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Domestic market a dead end?
When enterprises met difficulties in exporting products due to narrowed export markets, they thought of conquering the domestic market. However, after a period of trying to do that, they have since come to believe that the way out for Vietnamese goods is through exports.
Vietnam-made goods inferior in home market
130 Thai producers and traders together with 45 Thai restaurants are on a campaign to introduce products and seek distributors for their products, plastics, inox and glass-made goods, electric consumer goods, apparel and food, in Hanoi and HCM City.
In the food market, analysts once forecast that Vietnamese food would dominate the market to take the place of China-made goods after the quality scandals of the goods sourced from that country. However, it seems that Thailand-made products have been more swift-footed than Vietnam’s in conquering Vietnam’s market. Thai products have been flowing into supermarkets, wholesale markets and now retail markets. Retail shop chains that sell Thai goods have been mushrooming since the beginning of the year in Hanoi and HCM City.
In fact, Vietnamese businesses have been making every effort to conquer the home market with big-scale trade promotion campaigns. Garment and footwear companies were the pioneers in the campaigns as their export markets have been most influenced by the global economic crisis. These are also the businesses which put the highest hopes on sales in the domestic market.
Nevertheless, a lot of businesses, after a period of trying to conquer the domestic market, have realised that the domestic market, though a large one with 80 million consumers, is not a market that they can exploit easily. The domestic market requires product designs and quality different from the requirements of export markets.
Moreover, Vietnamese people’s income per capita remains modest at $1,000 per annum, not enough to generate high demand. Additionally, the habit of saving money due to the bad social security system and concerns about economic difficulties have prompted Vietnamese consumers to continue tightening their belts.
Exporting, the solution for Vietnamese goods
Analysts believe that the outlet for Vietnamese goods should be in export markets rather than the domestic market.
According to Vu Khoan, former Deputy Prime Minister, exporting is the sector that most suffered from the global economic crisis, but it is also the most effective measure to help Vietnam escape from the influences of the crisis. Therefore, Vietnam should still prioritise export-oriented policies.
However, economists have called for a different concept of ‘export-oriented policies’. They say that export should not only mean ‘sending goods across the border’. Le Duc Thuy, Chairman of the National Finance Supervision Committee, said this should be understood as meaning Vietnam needs to strive to make products capable of competing with products from other countries.
“Vietnam needs to strive to make products which can be sold in different markets,” Thuy said.
Analysts also say that in the case of Vietnam, when exports become bigger, imports increase accordingly, because Vietnam needs to import materials to make finished products domestically. The same situation does not occur with neighbouring countries like China or Thailand, who have seen trade surpluses increasing.
vietnamnet, dtck
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