A new direction for Vietnamese businesses
According to Dr Van, Vietnamese businesses need to change their approach to take greater advantage of opportunities arising from bilateral relations.
Australia is a high-purchasing-power market, but it also has stringent requirements around standards, quality, food safety, traceability, the environment and social responsibility. As a result, competing on low prices is increasingly difficult, while quality, branding, certification and the ability to meet market standards will become more important.
Vietnamese businesses should also identify opportunities within the new supply chains being promoted by the two governments. For example, in minerals, businesses do not necessarily need to participate in mining in Australia, but could explore opportunities in processing, component and materials manufacturing or industrial services. In clean energy, opportunities could lie in supply chains for electrical equipment, energy storage systems, components and technical services.
In agriculture, businesses should move towards deeply processed, branded and traceable products rather than relying mainly on exports of semi-processed products.
Dr Van said Vietnamese businesses should also make better use of the free trade agreements (FTAs) shared by the two countries, including CPTPP, RCEP and AANZFTA. However, the benefits of FTAs do not automatically reach businesses. They need to understand rules of origin, technical standards and the specific preferences available for their products.
One viable approach, particularly for small and medium-sized enterprises (SMEs), is to build direct relationships with Australian importers, distributors and lead firms.
“For most SMEs, the most viable path is not necessarily to build their own networks in Australia, but first to become suppliers or production partners for Australian businesses.”
Through these relationships, Vietnamese businesses can gradually move into higher-value activities such as deeper processing, product design, technology and brand development.
Trade promotion needs to shift from breadth to depth
To ensure that cooperation opportunities reach businesses, Dr Van said government support also needs to change, “moving from broad-based trade promotion to supporting businesses in entering markets more deeply”.
First, businesses need more specific market information, covering product demand, standards, buyers, distribution systems and competitors. Trade offices and trade promotion agencies could develop sector-specific databases to make this information more accessible.
Second is support for standards and certification. For many SMEs, the biggest barrier is not tariffs but the cost of meeting technical standards, quarantine requirements, food safety requirements, ESG standards and traceability requirements. The Government could provide support for consulting, testing, certification and training, particularly for businesses with export potential but limited resources.
Third is finance. Vietnam should explore appropriate financial mechanisms to enable domestic businesses to upgrade technology, meet standards or expand their operations in Australia.
Fourth, and perhaps most importantly, is connecting businesses along value chains. Rather than organising trade missions involving hundreds of relatively general meetings, relevant agencies should identify leading Australian businesses and specific supply chains, then match them with Vietnamese businesses capable of becoming suppliers.
Measuring success by value created
According to Dr Van, increasing bilateral trade turnover is only part of the story.
“More importantly, it is about how many Vietnamese businesses can participate in Australian supply chains, how much technology is transferred, how many Vietnamese products move into higher-value segments, and how many sustainable investment linkages are established.”
She said achieving these goals would enable Vietnam – Australia relations to move beyond expanding trade towards jointly creating production capabilities and new values.
Story: June Pham
