Resuming trade promotion activities with the Vietnamese market after the worse periods of the pandemic, Wang Yan Hua who is in charge of coffee at Sunwah Hong Kong hopes to buy a lot of Vietnamese coffee and raw materials for her company’s processing plants. Hua said currently the company is looking for Vietnamese coffee sources that are clearly classified from real partners.

Can coffee supply of Vietnam satisfy Chinese demand?

The first bags of Vietnamese coffee were officially exported to China in 1998 when China established the Beijing coffee futures market with the ambition to open futures markets such as in London, New York, and Tokyo. However, the ambition of the Chinese business world did not succeed. China still wants a slice of the global coffee market by promoting fast-growing production and exports with Yunnan, the province that accounts for more than 90 per cent of the country’s output. The area under coffee cultivation in China has exceeded 1.84 million hectares in 2021, up from about 1.8 million hectares between 2010 and 2013, according to market research firm Statista.

Though Chinese coffee has not been perceived as equal to Vietnamese or Brazilian coffee, the country is the destination of many of the world’s top roasters and instant coffee producers.

Nestlé, which has been present in Yunnan province since the late 1980s, has significantly increased its procurement and investment after signing an MoU with the local Pu’er government to invest in the coffee hub of the region in 2013. Starbucks also sought to expand its presence in Yunnan in 2012, assisting farmers in improving coffee quality.

In that development chain, many businesses also promoted links with major roasters in the world to develop the high-value roasted and instant coffee industry. Coffee trader Volcafe in 2014 announced plans to partner with Simao Arabicasm Coffee to supply, process, and export Chinese coffee to the international market.

However, China’s efforts are not enough to meet the demand for domestic consumption and exports as supply has not kept pace with the development of the coffee processing industry.

Coffee consumption in China is growing at an average rate of 15 per cent a year, according to the China Coffee Association of Beijing. With this, the supply from Vietnam could balance out the shortage of green coffee demand in China.

Nguyen Nam Hai, chairman of the Vietnam Coffee and Cocoa Association (Vicofa), said, “In the first six months of 2022, China imported 21,450 tonnes of Vietnamese coffee, of which green coffee accounts for the largest part of over 13,000 tonnes.”

China is spending more money on importing coffee from Vietnam. In 2020, the former bought coffee worth around $95.6 million, which increased to $128.4 million last year, rendering China the eighth-largest coffee buyer of Vietnam, according to the Vicofa.

Sun Zheng, vice director of the Chongqing Coffee Exchange, said last week that the city of 32 million people in Sichuan province has a huge demand for Vietnamese coffee, particularly Robusta coffee for processing. He explained, “Chongqing’s enterprises want to take advantage of price and transportation advantages.”

Zheng is not hiding his desire to cooperate with Vietnamese coffee enterprises, even offering solutions to handle import problems.

“Chinese businesses accept payments in both dollars and yuan,” he said. “However, in case imports are just transferred to China for later export to Russia, yuan would be better.”

Zheng believes that the Vietnamese consulates in China can assist exporters to register with the Chinese customs authorities under the legal provisions. “Exporters can consider transporting the coffee by rail to save costs. Currently, the railway routes between Hanoi and Moscow and Laos and Chongqing are cheaper than the Hanoi-Chongqing route,” Zheng added.

Despite this enthusiasm of Chinese buyers, Vietnam’s coffee exports to China have been slowing since the beginning of 2022.

According to statistics from the General Department of Vietnam Customs, in the first seven months of 2022, Vietnam exported about 24,500 tonnes of coffee, equivalent to $75.5 million to China, down 22 per cent over the same period in 2021.