OVERVIEW
Definitions
Border trade involves the exchange of goods and services across international borders, functioning within established export and import frameworks It specifically highlights trade in regions where crossing borders is relatively simple and where price disparities exist due to differing taxation levels on products.
- For example: a company in the US selling goods to a company in Canada; a Chinese merchant buying dragon fruits from Vietnamese farmers;
Official trade refers to trading contracts established between firms from two different nations Typically, these agreements are formed either between countries or between a nation and an international economic organization, adhering to international regulations.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), commonly referred to as TPP11 or TPP-11, is a significant trade agreement involving Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
Comparing Border and Official trade
1 Similar points of the two methods of exporting
- Goods being exported through both border trade and official trade have to be checked thoroughly by appropriate authorities before being gotten out of the country
- Goods exported both ways have to bare tariffs, although the level of tariffs are not the same
2 Differences between the two method of exporting
- Occurs between two neighboring countries, mostly by merchants and normal citizens of those countries.
- The amount of each affair is quite small; low stability; might get price squeezing
- High internationality, mostly occurs between big importing/exporting companies of the two countries.
- Complicated procedure, requiring strict contracts which follow international laws
- High transporting and maintaining costs
- Huge amount each affair; high stability
For many trading companies, border trade is often the preferred option due to its lower tariffs and costs, as well as simplified procedures This method of exporting does not require bills, payment documents, or foreign trading contracts, making it an attractive choice for businesses looking to streamline their operations.
However, border export is not stable and each deal worths pretty small value.
To expand our market and export goods globally, relying solely on border trading poses safety risks for businesses Consequently, most significant international transactions are conducted through official trading methods to ensure security and reliability.
The actual state of Fruit official exporting from Vietnam to China
At the moment (December 1019), there are only 9 kinds of fruit that are being exported officially from Vietnam to China These fruits are:
In this report, we are going to make it clear about the export practices ofWatermelon from Vietnam to China.
Overview of watermelon export situation from Vietnam to China
Situation of watermelon production in Vietnam
1 Provinces planting watermelon in Viet Nam a) Total area of watermelon production yearly in Viet Nam is 55.000 hectares, consisting of:
- Mainly concentrated in Hai Duong, Bac Giang, Nghe An and Hoa Binh during the spring crop.
- The remaining provinces accounts for 100-1.000 ha
- Spring crop: from March to May
- Fall-Winter crop: from July to late August, early September
- Early crop harvested from September to December accordingly
- Mainly concentrated in Quang Nam, Quang Ngai, Binh Dinh, Gia Lai and Lam Dong
- Winter-Spring crop: from late December to April
- This is the main crop with significant production volume
- Mainly concentrated in Long An, Tien Giang, Hau Giang and Can Tho
- Lac Hau crop: from December to Lunar New Year's Eve (5-8% planting area)
(50-65% planting area) -Third crop after the raining season
Others - Unstable watermelon growing area: approximately 20,000 ha / year (*)
- Watermelon production fluctuates: 500-600 thousand tons / year (*)
On Winter-Spring crop, production area of Vietnamreachsappox 18.000, about 30% of the total
- The remaining parts are used in other crops throughout the year
2 Watermelon consumption and export of Vietnam
In 2017, Vietnam produced approximately 1.5 million tons of watermelon, with around 80% consumed domestically and 20% exported The Chinese market dominated exports, accounting for about 95% of total sales That year, Vietnam's watermelon exports generated revenue of $95.4 million.
Exported value in 2016 Exported value in 2017
Value exported in 2018 (USD thousan d)
Share in Viet Nam's export s (%)
Growth in exporte d value between 2014- 2018 (%, p.a.)
Growth in exporte d value betwee n 2017- 2018 (%, p.a.)
Rankin g of partner countrie s in world imports
Share of partner countrie s in world imports (%)
Total imports growth in value of partner countrie s between 2014- 2018 (%, p.a.)
Concentratio n of all supplying countries of partner countries
Average tariff (estimate d) faced by Viet Nam (%)
Characteristics and requirements of China's market with imported watermelons
1 The production and consumption of watermelons in China
According to information from the Department of Industry and Trade, in China, watermelon is one of people's favorite fruits
Watermelons in China are primarily cultivated in two key regions: the Yangtze River Delta and the south-central provinces, including areas like Shanghai, Jiangsu, and Guangdong These regions collectively represent about 10% of the nation’s total vegetable planting area, with the total watermelon cultivation reaching 1.84 million hectares in 2015, as reported by the China Ministry of Agriculture From 2015 to 2020, China plans to expand its watermelon planting area by approximately 1% annually, aiming for around 2.2 million hectares, while shifting focus from small-scale production to mass production to enhance both productivity and overall production volume.
China has seen a significant increase in watermelon production, rising from 72 million tons in 2013 to 77.5 million tons in 2016, thanks to an expansion in planting areas This growth has solidified China's position as the leading producer of watermelons globally.
China's watermelon cultivation spans from April to August or September, with planting regions starting in Hainan and extending to Guangxi, Zhejiang, and Jiangsu Consequently, the country increases its watermelon imports from November to April of the following year to meet demand during the off-season.
Watermelons experience peak demand around the Lunar New Year holidays, with Chinese consumers showing a strong preference for medium-sized melons weighing approximately 3-4 kilograms each.
2 Watermelon import situation of China
China has experienced a notable decline in watermelon imports, as evidenced by data from China Customs In 2016, imports reached 201,400 tons valued at 32.2 million USD, marking an increase in quantity but a decrease in turnover The average customs declaration price for imports in 2016 was 160.5 USD per ton, down approximately 26 USD per ton (15%) from 2015 In 2017, imports further decreased to 188,320 tons with a turnover of 31.86 million USD, reflecting a 7.78% drop in quantity and a 2.81% decline in turnover.
Vietnamese watermelon dominates China's imports, comprising approximately 94% to 97% of the total import value However, significant quantities of watermelon are also imported from Myanmar, Laos, and Thailand via border trade, which are not reflected in official statistics.
Vietnam's watermelon export to China
1 The supply chain and situation of Vietnam's watermelon export to China
In 2016, Vietnam's watermelon exports surged to 238,363 tons, generating a revenue of 106.32 million USD, reflecting a remarkable increase of 651.1% in quantity and 543.1% in turnover compared to 2015, as reported by Vietnam Customs Between 2014 and 2018, China consistently imported an average of 196,777 tons of Vietnamese watermelon annually, contributing approximately 36 million USD to Vietnam's export earnings each year, according to Trademap.org.
Vietnam watermelon prices are generally quite competitive compared to other countries: ~ 190 USD/ton in 2014,2015,2018 and 161-169 USD/ton in 2016,2017.
Quantity of supplying markets for watermelons imported by China
Value of supplying markets for watermelons imported by China
Supply chain diagram exported to China
Input supply firms and businesses Input supply firms and businesses
Farmers and farms planting watermelon Farmers and farms planting watermelon
Border trade exporters Border trade exporters
Official trade exporters Official trade exporters
Vietnam's strategic geographical location facilitates the exchange and export of agricultural products to China, particularly watermelons Currently, most Vietnamese watermelons are exported through the Tan Thanh - Po Chai border gate, where import procedures are typically conducted as trade among border residents, allowing for duty exemptions Other significant border gates for imports include Lao Cai - Ha Khau and Mong Cai - Dong Hung.
Vietnam holds a dominant position in the watermelon export market to China, commanding an impressive 99.1% share, as reported by Trademap.org In contrast, its closest competitors, Myanmar and Malaysia, collectively contribute less than 1% to this market.
Vietnam's watermelon exports to China face significant competitive challenges due to China's shift from small-scale to large-scale watermelon production, aimed at increasing productivity From 2015 to 2020, China plans to expand its watermelon cultivation area by 1% annually, approximately 2.2 million hectares Since 2016, Chinese farmers have increasingly planted off-season watermelons to cater to domestic demand around the Lunar New Year, resulting in a substantial rise in supply This surge has led to a sharp decline in watermelon prices in China during January and late February 2017 Additionally, imports from Laos and Myanmar, which have similar harvesting periods and lower prices, further intensify competition for Vietnamese watermelon in the Chinese market.
The Vietnamese Ministry of Industry and Trade is focused on enhancing watermelon exports to China, offering essential support and guidance to farmers They provide timely recommendations on cultivation practices to ensure that the watermelons meet the specific standards required for successful export to the Chinese market.
Tariff and non-tariff measures
Tariff
In November 2002, ASEAN and China signed the Framework Agreement on Comprehensive Economic Co-operation, paving the way for enhanced economic collaboration This foundational agreement led to the signing of the Agreement on Trade in Goods and the Agreement on Trade in Services, both effective from July 2005, as well as the Agreement on Investment, which took effect in February 2010 These agreements collectively aim to establish a robust ASEAN-China Free Trade Area, fostering greater trade and investment between the two regions.
In November 2015, ASEAN and China finalized the Protocol to Amend the ACFTA, introducing new commitments related to Goods, Services, and Investment This protocol became effective in May 2016 and established a tariff reduction and elimination program for Vietnam, which is divided into three categories: Early Harvest Programme, Sensitive Track, and Normal Track.
Under the Normal Track, each Party voluntarily places tariff lines that will see their applied Most Favored Nation (MFN) tariff rates gradually reduced and ultimately eliminated This process will adhere to the modalities outlined in Annex 1 of the Agreement, aiming to meet the specified targets within the established thresholds.
Each Party may independently designate certain tariff lines to the Sensitive Track, which will then have their applied Most Favored Nation (MFN) tariff rates reduced or eliminated according to the procedures outlined in Annex 2 of this Agreement.
To expedite the implementation of the ASEAN-China Free Trade Area (ACFTA), the Parties have committed to launching an Early Harvest Programme (EHP) This initiative is a crucial component of ACFTA, encompassing all products specified in the relevant chapters at the 8/9 digit level (HS Code).
02 Meat and Edible Meat Offal
For product 0807110000 – Melons (including watermelons) and papaws (papayas), fresh melons (including watermelons)
Exported from Viet Nam to China
Preferential tariff for ASEAN countries
Schedule of tariff reduction for EHP
MFN tariff rate EHP tariff rate yearly
- All products where the applied MFN tariff rates are at 0%, shall remain at 0%
- Where the implemented tariff rate are reduced to 0%, shall remain at 0%
Watermelon, with HS code 0807110000, belongs to EHP, under the MFN rate 25% , so that the tariff rate on watermelon exported from Viet Nam to China is 0% from 2008.
Average tariff (estimated) applied by China (%)
Vietnam faces strong competition in watermelon exports to China from Myanmar and Malaysia, both of which are also ASEAN countries This allows all three nations to benefit from preferential tariffs when exporting watermelon to the Chinese market.
Non-tariff measures (NTMs)
Official policy measures beyond standard customs tariffs can significantly impact international trade in goods by altering the quantities traded and influencing prices These measures may include export subsidies, import quotas, and trade agreements, all of which can reshape market dynamics and trade flows Understanding these policies is crucial for businesses and policymakers to navigate the complexities of global trade effectively.
Mandatory requirements, rules or regulations legally set by the government of the exporting, importing or transit country (in contrast to private standards which are not legally set)
Can affect both export and import
1 Sanitary and Phytosanitary Measures (SPS) vesus Technical Barriers to Trade (TBT)
- Requires no measures to be commercially restricted than necessary to satisfy A righteous goal (according to each agreement, see objectives below)
- Including basic obligations on non-discrimination
- Encourage the use of international standards to promote
- Request prior notice of the proposed measures and establish the information clues or "answer point" (required for transparency)
- Special and distinct treatment for both developing and underdeveloped members
The basic rules of food safety standards and plan and animal health
Regulations on the construction, acceptance and adoption of technical regulations, standards and conformity assessment procedures.
The primary goal of these measures is to safeguard the health and lives of humans and animals from food-related risks They aim to protect children from epidemics linked to animal or plant food sources, as well as to prevent diseases, pests, and pathogenic organisms from affecting both animals and plants Additionally, these measures are designed to shield local communities from various types of pests.
All technical regulations, standards, and conformity assessments pertain to the trade of goods, encompassing both agricultural and industrial products However, sanitary and epidemiological measures governed by the SPS agreement are not included within the scope of this adjustment.
Apply only to the extent necessary to protect the life, human health, fauna or flora from the risks associated with food, pesticide or pests from animals or plants.
Can be applied and maintained in response to a genuine goal, including protecting human health or safety, protecting the environment or preventing fraudulent acts.
A WTO member is obliged to use International standards, unless the proved on the basis of Specific learning based on risk assessment.
WTO members are required to base their technical regulations on established standards, unless those standards are relevant internationally or do not effectively serve a legitimate purpose.
2 Some China’s SPS imposed on Vietnam’s exporting watermelon
Watermelon is a key fruit traded between border residents of the two countries, allowing China to import it without a formal plant quarantine protocol However, imported watermelons must comply with specific testing and quarantine standards to ensure safety and quality.
Shipments of agricultural products, particularly fruits imported into China, must undergo Quality Supervision, Inspection, and Quarantine by the management agency of the exporting country, adhering to the specified format and agreements established with Chinese authorities.
- For imports of animal, plants and their products that are in the catalogue, quarantine approval from AQSIQ shall be applied before import can take place.
- No plant residues such as pest, soil, branch branches, leaves that China bans entry
- The amount of harmful substances detected should not exceed the relevant safety and health standards of China
- Watermelon from Vietnam no longer allowed to be sent in straw-lined cartons as of May 2019
3 Some China’s TBT imposed on Vietnam’s exporting watermelon
Imported fruit must be properly wrapped and labeled, clearly displaying the product name, address, quantity, weight, garden profile number, workshop registration number, and packaging facility Additionally, the packaging must include the official quarantine release in Chinese It is essential to verify that the product meets all relevant quarantine requirements.
- Imported fruits are not used plants such as leaves, fruits, straw, As liner material Stems are not allowed to exceed 15 cm.
- Do not mix or contain other fruits that are not recorded in probate/plant Quarantine Certificate
- Export watermelon is packed in carton, weight normally 10-15kg/carton,glued adhesive tape outside the barrel before packing.
Rules of Origins (ROO)
- The ”Economic nationality” of goods in international trade (customs origin)
- Define one and only one origin to each and every product, which makes it easier for the importing countries to manage the product’s quality.
To facilitate Free Trade Agreements (FTAs), countries that have signed or are part of an Association with an FTA with the importing nation must demonstrate their national identity through Rules of Origin (ROO) This process enables businesses to qualify for the lowest tariff rates outlined in the FTA, thereby promoting trade efficiency and economic growth.
2 Origin criteria of fresh watermelon (HS code: 0807.11)
- Change in Tariff Classification (CTC), change at first 2 digits of HS code (CC) - The originating status is conferred to a good that is classified in a different
HS chapter than the non-originating inputs.
- CC’s occurrence was about 7%, among all 500,000 FTA x HS6 combinations (as of Oct 12, 2018)
HS code of Melon seed is 1207.70 When melon seed is planted and watermelon is harvested, its HS code is 0807.11 Therefore, the product is re-listed, from Chapter 12 to Chapter 08.
1.3 Some latest ROO requirements for fresh watermelon product by China imposing on Vietnam
Since May 5, 2018, China has enhanced the management and traceability of imported fruits, particularly watermelons New regulations mandate that importers register sample traceability labels with Chinese customs authorities, which must be stamped on the labels and packaging of imported fruits.
Information on the label includes information about the garden, packing facilities
Importing management agencies are now required to formally notify Chinese officials about the lists of gardens and packaged enterprises Although these regulations are not new, their enforcement has been lax in the past However, due to increasing consumer demands, there is now a heightened focus on adhering to these rules.
- Documents: including the latest C/O Form E below (released July 30)
Export procedure and required documents
How to export watermelon to China
1 Negotiation and export contract signing
- Watermelon export contract is used for the sale of watermelon of Vietnamese sellers to Chinese buyers in order to deliver watermelon to China and transfer the ownership to buyers.
- The sellers can export directly or consign to other unit (specializing in exporting) to carry out exports.
When entering into a watermelon export contract, Vietnamese sellers must be traders, which can include both legal entities and individuals who are independently engaged in trading activities and possess a business registration certificate On the other hand, the buyers from China must be organizations or individuals with legal capacity and the ability to engage in civil acts.
* Main contents of watermelon export contract include:
- Introduction: contract number, location, information of seller and buyer, definitions, terminologies, the basis of contract signing, agreements between the parties.
- Terms and provisions of the contract:
+ Commodity: name of product (watermelon), quality, quantity,packaging
+ Transport conditions: time, place of delivery, number of delivery, method of delivery, transport facilities
+ Insurance, guarantee: who is insurance buyers, insurance conditions + Legal articles: complaints, arbitration, case of force majeure
+ Contract number and the number of contracts kept by each side + Contract language
+ Term of contract + Provisions on amendments
- After signing contracts, export enterprises proceed the early stages of payment process For each method of payment, these tasks will be different from each other.
3 Preparation of goods for export
- The quantity, quality, package and preservation need to completely meet the specified conditions of conduct:
+ Prepare labor, tools and means of delivering transport after harvest, warehouses Gather products to processing, pack and set stations of purchase.
+ Remind to households and farmers the importance of the harvest: not to bruise or damage, select watermelon with good standards to sell to China.
To ensure the quality of fresh watermelon, it is essential to harvest and pack the fruit during daylight hours for optimal cold storage Selecting a packing team that is healthy and skilled in professional packing techniques is crucial for maintaining the freshness and integrity of the watermelons.
- For manufacturing/planting watermelon units: if do not want or cannot export directly, they can consign to other export units
Specialized export units should leverage various export strategies, including planned purchasing, direct investment in watermelon cultivation, and product ordering and exchanges Upon signing contracts, these units will receive goods for export, ensuring that packaging and export symbols comply with the terms outlined in the customer agreements.
Exporters must thoroughly inspect goods prior to delivery, ensuring accurate quantity, weight, quality through testing, and assessing the potential for disease spread during quarantine This examination takes place both at the production units and at the border to confirm the test results obtained at the units.
The product quality inspection department conducts testing in the units; however, the head of each unit remains primarily responsible for ensuring the quality of the products.
- In case of the State’s regulations or purchasers’ requirements, we need to invite independent supervisory unit
+ Step 1: Submit inspection request form, contracts + Step 2: Inspection officer checks the products, analyses sample at the laboratory
+ Step 3: Inspection officer announces the result and issues temporary
+ Step 5: Supervise shipping process + Step 6: Inspection officer issues official certificate
- Watermelon exporters submit customs declaration and dossier.
Customs declarants are required to submit various documents based on the specific circumstances, including contracts for the sale of goods, commercial invoices, transport documents, certificates of origin, export and import licenses, and written notices regarding test results or specialized test waivers Additionally, they must provide any other documents related to the goods as mandated by applicable laws.
Customs dossier is submitted and presented to the customs office at the customs headquarters.
To ensure compliance with customs regulations, it is essential to submit the customs declaration after gathering the goods at the designated locations and at least four hours prior to exit For exported goods shipped via fast delivery services, the declaration must be submitted at least two hours before the scheduled exit.
- Customs declarations are valid within 15 days from the date of registration.
Customs authorities determine the origin of exported goods by inspecting declarants' declarations, customs documents, and actual commodity test results If there is uncertainty regarding the origin, they may request additional documentation from declarants, conduct inspections, and verify the goods' origin at production sites.
+ Bring goods, means of transport to the determined places to check + Implement financial procedures
Customs authorities will only clear goods for export after completing necessary testing and analysis to confirm their eligibility This process involves identifying both exported and imported items based on the results of inspections or notifications of exemption from specialized inspection agencies.
Vietnam primarily exports watermelons to China via road transportation, utilizing container delivery The transportation arrangements can be managed by either the sellers, who are the export units, or the buyers, referred to as the import units.
Sellers must arrange transportation for delivery when export contracts specify terms such as CPT (Carriage Paid To), CIP (Carriage and Insurance Paid), DAT (Delivered At Terminal), DAP (Delivered At Place), or DDP (Delivered Duty Paid).
- The purchasers will have to hire means of delivering transport when preliminary delivery terms of the export contract are EXW (EX Works) or FCA (Free Carrier).
- Payment is the principal obligation of buyers in the purchasing process The process will be different depending on each method of payment.
- Contract liquidity is the last step of official watermelon export
- The contract liquidity is a written record after completing the purchase It is confirmed by the two parties to reconfirm the volume, quality, and the arising after
Required documents for export of watermelon from Vietnam to China
- Documents submitted to inspection officer in China: phytosanitary certificate issued by Vietnamese competent authorites
Comment and recommendation
Opportunities
China presents a significant export opportunity for Vietnamese agricultural products, but to fully capitalize on this potential, Vietnamese enterprises must enhance product quality and adopt innovative export strategies.
China is a large-scale consumer market and a large purchasing power thanks to the fast-growing economy, the average income of the people is increasing In
In 2018, China's average income per person reached nearly $10,000, while the country imported over $137 billion in agricultural products, according to the Ministry of Agriculture and Rural Development The close geographical proximity of China facilitates convenient transportation, delivery, and information processing Additionally, Chinese consumers have a strong preference for Vietnamese products, highlighting the potential for increased official trade between the two nations.
Over the past 30 years, trade between Vietnam and China has predominantly occurred through unofficial border crossings However, recent changes have seen China implement stricter food safety policies, necessitating that businesses conduct official imports.
The Chinese government has mandated that traders adhere to official channels, while the Vietnamese government aims to enhance export activities through trade agreements Additionally, both nations are focused on promoting exchanges at agricultural discussions, fairs, and exhibitions to foster collaboration and growth in the sector.
On June 13, 2019, the Vietnam-China Economic-Trade, Agriculture, and Logistics Cooperation Workshop was held in Chengdu, the capital of Sichuan Province, Western China This significant event, organized by the Vietnamese Embassy in China, aimed to enhance trade and economic collaboration between the two nations.
Vietnam and China have participated in the ASEAN-China Free Trade Agreement (ACFTA), effective since 2010, which has reduced tariffs to 0% on 8,000 product lines, including watermelon This presents a significant opportunity for Vietnam's agricultural and fishery products, as there is considerable export growth potential to China, provided that these products meet the increasingly stringent quality standards of the Chinese market.
The ongoing instability in northern Myanmar has cast uncertainty over the watermelon trade between China and Myanmar In the latter half of last year, military conflicts in northern Myanmar led to a suspension of border trade between the two nations.
Following this conflict, in the Chinese market, a variety of fruit from Myanmar remained out of stock Consequently, Myanmar‘s watermelon wholesale price soared by 60%.
In Malaysia, watermelon farmers exhibit a moderate level of technology adoption, primarily hindered by limited capital, a lack of confidence, and insufficient knowledge about available technologies Additionally, adverse weather conditions and pest infestations present significant challenges, often resulting in substantial financial losses for these farmers.
Melon farmers face significant challenges in marketing their produce due to fruit quality issues and the absence of specific insurance schemes to mitigate risks Addressing postharvest losses is crucial for the entire supply chain, as inadequate handling and high temperatures during distribution severely limit the shelf life of melons Additionally, the lack of skilled labor contributes to improper grading and packing, further impacting quality management in melon farming.
Quality control issues can significantly diminish the value of the final product, as appearance and external conditions are crucial factors in assessing its quality Additionally, tariffs provide various benefits to Vietnam, enhancing its economic landscape.
- Removing tariffs leads to lower prices for consumers So the price of imported watermelons will be competitive with domestic’s one
- Lower tariffs on Viet Nam exports will enable a higher quantity of exports boosting Viet Nam jobs and economic growth.
- Make use of surplus raw materials
Due to the simultaneous harvesting of all Vietnamese watermelons and the lower domestic demand compared to supply, surplus materials are sold to generate profit Non-tariff measures (NTMs) play a significant role in this process.
To successfully export products to China, Vietnam must adhere to all regulations outlined in the Rules of Origin (ROO) and other relevant documents; failure to comply can lead to border trade issues, delayed deliveries, and reduced product quality Businesses that can provide sufficient documentation proving the Vietnamese origin of their products will benefit from a 0% tariff rate on watermelon exports to China, as applicable to ASEAN countries Meeting ROO requirements not only saves time and money but also ensures the quality of watermelons during export, ultimately enhancing the volume and efficiency of trade with China.
2 Border trade a Non-quota watermelon exports also have a favorable time for businesses if the other side of the border consumes the goods they are exporting
In recent years, traders have flocked to melon fields, often making advance deposits due to a significant melon crop loss in China This situation has led to a concerning rise in non-quota exports as China tightens its trade policies and quality control measures Despite ongoing trade with China, Vietnam lacks adequate knowledge about this crucial market, with experts highlighting poor information capture and demand understanding The heavy reliance on the Chinese market makes Vietnam vulnerable, as non-quota imports can facilitate tax evasion and increase the risk of smuggling and the influx of substandard goods To address these challenges, a conference held in Lao Cai city on May 31 focused on strategies to enhance the export and import of agricultural products, fruits, and seafood between Vietnam and China.
Lao Cai is dedicated to enhancing the import and export process of agro-forestry and aquatic products by ensuring that its functional authorities issue certificates of origin at border gates This initiative includes the implementation of e-customs and the pre-registration of quarantine records, aimed at streamlining the clearance process and minimizing costs for businesses on both sides.
The Yunnan provincial government of China has committed to enhancing the import of agricultural products, fruits, and seafood through border gates in Lao Cai This includes the annual organization of the Hekou-Lao Cai Border Trade Fair and the expedited development of a cross-border cooperation area to streamline trade with Vietnam Additionally, Yunnan aims to establish optimal customs clearance and transportation incentives for the import and export of these goods between its localities and Vietnam.
Challenges
Since early 2017, farmers in Son Tinh, Binh Son (Quang Ngai) have planted watermelons simultaneously, hoping for a prosperous season and favorable prices However, despite favorable growing conditions, watermelon prices in Quang Ngai plummeted to just 500-1000 VND/kg, significantly below the breakeven point of 2,500 VND/kg As a result, farmers have had to transport their watermelons to various locations in an effort to salvage their crops.
On May 4, 2017, various associations, volunteers, and university students collaborated to bring Quang Ngai watermelons to Hanoi, selling them at a price of 7,000 VND per kilogram This initiative attracted a significant number of buyers, who supported the farmers of Quang Ngai through their purchases.
On May 5, 2018, nearly 5,000 tons of watermelons from Quang Ngai and Quang Nam were successfully "rescued" in Hanoi, sold at a price of 8,000 VND per kilogram.
Significant discrepancies exist between Myanmar's export figures and China's import statistics, with China's recorded imports dropping to nearly zero since 2014 Although Chinese authorities allow the import of fresh fruits from Myanmar, specifically eight items such as watermelons, melons, and mangoes, the majority of watermelon imports have not been reflected in China's import data since 2014 This lack of transparency creates uncertainty for other countries, including Vietnam, as they assess their competitive position and strategies in relation to Myanmar's fruit exports.
China's domestic watermelon season concludes in October, while Myanmar's off-season watermelon harvest begins, running from November to May Currently, Myanmar dominates over 80% of China's off-season watermelon market, with exports reaching 440,000 tons in the first ten months of 2017, marking a 26% increase year-on-year As Vietnam's watermelon season aligns closely with China's, the demand peaks during the Lunar New Year in late January or February Myanmar's favorable climate, characterized by high temperatures and extended daylight hours during winter, makes it ideal for watermelon cultivation Additionally, the lower labor and land contracting costs in Myanmar, along with the absence of greenhouse requirements, significantly reduce planting expenses Consequently, many Chinese farmers have shifted their watermelon production to Myanmar for export Furthermore, as a member of ASEAN6, Malaysia benefits from earlier tariff reductions compared to newer ASEAN members like Vietnam and Myanmar, which could negatively impact Vietnam's competitive position in the watermelon market.
All ASEAN countries, including Vietnam, benefit from an average tariff of 0% on watermelon exports, placing Vietnam in direct competition with two main rivals who also enjoy this tariff advantage This situation intensifies the challenge for Vietnam to distinguish its products in the market, highlighting the need for innovative strategies to enhance competitiveness Additionally, non-tariff measures (NTMs) further complicate the export landscape, necessitating a focus on product differentiation and compliance to succeed in the industry.
It is known that there are about 6,000 codes of plantation areas granted.
China's import agency will base on the area codes of cultivation for goods customs.
Chinese customs data reveals that only 0.6% of Vietnam's fruit plantation area has received area codes This limited certification could lead to delayed deliveries and a decline in product quality It is crucial for Vietnam to address this issue with urgency.
This year, the export volume is projected to decrease by 40% due to traceability requirements For businesses importing products for the first time, obtaining a Certificate of Origin (C/O) may be more costly than paying tariffs directly Additionally, preparing the necessary documentation can take 2 to 3 months, with the issuance process alone taking up to two weeks.
It’s a waste of time There is always arising problem occur, which could probably affect the product’s quality and delivery time.
China's recent implementation of the new Certificate of Origin (C/O) form E has resulted in significant delays for goods imported from China, with many shipments currently stranded at the border gates of Lạng Sơn Province since August 20, as reported by the Lạng Sơn Customs Department.
The new form aligns with the MOIT circular issued on July 30 regarding goods origin rules under the ASEAN-China Framework Agreement on Comprehensive Economic Cooperation; however, it will not take effect until September 12.
The Chinese government has introduced a new Certificate of Origin (C/O) form E, which they expect Vietnam to accept starting August 20 However, this new form is currently not being recognized by Vietnam's customs offices at the border gates.
The customs agency has announced that, effective September 12, 2019, a new form includes an appendix from Circular 12/2019/TT-BCT To ensure customs clearance for imported goods, enterprises must pay taxes and submit the C/O form E once Circular 12 is in effect to qualify for a tax refund on those goods.
Trần Bằng Toàn, Director of the Lạng Sơn Customs Department’s Customs Sub-department at the Hữu Nghị border gate, highlighted that China's abrupt policy changes negatively impact local import-export businesses, as delays in customs procedures can lead to storage fees and late delivery penalties Đỗ Thanh Tuyền from HAB Company, which specializes in importing aluminum products valued at VNĐ4-5 billion per shipment, expressed concerns that complying with the new tax regulations would significantly increase their costs.
VNĐ400-500 million, so they and other firms must wait for guidance from Việt Nam’s management agencies to solve this problem, he said.
Hoàng Duy Hiệp, a representative of Bách Việt Lạng Sơn Co Ltd, expressed concerns regarding two shipments of artificial grass and pears that are facing customs clearance delays He warned that if the fruit imports are not cleared soon, they risk damage and could incur daily storage fees ranging from VNĐ5-10 million in China Consequently, businesses are urging state management agencies to provide a timely resolution to these challenges.
SPS and TBT regulations can significantly increase business expenses, particularly for small and medium-sized enterprises that lack sufficient resources to navigate compliance challenges For instance, a company may invest in meeting these standards only to face denial of product exports due to newly implemented regulations This highlights the financial burden associated with regulatory transparency, making it crucial for businesses to stay informed about changing requirements to avoid unexpected costs.
Specific case: Vietnamese watermelons exported to China will be required to arrive with cartons lined using new materials from May this year.
Solutions
Farmers often exhibit a conservative mindset that hinders their adaptability to new regulations, placing them in a passive role in the agricultural market To mitigate risks and ensure stable exports of watermelon and other agricultural products to China, it is essential for farmers to evolve their farming practices and adopt a more proactive approach, thereby avoiding detrimental self-sabotage.
To ensure food hygiene and safety, it is crucial for farmers to refrain from using chemical fertilizers, pesticides, and stimulants during the production process Specifically, melons should not be treated with pesticides at least 10 days prior to harvest This practice not only enhances the quality of the produce but also aligns with health regulations and consumer expectations.
- Production planning must be linked to the consumer market demand, avoiding risks for farmers; linking businesses and farmers in the provision of agricultural supplies and product consumption.
- Creating favorable conditions for businesses to perform well the investment contract, to cover crop products with cooperatives and farmers
The Ministry of Industry and Trade advises traders to engage proactively with Chinese importers while thoroughly researching and adhering to Chinese quality standards, quarantine testing, packaging, and traceability regulations.
Watermelon imported into China must meet the following testing and quarantine requirements:
+ Do not mix or contain other fruits not listed on the phytosanitary certificate.
+ The full name of the fruit, origin, packing plant, or business identification number, in Chinese or English, must be shown on the packaging.
+ There are no plant residues such as quarantine pests, soil, branches and leaves that China prohibits entry.
+ The amount of hazardous substances found must not exceed China's relevant health and safety standards. c Enterprises:
Vietnamese enterprises should proactively reach out to the Ministry of Agriculture and Rural Development for specific guidance if their planting and packaging facilities are not officially recognized by the General Department of Customs of China.
To minimize risks such as price squeezing, enterprises should transition towards official trade practices Establishing a strong brand presence for watermelon in the Chinese market is crucial, as it lays the foundation for successful exports Once the brand is developed, the focus should shift to exporting through official channels and distributors.
Enterprises should prioritize trade promotion by actively engaging in specialized agricultural fairs in China, which will enhance the visibility and introduction of their branded fruit products.
Watermelon exporters must accurately classify the grades and specifications of their products prior to export This necessitates comprehensive research and an understanding of market information and relevant regulations specific to the Chinese market, enabling exporters to be more proactive and adaptable in their strategies.
For successful export to the Chinese market, packaging design must focus on clear presentation of information in Chinese, while minimizing errors It is essential that details on the quarantine certificate and certificate of origin align accurately with the actual export shipments to prevent delays in clearance by Chinese Customs authorities.
To enhance the quality of exported fruits and gain a competitive edge, Vietnamese exporting enterprises must invest in advanced technologies and improved plant varieties, reducing their dependence on natural conditions Additionally, exploring partnerships with Chinese e-commerce companies to facilitate the import and sale of watermelon in the Chinese market is crucial for expanding market reach and boosting sales.
To enhance import-export operations, it is essential for customs, border guard, and quarantine agencies to collaborate effectively This cooperation will provide clear guidance to businesses and streamline administrative processes, ensuring compliance with legal requirements while minimizing potential risks.
To succeed in the Chinese market, businesses must proactively address trade challenges and stay updated on local market information, including product quality standards and consumer preferences Enhancing product competitiveness by focusing on price, quality, and variety is essential, alongside implementing extensive trade promotion activities Additionally, protecting copyrights and trademarks, particularly for traditional products, is crucial It is also important to establish measures to regulate price discrepancies in border trading conducted by Chinese traders.