Project to boost exports to Africa

Rice, which accounts for roughly 40 per cent of the country's total export turnover to Africa, is packed for export at the HCM City Food Company. The Ministry of Industry and Trade has approved a project to help exporters better exploit the African market. — VNA/VNS Photo Dinh Hue

HA NOI — A project to boost exports to Africa, a location considered to be a potential market for Vietnamese goods in the wake of saturation in traditional markets, was ratified by the Ministry of Industry and Trade (MoIT).

Under the project, the ministry will select a number of large exporters to focus on Africa specifically and they will be grouped together to focus on exporting special products to key markets in the region.

MoIT will also ask the Government to introduce policies to encourage small- and medium-sized businesses to do more business in Africa.

Besides rice, apparel, coffee, footwear, electronics and construction materials, the ministry will also urge exporters to ship goods that are in high demand in Africa, such as household utensils, consumer goods, food, plastics, mechanical goods and medicine.

Africa is the world's third largest continent with 54 countries and a total population of more than 1 billion. As the continent's economy is forecast to expand by about 4.5 per cent this year, they will likely need to import various necessities and a greater volume than in the past.

Currently, Vietnamese products are present in 53 African countries. The key export markets are Egypt, South Africa, Angola, Nigeria, Ghana and Algeria.

Strategic gateway

Two-way trade between Viet Nam and Africa has grown by an average of 45 per cent per annum. Last year, Viet Nam's exports to Africa reached US$1.56 billion, an increase of 20 per cent compared to 2008, of which South Africa accounted for roughly 30 per cent.

Do Quang Lien, commercial counselor to South Africa, said Vietnamese businesses should strengthen their investment and exports to South Africa as it is the continent's largest economy and a strategic gateway for trade between the continent and other countries.

Viet Nam's main exports to Africa include rice, consumer goods, textiles and garments, electronics, plastic and wooden products, coffee, motorbikes, dairy products, seafood and processing foodstuff. Currently, rice accounts for roughly 40 per cent of Viet Nam's total export turnover to Africa and it is forecast that the product will remain at the top of Viet Nam's exports to Africa for the next five years.

Although trade between the two countries has increased, Vietnamese exporters to Africa are still facing challenges, including incomplete legal policies, poor infrastructure, an undeveloped banking system and a lack of information about African countries in general.

Apart from Africa's remote location, which bumps up transport costs, the difficulty in making payments is a daunting one. Le Thi Thai Hoa, deputy director of the Ministry of Industry and Trade's African Market Department, said several African countries were saddled by outdated payment facilities, which deter Vietnamese enterprises from penetrating this market.

To deal with this, Hoa suggested businesses should actively contact her department and Viet Nam's trade offices in African countries to seek help, avoid fraud and minimise risk.

This year, Viet Nam targeted a 3-per-cent increase to $1.6 billion in export revenue to Africa. — VNS

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African Market Necessitates A Different Approach

In recent years, the Vietnamese Government and enterprises have done quite a lot to expand the African market rated as having high potential. Such first steps have brought certain success, yet in reality, the export turnover of Vietnamese goods to Africa is still too small compared with the demand of this market.

Why is the African market, which has been exploited by enterprises over the years, still at the stage of “having potential”? Many contend that Africa is a new market, thus information regarding this market is still limited. The financial capability is weak and risks in payment as well as logistics costs are high.

However, Do Quang Lien, Vietnamese commercial counselor in South Africa, said: “We cannot hold on to the above reasons to continue exploiting the African market we have done in the past.”

Lien said that all the aforementioned concerns of enterprises have been addressed. As with more distant markets such as Europe and America, domestic enterprises have all had success. Similarly, difficulties in transporting have been dealt with, when international shipping companies opened transporting routes for this market. The lack-of-information reason is also no longer valid, since each year, the Government organizes trade promotion trips to the African market; seminars about this market are also held by the two parties. “If enterprises are really concerned about the African market, it will not be hard to search for information on the Internet,” Lien said.

For that reason, the commercial counselor said: Vietnamese enterprises have not made the most of the African market due to a lack of bond with this market. Enterprises are still hesitating, investing sporadically in areas deemed as having high potentials over the years.

Specifically, regarding aquaculture products, Dang Ngoc Quang, Vietnamese commercial counselor in Africa, said Egypt superseded the United Arab Emirates (UAE) as the biggest importer of Vietnamese products in the Middle East and Africa. Yet when Egypt requests Vietnam’s assistance in aquaculture technology, the domestic fisheries industry fails to meet it.

According to Quang, Egypt has a big demand for aqua-products such as tuna, lobster and octopus but domestic enterprises cannot meet due to lack of supplies. Many domestic aquaculture enterprises are not interested in the Egyptian market due to their attention to other traditional markets. Egypt’s aqua-product demand reaches millions of tons annually, but Vietnam can only export 30,000 tons every year.

Vietnam’s competitiveness versus other countries in the African market is still limited. Enterprises only stop at planning and do not have specific or long-term solutions. Experience from the recent economic crisis shows that Vietnam is too dependent on big export markets such as the EU, the U.S. and Japan. When the market is still at the primeval stage, there are many opportunities to exploit and conquer. However, some years later when foreign companies start to flock to Africa, domestic enterprises will find themselves a latecomer as “the early bird catches the worm.” This can be easily seen in government management, when Vietnam only has five trade bodies for 54 African countries. For big markets in Central, West and East Africa, Vietnam only has one trade office in Nigeria.

More focus needed

In order to enter the African market effectively, enterprises need to stay focused and have specific plans. Acecook Company participated in introducing and marketing products to consumers and distributors in South Africa at Saitex and Big Seven trade fairs held in July 2010. Similarly, HCM City-based Lotus Rice Company promoted their image and goods by sponsoring a conference on rice in Cape Town, South Africa, also held in July. Lotus Rice has a specific and clear strategy for the African market. The company hires foreign experts for market development in South Africa.

Nguyen Cong Hien, deputy director of the Department of African, West and South Asian Markets, said areas with low turnover should be given priorities in terms of budget for trade promotion and goods presentation. In markets where Vietnamese goods have had a good penetration and won consumer confidence, the Government has fulfilled its role of supporting enterprises. However, it should increase efforts to help businesses penetrate new markets such as Africa.

Hien also said that enterprises need to choose suitable business methods for the African market, in order to take full advantage of opportunities and limit possible risks. For enterprises who have just joined the game, it is advised to choose exporting through intermediaries. Enterprises should utilize intermediaries in Europe to export to Africa, as these companies have years of experience in the African market, strong finance capability and close relationships with banks in Europe and the U.S. Thus, Vietnamese enterprises will be able to curb payment risks.
Enterprises also need to utilize trade bodies or Vietnamese diplomatic agencies in Africa to export goods directly. Countries such as South Africa, Egypt and Angola, which already have a relatively developed banking system and a strong finance structure, are a good chance for direct export. Enterprises also need to maintain good relationships with direct partners for expansion to neighboring nations. Opening showrooms and promoting products in the African market are also necessary. Enterprises may ask trade bodies to be the intermediary for choosing business partners at a concerned country.

Currently, Europe offers 33 African nations the Generalized System of Preferences (GSP) status for goods. Therefore, it is worth investing into exported goods production by Africa. By doing so, enterprises will enjoy trade incentives that the U.S. and the EU give to African nations.

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HSBC in talks to buy majority stake in Nedbank

Asia-focused banking giant HSBC announced on Monday that it is in "exclusive" talks with insurer Old Mutual over the potential purchase of a controlling stake in South Africa's Nedbank

LONDON – Asia-focused banking giant HSBC announced on Monday that it is in "exclusive" talks with insurer Old Mutual over the potential purchase of a controlling stake in South Africa's Nedbank.

"HSBC Holdings plc has entered into exclusive discussions with Old Mutual plc about the possible acquisition of a majority stake in Nedbank Group Limited, South Africa's fourth largest banking group by total assets," HSBC said in a brief statement to the London Stock Exchange.

"The discussions are ongoing and if successfully concluded would be conditional on, among other matters, obtaining the necessary regulatory approvals."

In a separate statement, Old Mutual revealed that it has received a proposal from HSBC to buy up to 70 percent of Nedbank shares, but did not reveal the price.

Old Mutual added that the proposed deal would be a "major step" in its strategy to reduce the group's complexity, adding that the proceeds would be reinvested and used to cut debt.

Meanwhile, the Financial Times newspaper reported on Monday that HSBC had fended off competition for Nedbank from British-based emerging markets lender Standard Chartered.

The daily business newspaper, which cited people familiar with the talks, added that HSBC's proposed Nedbank deal could lead to a full takeover offer.

HSBC, which is seeking expansion in emerging markets, agreed last month to buy the Indian commercial and retail banking assets of Britain's state-controlled Royal Bank of Scotland.

 

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Africa offers huge trade potential

Workers at the Thuan An Production Trading and Service Co Ltd process tra fish for export. Domestic businesses are being encouraged to strengthen their exports to Africa. — VNA/VNS Photo Van Khanh

HCM CITY — Domestic businesses should strengthen their exports to Africa where demand for Vietnamese goods is huge, a senior trade official has said.

Speaking at a conference held last Friday, Ly Quoc Hung, head of the Ministry of Industry and Trade's Africa-West Asia-South Asia Markets Department said the promising market has great demand on consumer goods, machines, technology, and agricultural products, especially rice. "The African countries' rice demand reached nearly 10 million tonnes per year," he said.

Africa has plentiful unexploited natural resources, minerals and land. Its population is crowded and is growing rapidly but its capacity for agricultural and industrial production is weak.

Furthermore, Africa still benefits from the Generalised System of Preferences from the US and EU and Vietnamese businesses should take full advantage of it to set up production bases there.

Currently, Vietnamese products are present in 53 African countries. The key export-import markets are Egypt, South Africa, Angola, Nigeria, Ghana, and Algieria.

Last year, Viet Nam's exports to Africa reached US$1.56 billion, an increase of 20 per cent compared to 2008, with the main products including consumer goods, textiles and garments, electronics, plastic and wooden products, coffee, motorbikes, dairy products, seafood and processing foodstuff.

Viet Nam's imports reached $508 million.

Hung also said fields for cooperation in the near future include mineral exploitation and exploration, chemicals, textile and garment, agricultural product processing, agricultural machines, motorbikes and bicycle production.

Vietnamese businesses should pay much attention to trade and technical barriers, the production must meet the import requirements of the African countries. The payment method mainly used is Documents against payment (D/P), with just some countries using Letter of Credit (L/C).

For instance, the brands and information on products are written in English, French or the mother-tongue. Besides, the businesses need to thoroughly understand the customs and tastes of local customers.

Promising markets

At the conference, the commercial counsellors in Egypt, Algieria, Morocco, Nigeria and South Africa shared experience to give more support to Vietnamese businesses in Africa, which is a promising market for Vietnamese goods.

Nguyen Thi Hong, vice chairwoman of HCM City People's Committee said the commerce counsellors played as important bridges in attempt to help them become successful in the potential market.

City authority also highly evaluated the African market and would create more favourable policies to intensify the investment, trade and service development in this market.

She said the City had asked the Investment Trade Promotion Centre to carry out promotional programmes, organise many visits to make surveys on this market, as a result, the businesses would map out suitable strategies to expand their exports.

Do Quang Lien, commercial counsellor to South Africa said Vietnamese businesses should strengthen their investment and exports to the South Africa, which is the continent's largest economy and is a strategic transport gateway in trading between the continental and many other foreign countries.

Dang Ngoc Quang, commercial counsellor to Egypt said seafood was the key Vietnamese export product in Egypt. In the first six months, seafood turnover reached $25.93 million, of which tra and basa catfish turnover was $16.9 million and shrimp $8.1 million

"Viet Nam is seen as a strong seafood exporter, and it is able to provide various kinds of seafood at a competitive price and quality to the African market," he said, adding that Viet Nam could totally supply these products in the long-term and in huge volume.

Product diversification and promotional programme intensification are keys to help the domestic seafood businesses to expand exports.

The commercial counsellors to Algieria, Morocco, and Nigieria agreed that the businesses should take part in fairs, exhibitions and look for long-term and large contracts as well as popularising their images and brands to the market. — VNS

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