Latin American businesses seek supply sources in Vietnam

For many years now, trade - investment relations between Vietnam and Latin America have developed and expanded continuously despite the market facing ample difficulties in recent years. In just 5 years, the two-way trade turnover has doubled from USD 14.2 billion in 2018 (also the first year the Vietnam - Latin America Trade Forum was held) to USD 23 billion in 2022.

One thing to note is that apart from markets taking the lead in terms of exchange turnover in the region such as Brazil, Mexico, Argentina, and Chile, many emerging markets such as Panama, Colombia, and Peru have become highlights in Vietnam's trade exchange activities with Latin America, reflected in impressive growth rates in recent years.

Ta Hoang Linh, Director of the European - American Market Department (Ministry of Industry and Trade) mentioned this fact at the Vietnam - Latin America Trade Forum 2023, an event within the framework of the Export Forum organized by the Ministry of Industry and Trade and Ho Chi Minh City People's Committee recently on September 14.

According to Director Linh, regarding Vietnam's trade relations, Latin America is always among the most important markets and an export market with big potential for strong products such as textiles, garments, leather footwear, agricultural and fishery products. Latin America also has strong input suppliers for Vietnam’s production sector. The major products include maize, soybeans, and animal feed.

In terms of investment, Vietnam continues to implement a number of important investment projects in Latin America with a capital of up to hundreds of millions of USD. There are some mentionable examples, such as the telecommunications network development projects of Viettel Group in Peru and Haiti or the projects of Viglacera Corporation and Thai Binh Company in Cuba in the fields of infrastructure and consumer goods production.

On the other hand, there have been 21 Latin American countries investing in Vietnam (as of 2022) with a total of 117 projects and an investment capital of USD 673 million. However, the value of trade exchange between Vietnam and Latin America remains in modest figures, thus incommensurate with the potential.

"The Vietnamese and Latin American business communities still face many challenges in business cooperation such as geographical distances, no direct freight routes, high logistics costs, language differences, lack of market information. Particularly in the current context, economic recession, geopolitical conflicts and the prolonged impact of the Covid-19 pandemic have been causing negative impacts on global trade, which include trade between Vietnam and Latin American countries," said Director Linh.

In the first 8 months of 2023, bilateral trade turnover between Vietnam and Latin America reached USD 13.4 billion, down 14% compared to the same period in 2022. However, looking from a positive perspective, the downtrend in import and export is gradually shrinking compared to the beginning of the year and there are still some markets with eight-month turnover achieving positive growth, showing that two-way trade between Vietnam and Latin America is showing signs of recovery.

Mario Schuff, economic and diplomatic expert, Director of Vietnam-Argentina relations of Asian Chamber of Commerce, said that Latin America is a very promising business environment for Vietnamese enterprises. Still, they need to take more systematic and professional steps.

At the Vietnam - Latin America Trade Forum 2023, Nguyen Thi Thanh Ha, Sales Director of Napoli Coffee JSC, shared practical experiences in trade transactions with Latin American countries, as well as notes for Vietnamese companies in business with this region.

“Companies must first learn about the consumption habits, distribution channels and geographical conditions of the country they want to export to. Vietnamese companies should also open letters of credit to support both sides of import and export.

“Because this is a market with long delivery times, packaging must be chosen to suit the consumption methods and distribution channels in Latin America. The product's shelf life must also be longer. One important thing is that companies should choose a shipping unit that understands the market and has certifications appropriate to each country in the Latin American region.”

Within the framework of the forum, nearly 30 Latin American business delegations participated in the direct B2B connection session, helping Vietnamese businesses learn more about the demands and requirements of partners, thereby opening up many opportunities for cooperation between Vietnamese and Latin American businesses in the near future.