Vietnam is considered the largest shrimp supplier to Korea. Photo: ST

Potential export market

South Korea currently holds the position as the largest investor in Vietnam; is the second largest ODA, tourism, labor partner and the third largest trading partner (after the US and China) with a bilateral trade turnover reaching US$78.1 billion in 2021.

South Korea is expected to increase trade turnover with Vietnam to reach US$100 billion by 2023. In contrast, Vietnam is the key target of South Korea's southward policy in the ASEAN region when the two countries' trade turnover accounts for more than 40% of the total trade turnover between Korea and ASEAN countries.

Many multinational corporations, and large enterprises with modern technology, including many Korean enterprises have invested in Vietnam; capital scale and project quality increase, contributing to job creation and income for employees; raising production level and capacity; increasing state revenue, stabilizing the macro-economy; promoting economic restructuring, renovating growth models; and improve Vietnam's position and prestige in the international arena.

According to the Vietnam Trade Office in Korea, the bilateral trade turnover continues to increase despite the impact of Covid-19 pandemic and the increasing economic and political instability in the world, which negatively affects the economy and commerce. In the first 7 months of 2022, exports to the Korean market reached US$13.9 billion, an increase of 14.5%; imports reached US$37.28 billion, a growth of 23.7%; trade deficit from this market was US$23.38 billion.

The main export groups to Korea included: phones and components; computers, electronic products and components; textiles; other machinery, equipment, tools and spare parts; wood and wood products; seafood.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam's shrimp exports to South Korea in the first half of 2022 reached over US$231 million, increasing by 38% over the same period last year. Vietnam is considered the largest shrimp supplier to South Korea, accounting for an overwhelming market share of 45% (Canada accounted for 11%, China 8%, and Ecuador 7%).

Business support

Speaking at the Seminar "Promoting economic cooperation between Vietnam and South Korea" held last weekend, Mr. Keang-Kido, representative of the Korea Import-Export Association, said the unit can support Vietnamese enterprises both in person and online. Currently, the Korea Import-Export Association is supporting start-ups that do not have the capital capacity and has established a special zone for these businesses. According to Mr. Keang-Kido, the Korean side promised to give more support to Vietnamese startups, especially in the field of cosmetics and garments. Specifically, the Korea Import-Export Association can share the experience as well as transfer techniques and technologies in these two fields to Vietnamese businesses.

In order to connect and support cooperation, recently, the delegation of Vietnam - Korea Business and Investment Association (VKBIA) also had a meeting with Ben Tre province on the issue of attracting foreign capital flows, investment promotion, supporting the development of infrastructure investment projects; proposed cooperation in areas such as developing high-quality human resources, recruiting workers for Korean enterprises. In particular, supporting the export of Ben Tre's key products to the Korean market.

In Notice No. 251/TB-VPCP dated August 19, 2022 of the Government Office on the Prime Minister's conclusion at the meeting and dialogue with the Korean Embassy and Korean businesses in Vietnam. The relevant ministries, sectors and localities should actively seek solutions to diversify products to further promote exports to the Korean market in the current period, especially through Korean enterprises in Vietnam.

However, according to the Vietnam Trade Office in Korea, high inflation causes great risks in terms of exchange rates and prices, which have affected the import-export activities and investment of Korean enterprises in Vietnam. Along with that, due to the complex development of the Covid-19 pandemic in South Korea recently and the geopolitical instability in some parts of the world, it has caused supply chain disruptions and affected import and export activities between the two countries. On the other hand, Korea’s food safety and animal and plant quarantine measures continue to be major obstacles, affecting Vietnam’s exports of agricultural, aquatic products and processed foods.

Accordingly, to be able to export products to the Korean market, products must ensure quality and taste factors; have stability in production, processing and circulation; ensure food safety and hygiene, and safety in processing and circulation.

The most important notice is the credibility in the commitment when Korean enterprises and Vietnamese enterprises work together. When having credibility, Vietnamese enterprises will have the opportunity to negotiate smoothly and keep orders for a long time.