US President Joe Biden’s official visit to Vietnam in early September opened a new era in relations between the two countries, and upgrading this relationship is an important step forward, opening a period of new cooperation between Vietnam and the United States.
According to Mr. Nguyen Hong Dien, Minister of Industry and Trade, in the first 8 months of 2023, the difficult economic situation and high inflation rate in the United States made the purchasing power of consumer goods decrease significantly. The Fed’s continuous increase in interest rates to control inflation has caused consumer demand in the United States to decline because of high interest rates.
Besides, cyclical factors and rising high inventory reserves are also one of the reasons why Vietnam’s exports to the United States decreased in the first months of the year. However, this decrease is assessed as temporary and not a major trend next time.
According to the minister, Vietnam’s exports have grown again in recent months, which shows an expected improvement for 2023, when many organizations assess that the FED has reached the final stage of its cycle of increasing interest rates. The purchasing and confidence of the US consumers are rising again.
In particular, Vietnam’s traditional and strong export products such as textiles, furniture, footwear, electronics etc are assessed to continue its recovery with positive export growth rates.
Also agreeing with this opinion, Mr. Nguyen Do Anh Tuan, Director of the Department of International Cooperation, Ministry of Agriculture and Rural Development, with a population of 338 million people, the United States annually imports over US$200 billion of all kinds of agriculture, forestry and fisheries to meet its domestic needs. The major imported products from the United States are seafood, timber and wood products.
As known, the United States is always among the largest export markets of Vietnam in particular and the wood industry in general. In 2022, the export of timber and wood products to this market achieved US$8.67 billion (down 1%), but the total export turnover of agricultural, forestry and fishery products to the United States in 2022 achieved US$13 billion, accounted for US$24,4% of Vietnam’s total export turnover of agricultural, forestry and fishery products to the world, but only accounted for about 6.7% of the import value of agricultural, forestry and fishery products of the United States, so there is potential for Vietnam to expand its market. market. The US market is still very large.
In recent years, Vietnam has been transformed strongly to become a major global manufacturing center. Vietnamese enterprises have produced many products with rich types, competitive prices and increasingly improved quality.
In particular, despite competition and contraction in the US market, Vietnamese wood processing enterprises are very active in following the taste and constantly changing to adapt to the current situation. At the same time, after the pandemic as well as recent geopolitical-economic instability, many corporations, retail and wholesale distribution channels have been promoting their diversified strategies, ensuring sustainable supply and have chosen Vietnam as a strategic location in the global supply chain. This is a great opportunity. However, seizing the opportunity will also require great efforts from manufacturing and export businesses.
Minister Nguyen Hong Dien recommends that for the current difficult and challenging global economy, consumers’ needs and tastes in Vietnam’s export markets in general and the United States in particular have had many new trends, new requirements, especially price, quality and related requirements to environmental protection and sustainable development, “green production” standards, “clean and sustainable supply chains”.
This requires Vietnamese wood processing enterprises to adapt to those changes quickly. Businesses exporting to the United States need to clearly define product strategies, partners, and distribution channels; Thoroughly research regulations, export barriers, and possibilities related to trade defence cases; ensure input materials have clear origins, not affect the environment or use forced labor; At the same time, they should gradually research and upgrade their production facilities andfactories according to “green production” standards.
In addition, businesses need to participate actively in trade promotion programs, wood industry exhibitions, connect with relevant agencies, make a reputation and build trust with the US customers. To develop the market, in addition to cooperating with large importers and distribution channels, businesses also need to apply a customer diversification strategy and actively search for niche markets to minimize risks.
The United States is a huge import market, but it is also a super competitive market, that requires wood businesses to constantly make efforts in research, as well as market development, and investment in upgrading production capacity, improving product quality in order to meet increasingly high technical standards as well as regulations on sustainable development.
In the US market, the presence of leading manufacturers and suppliers in the world always requires Vietnamese businesses to be ready for competition in quality, price and service.
To compete effectively, Vietnamese businesses not only need to improve product quality or reduce production costs but also ensure effective management and customer care.
Mr Nguyen Do Anh Tuan said that the United States has recently issued many trade protection policies to protect its interests of domestic businesses, along with policies to encourage and support domestic production. Nontariff barriers can limit market access and increase costs for Vietnamese businesses.
On the other hand, the United States has increased the frequency of trade defense investigations against Vietnamese goods, in which wood products are also one of the subjects of most concern, so wood processing businesses need to raise awareness and comply with the legal policies of the two countries.