Expectations on the European market after the pandemic

 According to the assessment, Europe - Vietnam Free Trade Agreement (EVFTA) will be a driving force for Vietnam to boost exports after the Covid-19 pandemic. To take advantage of opportunities, businesses need to focus on improving the quality of goods and production capacity to meet export requirements to this potential market.

The export wood industry is expecting from EVFTA after the pandemic. In photo: Production activities at Goldenland Company, Tan Binh Industrial Park.

 A robust "push"

According to provincial Department of Industry and Trade, the early approval of EVFTA along with the support measures from the Government will soon help businesses overcome difficulties, access markets, and recover their production. Overall, EVFTA will contribute to diversifying the consumption market, reducing excessive dependence on a specific market, thereby ensuring Vietnam's economic security. EVFTA gives Vietnam the opportunity to access the European market with preferential tax rates than competitors. Combined with high commitments on opening investment and improving business environment, EVFTA will be a robust "push" for attracting domestic and foreign investment, thereby creating new production capacity. The European Union (EU) is also one of the largest export markets of Binh Duong with competitive advantages such as textiles, footwear, wooden furniture, etc.

On March 30, the EU Council also approved EVFTA, completing the final legal procedure according to the internal EU approval process. Thus, after National Assembly of Vietnam approve and the two sides complete the notification process as prescribed, EVFTA will officially take effect for both EU and Vietnam members. This is a very optimistic signal while the Covid-19 pandemic is seriously affecting the production and business activities of businesses, opening up opportunities for exports to the EU market.

According to economist Vo Tri Thanh, EVFTA marks an important step for Vietnam, creating an impetus for domestic enterprises to develop export capabilities and motivate the Government of Vietnam to continue reforming regulations. EVFTA also demonstrates a deeper institutionalization of export opportunities during a period of global trade constrained by the Covid-19. “From the post-pandemic perspective, especially in the medium and long term, EVFTA would be definitely a great opportunity for Vietnam's economy. This is the time when all preparations must still be mentioned to take advantage of opportunities, both from the Government", Mr. Thanh emphasized.

According to experts, EVFTA provides a good foundation for Vietnam to continue helping domestic businesses penetrate the EU market. The agreement helps link Vietnamese companies with European standards for sourcing and manufacturing, potentially enhancing product quality and reliability as Vietnam is seeking to strengthen its global brand image to compete more equally on the EU market.

In Binh Duong, businesses also have great expectations from free trade agreements, including EVFTA. Otso Toikka, Vice President of Tetra Pak Supply Chain (VSIP 2) in Pacific region, said: "Binh Duong is strongly attracting FDI capital, the signed free trade agreements will create favorable conditions for us to do business, not only for Vietnam but also for partners of Vietnam".

To take advantage of opportunities

To timber industry, Europe is currently the second largest import market and continues to maintain good growth. Along with the trend of e-commerce and online business, timber enterprises exporting to Europe try to find opportunities to cooperate with partners to build their distribution channels. Especially, Binh Duong timber enterprises are appreciated in technology and management, which will be a good strength to continue exploiting this market. Binh Duong's textiles and garments exported to Europe are also expected to grow strongly in the coming time, despite facing fierce competition from regional countries. Europe is also the largest market for footwear businesses of Binh Duong, with an estimated export turnover of $3.42 billion, accounting for 11.3% of the province's export turnover. Before the pandemic, the province's footwear industry expected to grow well thanks to the effects of free trade agreements.

Although having a solid foundation before, according to Phan Le Diem Trang, Vice Chairman of Binh Duong Textile and Garment Association, in order to have qualified products exported to the EU, businesses need to innovate technology to meet requirements of partners. Secondly, businesses need to pay attention to the European standards to have a firm step, to avoid a bad reputation right from the first place. In addition, with fierce competition in the garment industry of countries in the region, especially in terms of labor, performance efficiency, businesses have to change management method to be able to compete with this large market but also having very high standards.

Sharing experiences of exporting auxiliary industrial products to Europe, Trinh Thi Hong Chau, Director of Kim Chung Mechanical Company (Tan Uyen Town), said that European partners demanded not one or two meets. “We test samples for partners in 1 year, 2 years, with a few dozen times. Do it again until we reach standards. It is important that our perseverance get good results. So far the company has had export contracts to Europe with high values", said Ms. Chau.

Reported by Tieu My - Translated by Ngoc Huynh