From a few initial containers, after 6 years of conquering the billion -dollar market, every week, Hoang Anh Gia Lai regularly exports 200 banana containers to China.
“China is a ‘giant’ consuming Vietnamese agricultural products,” Mr. Doan Nguyen Duc – Chairman Hoang Anh Gia Lai compared to the market, accounting for more than half of the company’s export turnover of fresh bananas.
Hoang Anh Gia Lai Joint Stock Company of Bau Duc owns more than 7,000 hectares of bananas, exporting hundreds of thousands of tons each year to China, Japan, Korea and domestic supply. From the initial containers, every week, Hoang Anh Gia Lai regularly exports 200 banana containers to China.
“Customers order continuously, bananas are not enough to deliver,” Mr. Duc said, adding that after 6 years of penetrating the billion -dollar market, their products have appeared in most of the supply chain, from the market to the large supermarket system.
Fresh bananas are the 4th largest export item, only after durian, dragon fruit and coconut to China. Last year, this market increased to buy, helping Vietnam overtake the Philippines, becoming the No. 1 banana supplier here.
Currently, 14 Vietnamese agricultural products have been exported to neighboring countries, bringing billions of dollars in revenue each year. Last year, Chinese consumers spent US $ 4.6 billion to buy Vietnamese vegetables. In particular, dragon fruit tops with more than 1.2 billion USD, durian about 900 million USD, bananas 400 million USD.
With Huy Long An Co., Ltd – a exporter of mango and bananas – China is an attractive market and consumes Vietnamese agricultural products many times more than other countries. Particularly in the first quarter of this year, Huy Long An’s selling volume to this market increased by about 30% over the same period.
“Vietnamese fruits to China have never been dull, although sometimes the price fluctuations make profits not high,” said Vo Quan Huy, Director of Huy Long An Company.
Mr. Dang Phuc Nguyen, General Secretary of Vietnam Vegetable Association, said that exporting fruits and vegetables to China increased sharply by the two countries to participate in bilateral trade agreements (FTAs), such as ASEAN – China Agreement, Regional Comprehensive Economic Partnership (RCEP) and secretive decrees between the two countries.
Vietnam also has a great geographical advantage when owning more than 1,450 km of border (road and waterway) with neighboring countries. In addition, China has many large wholesale markets close to the northern border, several hundred kilometers from Vietnam’s agricultural growing areas. As a result, low logistics costs, faster shipping time and more competitive than other countries.
“With 1.4 billion people, China is the most attractive purchasing market in the world. Even the US or Chile – countries with remote geographical geography always seek to dominate this market,” Mr. Nguyen said.
Bananas are packed at the factory of Hoang Anh Gia Lai. Image: Thi Ha
Disadvantages for businesses and fruit exports to exploit the market of 1.4 billion people are still very large. Because in addition to 14 types of agricultural products that follow the official lines, most of the remaining items still export through the border trading channel (small rank). While the demand for agricultural products of the billion people market is very large and the ability to supply specialty fruits, high quality of Vietnam is abundant.
Recently, on the occasion of attending the Meeting of the World Parliament at Uzbekistan, Deputy Head of the Standing Committee of the National People’s Congress of China Lac Tang Giang village affirmed that the country is ready to import high quality export items of Vietnam, including agricultural products.
Earlier, the Ministry of Industry and Trade negotiated with China to open more markets for other vegetable items such as green grapefruit, fresh coconut, butter, pineapple, breast milk, lemon, melon … The operator proposed that the country soon signed the Protocol on quarantine requirements with some traditional exported fruits. This is to help Vietnamese agricultural products have more opportunities to reach Chinese consumers.
In order to increase links, ensure smooth supply of goods, the two countries plan to cooperate in deploying a series of railways connecting Vietnam – China (Lao Cai – Hanoi – Hai Phong; Lang Son – Hanoi; Mong Cai – Ha Long – Hai Phong).
The opportunity becomes even more pronounced when the world trade context has changed a lot. The US’s tightening of trade with some countries caused China to turn imported from markets, including Vietnam.
“The price of Vietnamese bananas increases sharply,” the boss Hoang Anh Gia Lai revealed. In recent weeks, this agricultural price has soared to 12.5 USD per barrel 13 kg, up 10% compared to the previous week and 25% in the same period last year. Places where the planting area and the valid packaging facility according to GACC – the quality monitoring standard of the Chinese Customs – is more purchased.
Durian at Hoang Anh Gia Lai’s garden. Image: Thi Ha
The Chinese market is attractive to all exporters, but no longer easy. Recently, they offer many technical standards for quality for Vietnamese goods.
Two years before durian was licensed to export official exports to China, this item was strongly exploded, up 300%. But from the beginning of the year, they began to tighten technical requirements, the amount of buying this fruit dropped. By the end of February, durian exports to China decreased by 83%, to 27 million USD. From the No. 1 position, this fruit fell to the third, after the dragon and bananas to the billion -dollar market.
The reason is that imported durian shipments must have results of analysis of cadmium residues and y gold at the laboratory recognized. Cadmium is a toxic heavy metal that can accumulate in food, while y gold is an industrial dye, both are strictly controlled due to the risk of cancer. Not only in Vietnam, these types of exporting countries are affected by the quality tightening regulations, making the clear and complicated customs process.
Recently, China has also applied a policy of 100% of durian shipments from Vietnam, slowing clearance time, increasing the risk of damage and making export businesses more cautious. The representative of the Vegetable Association expressed concern if these technical barriers continue to tighten with other agricultural products, Vietnam’s export turnover to China will be seriously affected.
Mr. Dang Phuc Nguyen proposed that the Ministry of Agriculture and the Environment and the planned agencies to improve the quality of Vietnamese agricultural products. Instead of giving a document, the authorities should support farmers to control tightly from planting areas and arable lands, to the process of cultivation, packaging and testing, in order to meet the increasingly strict requirements from the neighboring market.
In order to maintain and expand market share, Mr. Nguyen Quoc Toan, Director of the Processing and Development of Agricultural Products Market (Ministry of Agriculture and Environment), said that businesses need to transfer from urine export to official ranks, invest in quality and traceability to avoid being eliminated from the game.
In the same opinion, expert Vu Vinh Phu said that the rate of taking advantage of the FTA between the two countries is not high, about 30-40%, due to the compliance capacity of the business and lack of a clear market strategy.
“This is a bottleneck that needs to be removed soon if you want to increase the competitiveness of Vietnamese goods in the neighboring market,” Mr. Phu said.
From an enterprise perspective, according to Mr. Vo Quan Huy, Vietnam needs to access this billion -dollar market and wiser. That is, businesses need to invest properly to increase the added value for products and build production chains, from selecting breeds, making soil to packaging, more professional supply.
In fact, Vietnam has proposed China to speed up the opening of the agricultural market, sign the framework agreement on rice trade, coordinate customs clearance at the border gate to avoid congestion. A specific proposal is to set up a trade promotion office in Hainan and coordinate to build a Chinese -ASEAN Fruit Trading Center in Guangxi and Quang Ninh.
The management agency also emphasizes the standardization of the production process (preliminary processing – packaging – shipping) according to international standards is a prerequisite for Vietnamese goods to maintain market share in this market. Along with that, the negotiation to expand the list of agricultural products is allowed to export, invest in the cold storage system in the border provinces, upgrade logistics infrastructure, simplify customs clearance … are also being promoted by the parties.
Vietnam also encourages businesses to take advantage of FTAs to reduce dependence on a single market, while improving the capacity to participate in the global supply chain. The operator promotes the export of key items such as durian, dragon fruit, mango, passion fruit to China, in order to balance the trade balance in the long term.