December 16, 2017 17:58

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Thai goods 'flood' into Vietnam: predicted early but still confused

10:15 | 08/10/2017

VCN- Thai Thai goods "flood" into Vietnam was predicted early. And in fact, now Thai goods are gradually "beat" the Vietnamese goods, quickly occupy the market share. The more worried as the tariff reduction under the ASEAN Trade in Goods Agreement (ATIGA) is removed, we seem to be confused in the response.

thai goods flood into vietnam predicted early but still confused
Thai electrical goods are present in Vietnamese electrical machine supermarkets. Photo: Huu Linh.

The fear of Thai goods

Thai goods have been flooded into Vietnam by many ways, such as import and export through supermarkets and fairs. It is not difficult to find from household products such as soap, shower gel, toothpaste, candy... to household goods such as TV, refrigerator, washing machine, air conditioner... imported from Thailand in supermarkets, Thai specialty stores.

Statistics of the Ministry of Industry and Trade showed that the above items are one of the causes of Vietnam's trade deficit from Thailand is increasing. Specifically, four groups of commodities including electronics, electrical appliances, refrigeration; machinery, computer and accessories; automobiles and auto parts; fruit and vegetables account for 45% of Vietnam's total imports from Thailand.

In fact, that Thai goods are flooded into Vietnam is not a new issue. Experts have warned about the storm of Thai goods in Vietnam. Vu Vinh Phu, an economist, said that more than 50% of the retail market in Vietnam was acquired by Thai giants. Many retail brands of Vietnam such as Big C, Metro, Nguyen Kim ... have fallen into the hands of Thai investors. The loss of the retail market also means that Vietnam pushes itself into the passive position, ceding the right to own distribution channels in the domestic market for Thai enterprises.

We can see that Vietnam's trade deficit from Thailand has been increasing continuously over the past years and is forecasted to continue as many factors such as tax reduction and demand for raw materials and auxiliary materials of Vietnam. As a result, Vietnam's trade deficit from Thailand in 1995 and increased sharply in the period 2011-2008. In the first eight months of 2017, the trade deficit from Thailand was $US 3.5 billion, rose by 15.6% compared to the same period (export turnover to Thailand reached $US 3.07 billion, import turnover from Thailand reached $US 6.57 billion).

However, for many years, it seems that we have not paid much attention to measures to limit the situation that Thai goods flow into Vietnam, which is still considered as a common trend of integration. The emergency meeting of the Ministry of Industry and Trade’s departments chaired by the Minister of Industry and Trade Nguyen Anh Tuan has raised a fear of “letting the grass grow under our feets”.

Being confused

It can be said, the warning of experts is not redundant when the Thai goods gradually enter in each corner of the Vietnamese people. Most Vietnamese families also have one too many Thai items. Not only stopping in favor of Thai goods of Vietnamese people thanks to the quality and design, the problem has risen to another level that must be discussed is the competitiveness of Vietnamese goods in its home.

According to Ms. Dinh Thi Bao Linh, Deputy Director of the Information Center for Industry and Trade (Ministry of Industry and Trade), improving the competitiveness of Vietnamese goods not only helps Vietnam maintain its position in the domestic market. but it also can compete in the export markets. Therefore, improving the competitive ability of Vietnamese goods to defeat the favor of Thai goods is must be done. If we are slowly, tax reduction under the ATIGA comes into force in 2018, 98% of import tariffs will be eliminated that will make it more difficult for Vietnamese enterprises.

There should be a pre-check mechanism to control the excessive economic concentration. The review of the licensing regime for foreign retailers in Vietnam should take into account the solutions that the units under the Ministry Trade and Industry to limit the status of Thai goods into Vietnam as well as reduce the trade deficit with Thailand for many years. According to Mr. Nguyen Anh Tuan, Deputy Director of Competition and Consumer Protection Department (of the Ministry of Industry and Trade), in some markets such as Vinh Phuc, Hanoi, the market share of Thai enterprises is quite large (over 40%). This is a problem that should be concerned due to, Thai companies are only present in these markets, but after the acquisition of other enterprises, their market share started increasing. The Ministry of Industry and Trade will plan to control this situation and it is expected that the Competition Law when it comes effective, will ensure the competitiveness of the goods.

In fact, these are issues that have been suggested by some retailers but have not been implemented yet. Again, the public raises the question "is the management agency still confused about the control of goods from abroad into Vietnam?"

In addition to the above measures, in order to help Vietnam compete better on its home, the way of doing business that Thai people have applied is a lesson for both management agencies and Vietnamese enterprises to learn. Thai trade promotion organizations bring very high efficiency in many cities that they choose. Eventually, their products are voted right in their country before launching promotion in other countries. "The strategy to expand the export market of Thailand is specific, feasible with the mobilization of both the Government and enterprises. This is something we have to learn. Thailand determines that, along with the competitive advantage of the quality of design, the distribution system is the strength of their exports”, Ms. Linh said.

By Phan Thu/ Kiều Oanh