Shifting from direct to indirect exports through distribution and e-commerce systems has become an urgent requirement in the context of the outbreak of the acute respiratory disease caused by the novel coronavirus (Covid-19). 

Benefits

In recent years, in order to promote the sale of agricultural products, the government, ministries and sectors have proposed a number of programs and projects aimed at connecting producers and sales networks, especially foreign supermarket chains in Vietnam. In 2017, the Ministry of Industry and Trade (MoIT) deployed an on-site export program by connecting domestic businesses and producers with foreign distribution systems such as AEON Mall, Lotte and MM Mega Market in various countries.

Various kinds of Vietnamese goods have been exported indirectly to the supply chains of major groups. In 2019, MM Mega Market exported more than 1,000 tonnes of Vietnamese farm produce through its distribution system. Saigon Co.op, in coordination with NTUC FairPrice, exports more than 200 containers of Vietnamese goods to Singapore each year. Vinamilk has successfully exported organic milk products to Singapore and is promoting exports to other markets such as China, Japan, the Republic of Korea and Europe.

To enable Vietnamese goods to enter these distribution systems, producers and exporters must abide by strict regulations on product quality, packaging and labeling as required by purchasers.

Further efforts required

Not every business can export through these distribution systems even if they are aware of the benefits, except those with large-scale production, export experience and robust manufacturing capacity. Small and medium-sized companies with no export experience will encounter difficulties due to their lack of knowledge of importer requirements in terms of technical standards and product quality.

The MoIT has taken flexible measures to help businesses minimize risks and promote indirect exports. Ministry heads have worked with major distribution groups in Vietnam and e-commerce systems in order to diversify export channels for Vietnamese goods.

Meanwhile, state authorities, especially Vietnamese trade counselors in foreign countries, have been guided to take the initiative in providing domestic businesses with information about market demand for potential export products. They were also asked to provide warnings of technical barriers and compulsory standards for export goods so that domestic companies can take action to prevent their products, either direct or indirect exports, from being rejected.

The MoIT will coordinate with other ministries and sectors to intensify inspection and supervision of goods’ origin traceability in order to enable sustainable business participation in global supply chains and distribution systems.

Source: Vietnam Economic News

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