Exporters urged to shed Africa inhibitions

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Vietnamese businesses need to change the way they see the African market and realize its full potential before they are beaten to it by competitors from other countries, experts say.

Vietnam now has diplomatic and trade ties with more than 50 countries in the continent. Trade value increased from about US$360 million in 2003 to $2.1 billion last year.

In the first seven months this year Vietnamese exports to Africa were recorded at $670 million, similar to the same period last year. However, this represented just 1 percent of Vietnam's total shipments.

Prime Minister Nguyen Tan Dung said at a conference in Hanoi last month that Africa was a promising market in the long term, but Vietnamese exporters have not been able to tap its potential.

Products from Vietnam now hold a miniscule share of 0.18 percent in the continent even though the country is the world's top exporter of various products.

Le Thi Thai Hoa, deputy head at the Ministry of Industry and Trade's Africa Department, said the biggest concern for Vietnamese exporters shipping goods to Africa was payment.

"Many African countries are still using outdated payment methods and they often delay payments, sometimes for as long as a year after delivery," she said. The recent rise of Internet frauds from Africa made Vietnamese exporters even more cautious.

However, Hoa said the risks can be avoided if exporters contact trade agencies like hers to learn more about the market first.

For many years, Vietnamese exporters have considered Africa a new market. They have been saying they do not have sufficient information, that payment risks are high and transportation is not convenient.

But Vietnamese commercial counselor to South Africa, Do Quang Lien, said exporters should not keep citing these reasons to explain their lack of enthusiasm.

He said such difficulties are no longer insurmountable, considering that Vietnamese exporters have successfully entered both the EU and US markets, which are pickier and further from Vietnam.

Many shipping lines have launched new routes linking Vietnam and Africa. Besides, the government has made a lot of effort to promote trade between the two countries, offering opportunities for businesses on both sides, Lien said.

"If businesses really care about the African market, it's not difficult at all to find information about it on the Internet," he said.

The problem is, Lien said, local exporters are just uninterested.

Dang Ngoc Quang, commercial counselor to Egypt, agreed. He said although Egypt is now the largest importer of Vietnamese seafood in Africa and the Middle East, the market is still underrated by many exporters.

As Vietnamese businesses only pay attention to regular customers, they do not fully tap the high demand for seafood in Egypt, estimated at several million tons a year, he said, noting that Vietnam's annual exports to the African nation are only around 30,000 tons.

Experts said the recent economic crisis has proved that it's not a good idea for local exporters to put all their eggs in one basket, depending solely on traditional markets like the EU, US and Japan. Africa is a place that they can target and disperse the risk, they suggested.

It's a good time to enter the African market now, before it becomes too crowded with exporters from other countries, they said.

In fact, the competition pressure can be felt already.

Thailand is boosting rice shipment to Africa after reserving enough of the grain, while Myanmar has just entered the market. Meanwhile, the supply of footwear and garment products in Africa is about to reach a balance with demand.

Experts said as the export door gets narrower, Vietnamese companies should start thinking about expanding production in Africa.

Many industries in Africa are underdeveloped and African countries mostly export raw materials, with industrial output accounting for only 25 percent of the gross domestic output.

Vietnamese companies should invest in projects to produce goods in Africa, even though it will be a tougher path to follow than just exporting, the experts said.

The government will start a five-year program next year to promote Vietnamese investment in Africa. The program will focus on ten sectors that Vietnam is strong in, including oil exploration, fertilizer, garment and footwear production, and wood processing.

Nguyen Cong Hien, a trade official responsible for markets in Asia and Africa, said it was a good business plan to expand production to Africa because the EU and US often give preferential treatment to products made there.

Europe, for instance, is offering tax incentives for 33 African countries and Vietnamese investors can make use of this, he said.

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