Improving product quality – key to making inroads into Australian market

Bright spots in bilateral trade 

The Vietnam Trade Office in Australia reports that two-way trade turnover between Vietnam and Australia fell by 12% to US$13.75 billion last year due to slow economic recovery, high inflation and exchange rate fluctuations.

Of the total trade figure, Vietnam earned US$5.22 billion from exports, representing a year-on-year decrease of 5.3%. Despite the fall, several key export products still witnessed an upward trajectory, including crude oil, up 37.4%; garment and textiles, up 4.9%; and iron and steel products, up 1, 5%. Most notably, the export of textile and garment products to Australia saw robust growth amid a remarkable decline in other markets. 

On the bright side, a sharp decrease in inflation in Australia and a strong recovery in trade exchanges in the last months of 2023 raised hopes for bilateral trade to prosper in 2024. 

Representatives of the Vietnam Trade Office in Australia stated that Vietnamese exports to this market are anticipated to see advantages moving forward thanks to positive developments in bilateral relations in multiple fields, especially in the economic sphere. 

The leaders of both countries are considering upgrading  bilateral ties to a comprehensive strategic partnership at an appropriate time. In addition, both countries are members of the World Trade Organization (WTO) and three important free trade agreement (FTAs) -  the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) with tariff incentives. 

Both sides have also signed the Australia-Vietnam Enhanced Economic Engagement Strategy (EEES) that outlines measures to rev up cooperation. In particular, the Australian economy has witnessed plenty of positive signs of recovery with inflation being kept in check.

The Australian Government recently launched the Economic Strategy for Southeast Asia until 2040, with a primary focus on four priority areas in Vietnam - agriculture and food, clean energy, mineral resources, and education - training, that are expected to help step up bilateral trade ties.

Several Vietnamese products have also gained a firm foothold in the demanding market, with some items recording impressive growth such as confectionery and cereal products, up 89%; rice, up 19.1%; clinker and cement, up 119.7%. 

Moreover, the Vietnamese State has introduced a number of policies to support businesses in accelerating exports, including tax exemptions and access to low interest rates for bank loans. 

However, insiders point out that there remain challenges ahead as the Australian market has set forth stringent regulations relating to packaging and labels, food hygiene and safety and quarantine, intellectual property rights, trademarks, and other business practices. They advised local enterprises to give top priority to improving product quality, instead of price, in order to further penetrate the market, as Australian consumers pay special attention to product quality.

FTA advantages

The Vietnam Trade Office in Australia says this year it will continue to proactively update market information and deploy trade promotion activities to support firms in taking the full advantage of FTAs to promote exports. It will closely coordinate with the Vietnamese Embassy in Australia, the Vietnamese Consulate General in Sydney, and relevant agencies in a bid to enhance trade promotion by displaying products at major international fairs, and at the same time facilitate business-to-business meetings in Australia. 

The Trade Office recommends that Vietnamese businesses carefully research market trends, gain greater insights into consumer tastes and laws, and pay closer attention to product packaging, especially regulations on chemical ingredients. It encourages the businesses to boost digital transformation in agricultural production and improve capacity building in the fields of advanced technologies and human resources.