Vietnamese drawn to easy, risky Chinese border trade

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Chinese buyers continue to best small-time Vietnamese traders who truck goods across the border hoping to turn a profit

Trucks carrying Vietnamese goods wait for customers at Tan Thanh border gate in Lang Son Province

Every day, hundreds of trucks loaded with Vietnamese goods line up at Chinese border gates, awaiting customers.

Official statistics show that border trade exports account for one third of the trade value between Vietnam and China, which reached nearly US$30 billion in 2010.

Cross-border trading is a gamble for Vietnamese traders, who are often at the whim of coordinated Chinese efforts to control the price of imported goods. Nevertheless, a lack of tariffs and quality standards has made it an attractive option for small firms and individual traders.

A business owner near Tan Thanh border gate in Lang Son Province, who asked to remain anonymous, said that exporters using the official trading passage should be benefitting from a free trade agreement between China and Southeast Asia, but many businesses and individual traders "are discouraged by the red tape involved."

Border traders are paid in cash, but they are exposed to many risks. The business does not involve formal orders or contracts, allowing Chinese buyers to manipulate prices, the businessman said.

Most cross-border exports leave Vietnam through border gates in Lang Son, Lao Cai and Quang Ninh Provinces.

At Tan Thanh border gate, Thanh Nien reporters found around a hundred trucks loaded with local agricultural produce heading towards China's Po Chai market every day.

Once in China, the traders begin searching for buyers immediately. Their goods are usually sold to a number of familiar Chinese buyers.

Nguyen Trong Huu, a litchi trader, says he's driven into China through Ha Khau border gate in Lao Cai every day for the past several years. Once he gets across the border, he begins unloading boxes of the sweet fruit to display them for waiting customers.

"It's similar to the way my wife brings ducks or chickens to a district market for sale. If we're lucky, we gain a profit," said Huu.

Official statistics showed that more than 20,000 tons of fresh litchis were exported to China through the province during the first half of July. Only 25 percent of them left the country through official channels.

Le Thanh Ngoc, a director of a fruit company from the south central province of Binh Thuan, said she has spent ten years trading the province's prized dragon fruit in China, but seldom chose to go through official waypoints.

It's because customers waiting at the official ports can be picky and tend to only buy parts of the cargo, she said.

"Cross-border trading is a matter of luck," Ngoc said. "But I have no choice because I need to sell the fruit for the farmers and create jobs for my workers and drivers."

In Quang Ninh Province, northeast of Hanoi, a long line of container trucks also waits at Ka Long, Mong Cai and Gia Van border gates to bring litchis, dragon fruit, soy beans and seafood into China.

Bac Luan border gate has been designated the official waypoint for Vietnamese exporters. But local traders prefer to use the other three, where their products are free from official tariffs and are not subject to safety and quality inspections.

Price manipulation

Tran Manh Tien from Bac Giang said he has been trading litchis in China for 12 years.

The 51-year-old trader collects 10 to 15 tons of the fruit from local orchards, every two or three days, and heads to Po Chai market.

He said Chinese traders there check the boxes one by one and bargain for every single dong.

"When there're a lot of trucks from Vietnam, they try to find fault with each load and even stop buying at the same time or buy just a little in order to force the price down," Tien said.

"Sometimes the prices they offered were equal to what I'd paid for the fruit at home. But I still had to sell them. If I brought the fruit back, it would just rot," the trader said.

Vu Tien Thanh, a trader from Binh Thuan, said many Chinese customers paid in full, the first several times. Then they urged him to trust them for the sake of long-term business and even asked him to advance them the fruit. 

But when they met again, the Chinese traders alleged that the previous cargo was of poor quality and they paid less than the agreed price, he said.

Thanh also said he and his driver once had to wait at the border gate for at least two days with a truckload of dragon fruit because the Chinese traders claimed they had not sold their stock yet.

Fruit is not the only cash crop that is providing fodder for the border trade with China.

Officials from Vietnam Rubber Group said that around 50 to 60 percent of rubber exports into China cross the land borders.

When the price of rubber surged last August, Vietnamese businesses began trucking loads into China, only to find out that they were at a complete disadvantage. Chinese buyers had worked together to drive the prices down sharply by refusing to buy the material.

To make things worse, China's border trade policies change every now and then for the benefit of Chinese traders, said Nguyen Xuan Quynh, director of a cassava exporting firm.

Vietnamese suppliers are usually the last to hear about such changes; and usually after they have arrived at the Chinese border with their goods, Quynh said.

Experts believe border trading could badly affect the Vietnamese economy.

Huynh Van Minh, chairman of the Ho Chi Minh City Business Association, said that low quality requirements from Chinese buyers at border gates are not really a blessing.

Vietnamese manufacturers will not be motivated to improve their products and will keep producing low-quality goods without knowing what the Chinese market is really demanding, Minh said, adding it would have negative impacts in the long run.

Lawyer Tran Xoa from HCMC said border trade ultimately prevents the government from profiting on the business at all.

"The traders do not use a contract and do not pay via banks, so it's impossible to collect tax revenues," Xoa said.

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