietnam's export goods to the UK only accounts for 0.88% of the total import value of this market. Similarly, the import value of Vietnam only accounts for about 0.17% of the total value of the UK’s exported goods to the world market. That means, the market space for cooperation between the two countries is still large.

“Notably, import-export products between the two countries are complementary instead of competitive, which is a favorable condition for businesses of the two countries to further exploit the advantages of the UKVFTA, thereby raising bilateral trade relations to a new higher level,” said the leader of the Multilateral Trade Policy Department.

Need to "step out of the comfort zone"

As a matter of fact, Vietnamese enterprises must make better use of the opportunities opened up by the UKVFTA. In response to this question, Mr. Ngo Chung Khanh, Deputy Director of the Multilateral Trade Policy Department, said to show that many Vietnamese enterprises are following traditional ways of thinking in doing business such as only focusing on safe and traditional markets instead of entering new ones even with both the FTAs already and the newly signed FTAs.

“Many businesses are not really ready to export to the UK because they are afraid of many barriers and high standards. In order to make effective use of the UKVFTA, businesses must first change their thinking and get out of the safe zone to do business in new markets," said Mr. Ngo Chung Khanh.

As said by Mr. Nguyen Canh Cuong, Commercial Counselor of Vietnam in the UK, in order to effectively access the UK market, businesses must first understand the customs and methods of approaching British partners. Before the pandemic, British partners often preferred to meet potential suppliers face-to-face. Currently, the UK has opened up almost all economic activities, and international fairs have gradually recovered. Vietnamese business people who have vaccinated against Covid-19 and have a negative certificate for Covid-19 can attend international fairs. If it is difficult to attend directly, enterprises can authorize and send their representatives in the UK to participate in international fairs and meet potential import partners.

“One of the focal points businesses can represent and authorize is the Vietnam Business Association in the UK. In addition, Vietnamese enterprises can also use the network of Vietnamese alumni in the UK, students studying economics and business in the UK to participate in these international fairs on behalf of them," said Mr. Nguyễn Cảnh Cường.

In addition to the above issues, meeting standards and quality of goods is also an important factor in order to promote the export of Vietnamese goods in the UK market, especially for agricultural products.

One of the prerequisites for Vietnamese agricultural products to penetrate the market is to meet Global GAP standards. Partners in the UK in particular and the EU market in general, have a research and statistics organization on Vietnam's agricultural production and wish to establish a long-term and sustainable cooperative relationship. They express high interests but strict requirements with the production process.

“It is a major concern that, when Vietnamese enterprises do not have enough qualified products, they are ready to collect goods from other manufacturers to meet their orders which has raised concerns about the product quality from the importers. As a result, the quality of the orders is more strictly controlled,” said Mr. Nguyen Canh Cuong.