Vietnam’s traders urged to prioritize official trade channels with China

It becomes necessary for Vietnamese companies to follow the official trade channels with China to survive in this market.

Director of the Department of Agricultural Product Processing and Market Development under the Ministry of Agriculture and Rural Development (MARD) Nguyen Quoc Toan told The Hanoi Times about the issue.  

Director of the Department of Agricultural Product Processing and Market Development under the Ministry of Agriculture and Rural Development (MARD) Nguyen Quoc Toan.

What is your assessment of both the short- and long-term impact of the Protocol on phytosanitary procedures for Vietnamese fresh bananas exported to China?

The Protocol signed between the MARD and the General Administration of Customs of China (GACC) would ensure sustainability for exporting Vietnamese bananas to China via official trade channels. In the long term, this would help boost the scale of Vietnam’s banana production and form a better linkage between farmers, traders, and producers, eventually leading to a modern and standardized agricultural production.

Another point is that full compliance with the Protocol would shorten the customs clearance process and facilitate bilateral trade.

Could you specify the major requirements under the Protocol?

The Protocol, with a validity of five years, would require strict safety standards for Vietnamese bananas. Specifically, all banana farming areas and packaging facilities for export to China must be approved by the MARD and the GACC. Banana farms are expected to have growing area codes and follow Good Agricultural Practices (GAP) standards, while packaging facilities are required to create a traceability system of origin to ensure food safety standards before export to China.

In the first two years after the Protocol enters into force, MARD experts are expected to conduct phytosanitary tests for 2% of the export volume. If no violations are detected, the percentage will be reduced to 1% after two years.

How do you assess the potential of Vietnam’s banana exports?

MARD statistics revealed that Vietnam's total banana production capacity is 2.1 million tons per year. In the first nine months of 2022, Vietnam's vegetable and fruit export turnover decreased by 11% year-on-year to US$2.45 billion. However, the turnover of fresh bananas increased by 28% to $237 million during the period, ranking second among Vietnam's fruits with the highest export earnings.

The potential for bananas is large for its all-year-round harvest. Chinese traders have been increasing their imports of Vietnamese bananas due to the proximity between the two countries and the rising production cost of growing bananas in China.

It is estimated that China would import bananas worth $1 billion, of which the Philippines would account for 50%, Cambodia 20%, and Vietnam 16%. The Protocol will therefore further open the door for Vietnamese bananas in the Chinese market.

How would the Protocol impact the prospects of other farm produce being exported to China?

Bananas and other farm produce would need to meet the technical standards of the export markets. Effective implementation of the Protocol for bananas would therefore create an opportunity for other fruits and contribute to the sustainable development of the agricultural sector.

It is worth saying that China remains a large export market for Vietnamese fruits and vegetable products.

Because of the global trade woes and rising transportation fees, this nearby market is significant.

What are your recommendations for Vietnamese producers and traders?

Given the rising standards, local farmers and traders must change their mindsets to penetrate the Chinese market better. They have to be aware of the technical regulations and requirements of the market, as well as adopt food safety standards in every production process.

There should also be a working mechanism among the authorities, businesses, and producers to ensure a safe and effective supply chain.

Enterprises must promote a marketing strategy for local products and invest in high-quality products. The most important issue would be for businesses to prioritize official trade channels to minimize potential risks in trade.

For its part, the MARD would further restructure agricultural production toward large-scale and concentrated farming zones for export. The ministry is speeding up the negotiation for a list of products subject to official trade routes and utilizing existing free trade agreements, especially the Regional Comprehensive Economic Partnership (RCEP). Another priority is to help businesses and farmers meet requirements from the Chinese side and provide updates on any changes in the market.

Thank you for your time!