Another export channel for Vietnamese products

A survey conducted by the Vietnam E-commerce and Digital Economy Agency (iDEA) at the Ministry of Industry and Trade (MoIT) found that 53 per cent of businesses now also export through e-commerce platforms, while 47 per cent use self-built websites or apps. Sixty per cent of businesses, meanwhile, reported that cross-border e-commerce accounts for 10-30 per cent of their total import-export value.

The development of cross-border e-commerce has enabled businesses to expand their export markets and rapidly increase sales within just a short period of time. Companies can quickly identify and respond to market demands, allowing them to improve their products to meet those needs more effectively. Notably, cross-border e-commerce helps products overcome the limitations of market size and seasonality. Recognizing the vast potential of e-commerce in export activities, many businesses in Vietnam have swiftly and extensively adopted the model in their operations.

Growing trend

Speaking at the E-commerce Connection and Development Forum 2024, Ms. Le Hoang Oanh, Director General of iDEA, noted that cross-border e-commerce has been identified as a crucial growth driver in enhancing online export activities. “No other tool can enable Vietnamese businesses to deliver goods to consumers as quickly and as cost-effectively as e-commerce, with sales experiencing significant growth in a short time,” she told the gathering.

Ms. Ana Nguyen, Deputy Chairwoman of the Global Cross-Border E-commerce Alliance (ACBC Global), said with the explosion of digital consumers, particularly in Southeast Asia, East Asia, India, and Africa, the global cross-border e-commerce market has seen growth rates of 20-30 per cent in recent years. This is a trend Vietnamese businesses can capitalize on further, as Asia accounts for 40 per cent of consumption through e-commerce channels.

South Korea leads as the most popular e-commerce export market, with 45 per cent of Vietnamese businesses reportedly using e-commerce to export to the country, followed by Japan with 40 per cent and China with 38 per cent.

Commenting on Vietnam’s online export potential to China, Mr. Liu Liang, a representative from the Yunnan Provincial Department of Commerce in China and Chairman of the Yunnan E-Commerce Association, noted the country’s remarkable progress in e-commerce over recent years, achieving an average annual growth rate exceeding 25 per cent. With a young consumer base and strong demand for international online shopping, Vietnam naturally complements the Chinese market.

Vietnamese products, including agricultural goods, handicrafts, apparel, and footwear, hold significant potential in China. For example, dragon fruit, cashews, and coffee beans from the country have reached Chinese dining tables via Yunnan’s cross-border e-commerce platforms.

Remaining obstacles

Though e-commerce provides businesses with a fast and cost-effective channel for exporting goods, it also poses challenges for companies in meeting consumer demand while maintaining product quality.

According to Ms. Ana, as Vietnamese products begin to establish their reputation among international consumers, a critical issue arises: supply capacity. For instance, some provinces in China have populations reaching into the hundreds of millions of people. Without sufficient production capacity, Vietnamese businesses will find it difficult to penetrate into such vast markets.

In addition to challenges in meeting consumer demand, Vietnamese businesses also face difficulties in managing logistics costs and ensuring timely delivery to international customers. Mr. Bernard Wong, Chairman of ACBC Global, said that in countries with well-established cross-border e-commerce systems, such as China and South Korea, major e-commerce platforms serve as pillars supporting both domestic markets and international export activities. For example, platforms like Alibaba and Temu in China boast extensive logistics and shipping networks across multiple countries and continue to invest heavily to expand these networks.

Currently, Vietnam lacks a similar platform and adequate infrastructure, such as warehousing systems and distribution centers, posing significant challenges for businesses aiming to engage in online exports, especially small and medium-sized enterprises (SMEs), as they would have to hire third-party transportation services to move products.

Beyond these challenges, experts noted that Vietnamese businesses also face limitations in digital knowledge and skills, low competitiveness, lack of market information, and obstacles related to legal barriers, tariffs, and payment systems.

Moreover, ensuring consumer protection when purchasing goods, preventing tax evasion and smuggling, and safeguarding domestic businesses against competition from foreign products in e-commerce are still problematic.

Logistics also remain a key obstacle for businesses, as high costs and underdeveloped infrastructure are significant barriers to fully realizing Vietnam’s e-commerce potential. According to Dr. Yap Kwong Weng, CEO of Vietnam SuperPort, cross-border e-commerce requires a transparent and secure logistics system to ensure smooth processes. “The ability to connect domestic and international supply chain hubs is also a key issue that needs prioritization,” he continued. “Especially in the context of regulations aimed at greening the supply chain from production to end-user, the application of sustainable development solutions in logistics must also receive special attention.”

Invest to expand

To promote online exports, Mr. Liu emphasized that the Vietnamese Government must invest in logistics infrastructure as well as encourage the development of domestic businesses in the field. Without adequate investment in this endeavor, no matter how well businesses promote their products on e-commerce platforms, they will be unable to fully leverage the potential of cross-border e-commerce.

In the case of Vietnam and China, in addition to traditional border gates for road transportation, there is also an international freight railway line. In the past, only about 17-19 train cars could transit through the Vietnam-China border every day. This number has increased in recent years and has the potential to rise further. Mr. Liu expressed a belief that with investment and cooperation between the two countries, the cross-border railway could become a key logistics route facilitating e-commerce. Moreover, the railway could act as a means for Vietnamese goods to reach other countries through China’s extensive and well-connected rail network.

Vietnamese businesses engaging in online exports must also thoroughly understand the export procedures of each target country. For instance, in countries with comprehensive e-commerce ecosystems like China, businesses exporting through e-commerce platforms are required to register their products with customs authorities under one of four customs supervision methods. Similarly, countries like South Korea have developed their own specific processes that Vietnamese enterprises must familiarize themselves with before participating in online exports.

Ms. Nguyen Thi Minh Huyen, Deputy Director of iDEA, said that to support the business community, particularly SMEs, which are facing numerous challenges in online exports, the Agency has tasked the E-commerce Development Center with researching and developing an Online Export Ecosystem (Ecomex). This initiative offers specific solutions to realize the government’s vision and collectively support Vietnamese businesses in bringing potential export products to international markets through e-commerce.

She encouraged Vietnamese businesses, particularly SMEs, to take advantage of the sales channel as well as other support programs of MoIT within the framework of the National E-commerce Development Program for 2021-2025, together with any future programs, to more easily participate in the cross-border e-commerce market. Vietnam, she added, will continue to support domestic businesses in bringing their products to international markets through e-commerce.