Trade exchange has been progressing, but not met its potential
The bilateral trade between Vietnam and Sweden is developing with each year. Vietnam has, in terms of growth, become Sweden’s best market in South East Asia. In 2003, exports from Sweden to Vietnam reached a value of SEK 813 million, approx EUR 88.67 million. Imports to Vietnam in 2003 reached SEK 984 million or EUR 107.32 million.
Though there has been growth in bilateral trade in recent years, these figures do not represent the true potential of the two countries. Vietnamese exports only consist of garments and textiles, shoes, household items, pottery and seafood and Swedish exports are mainly machinery, pulp, telecommunication equipment, equipment for the energy sector and steel. Vietnam’s coffee, tea, fruit, vegetable, and handicraft and Sweden’s furniture and interior decoration industries are still to be fully exploited.
Explaining the reasons, Ms. Helena Sangeland says that in times of global economic uncertainty and political tension, Swedish exporters become more hesitant to explore new and distant markets in spite of the possibilities. This is a market with a different business culture, a market where a good network of contacts is essential, and a thorough knowledge of the rapidly changing legal environment is vital.
Furthermore, Swedish companies still need information on the development of the Vietnamese market. Improvements in the business environment during the last years have been considerable as the reform process continues. One obstacle, which keeps some companies away from Vietnam, is a pre-conceived notion among many Swedish businessmen that Vietnam is “too much red tape and corruption”.
Vietnam exporters, on the other hand, lack knowledge of the Swedish market. Plenty of standards, environmental policies, codes of conduct, knowledge of buyers’ expectations on product quality, trial orders, delivery on time, packaging and environmental issues are of particular importance to gain and maintain customer confidence in Sweden. Some Vietnamese suppliers are still on the learning curve in satisfying Swedish demand.
Ms. Helena Sangeland informs Vietnamese exporters that the Swedish consumer goods market has some general characteristics, which could be useful to keep in mind. Swedish consumers have high a purchasing power, they want quality and brands that they can trust, as well as being very health, social and environment conscious. Other features are their price and trend consciousness when it comes to garments, footwear and furniture. Buying practices and distribution channels vary greatly depending on the product. Many of the above features also apply to the industrial market.
Vietnamese exports should be able to find their way to Sweden. Ms. Helena pointed out a special example for illustrating that Sweden has one of the world’s highest per capita consumption of coffee in the world. Gaining entry into the Swedish market is a challenge. The trade is stable and very set in its trading patterns. However, coffee buyers are still interested in looking for new suppliers of green Arabica beans for when shortages suddenly occur. She hopes Vietnamese coffee is brought to the store shelves in Sweden the near future.
One common denominator of the Swedish companies already on the market is that they are very optimistic about their future in Vietnam. For some of them, Vietnam is even the best emerging market in Asia. This year Vietnam and Sweden celebrate 35 years of unbroken diplomatic relations and there is definitely potential for more bilateral trade.
“It’s high time to take our relations even further,” Ms. Helena emphasized.
Swedish representatives focus on bilateral trade
Vietnam and Sweden are extremely dependent on foreign trade. Rapid export growth is fundamental for overall growth. In addition, both countries benefit from imports, which are not impeded by trade barriers.
In light of this, the Swedish Embassy is now focusing more on import promotion. In February 2004 import seminars were held in both Hanoi and Ho Chi Minh City. In September, in Stockholm last year, a day was dedicated to information on business in Vietnam. This was a joint effort by the Trade Council office in HCMC, the Embassy and the Swedish Trade Council. It was a successful event with 104 participants, out of which 22 were from Vietnam.
Swedish exporters are similarly encouraged. Companies with systems, products and machines for upgrading the Vietnamese industrial infrastructure should take a closer look at the market. Environment is also a good sector as long as one keeps in mind that most of the orders so far have been financed with soft loans or loans from the Asian Development Bank. The health care sector is also of interest.
A highlight in our bilateral relations and trade promotion was the visit of King Carl XVI Gustaf and Queen Silvia of Sweden in February. The visit incited further Swedish interest in doing business in Vietnam and vice versa.
In connection with their visit a number of trade promotion events were organised. A high-level business delegation, representing around 15 Swedish government institutions and private companies, held discussions on relations between Sweden and Vietnam in a regional and global context with its Vietnamese counterparts.
Seminars were held in Hanoi and Ho Chi Minh City on “Developing an Environmentally Sustainable Society”. Vice minister Krister Nilsson headed the environment delegation. An IT&telecom delegation was headed by the vice-minister for industry, employment and communications, Jonas Bjelfvenstam. Seminars were arranged in Hanoi and Ho Chi Minh City on “Creating a Wireless Society”. A health delegation, headed by Professor Jan Carlstedt Duke, Karolinska Institutet took part in a Vietnamese and Swedish health symposium in Hanoi.
In addition, an import delegation, headed by Mr. Borje Risinggard, director of the Swedish Import Council of the Swedish Federation of Trade, held business meetings on “Sweden – An Attractive Export Market for Vietnam” in both Hanoi and Ho Chi Minh City.
Ms. Sangeland says the Embassy of Sweden and the Swedish Trade office in Ho Chi Minh City support Swedish companies in several ways to gain market access. Vietnamese exporters are supported by identifying useful contacts and providing market information. Promotion projects financed by the Swedish International Development Cooperation Agency, Sida, to support Vietnamese exports to Sweden are underway. Garments and textiles, furniture and handicraft are targeted in particular.