Steady increase

Hoang Le Hang, First Secretary at the Vietnam Trade Office in the UK and Ireland, citing statistics from the General Department of Vietnam Customs, reported that in the first half of 2024, the total trade value between Vietnam and the UK exceeded US$3.9 billion, a year-on-year increase of 21.7 percent, with Vietnam recording a trade surplus of over US$3.2 billion, an increase of 28.5 percent compared to the same period in 2023.

Farm produce exports to the UK have shown positive signs - illustrative photo

In June 2024, Vietnam exported US$573.3 million worth of goods to the UK, an increase of 10.7 percent compared to May. In the first six months, the export value exceeded US$3.57 billion, a year-on-year increase of 24.7 percent.

Notably, thanks to tariff preferences under the UKVFTA, the market share of Vietnamese goods in the UK has been steadily increasing, with all of Vietnam’s exports to this market growing significantly in the first six months of 2024. Computers, electronic products and components topped the list with a 142.7 percent increase, followed by rubber 110 percent, electric wires and cables nearly 68 percent, machinery and equipment 44.8 percent, fruits and vegetables 55.5 percent, and confectionery and cereals 46.6 percent.

Phones and components accounted for 17.9 percent of the total value of exports to the UK in the first six months, followed by machinery, equipment, and spare parts 17 percent; footwear 13.4 percent; textiles and garments 9.8 percent; computers, electronic products and components 9.6 percent; seafood four percent; timber and wood products three percent; iron and steel 3.5 percent; and coffee 1.8 percent.

Under the UKVFTA, 94 percent of the total 547 tariff lines for fruits, vegetables and related products were eliminated immediately after the agreement came into effect. This provides a competitive advantage for Vietnamese agricultural products compared to similar products of countries that do not have a free trade agreement with the UK.

In 2023, Vietnam exported many specialty fruits to the UK through official channels, such as Canh oranges, Dien pomelos, Cao Phong oranges, Cao Phong mandarins, Tan Lac red pomelos, Ri6 durians, U Hong lychees, and seedless lychees. These products received positive feedback from the UK market. Some agricultural products, food items, and fresh fruits have made their way into high-end and mid-range supermarket chains in the UK, such as Whole Foods, Marks & Spencer (M&S), and Waitrose.

The UK is a sizable market with approximately 68 million consumers, including a community of over 5.5 million people of Asian descent, creating favorable conditions for Vietnamese goods, including wooden furniture, to increase presence in this market.

The market share of Vietnamese goods in the UK is steadily increasing - illustrative photo

Adapting flexibly to market changes

However, according to Hoang Le Hang, the export of goods in general and agricultural products in particular will face challenges in 2024. The Red Sea conflict has disrupted maritime exports to the UK, causing shipping time to be extended by 10-15 days and increasing shipping costs. This will impact the export of agricultural products and fresh fruits.

Moreover, the UK market’s demand has decreased due to economic downturns, high inflation, and tightened consumer spending as living costs rise and economic uncertainties persist.

The UK is a discerning market with extremely strict standards. The increasing preference for green certifications and fair trade requirements compels businesses to increase investment, raising their input costs and, consequently, the prices of products.

Despite these challenges, Hoang Le Hang believes there is still much room for Vietnam to increase exports to the UK, especially agricultural products and food items, as the UK currently imports to meet about 40 percent of its food and produce needs.

To make the most of opportunities from the UKVFTA, the Vietnam Trade Office in the UK and Ireland said that Vietnamese businesses should ensure their products and production processes meet UK standards. Additionally, businesses should stay updated on new market standards, regulations, and consumer trends to improve technology and product quality accordingly.

Bob Fletcher, Director of Global Customs and Trade Services at Deloitte Vietnam, emphasized that Vietnamese businesses should leverage digital technologies and e-commerce platforms to expand their reach, engage with the market, and connect with consumers. He also recommended active participation in trade fairs and industry events to connect with UK companies interested in investing in Vietnam.

For its part, the Trade Office will strengthen the connections between the UK business community and Vietnamese companies in the UK to facilitate and explore collaboration opportunities. The Trade Office affirms its commitment to accompany and support domestic businesses in exporting goods to the UK and Ireland.