Penetrating Japanese market – advantages and challenges

Exports of Vietnamese farm produce to Japan will see sharp increases if domestic businesses take advantage of the Vietnam-Japan Economic Partnership Agreement (VJEPA).

In 2010, the export turnover of Vietnamese agricultural, forestry, and aquatic products hit a record high of US$19.5 billion. The export value of these products to Japan alone reached US$1.5 billion, up 18 percent.

Taking advantage of the VJEPA

Vo Thanh Ha from the Asia-Pacific Market Management under the Ministry of Industry and Trade (MoIT) said that Vietnamese farm produce will benefit the most from the VJEPA under which Japan commits to cut tariffs on products which make up nearly 84 percent of the total value of Vietnamese farm produce exports.

 As soon as the VJEPA took effect on October 1, 2009, Japan cut tariffs on 784 out of 2,020 tax lines on farm produce, or 36 percent of the total tax lines on farm produce, and 67.6 percent of Vietnam’s total export value to Japan.

Fourteen products including seasoning, soybeans, ginger, bananas, durian, and rambutans, which account for 14 percent of Vietnamese farm produce exported to Japan, will see the tariff cuts over a period of 3-5 years.

72 other agricultural products will enjoy the tariff cuts within 7 years, and 214 products within 10 years.

64 out of 330 products, or 71 percent of seafood exports value to Japan, enjoyed tax cuts immediately after the agreement came into effect. Vietnamese shrimp exported to Japan now enjoy zero percent import tax.

In 2010, shrimp exports saw the most significant increase with export turnover of US$581 million (up 27.6 percent against 2009), followed by cuttlefish with $114 million (up 23.3 percent).

Vietnam is now Japan’s biggest shrimp supplier and its fifth biggest cuttlefish supplier with a market share of 23 and 8 percent, respectively.

One of the positive signs for Vietnamese seafood exports to Japan is the increase of import orders and the high prices. Japan is now in need of hygienic food, especially after the restrictions in the country because of the growing concerns over the radiation contaminated food.

It is a good time for Vietnamese seafood exporters to expand their business in Japan, Ha said.

Wood and wood products are also potential exports to Japan with values increasing from US$286 in 2006 to US$455 in 2010. In the first four months of 2011, they reached US$163 million, up 29 percent against the same period last year.

Because of the lack of domestic supply, Japan’s demand for wood products is increasing and it is also an opportunity for Vietnamese businesses.

Finding a firm foothold in the market

Le Quang Lan, Deputy Director General of the MoIT Mulilateral Trade Policies Department said that high quality is a prerequisite when exporting products to the Japanese market and that Japan never compromises on that.

In an effort to protect the population’s health, Japan is also applying very high food safety and hygiene standards.

However, all the standards are in compliance with the principles of the World Trade Organization, Lan said, adding that there is no unequal treatment between domestically-made and imported products.

Deputy Minister of Agricultural and Rural Development Ho Xuan Hung said that Japanese businesses are very interested in managing product quality.

Having adequate information about the Japanese market is also necessary for Vietnamese exporters.

For example, he said, as Vietnam is the world’s second biggest coffee exporter, businesses should know that all coffee transactions should be made through trading floors, not direct transactions.

In order to successfully penetrate the Japanese market, Vietnamese businesses should cooperate closely with each other and with their Japanese partners.

(VOV) 

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