Despite increasing exports to South Korea, Vietnamese companies still find it hard to penetrate deeply into this market, heard a seminar in Ho Chi Minh City last week.
According to Vietnam Customs, the country’s exports to South Korea increased by nearly 50 percent year-on-year to more than US$3 billion last year, accounting for 4 percent of Vietnam’s total exports. Textile and garment products took the second position among the biggest export earners to the market behind crude oil.
Kim Euk Guen, director of Global Kim Co., Ltd, told the Saigon Times Daily after the seminar that Vietnam’s exports to Korea started the uptrend several years ago partly due to good prices of Vietnamese products and Vietnamese companies’ stronger interest in the Korean market.
Efforts by the two governments also contribute to the trend, he said after the seminar held by the HCMC Investment and Trade Promotion Center (ITPC) on Wednesday to help local enterprises enter South Korea’s market.
In addition, according to some local businesses, tariff reduction as committed in the free trade agreement (FTA) between ASEAN and South Korea also contributes to the increase. About 78 percent of Vietnam’s exports to South Korea are subject to preferential tariffs from the FTA, notably garment products.
However, the market is found as a potential but hard-to-access one, said local traders at the meeting.
The director of a local food trading company said she had seven years exporting Vietnam’s products to foreign markets, but succeeded in penetrating South Korea just in the last three years.
“Now the company has seven long-term Korean partners, but we still meet many difficulties to access the market. The biggest barrier is cultural difference,” she said.
“They are more reserved about Vietnamese partners. Therefore, they often take more tests on Vietnamese products,” she explained.
She asserted that there was high potential for Vietnamese goods to penetrate South Korea, but Vietnamese businesses didn’t tap the market well. High costs of visiting the country and joining exhibitions in Korea partly discouraged local traders.
“I knew some basa fish processors participating in an exhibition in Korea, but they failed to find the right partners. They, then, seemed to give up trying to enter the market,” she said, calling for more patience.
In the seminar in HCMC on Wednesday, Tran Thanh Quang, vice manager of sale and marketing department of Khatoco Ostrich – Crocodile Business Co., said the company was now exporting ostrich skin and shoes made from ostrich skin to Korea, but still didn’t know how to tap into this market.
Even for apparel products as the second biggest export from Vietnam to South Korea, most of made-in-Vietnam textile and garments imported by South Korea are made by Korean investors in Vietnam.
According to Dong Ook Byun, a consul at the Consulate General of Korea in HCMC, South Korea is an open market. It means that Vietnamese products are expected to meet strong competition from other countries’ as well as South Korean producers in their own country and producers elsewhere such as China.
In the first five months of this year, Vietnam exported US$1.8 billion worth of goods to South Korea, including US$267 million of textile and garment products, and imported $4.96 billion worth, according to Vietnam’s Customs.