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E-commerce trading fails to take off in local farming sector

Update: February, 11/2014 - 09:25
Workers of Nhat Huy Company Limited in southern Binh Duong Province on a cashew processing line. Many local farming products cannot be sold online because Viet Nam does not have quality standards for those products to make them match the requirements of the global trading floor. — VNA/VNS Photo Dinh Hue

HA NOI  (VNS) — Transactions of farming products on electronic trading floors are not popular in Viet Nam, even though the state and many firms have tried to promote them.

Experts say local farming product trading floors built to promote e-commerce on the domestic market have not developed as expected, reported the Dan Viet online newspaper.

The Can Gio Seafood Trading Centre was set up in 2002 to be the first farming product trading floor in Viet Nam. However, the centre must now be closed as it does not have sufficient buyers and sellers, despite tens of transactions being undertaken at the centres.

Meanwhile, the Binh Phuoc Cashew Trading Floor, launched with investments from Sacombank, has also been closed. Enterprises must import raw cashew for processing and do not have enough raw cashew in stock for transactions on trading floors.

The other commodity to lose its trading floor is coffee, which has been traded on the Buon Ma Thuot Coffee Trading Floor since 2008. The trading floor was developed with a total investment of VND100 billion (US$4.76 million) but has not developed as expected.

The trading floor has attracted 10,000 tonnes of coffee per year, too low a volume and value, given the total output of one million tonnes of coffee each year in the Southeast Asian region.

Economic experts say electronic trading floors are popular in the world market as it provides a modern, convenient and transparent trading method.

Economist Nguyen Hoang My Phuong, who has studied the coffee trading policies of Viet Nam and the world, points out that e-commerce is a modern trading tool that helps companies manage risk in business.

However, many local farming products cannot be traded on international trading floors because Viet Nam does not have quality standards for those products to make them match the requirements of global trading floors, Phuong states.

Moreover, domestic companies must have deposits with trading floors to sell their products there. They then have to transport goods to the warehouse and wait for buyers, she explains. So, in this way, expenditure increases, and some capital that matches the value of the products in stock is "buried" at the warehouse. Domestic firms, however, cannot handle these expenses with their small capital bases.

Tran Duc Tung, head of the Viet Nam Pepper Association's administrative office, says local enterprises are not successful on e-commerce trading floors because they have a habit of buying and selling via intermediaries.

In addition, state policies on e-commerce activities still do not ensure security in financing, shipping and receipt of goods for farmers and companies when they use the trading floor, Tung notes.

At present, domestic pepper traders are successfully trading Vietnamese pepper products. However, if they join the trading floors, they may not be as successful because they do not have much experience with market forecasts and may not be able to fix selling prices that are profitable, he adds. — VNS

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