Local businesses incentivised to expand exports to potential markets in Asia

The economic outlook ahead in 2024 of Ho Chi Minh City, as well as Vietnam, depends greatly on the world's economic outlook.

According to many economic experts, there are three potential export markets, namely Japan, the RoK, and India. Despite the nation having signed a comprehensive strategic partnership agreement with the three Asian nations, they currently account for a very modest proportion of Ho Chi Minh City's total export turnover.

Specifically, of the southern city's total export turnover in 2022, Japan made up 7.16%, the RoK 4.31%, and India only 1.41%.

Dr. Ho Hoang Anh of the University of Economics Ho Chi Minh City (UEH), analyzed that currently the nation’s two major export markets of the United States and China both face certain difficulties. This year Ho Chi Minh City must find ways to diversify exports to the Indian, RoK, and Japanese markets.

“In particular, India is predicted to continue to see strong growth at 6.3% in 2024. If we can take advantage of India's growth and diversify exports to the Indian market, HCM City will be able to improve its exports.

The RoK and Japan are demanding markets which have strict technical standards, therefore Vietnamese products are required to fully meet health and environmental standards.

This can be viewed as an opportunity for Ho Chi Minh City to promote its green economy faster, as well as increase exports to these demanding markets, thereby helping the short-term economic outlook in 2024 improve even more. This is the appropriate direction for the year and is consistent with the medium-term economic trend of the southern city.

Nguyen Thanh Dao, chairman of the Ho Chi Minh City Advertising Association, recently made a survey trip to the Indian market and said that through actually learning and working alongside a number of partners, India represents a potential export market for Vietnamese firms, especially in terms of population size, geographical distance, and product requirements.

“The import-export turnover of Vietnam and India is currently at a good level. The export and import products of both nations mostly complement each other, with few directly competing products," Dao said.

​What should businesses pay attention to?

Many businesses exporting to the Japanese market said that the most important thing is that product quality must meet requirements, be guaranteed, and certified.

When Vietnamese businesses work with Japanese partners over the long run, they can not only export goods, but also receive technology transfer, guidance, and support from the Japanese side.

Nguyen Thi Thanh Dieu, deputy general director in charge of business of Vi Na Kitchen Equipment Joint Stock Company (NaMilux), said that the company has been exporting gas products to the Japanese market for more than 20 years. In 2023 alone NaMilux exported more than 500,000 gas products to the Far East nation, mainly gas stoves of all kinds. This market thereby accounts for half of the company's sales.

In parallel with the Japanese market, NaMilux is also bolstering exports to the RoK and initially seeking co-operation opportunities in the Indian market.

Any other businesses, including mechanical and supporting industry businesses in Ho Chi Minh City, are also keen to grasp this year's export market trends whilst intensifying a broad array of activities.

According to Do Phuoc Tong, chairman of Ho Chi Minh City Association of Mechanical - Electrical Enterprises, the potential market of the mechanical - electrical industry is the US is currently facing many objective difficulties. This year, mechanical and electrical enterprises continue to boost exports to both the Japanese and Korean markets that they already have relationships with, whilst they are also approaching the new market of India.

Major export markets of Ho Chi Minh City and the nation in general, including China, the US, and Europe, are all forecast to see slow growth in the year ahead. This highlights that the exports of Ho Chi Minh City and Vietnam in these markets will be difficult to see breakthroughs in the coming time.

This will represent a challenge for Ho Chi Minh City in terms of promoting the recovery of aggregate demand.

Experts are therefore recommending that the southern city support and encourage local businesses to find partners whilst expanding export markets to countries other than China and the US.

Market diversification will serve to help the southern metropolis' exports minimise cyclicality and ensure stable growth moving forward.