General Secretary, President To Lam witnesses the signing of cooperation agreements between the Ho Chi Minh City Department of Tourism, Vietnam Airlines, Saigontourist Group, and their Australian partners. (Source: TTXVN)

The economic relationship between Vietnam and Australia is opening up new and promising cooperation opportunities. To seize this opportunity, Vietnamese businesses need to shift from the mindset of merely “exporting goods” to deeper participation in Australia's value chains.

Joint capacity building for businesses of both nations

The joint statement on enhancing resilience, adaptation, and economic recovery between Vietnam and Australia has specifically identified areas such as essential minerals, semiconductors, clean energy, agriculture, and emerging technologies.

Based on this, three potential areas could generate significant value.

Firstly, energy and essential minerals. Australia has a significant advantage in resources, mining technology, and mineral management, while Vietnam needs a stable source of raw materials for production, energy transition, and new industries. Both countries emphasize building diverse, secure, and resilient essential mineral supply chains, while promoting electrification, renewable energy, and energy transition.

Therefore, cooperation opportunities should not stop at Vietnam importing raw materials from Australia but should aim towards deep processing, material technology, energy equipment, and producing high value-added products.

Secondly, high technology and future industries, particularly semiconductors, artificial intelligence (AI), quantum technology, biotechnology, and digital technology. Vietnam can leverage not only capital but, more importantly, knowledge, research, workforce training, and connections between Australian universities and businesses and the domestic innovation ecosystem.

Thirdly, agriculture and food processing industries. The complementarity between the two economies also opens up cooperation opportunities in processing, cold logistics, agricultural technology, and building traceable food chains.

Dr. Ha Thi Cam Van is currently the Senior Program Manager for Economics at RMIT University Vietnam. (Source: RMIT Vietnam University)

New directions for Vietnamese businesses

In this context, Vietnamese businesses are assessed as needing to change their approach if they want to take full advantage of the opportunities from the bilateral relationship.

Australia is a high purchasing power market but also imposes stringent requirements on standards, quality, food safety, traceability, environment, and social responsibility.

Therefore, competing on low prices will become increasingly difficult, while quality, branding, certification, and the ability to meet standards will become more important factors.

Vietnamese businesses also need to find their position in the new supply chains being promoted by both governments. For example, in the mineral sector, businesses do not necessarily have to participate in mining in Australia but can find opportunities in processing, component manufacturing, materials, or industrial services.

In clean energy, opportunities may lie in the supply chain of electrical equipment, storage systems, components, and technical services.

In agriculture, businesses should aim for deeply processed, branded, and traceable products instead of primarily exporting raw products.

Additionally, Vietnamese businesses should better leverage the Free Trade Agreements (FTAs) that both countries participate in, such as CPTPP, RCEP, and AANZFTA. However, benefits from these agreements do not automatically come to businesses. They need to understand the rules of origin, technical standards, and specific incentives for their products.

A viable direction, especially for small and medium-sized enterprises, is to proactively establish direct relationships with importers, distributors, and leading businesses in Australia. Accordingly, the feasible path is not necessarily to build their own network in Australia but first to become a supplier or production partner for businesses in the land of kangaroos.

From these relationships, Vietnamese businesses can gradually move up to higher value-added stages such as deep processing, product design, technology, and brand development.

Trade promotion shifts from breadth to depth

For cooperation opportunities to truly reach businesses, support policies also need to change towards shifting from broad trade promotion to supporting businesses in penetrating the market in depth.

Firstly, it is necessary to provide more specific market information, from product demand, standards, buyers, and distribution systems to competitors. Trade missions and trade promotion agencies can build industry-specific databases for businesses to access easily.

Secondly is support for standards and certification. For many small and medium-sized enterprises, the biggest barrier is not tariffs but the cost of meeting technical standards, quarantine, food safety, ESG, and traceability. The state can support consulting, inspection, certification, and training, especially for businesses with export potential but limited resources.

Thirdly is finance. Vietnam needs to research suitable financial mechanisms so that domestic businesses can invest in technology upgrades, meet standards, or expand operations in Australia.

Fourthly, and perhaps most importantly, is connecting businesses along the value chain. Instead of organizing trade missions with hundreds of relatively general meetings, it is better to identify leading businesses and specific supply chains in Australia, then find Vietnamese businesses capable of becoming suppliers.

It can be seen that increasing Vietnam-Australia trade turnover is only part of the story.

More importantly, how many Vietnamese businesses can participate in Australia's supply chains, how much technology is transferred, how many Vietnamese products move up to higher value segments, and how many sustainable investment links are formed.

If these goals are achieved, the Vietnam-Australia relationship can shift from expanding trade to jointly creating new production capacities and values.