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Cheap Chinese imports threaten local produce industry

21:01 | 10/11/2016

Cheap imports of fruit and vegetables from China are a disquieting concern for the produce industry in Vietnam, as local actors find themselves unable to effectively compete with their Chinese rivals.

cheap chinese imports threaten local produce industry

Locally produced fruit, vegetables and dairy products are agricultural products typical of the country’s wide array of fine cuisine that can be found on supermarket shelves nationwide.

However, a new governmental decree taking effect later this year, has prompted concerns that an increasing assortment of imported goods from China will find their way into the country’s supermarket and other retail outlets.

Under the decree, import tariffs on 90% of all goods imported from China will be abolished over a three-year phase-out period running through 2018, with the remaining 10% eliminated by the end of 2020.

The lower cost of importing foodstuffs brought about by the new decree such as the reduced import tariffs is an economic boost for local retailers – as they can offer cheap, imported products from China, even in some cases when the produce is not in season locally.

Underselling local producers with cheap imports puts the local industry at risk, says Nguyen Thai Dung a store manager at Big C Thang Long.

For locals involved in the produce supply chain, from truck drivers to farmers, an anticipated explosive growth of imports from China will ruin years of hard work and established businesses.

Foods that come from local sources are a tremendous boon to the local economy, says Mr Dung, noting that more money stays in the local regions, creating significant value and more good paying jobs.

However, money is not the only driving force for Vietnamese producers competing with cheap imports, says Dinh Tuan Anh, a store manager for CP Ladoda. The quality of the end-product which makes its way to the consumer's table is also of great importance,

The value of buying local food is not only about the economy.

For one thing, he says shorter distances from the farm to the table means produce can be harvested closer to peak ripeness, when it is most nutritious, because it does not have to withstand extended transport and storage.

Vietnam is not alone when it comes to importing food which can just as easily be produced on home soil. Increasingly more westernized countries are choosing to import frozen or processed foodstuffs from countries like China because of the markedly cheaper costs.

Mr Anh says this trend is being driven by Vietnamese consumers who are much too often preoccupied with buying at the lowest price irrespective of quality concerns. Food to these consumers must be cheap or they won’t buy it.

A good example is fruit such as strawberries shipped from China, the world's second-largest producer of the bright red juicy sweet fruit. Local farmers will not be able to complete with the cheap operating and labour costs after the new decree comes into effect.

By freezing the strawberries, with the lower import tariffs Chinese producers will be able to make them more compact and less fragile, and easier to transport to Vietnam thus driving local growers out of business, says Mr Anh.

Then there is always the question of food safety with strawberries as there is with all food imports from China— as the government has a long track record of lax enforcement of food safety standards.

This has led to food illnesses outbreaks around the globe from exports such as the EUs largest food-caused incidence of gastroenteritis caused by the import of tainted strawberries from China a couple of years ago.

Nguyen Cong Thua of the Anh Dao Agricultural Service Co-operative in the central highlands province of Lan Dong says it simply comes down to the fact that smallholder farmers in the region cannot compete with producers in China who benefit from economies of scale.

The Chinese producers have a larger production scale that results in lower production costs, he says, noting they therefore they can cut their prices and sell produce at a lower cost than the local farmers in Vietnam.

Source: VOV