Still taking regulations lightly

According to Ms. Nguyen Minh Lien, General Director of Vinamex, the EU is a large market with very strict standards and regulations. However, many businesses and individuals still take this matter lightly when producing and consuming products in the EU market. The most notable are regulations on food safety and hygiene as well as basic mistakes in packaging and the inability to find the right partners.

The essence of the EU procedure is post-audit. Imported goods will enter the distribution system first then the appropriate authorities will take samples and execute an inspection for food safety and hygiene.

"In the contract, EU importers often request Vietnamese enterprises to be responsible for the quality of products until they reach consumers. And in reality many domestic manufacturing enterprises have had to pay fines or additional costs due to poor quality products.

"Businesses also often encounter very basic errors. The packaging does not display enough information in the prescribed language and is forced to return or sell cheaply to other markets. One must note that when exporting goods to the EU, domestic enterprises must work closely with importers on brands, product quality, packaging, and contract inspection to avoid damage to both parties,” said Ms. Lien.

Enhance understanding of markets that still have a lot of fiscal space

According to Mr. Pham Van Cong, Trade Counselor, Head of the Vietnam Trade Office in Hungary, Vietnam’s agro-products export turnover in Hungary is still low, but this market still has a lot of room to grow.

Mr. Cong cited that Vietnam's processed coffee products only account for 12.6% of the market share in Hungary, while the import demand is USD 30-50 million/year. Hungary’s demand for rice is 40 million USD/year but Vietnamese rice accounts for only 0.5% of the market share. Regarding pepper, the country’s market demand is USD 5 million/year and Vietnam occupies 18.7% of the market share.

In order for Vietnamese goods to grow in exports to the Hungarian market, businesses need to adjust the palate, learn the market, and become more invested in researching consumer behavior. Vietnamese products must meet regulations on quality and packaging before they can be sold.

When joining hands with a distributor of goods in Hungary, enterprises in Vietnam must ensure continuous supply and stable quality, delivering a throughout message to customers.

Along with vegetables and spices, Hungarian consumers are shifting from high-sugar flour-based products to low-sugar products such as certain types of rice and cashews. These items may have the chance to penetrate further into the Hungarian market.

Ensure quality, avoid investigation and litigation

Mr. Tran Ngoc Quan, Head of the Vietnam Trade Office in Belgium and the EU, stated that the EU's seafood consumption demand is 24.5kg/person/year. This market block imports approximately USD 30 billion worth of foreign investors every year.

The EU-Vietnam Free Trade Agreement (EVFTA) has come into effect and will eliminate 86.5% of turnover within three years, 90.3% in five years and 100% within seven years for Vietnamese seafood. The EU has also granted Vietnam a quota of 11,500 tons of tuna and 500 tons of fish balls.

Among Vietnam’s fishery products, shrimp hold the most advantages. EVFTA helps frozen black tiger prawns and whiteleg shrimp from the tax rate of 4.2% under GSP reduce to 0%. Thanks to this fact, Vietnamese shrimp now gains an absolute competitive advantage over similar products from Thailand, China, and Ecuador (subject to 12% tax), as well as India and Indonesia (subject to 4.2% tax).

Businesses need to pay special attention to two regulations when exporting to the EU, namely the “General Food Law” and “Legislation on residual chemicals and contaminants limit”. Particularly for regulations on maximum residue level (MRL), the limit is 0.01mg/kg. MRLs vary with different active ingredients, fresh produce and processed products. Some countries such as Germany, Austria, the UK, the Netherlands, Belgium apply MRLs that are stricter and higher than the EU General Food Law regulations.

“EVFTA creates a great advantage for Vietnam compared to other competitors accessing the EU market. Vietnamese enterprises must be self-conscious to do business in an appropriate order, establish sustainable relationships. On the other hand, they should not engage in fraudulent trade practices or transship goods to other countries to profit from the EVFTA," said Mr. Quan.

Translated by Samuel Pham