Advantages

China is the main export market for many of Vietnam's main export products, such as footwear, clothing, agriculture – forestry- fishery, etc. and is still a market with a lot of room for Vietnam to exploit and increase market share.

In the coming time, Vietnam's exports to China are forecast to continue to grow thanks to favorable factors such as:

- Despite the slowdown in population growth in recent years, China remains the world's second largest populous country with a population of over 1.4 billion. Therefore, this market has huge consumption demand, creating room for imported goods (including goods from Vietnam) to easily reach consumers.

- Similar consumption and living habits between Chinese and Vietnamese consumers lead to Vietnamese goods generally being suitable for Chinese tastes and preferences.

- Under the negative impacts of the COVID-19 pandemic, China's economy has also been affected according to general global trend, resulting in a decrease in the income of most consumers. Therefore, their demand for more affordable products from developing countries like Vietnam has increased, especially essential goods such as food, clothing, etc. Meanwhile, Vietnam has the strength to produce these products with prices typically lower than developed countries, and Vietnam also has the advantage of preferential tariffs from FTAs with China.

- In the two years 2022-2023, China granted official export licenses for many Vietnamese agricultural products and is considering licensing many other ones. As of July 2023, there are 13 types of Vietnamese agricultural products allowed to officially export to the Chinese market (including: dragon fruit, mango, watermelon, lychee, longan, banana, jackfruit, rambutan, passion fruit, mangosteen, durian, sweet potato and bird's nest). This is an extremely favorable opportunity for Vietnamese agricultural enterprises to promote exports to this large market.

- China is building a roadmap from 2025 to tighten unofficial exports from Vietnam and all goods exported to China will be required to follow official channels by 2028. In the long term, this will promote the growth of Vietnam's export value to China. Previously, a lot of Vietnamese goods entered China, but a relatively large portion was through unofficial channels, so it was not counted in the import-export turnover of the two countries.

Disadvantages

- The structure of Vietnam's key export goods is not highly complementary to China's import structure. In 2022, top 10 product groups imported the most by includes: electrical equipment, mechanical equipment, optical equipment, mineral fuels, ores, copper, pearls, vehicles, plastic products, grain glass. Compared to top 10 products exported the most by Vietnam to China in 2022, Vietnam has only gained market share in two items: electrical equipment and mechanical equipment, but their proportion is not really significant. Other strong products of Vietnam such as footwear, clothes, and agricultural products are not China's biggest import demand.

Table - Comparison between the top 10 products imported by China with the top 10 products exported by Vietnam to China in 2022

Source: ITC Trade Map, 2023

- The Chinese market is becoming more and more demanding with many new strict import regulations on quality, food safety, traceability, packaging, etc. Products that do not meet the regulatory system regulations, the standards of this market will be warned, affecting the reputation of businesses in particular and image of Vietnamese products in general.

According to the Vietnam Trade Office in China, in recent years, Vietnam has appeared many times in top 10 countries/territories with the largest number of agricultural and food products subject to warnings in China. Groups of agricultural and food products subject to many warnings include seafood, fruit juice (not including coffee, dairy products), and all kinds of cakes. Warning errors include: (i) Failure to ensure quality and food safety (using food additives exceeding the allowable threshold; mold; pathogenic bacteria); Documents accompanying the goods do not meet the requirements (lack of goods certification; goods do not match the certificates; goods are not allowed to be imported); Goods packaging labels do not meet regulations and import requirements, etc.

- Chinese consumers tend to prioritize domestic products and gradually develop the habit of online shopping. Chinese consumers are considered to have a high national consciousness, along with the increasingly progressive domestic production capacity, making people believe that the quality of domestic goods is no longer inferior to foreign goods, and even somewhat superior, better meeting their consumption habits. Furthermore, Chinese consumers, especially young people, are accustomed to online forms of promotion, communication, shopping, and payment because of their convenience and speed. Meanwhile, reaching Chinese consumers directly on online shopping platforms is not easy.

- The level of competition in the Chinese market is very high, with the main competitors in the same region such as Korea, Japan, and ASEAN countries. These countries have a structure of goods exported to China quite similar to Vietnam, so the level of competition is even higher. In addition, countries that have FTAs with China from the Americas and Oceania region also create certain difficulties for Vietnam in competing in this market. Furthermore, even with strong products, Vietnamese goods do not necessarily have advantages in quality, diversity and brand compared to these competitors.

Source: Center for WTO and International Trade

• Market size of China
• Trade activities of China
• Consumer characteristics in China
• Characteristics of China’s distribution system
• Vietnam's exports to China