Đề tài Recommendations to further promote vietnam’s export to the EU market

business. For example, owners and managers of small companies, which typically have little or no knowledge of how to conduct business in other cultures, use exporting to gain valuable international experience. 1.3 METHODS OF PROMOTING EXPORT Countries often in trade by strongly supporting their domestics companies exporting activities though they all know that it brings both pros and cons. There are three most common instruments that governments use to promote export: Subsidies Financial assistance to domestics produces in the form of cash payments, low interest loan, tax breaks, product price supports, or some other forms is called subsidy. Regardless of the form a subsidy takes, it is intended to assist domestic companies in fending off international competitors. This can mean become more competitive in the home market or increasingly competitive in international markets through export. Because of many forms a subsidy can take, it is possible to calculate the amount of subsidies any country offers its producers. One of the most popular forms in the world today is a media and entertainment, especially in developed countries. In Vietnam, this type of subsidy only appears in tourism sector. Nevertheless, when offering subsidies, governments should pay more attention to arguments over unfair subsidies settled by WTO. Critics charge that subsidies cover cost that truly competitive industries should be able to absorb on their own. In this sense, subsidies simply encourage inefficiency and complacency. Because government generally pay for subsidies founds obtained from income and sales taxes, it is widely believed that subsidies benefits companies and industries that received them but harm consumers. Export financing Government often promotes exports by helping companies finance their export activities. They can offer loans that company could otherwise not obtain or charge them an interest rate that is lower than the market rate. Or the government can guarantee that it will replay the loan if a company should default on the repayment-called loan guarantee. However, receiving financing from government agencies is often crucial to the success of small businesses just beginning export. Export financing programs are not immune to controversy. Few criticize government support of small business exporting activities. But support for large Multinational Corporation is often controversial. Special government agencies. The government of the most nations has special agencies responsible for promoting exports. Such agencies can be particularly helpful in obtaining contracts or small and midsize businesses that have limited financial resources. Government trade-promotion agencies also often organize trips for trade officials and business people to visit other countries to meet potential business partners and generate contracts for new business. They also typically trade officers in other countries. These officers are to promote the home country’s export and introduce business to potential partners in the host nation. Government trade promotion agencies typically do a great deal of advertising in the other countries promote the nation’s export. The above trade theories have given an overview of what exporting is, its rationales, and what gains that a company can benefit from talking export activities. From these theories, Vietnamese companies may draw out an exporting pattern in which they can take use of the countries international advantages for achieve high manufacturing and trading productivity. CHAPTER 2 REAL SITUATION OF VIETNAM’S EXPORTS TO THE EU 2.1 ESTABLISHMENT AND DEVELOPMENT OF THE EUROPEAN UNION The European Union (EU) now consists of 15 member countries, including France, Germany, Italy, Belgium, Holland, Luxembourg England, Ireland, Denmark, Greece, Spain, Portugal, Austria, Swede, and Finland. The EU total area is of 3.3 million square kilometers, with the population of 400 million, and Gross National Product of USD 8.000 billion. The head office is located in Bruxelles (the capital of Belgium). EU is managed by a range of general Institutions (including European Parliament, Assembly, and Committee…) The foundation process of EU was marked on 04/18/1951 when Belgium, France, Italy, Holland, Luxemburg and Federal Republic of Germany (Western Germany) jointly signed Paris Treaty, establishing a Community of European Steel and Coal (CESC) in order to form a common market for a coal, steel and iron ore products. Next, all member countries of CESC signed Roma Agreement on 07/25/1957 setting up an European Economic Commodity (EEC), which aimed to establish a common market of agricultural and industrial goods. And then they came to form a Community of European Energy Atomic (CEEA) as to control the use of energy and study of atomic in cooperation. From the date of January 07, 1976 on hall head offices of the organizations including CESC, EEC, and CEEA were brought together and called with a common name-European Community (EC). In December 1991 in Maastricht (Holland), the heads of states of the EC countries unanimously arrives at a decision of renaming European Community (EC) to European Union (EU) on 1st December 1992 when European Union Treaty (normally called Maastricht Treaty) was signed. European Union was officially founded on 10th September, 1993. Regarding the economic alliance, EU countries began out abolishing the control of capital exchange among its member countries, founded European Monetary Instruction in 1945, European Central Bank in 1998. Since 1st January 1999, the Euro has been officially considered as the common money for 11 countries out of 15 European members. The European common money (Euro) was formally circulated at the beginning of 2002, and replaced the stated currency of EU member countries with a view to delete the monopoly position of the US dollar in the world market. When the opening European Treaty became effective (on 1st May 2004), EU became the biggest economic area in the world with 25 member countries (including 10 new candidates: Spain, the Czech Republic, Estonia, Hungary, Latvia, Manta, Poland, Slovenia); and the total population of 500 million. 2.2 VIETNAM EXPORT TURNOVER The EU is now one of the important trading partners of Vietnam. Since 1995 when Vietnam signed the trade cooperation agreement with EU, which opened a new period of bilateral cooperation relationship, to 1995 Vietnam’s trade surplus has been increasingly rising (table 2.1) Table 2.1: VIET NAM – EU IMPORT AND EXPORT TURNOVER (1996-2006) (Unit: Million USD) Year Vietnam to EU export turnover Import turnover of Vietnam from EU Import and export turnover Cost of Trade Surplus Cost Increase rate (%) Cost Increase rate (%) Cost Increase rate (%) 1995 695 664 1.359 31 1996 840 20.86 1.142 72 1.892 46 -302 1997 1.583  88.45 1.313 15 2.896 46 270  1998 2.044 29.12 1.255 -4 3.299 14 789  1999  2.474  21.04  1.062  -15 3.536   7 1.412   2000  2.849  15.16  1.261  19  4.110  16  1.588  2001  3.008  5.58  1.269  1  4.277  4  1.739  2002  3.168  5.32  1.425  12  4.593  7  1.743  2003  3.860  21.84  1.498  5  5.358  17  2.362 2004  4.797  24.27  1.615  8  6.412  20  3.182 2005 5.319 10.88 1.825 13 7.144 11 3.494 It is clear that the trading scale between the two partners is ceaselessly speeding up. The annual average commercial growth speed is 29.52% per year, export and import growth is 41.32% and 29.52% respectively. The real statistics shows that Vietnam exported commodities have been accepted by EU market and its prospect will be much brighter. Vietnam exported to the EU grows both in quantity and quality. The structure of exports has a significant change and the export turnover quickly increases. According to the statistics supplied by the Vietnam General Statistics Department, the export turnover of the country to the EU grows at a relatively high average speed of around 36.32% right after signing a draft Agreement on cooperation relationship between the two parties (during 1995-2005). This result demonstrates the fact that the EU great partner who strongly supports Vietnam efforts in ameliorating the prolonged trade balance deficit. Vietnam’s exports to the EU in 2001 accounted for 19.63% of the country’s total export revenue. In addition, Vietnam-EU exports in the EU total import volume are strongly increasing; it increased to 41.86% in 1996; 13.02% in 1997; -4.62% in 1998; -8.00% in 1999; 7.85% in 2000; 7.89% in 2001; 3.93% in 2002; 10.83% in 2003; 6.82% in 2004 and 6.03% in 2005. Table 2.2: VIETNAM – EU EXPORT TURNOVER (1995-2005) (Unit: Million USD) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Vietnam's total export turnover(1) 5.448 7.255 9.185 9.361 11.54 14.48 15.029 16.706 20.149 26.49 32.441 Vietnam's export to the EU turnover(2) 664 848 1.607 2.079 2.515 2.845 3.002 3.162 3.852 4.968 5.519 (2)' share of (1):% 24.9 21.01 1.88 18.88 20.3 3.63 10.03 17.08 23.92 18.35 The EU total import turnover(3) 664 1.142 1.313 1.255 1.062 1.261 1.269 1.425 1.498 1.615 1.825 (2)' share of (3):% 41.86 13.02 -4.62 -8 7.85 7.89 3.3 10.83 6.82 6.03 Yearly increase of (2):% 21.7 47.23 22.7 17.34 11.6 5.23 5.06 17.91 22.46 9.98 Table 2.2 shows that Vietnam-EU export value rises but with unstably speed: in 1996 in creasesed by 21.70% compared with 1995; in 1997 increased by 47.23% over 1996; in 1998 increased by 22.70% over 1997; in 1999 increased by 17.34% over 1998; in 2000 increased by 11.60% over 1999; in 2001 increased by 5.23% over 2000; 2002 increased by 5.06% over 2001; 2003 increased by 17.91% over 2002; 2004 increased by 22.46% over 2003; however, only by 8.89% in 2005 over 2004. The cause of this is a hard price reduction of some goods in the world (especially coffee), and all Vietnam key export commodities are facing some difficulties and barriers caused by the import regulations of the EU. Although the EU market has a great annual demand for Vietnam main exported goods and Vietnam export turnover to the market rapidly grows up, the volume of Vietnam-EU exports is negligible (0.22%) compared with the total import quantity of EU. The prior discussible cause of this matter is Vietnam small economic potential, weak industry development, and poor processing technique; another reason is that EU partner’s requirements; for example, the exports still contains impurity, the aquatic processing condition do not meet EU hygienic standards, textile garment goods is sometimes covered with stains. Besides, in some case, Vietnam export products fail to guarantee contractual regulations in terms of specifications, quantity and delivery deadline. Accordingly, the export-import circulation from Vietnam to the EU is relatively decreased. Since 1995, there are fifteen member countries in European Union, and all of them have trade relationship with Vietnam, however, at different levels. Vietnam has also fifteen export markets in European Union and the share Vietnam exports to each of these markets is also various. Table 2.3: VIETNAM – EU EXPORT TURNOVER (1995-2005) (Country-division, Unit: Million USD) Country 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Demark 18.5 32.2 43.3 43.7 58.4 49.7 63.3 71.1 80.2 88.2 Iceland 12.1 20.8 19.2 17.1 28.3 25.1 England 125.1 256.2 335.8 421.2 479.4 511.6 571.6 754.8 1010.3 1015.8 Finland 22.4  19.9  24.3 28.8 41.9 57.1 Sweden  4.7 31.8  47.1  58.5 54.2 55.1 53.2 62.4 90  108.5  133.6 Portugal  8.9 6.2  5.6 10.4 16.2   22.9 Greece  16.3 21.1 34.3 42  45.4  55.1 Italy  57.1 49.8 118.2 144.5 159.4 218.0 237.9 264.6 330.9  369.9  469.7 Spain  8.8 27.6 66.4 85.6 108.0 137.3 158.5 179 234.2  312  410.4 Austria  9.4 5.6 11.4 8.4 34.9 23.7 28.9 29.7 38.1  59.5  88.9 Germany  218.0 228.0 411.4 552.5 654.3 730.3 721.8 729 854.7  1064.7  1086.7 Belgium  34.7 61.3 124.9 212.3 306.7 311.9 341.2 337.7 391.4  515.7  544.2 Holland  79.7 147.4 266.8 304.1 342.9 391.0 364.5 404.3 493  581.9  659.7 France  169.1 145.0 238.1 297.3 354.9 380.1 467.5 437.9 496.1  555.1  652.7 Luxembourg 0.3 0.6 1.5 2.1 3.3 4.2 5.8 6.6 7.5  8.3  9.5 Based on table 2.3, it is seen that our export turnover to the EU gradually goes up. The greatest export market of Vietnam to EU block is Germany; it occupied around 24.04% of total Vietnam-Euro export turnover in 2005 followed by England with 17.04%; France (15.57%); Holland (12.13%); Belgium (11.36%); Italy (7.9%); Spain (5.3%);…Denmark (1.6%); Finland (0.9%); Egypt (0.47%); Portugal (0.4%); Island (0.3%) and Luxembourg (0.2%). 2.3 REAL SITUATION OF SOME MAIN EXPORT ITERMS TO THE EU 2.3.1 Textile fabric goods Based on export quota, the EU is the biggest textile fabric importer of Vietnam. Vietnam export for this kind of goods to the EU particularly increases rapidly since textile and garment trading treaty signed in 1993. For the period of 1993-1995, Vietnam export to the EU went up to 80%: from 250 to 450 million US dollars; to 765.5 million US dollars in 1995, then 993.1 million US dollars in 1996; it obtained 1.502.6 million US dollars in 1997; then 1.450.0 million US dollars in 1998; 1.746.2 million US dollars in 1999; 1.981.9 million US dollars in 2000; 1.975.4 million US dollars in 2001; 2.732.0 million US dollars in 2002; 3.609.1 million US dollars in 2003; 4.429.8 million US dollars in 2004 and 4.838.4 million US dollars in 2005 accounting for 32.7% of Vietnam total export turnover. Jacket commodity covers 51.7% in the structure of Vietnam textile and garment products exported to the EU; in 2001 18 million jackets were exported volume in 1993; including shirt (11%), trousers (5%), sweaters and knitted shirt (3.9%), knitwear (22.7%)… The Proportion of Vietnam export to EU member countries is 46.9% for Germany; 10.8% for France; 9.4% for England; 6.1% for Belgium; 5.1% for Spain; 4.1% for Italy; 2.0% for Denmark; 1.9% for Sweden; 1.5% for Australia; 0.65% for Finland; Island(0.4%); Luxembourg (0.3%); Greece (0.2%); Portugal (0.1%). Like footwear products, Vietnam textile and garment products exported to the EU are mainly processing (nearly by 80%), so the practical benefit is very diminutive. In order to push forward export to the EU in the next period, in addition to Vietnam government’s effort to facilitate its textile and garment development, Vietnam garment and textile enterprises are to improve quality and diversify their products to meet the requirements of the world market, so as to effectively compound with products from China and other Asian countries when the EU omits its imposition of import quota limitation. 2.3.2 Footwear Vietnam footwear is one of exported products with large export turnover. The major footwear importing market remains EU, occupying 74% of total export revenues of Vietnam nationwide for this commodity. Vietnam, at present, stands at the second position behind China among the largest exporters to EU market. Vietnam – EU export turnover for its footwear products sharply augments since signing bilateral cooperation between the two countries in 1995. According to statistics provided by the Ministry of Trading of Vietnam. Vietnam – EU export turnover for this product was 296.4 million US dollars in 1995; 530.0 million US dollars in 1996; 978.4 million US dollars in 1997; 1.031.0 million US dollars in 1998; 1.387.1 million US dollars in 1999; 1.471.7 million US dollars in 2000; 1.587.4 million US dollars in 2001; 1.875.2 million US dollars in 2002; 2.260.5 million US dollars in 2003; 1 million US dollars in 2004 and 3.039.6 million US dollars in 2005. Vietnam exported 200 million pair of footwear of all kinds to EU market, equal to 1.207 million US dollars; then up to 1.560.5 million US dollars by 2002 left gar behind textile garment products, which had been placed in champion exporting position during the period of 1992-1995. Vietnam footwear exported to EU market contains mainly gym shoes, accounting for over 40% of the total footwear export turnover of Vietnam to this market. Meanwhile, canvas shoes covers nearly 20%, a stiletto contributes approximately 15%, and sandal, leather shoes share 17% and over 1.5% respectively. The largest imported Vietnam footwear market in European Union is Germany (with 25.3%), right followed by England (with 12.0%), France (14.3%), Italy (8.1%), Holland (7.9%), Spain (4.6%), Denmark (1.3%), Egypt and Australia, Holland stand at the same position (with 0.8%), Portugal and Luxembourg in turn with 0.2% and 0.1% are ranked at the end line. Although Vietnam exported footwear turnover to the EU rapidly increases, our export products are mainly under the form of processing (above 70 % of the total export), and so the real benefit is rather small (around 25-30% of the whole Vietnam export sale). 2.3.3 Art and handicraft The consumption quantity for this product of EU is very large. Vietnam art and handicraft products exported to the EU are mainly fine art wooden furniture, potteries, porcelain products and commodities made from rattan and bamboo. Recently, the export turnovers of this group to the EU increase rather quickly, to 21.28% per year; however, this equals to 2.8% of Vietnam total export turnover density to the EU despite of our great exportability. According to the statistics supplied by Vietnam Import-Export Department under the Ministry of Trade in 2006, we exported the quantity of the art and handicraft goods equaling to USD 19.40 million to the Federal Republic of Germany; USD 7.9 million to Belgium; USD 15.52 million to Holland; USD 17.64 million to England. The art and handicraft is a kind of decorative product with requirements for utility; but it is also required for its uniqueness in the design and intuition pattern to meet the EU market’s demands. Meanwhile, most of these products are made in establishments in the countryside, so they are very simple. Beside the monotonousness, these products have other important weak point that is its poor quality and lack of uniform. Because of being poorly treated, a vegetation original material is usually deformed, even moldy or wooden-eaten on the way of shipment when it faces with the climate change and cold weather. Dispersal production is a cause making contribution to the lack of uniform of product completion process resulting product quantity in a jumble. If we have suitable resolves to the production development, diversification, quantity enhances, and design and pattern improvement, the EU will be a real potential market for the kind of export. The EU consumers now prefer using Vietnam art and handicraft products. In the EU block, Germany with 26.4% is the biggest exporting market of Vietnam for the product, accompanied by France (14.7%); Holland (11.6%); England (11.0%); Belgium (10.7%); Italia (7.4%); Spain (6.3%); Sweden (5.0%); Denmark (4.1%); Holland (0.8%); Greece (0.5%); and finally Portugal (0.4%). 2.2.4 Seafood and aquatic products Aquatic product is one of the commodities bringing about highly economical effects to Vietnam during the last period. The EU is the second biggest importing market of Vietnam aquatic products. The thousands of fishery products are exported by Vietnam to the market every year, mainly including frozen products namely shrimps, fish, and contained fish, cuttlefish, mixed shrimp meat and other aquatic products. Thanks to Vietnam aquatic sector’s efforts in improving the product quality, the competitiveness of the products has been up graded and they penetrate deeply into the EU with the increasing quantity. The exporting turnover of Vietnam seafood and aquatic products to the EU was 2.408.3 million US dollars in 2004; 2.738.7 million US dollars in 2005 accounting for 5% of the Vietnam total aquatic export turnover. The European Union acknowledged Vietnam Aqua-product Quantity and Hygiene Checking Center as a competent agency authorized by EU to survey quality of aqua-products exported to the market. At the same time the European Union also put Vietnam seafood into the list of priorities No 1 in which 40 out of 200 foreign enterprises have full condition to export their aqua-product right to the EU without requests for any bilateral agreement with each EU member country. The acknowledgement not only ensures stability of Vietnam export to the EU also enhanced the prestige of Vietnam seafood quality in the other markets and strengthened penetrability of this aquatic group. The markets to which Vietnam exporting its aquatic products in the EU block are as Belgium (with 29.9%); Italy (17.2%); Holland (15.9%); Germany (15.4%); and England (9.9%); France (5.1%); Spain (4.1%); Sweden (0.8%); Denmark (0.8%); Greece (0.6%); Portugal (0.2%); Australia (0.1%). 2.4 SOME ACHIEVEMENTS AND CHALLENGES OF VIETNAM’S EXPORTS TO THE EU Looking at the real situation of Vietnam export to the EU in recent years, it is acknowledged to have the following achievements and challenges: 2.4.1 Achievements Vietnam-EU export turnover of the period of 1990 to 2005 had increased with rather high average growth rate of 33.62% per year. Vietnam has made use of its comparative advantages in concentrating on exporting some commodities in strong position to the markets of European countries. Vietnam has been focusing on industrial goods, processed tropical agricultural products, textiles, and art and handicraft commodities for its exports to the EU. At the same time, it gradually invests in quality improvement of the commodities to produce competitive goods in the EU. The exploitation of the EU markets require us to develop material facilities and capacity of some agricultural branches in processing sectors of cashew nuts, fruits and vegetables, coffees. The export growth of some agricultural goods such as coffee, cashew nuts, tea, and industrial items as garments, footwear; creates rapid changes in products’ quality, design and model. The sectors of textile and garment, footwear, aquaculture make a big contribution to solving unemployment. And thanks to industrial export strengthening, the process of economic structure transfer increasingly occurs; especially, there are big changes in industry-agricultural-service structure. 2.4.2 Disadvantages The structure of Vietnam exports to the EU is poor in variety of goods, and only highly emphasis in some kinds of commodities such as textile, footwear, coffee and fishery. In term of textile garment, for example, Vietnam textile garment enterprises only focus on producing some easily made and simple products as jackets of two or three layers, dresses, shirts. Most of Vietnam exports to EU are passed though middlemen. Vietnam footwear still remains some typical limitations in manufacturing ability, failing to meet requirements of the present-day development. Most of the products are manually processed based on in-hand goods sample enclosed with order of foreign clients and heavily depend on imported accessories. The biggest barrier for seafood exports is now product quality, which does not meet production quality and hygiene standards of EU. The majority of Vietnam exports to the EU must be shipped through mediators, which causes some retrains and inconveniences in their transportation. Additionally, the system of producing and processing facilities of Vietnam exports remain backward with small production scale, undeveloped technique-technology-management levels; the application ability of advanced technology is limited and fails to satisfy EU requirements. Because the system of Vietnam laws, policies for its economy and commercial management is not fully made and uninvited, it causes many difficulties for implementation of its commitments with international organizations. The competitiveness of Vietnam business is still weak in term of both production and management processes. They lack precious experiences in the business world; and are still like fishes out of the water even in the EU market; do not know how to grasp opportunities and fully understand business regulations and habits of the European markets. Therefore, we are not able to supply big shipments of exports and to fill valuable orders. Furthermore, the advertising and marketing skills of Vietnam enterprises remain many restrictions. When they carry out cooperating project with their foreign patters, for example, they do not want to actively participate in the good selling and dislike understand customer needs and tastes, which decrease their position and roles in marking decisions of production development cooperation, reducing effectiveness of international business and manufacturing activities. CHAPTER 3