CHAPTER 3: SUGGESTIONS FOR VIETNAMESE AGRICULTURAL PRODUCTS’
3.2. Suggestions for Vietnamese government and related governmental bodies
Vietnamese government and ministries. The Vietnamese government needs measures and policies to coordinate its efforts with those of agricultural suppliers in order to ensure long-term and sustainable development of market penetration in the EU. To make appropriate political suggestions and promote trade in agricultural products to the EU market, the study will make the following recommendations for the Government of Vietnam.
Firstly, Vietnamese governments need to continue promoting trade relations and negotiate to avoid unreasonable barriers imposed by the EU. These days, with the ongoing epidemics, the unstable relationships from the Russia-Ukraine war and the polarization of major economies in the world, our Government needs to closely monitor fluctuations from the EU market. Especially with Russia being one of the union's main resources suppliers, the Eurozone is bound to have changes as to deal with the shortage.
Therefore, Vietnamese government bodies these days need to actively research and consult with specialists to constantly get a clear image on the EU market and what are their effects on the countries’ state of commercial trade. Only then will we be able to come up with appropriate strategies and agreements to further benefit our trade relations with the EU and at the same time, promote the attraction of foreign direct investment to increase the proportion of exports.
In the midst of keeping a close eye on the international outlook and the EU market in particular, the Vietnamese government also needs to introduce new regulations to update the trends of the EU market on the basis of creating easy conditions for businesses. This also means the government needs to continuously push our partnership with the EU. Knowing that the EVFTA has contributed to many favorable conditions on tariffs and boosting the trade between the two parties, many existing technical barriers are still hindering Vietnamese agricultural suppliers. This requires the government bodies to continue building up the relationship with the EU, making positive notes on how the governments are working with Vietnamese agricultural suppliers to enhance their products as to negotiate and avoid unreasonable barriers imposed by the EU.
Secondly, in accordance with the recommendation for Vietnamese agricultural suppliers, the Vietnamese government also needs measures to promote agricultural production towards high technology. First and foremost, the government will need to set aside an appropriate budget to support investment in agricultural innovation and accrediting reform, in which priority is given to investment in innovation and improvement of the quality of machinery, equipment and production technology in the direction of producing high quality and fresh agricultural products, while respecting international standards. Also, to encourage investment in agriculture, one more possible measure is to increase the tax exemption on agricultural suppliers which sufficiently apply technology to their business.
Development of policy framework will also help to promote synchronous mechanization, digitization to create motivation and encourage enterprises and producers to apply high-tech agriculture and new technologies (automation, digitization, new technology, IoT, AI etc.) in planning, manufacturing, trading and connecting supply - demand - market information of products. The research would also advise the government to create a favorable policy environment (such as in accessing technology, interdisciplinary national databases on land, hydrometeorology, satellite images, resources, disaster risks etc.) for businesses and producers to apply advanced and new digital technologies, develop e-commerce, connect consumers to manufacturers, strengthen traceability and control of food safety and international trade integration.
Thirdly, Vietnamese governments should assist agricultural suppliers in accessing detailed updates on the commercial information of EU countries. The Vietnamese government can further support businesses and provide them EU trade information through the development of a market information system, the organization of trade promotion programs. It’s also advised that specialists and consultants should strengthen analysis, market forecasts and research; promoting measures to facilitate business thus supporting Vietnamese businesses in a direct and effective way. Having
information would also be a drastic advantage which can secure our participation in the supply chain and value chain of agricultural products in the EU.
Having a compilation methods and platforms for informing the agricultural manufacturers would also help strengthen the warning of the regulations on obstacles and problems in the export of agricultural products. In the past, the Ministry of Industry and Trade opened and commissioned the Free Trade Agreement portal (FTAP). As the portal included the EVFTA agreement, this can be considered a great stepping stone for the Vietnamese authorities to further advance this platform and continuously update its content as the platform will be a very effective tool to help companies collect information on the obligations of the Agreement and to compile market information. From platforms as such, Vietnamese agricultural suppliers can make use of the information to ensure the business stays on course and sketch out future objectives to establish their penetration strategies more effectively.
At the same time, authorities can regularly organize training programs in the form of online and face-to-face events following the pandemic safety protocols on the current state of the commercial trade, specifically with the EU. It is also noted that these training events can be much more effective when disseminated to companies in all localities, regions across the country.
Lastly, the government bodies need to develop and complete a set of standards on agricultural products safety and health as to strengthen the ability to have appropriate technical standards. In order for many Vietnamese agricultural products to penetrate deeply into the EU market, which is considered a difficult market with strict regulations on hygiene, safety and quality, Vietnamese agricultural products need to make drastic changes in quality, applying cultivation methods according to standards such as VietGAP, GlobalGAP etc. And to do so, Vietnamese authorities must implement and strictly maintain a set of standards for agricultural suppliers in terms of safety indices.
Our government bodies or ministries can start promulgating policies to support farmers and agricultural businesses in shortening the time and cost of carrying out specialized inspection and phytosanitary procedures, encouraging farmers and businesses to cooperate in production according to regulations to control the quality of agricultural products effectively. Currently, as there are agricultural suppliers who do not have a deep understanding of advanced techniques to improve productivity and product quality, the government bodies can help them by decreasing their limitations in accessing technology in building traceability processes and the requirements they need to meet if the facility wishes to penetrate the EU market in particular. In addition, Vietnamese authorities also need to pay attention to building a systematic promotion of information, making sure that every region, every agricultural supplier will get a grasp of the set of standards. This will require the government to establish strong relationships, reach out to the ministries, local authorities etc. and be transparent with the set of standards on agricultural products to make sure that there will be no misunderstanding in the process of transmitting to the locals.
SUMMARY OF CHAPTER 3
Forming from the theoretical background of Chapter 1 and the analysis of Chapter 2, the thesis has provided orientations as well as recommendations for Vietnamese agricultural products suppliers and Vietnam government bodies. Aiming to achieve and successfully implemented in the period of 2022-2032, the recommendations suggested were based on the current development of Vietnam’s agriculture and the major future global trends, hoping that these will help form the basis to further advance the agriculture pillar in Vietnam particularly and Vietnam’s cross-border commerce in general.
CONCLUSION 1. Summary
Having joined the Vietnam-European Union Free Trade Agreement (EVFTA) in 2020 with the context of the COVID-19 epidemic and many global events continues to mark its effects, the market penetration strategy of Vietnam into the EU market in particular is urgently required for evaluations and reform to suit the current state. With agricultural products deeply rooted in the Vietnam economy and considered as one of the largest export forces of Vietnam to the EU market, the study has commenced evaluating the current statistics on the export volumes and using the Uppsala Model to further assess the suitability of Vietnam’s penetration strategy into the EU market.
The thesis pointed out that even though the main current mode of entry (exporting) is appropriate in the foreseeable future, according to the assessment of the Uppsala Model. However, incorporated with the SWOT Model analysis, Vietnam suppliers need to make efforts to perfect the agricultural products to meet the stringent standards of the EU market, develop the procedure of manufacturing and handling agricultural products in the direction of modernization and be environmentally friendly.
As the EU market is facing imminent supply problems from the Russia-Ukraine war, this is the chance for Vietnam suppliers to take a strong step forward to further push the nation’s integration into the EU market in particular and other influential economies.
As for Vietnamese government bodies, besides implementing and promulgating policies to consolidate and support in accordance with the nation’s suppliers, the government is advised to actively communicate, negotiate and maintain a good relationship with the EU on a regular basis. This action will aim to help Vietnam gain further knowledge on the EU’s newest trade movements and also keep our stances to avoid unreasonable barriers imposed by the EU.
2. Limitations
While the study has presented its analysis and results above, there are limitations which should be addressed and perfect.
Firstly, the thesis has only utilized qualitative analysis and not any other quantitative models. Hence, the results can only be seen as partly accurate when it comes to appraising the market penetration strategy of Vietnamese agricultural products into the EU market.
Secondly, the study did not cover all the macro and micro factors of the EU market that could potentially affect the penetration of Vietnamese agricultural products into the market. Therefore, the results have not shown the uniformity and optimal coverage. The explanation for this problem stems from the limited time frame of the study along with the desire to still be able to draw the most comprehensive conclusions. Because of that, the study has selected and analyzed the factors that have the most direct and most specific impacts at the present time. However, this has directly affected the research paper since the content can be seen as not detailed and thorough for the topic at hand.
Finally, the current thesis only evaluates based on an overview of the export capacity of all agricultural product suppliers in Vietnam, without going into each segment of agricultural export enterprises. This will require further study with the appearance of a dataset and the use of qualitative methods to determine whether factors, such as size, foreign investment or any form of influence, have effects on the penetration strategy of Vietnamese enterprises into the EU market. And if so, what will be those influences and how will they affect the strategic direction of market penetration?
3. Future research
The thesis would also like to contribute by providing references for future research. Based on the limitations mentioned above, the thesis can recommend directives for future research as such: Firstly, the future researchers can dwell into the quantitative aspect of the topics with expanding scope of the samples, which can lead to a more
objective and thorough research on the Vietnamese suppliers' penetration strategy into the EU market. Secondly, future research can build observed variables which are described comprehensively and include factors such as size, foreign investment etc. This will help broaden the research topics by answering how these factors play a role in Vietnamese agricultural suppliers’ penetration strategy and particularly, suppliers’
decisions to export to the EU market.
As the COVID-19 and the global political situation are getting heated by the day, the topic of international trade requires constant and close attention from researchers from all over and specifically, from Vietnam. Hence, the research here has presented our research gap in the hope that future researchers can use it as a reference and commence a more complete study.