Disadvantages of Vietnamese exports in the German market

Disadvantages of Vietnamese exports in the German market

  • EU/Germany’s mandatory import requirements on food hygiene and safety, technical standards, labelling, packaging, etc. are very strict and more difficult to meet than other export markets of Vietnam. Sanctions for violations of import regulations are also very strict. Goods found to be in violation of mandatory German import requirements are at risk of being returned or destroyed. In some cases, if the frequency of violations is high (a number of times in a certain period of time), Germany can apply stricter control measures such as increasing the frequency of inspection, applying import ban for a period of time, etc.;

  • German consumers have very high requirements on the quality, design, brand, reputation... of imported products. These requirements are often much higher than that of consumers in many other exporting markets of Vietnam like China, ASEAN countries, and even in some other EU members. Meanwhile, some Vietnamese products still have limitations in quality, design and brand. In addition, the German consumers are increasingly interested in sustainable consumption, choosing products that are friendly to the environment and the society, etc. Therefore, German importers often require imported products to have additional certificates (which are not mandatory import regulations) such as certificates of food safety, social certificates, green labels, eco-labels, etc. These requirements take more time and cost for Vietnamese enterprises to meet, thereby als reducing their interest in the German market;

  • Germany has a long geographical distance from Vietnam, so the cost of transporting and preserving goods exported to this market is often high, leading to increased product prices and difficulty in competing with goods from countries near Germany. Especially during the COVID-19 period, the rising costs of transportation and logistics made Vietnam's exports to German market significantly affected;

  • The level of competition in the German market is relatively high. Up to now, the EU has had a total of 42 FTAs in force with 79 partners, and granted GSP preferential mechanism for 67 developing and least-developed countries. In addition, Vietnam's export goods also have to compete fiercely with Chinese goods - the country that exports the most to Germany. China and many countries enjoying preferential tariffs of the EU have similar export product structure to Vietnam, leading to a high level of competition.

Source: "Business Handbook: Exploiting the EVFTA  to import and export goods between Vietnam and Germany" - Center for WTO and International Trade