Trade concessions help enterprises

Update: July, 30/2015 - 10:13

Professor Nguyen Quoc Thinh, a member of the Viet Nam Value Programme, spoke to Hai Quan (Customs) newspaper about trade potential.

What are the advantages and disadvantages Viet Nam faces in trade concessions?

A trade concession agreement grants to a concessionaire the exclusive right to do business in a particular area or venue under carefully negotiated terms.

With this type of agreement, the concessionaire/operator can quickly join the market and earn profits right from the get-go.

Another benefit concessionaires enjoy is the opportunity to learn from major foreign and global companies.

However, a big disadvantage for a concessionaire is that the operator pays a sizeable amount for the annual concession fee and other expenses they may incur.

Any way, in my opinion, trade-concession deals have more advantages than disadvantages; it is safer, has fewer risks and does not require a big sum of investment money.

What about trade concession activities specifically in Viet Nam?

Viet Nam has great potential in trade concession activities, particularly in food industry, health care and training.

As of now, Viet Nam has and will sign Free Trade Agreements with many countries and territories. These agreements serve as a pre-requisite and boon for trade concession activities in Viet Nam.

However, at present most of our enterprises are concessionaires, only a few have been granted concessions to do business abroad (concessioner).

A key reason is that foreign markets for Vietnamese products are still limited. Only a few Vietnamese trademarks like Pho 24, Trung Nguyen Coffee or AQ Silk have been granted a concession by foreign firms.

There is another form of concession, a trademark concession.

Nowadays, a few Vietnamese firms are allowed to exploit foreign trademarks via a licence. Their products are permitted to carry the trademark as long as it meets strict quality controls from the foreign company.

What should Vietnamese enterprises do to optimise concession agreements?

There are five steps that Vietnamese enterprises should take.

Firstly, select prestigious trademarks with a large potential for development.

Secondly, conduct current and thorough market research to make sure the concession trademark is still popular with customers and is growing.

Thirdly, conduct a careful study of the legal terms, particularly the rights and obligations of the concessioner and the concessionaire.

And finally, in the Vietnamese enterprise's development plan, it is important to give equal treatment to its own products as to the foreign trademark.

What impact has trademark concessions had on Vietnamese products in the home market?

I would say trademark concessions put huge pressure on Vietnamese products. However, it presents an opportunity for Vietnamese enterprises to reform and rise to the level of those foreign trademarks. If not, they will be defeated right in their own yard.

I'd also add, when the domestic market is flooded with foreign brands, Vietnamese consumers may have a tendency to turn their backs on made-in-Viet Nam products.

It is high time for Vietnamese firms to renew their business strategies in order to secure a stronger foothold in the domestic market. — VNS