E-commerce, e-logistics – An inevitable trend for successful exporters

Leaders and representatives of government agencies, experts and companies have gathered to discuss the solutions to help Vietnamese agro-fisheries exporters increase the opportunities in major value chains, while preventing possible loss risks amid changing global trading rules and the wide influence of Industry 4.0.

At a conference held on September 13 by the Ministry of Industry and Trade (MoIT) and the Ministry of Agriculture and Rural Development, they agreed that the new requirements by China and other international markets remain a challenge to Vietnamese exporters, urging them to make changes to adapt.

According to experts, giving priority to e-commerce and e-logistics platforms is an optimal solution for Vietnamese exporters to increase the opportunities to join major value chains, while easing possible loss risks.

The issue has become more serious since Viet Nam’s agro-fisheries exports to China were down 9.2 per cent year-over-year, reaching over $3.8 billion in the first seven months of 2019. Of the export items, rice saw the highest drop with a decrease of 67.5 per cent, hitting over $159.4 million. The runners-up were fruits and vegetables with $1.6 billion in export turnover, a fall of over 8 per cent; cassava also decreased 10 per cent to $466 million, according to statistics from the MoIT.

The US-China trade tension is partly to blame along with China’s strict regulations on the import of agricultural and aquatic products on the land border areas through measures to strengthen supervision of traceability, packaging, and food safety and hygiene. In fact, China had announced the requirements since mid-2018, however few Vietnamese companies had been aware of them.

"This is an inevitable trend and is aligned with international practices. Not only China, but also many other countries are applying stricter requirements for imported products," said Tran Thanh Hai, deputy director of the Agency of Foreign Trade under the MoIT.

According to Minister of Agriculture and Rural Development, Nguyen Xuan Cuong, if businesses do not catch up and transform in time, they will be end up in an embarrassing situation.

In this view, many logistics firms and technology companies have introduced new solutions to help Vietnamese exporters ease possible risks and benefit from a global boom in cross-border e-commerce. This is adopting emerging technology into their business.

IMG Group is a one such example. IMG has been working closely with the Foreign Trade Agency since the 1990s, particularly in the early days of Import-Export, and brought in billions of dollars in Foreign Direct Investment (FDI). Addressing the conference, Ms. Nguyen Thi Thu Hien, chairwoman of IMG Group, IMG Alliance, and IMG Club, highlighted the efficiencies of e-Trade and e-Logistics that IMG has planned to serve as global trade-logistics linkages.

“With an ‘Offline-to-Online’ strategy, IMG’s platform promises to have great support for all sizes of Vietnamese businesses that want to enter the Chinese market faster and cheaper. This is one of the important activities in the master plan of IMG’s global initiative to support local companies and enable them to join major value chains effectively,” she told Vietnam Investment Review.

To this end, IMG Logistics has signed a cooperation agreement with Singapore’s V-Cargo Cloud, which is one of the leaders in Singapore’s e-commerce logistics platforms and has had great success in over 40 countries including the key regions of Asia-Pacific, China, the Middle East, Central Asia, Latin America, and the African continent. With this agreement, we will cooperate for the digitalisation of logistics and cross-border e-commerce (CBE) in Viet Nam.

“We plan to develop the e-commerce logistics platform step by step, with the first moves to be made within the year. The platform will work as an information and database hub, enabling international logistics firms to enter the Vietnamese market, and helping Vietnamese firms venture further into international markets in order to benefit from a boom in e-commerce driven by growing regional and international trade,” Ms. Hien said.

The platform, which will be based in Viet Nam, will support firms in administrative procedures, management of the flow of goods, insurance, financing, and shipping services. This will help them to reach higher service standards while also saving time and reducing costs, thus increasing their competitiveness.

Viet Nam has signed a lot of free trade agreements with countries worldwide. If local exporters have the right approach, they can gain huge benefits from these agreements, otherwise they will lose out.

CBE is now a key trend globally and is forecast to continue its growth momentum in the years to come. DHL’s recent report showed that CBE globally will maintain average growth at 25 per cent in the next three years. Accordingly, the total transaction value is projected to rise from $300 billion in 2015 to $900 billion next year. In Southeast Asia, even though CBE is still in the early stages of development in some areas, it is nonetheless reporting positive growth.