Scope exists for wider trade relations with Great Britain

The total turnover of Vietnamese goods exported to the United Kingdom was about $5 billion a year before the pandemic – accounting for less than 1 per cent of market capacity. The biggest opportunity for Vietnamese businesses in the UK market has been since the UK-Vietnam Free Trade Agreement took effect in early 2021. However, Vietnamese enterprises still face some difficulties when exporting goods to the UK. Firstly, the shipping cost is very large, at about $12,000 for a 40-feet container, and transportation schedules are not regular. Secondly, many businesses are afraid or unable to attend fairs in the UK so as to introduce their products, meet potential customers, and grasp market trends or changes in consumer tastes.

The lending rates for bank loans in Vietnam are also quite high, while importers want to pay after receiving goods from 30 to 60 days or longer. The payment tools and practices of Vietnamese enterprises have not kept pace with British counterparts.

Meanwhile, Vietnamese enterprises do not fully understand the market approach and business practices in the UK. Vietnamese enterprises are often at a disadvantage when facing a dispute with British customers due to a lack of knowledge of UK business laws and a lack of risk prevention measures. Finally, the digitally technological skills of many Vietnamese businesses have not reached the level of British businesses and consumers, so the effectiveness of e-marketing is very low.

To help Vietnamese businesses to overcome these obstructions, some solutions are proposed. The Ministry of Transport needs to have measures to reduce logistics costs for businesses. Moreover, the Ministry of Industry and Trade (MoIT) should increase support for businesses to attend major international fairs in Europe.

Furthermore, Vietnamese banks should expand cooperation with British banks and businesses to provide more export credit for Vietnamese businesses with more reasonable lending rates. It is necessary for the MoIT to cooperate with the Foreign Trade University to organise short-term training programmes for businesses on effective methods of market access, business culture, business law, and digital marketing in foreign targeted markets.

In addition, the Vietnam Chamber of Commerce and Industry needs to add a Vietnamese business database in English on its website so that foreign enterprises can easily verify their Vietnamese partners, and thereby boldly do business with Vietnamese companies.

There are five key industrial sectors in the UK that Vietnamese businesses can seek partners and forge cooperation with. One is the production of high-grade steel using decarbonisation technology. This is a technology with lower power consumption and lower carbon emissions than traditional technology.

Second is the production of engines for aeroplanes, ships, trains, and cars, and the third is ICT. This sector in the UK is being invested in with high-speed transmission lines and attracting talents from other countries.

5G internet will be common in the next two years in this nation, while 6G is being researched and has application prospects for the next 3-5 years. ICT is one of the important components of Industry 4.0, and can be considered a cornerstone for many other economic sectors.

The next factor is to build AI-based robots. Along with the great advancement of ICT, manufacturing robots with AI is becoming a cornerstone industry for many other economic sectors and promoting unprecedented high labour productivity.

Another crucial industrial sector in the UK is the production of wind power and its equipment. The UK is one of the pioneers in this field and is looking forward to helping Vietnam develop wind power to gradually replace coal power in order to achieve the goal of neutralising emissions by 2050.

Vietnamese enterprises can approach partners from these aforementioned industrial sectors via different channels. They can do this via big banks such as HSBC, Standard Chartered, Lloyds, and NatWest to find investors or manufacturers wishing to move factories abroad. These banks have both financial and management capacity and the ability to find technology experts.

Vietnamese businesses can also find British partners through the Association of Vietnamese Intellectuals in the UK or the Vietnam-UK Network to search for local experts to work for Vietnam.