Experience in working with international distributors

VCN – Besides quality issues, factors related to price, and market understanding, partners also play an equally important role for enterprises to be effective when negotiating with international distributors.

Foreign customers learn about Vietnamese spice products at the HCMC Foodex exhibition 2022. Photo: N.H
Foreign customers learn about Vietnamese spice products at the HCMC Foodex exhibition 2022. Photo: N.H

The world is more and more interested

Statistics for the first nine months of 2022 from the Ministry of Agriculture and Rural Development showed that the total export turnover of agriculture, forestry and fishery products reached about US$ 40.8 billion, up 15.2% over the same period last year. In particular, there were 7 products and groups with an export value of over US$ 2 billion, including coffee, rubber, rice, vegetables, cashews, shrimp, and wood products. In addition, many items achieved higher export value than in the same period last year, such as coffee increased by 37.6%, rubber increased by 7.8%, rice increased by 9.3%, pepper by 7.7%, cassava and cassava products increased by 21%…

Mr Tran Phu Lu, Deputy Director of the Investment and Trade Promotion Center of Ho Chi Minh City (ITPC), said Vietnamese goods were increasingly appearing in large supermarkets under modern distribution systems abroad. Vietnamese enterprises have developed the method of exporting goods quite well through large supermarkets investing in Vietnam, which is reflected in the value of Vietnamese goods exported through the modern distribution system in Vietnam increased gradually over the years. The product category of Vietnam also increased in quantity and quality. The displayed goods had a variety of types and designs, with a wide variety of items such as agricultural products, fresh fruits (coconut, dragon fruit, banana, litchi), processed foods (instant noodles, instant pho, spices, drinks), garments, consumer goods, handicrafts.

According to Mr Tran Phu Lu, consumers in many countries were increasingly interested in and accepting Vietnamese products, especially fresh fruits such as dragon fruit, mango, banana, litchi, sweet potato, bell pepper, beetroot and seafood such as frozen pangasius and squid.

Mai Thi Hong, Coordinator of the Netherlands-Vietnam Agricultural Business Cooperation Association, also assessed that, compared with previous years, the product quality of Vietnamese small and medium enterprises had improved a lot in terms of quality and packaging, taking advantage of local ingredients. “It should be encouraged. As long as enterprises ensure reasonable prices, stable production capacity and quality, they can firmly believe in success”, said Ms Mai Thi Hong.

Vu Kim Hanh, Director of the Center for Business Research and Support (BSA), said that after long time of the pandemic, enterprises faced the world economy’s recession and unfavourable factors of the domestic economy. But the positive point was that Vietnamese enterprises were constantly changing to regain things that were lost before.

Mr Tran Phu Lu also said that representatives of significant distribution groups in the world were present in Vietnam, such as Walmart, Central Group, Aeon, Lotte, and Decathlon and ready to support small and medium-sized enterprises in Vietnam. Vietnam should find opportunities to export Vietnamese-origin products into their distribution system with strict product selection standards regarding quality, quantity, price, and consumer response. It was an opportunity for enterprises to standardize their products further to enter the world’s major distribution systems.

Notes when working with international distributors

To achieve efficiency when working with international distributors, Ms Mai Thi Hong noted that import markets all required quality certificates. Therefore, enterprises should consider their capacity. “After obtaining the certificates, it means perfecting the production, packaging, labeling, and transparency of raw materials. At that time, can the price be competitive, will it be profitable to sell in the long run?” – Ms Hong asked questions enterprises.

In addition, Ms Hong emphasized that enterprises always had to put themselves in the position of buyers, see what buyers needed, what benefits they got, and what was different from other products on the market. According to Ms Hong, customers might make the first purchase because it is eye-catching and curious, but focusing on quality, features, and effects is necessary for long-term sustainability.

As an enterprise with many years of experience exporting fruit to fastidious markets, Mr. Nguyen Dinh Tung, Chairman and General Director of Vina T&T Company, said that to export goods to a market, the deciding factor was to understand and comply with the laws of that country. For example, the U.S. market required a growing area code issued by the U.S. Department of Agriculture, a code of product packaging unit assessed by the U.S. Meanwhile, the European market required certifications of GlobalGAP, SMETA, ISO, HACCP… Mr Tung also paid special attention to the problem of pesticide residues. “There are substances that are not banned in Japan, the U.S. and Australia but are banned in Europe, so enterprises need to pay attention”, Tung said.

To ensure quality control of goods, Mr Tung said that fresh fruits should be harvested, processed and transported from the farm to the factory in the shortest time to ensure quality. The steps in the process also should match the timelines. Regarding preservation, preservation technology must meet HACCP standards, ensuring the control of hazards in preliminary processing, packaging, preservation and export. Planting areas must control banned plant protection substances and apply VietGAP and GlobalGAP standards; Packing factories must meet standards of HACCP, ISO 9001, SMETA…

In addition to quality issues, enterprises also should learn about the import market and partners. “If your product is unavailable, you need to find out the price level of similar products or features. The companies can find information through online sales websites abroad or consulting organizations…” – Ms Hong suggested.

According to Mr Tung, enterprises can take advantage of the Vietnamese commercial counsellor system in other countries to know their partners’ operations and business forms. “In recent years, Vietnam’s trade counsellors have operated very effectively, so Vina T&T has received many positive supports for export activities in markets”, said Mr Tung.

Mr Tung also shared the secret to achieving the best selling price in the market. Accordingly, Vina T&T has cut down the intermediary stages and built a strictly monitored export process from the growing area to the consumer. For example, planning concentrated planting areas by cooperatives and farmers with an area of 10-20 ha or more. Besides, building a synchronous and modern system of factories, lines, machinery and equipment. Warehouses are arranged at “navel”, gathering points or seaports to facilitate agricultural products’ purchase, processing and export.

By Nguyen Hien/ Binh Minh

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