Vietnamese small and medium sized enterprises (SMEs) have been advised to fully tap into the opportunities brought about by the European Union-Vietnam Free Trade Agreement (EVFTA) once the trade pact comes into force in August.

While boasting 49% of the untapped market share, the EU market is expected to make a series of breakthroughs for import-export activities for local businesses, especially with regard to SMEs. 

With the goal of boosting the export of sachi seeds to the EU market, Nguyen Thi Kim Thong, managing director of Kim Thong Co-op, said her company has encountered a number of difficulties in penetrating the EU market despite constant support from the Vietnamese trade offices in Germany and Italy.

She attributed these challenges to the time-consuming administrative procedures and huge costs that exist in order to conduct major trade promotion activities. In addition, the firm still lacks information about market consumer demand and especially reputable importers.

In fact, these are the common problems that many SMEs address in implementing trade promotion activities in order to make forays into the EU market.

Mac Quoc Anh, Vice President and General Secretary of the Hanoi Small and Medium sized Enterprises Association, emphasised that although the EVFTA is expected to open up numerous opportunities for local enterprises, there remains a number of hurdles that domestic businesses must overcome. The hurdles are limited capital resources, production technology, competitive capacity among others in order to meet the export standards set by EU importers.

Indeed, plenty of firms are facing challenges when attempting to launch trade promotion activities due a shortage of capital sources and a general lack of international trading experience, especially when it comes to the branding of their products not yet being protected in foreign markets.

Moreover, SMEs have also encountered other difficulties, including language barriers, cultural differences, as well as limited knowledge about the EU’s market regulations.

In line with this, Anh proposed that the State should support several big companies, instead of thousands of SMEs, in penetrating and securing a firm foothold in the EU market first. These businesses will then connect with other SMEs to create the production and supply chains of goods to be exported to the EU.

Vu Ba Phu, Director of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade, advised local businesses to enhance their competitiveness by striving to meet the stringent export requirements set by the EU in order to cater to the need of this demanding market.

Only when SMEs address three major issues of market accessibility, competitive capability and the quality of human resources, will they have the chance to penetrate the EU market, and the ministry will support them in achieving this goal, said Phu.