Firms Need to Embrace Transformation to Sustain Exports
At a critical juncture where major import markets are enforcing stricter environmental and social standards, Vietnamese enterprises are being urged to pivot towards green manufacturing to ensure the sustainability of their export activities. This was the core message delivered at a recent conference held in Ho Chi Minh City, focusing on the evolving landscape of foreign trade transactions, business strategy adjustments, and dispute management.
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The conference, titled “Current Foreign Trade Transactions: Changes in Business Strategies and Disputes Management”, brought to light the significant growth in trade Vietnam has experienced in recent years, with imports and exports in the first half of 2024 reaching an estimated total of over $190 billion, marking a 14.5% increase from the previous year. A notable trade surplus of $11.6 billion was also highlighted, signaling strong economic performance.
However, the increased integration into global markets has not come without its challenges and risks, especially for businesses in the foreign trade and logistics sectors. One of the main hurdles discussed was the rising bar for environmental standards and the necessity for digital transformation in the wake of a global shift towards sustainable development.
Experts at the conference stressed the importance of Vietnam adopting policies and strategies that support green transformation and the development of a circular economy. They pointed out that the move towards sustainability is not just a global trend but an inevitable shift that Vietnamese firms must embrace to maintain their competitive edge in international markets.
The legal landscape and risks associated with import and export activities were also dissected during the conference. It was revealed that disputes related to international trade and the sale and purchase of goods have consistently topped the list of cases adjudicated by the Vietnam International Arbitration Centre (VIAC) in recent years. Many Vietnamese enterprises find themselves at a disadvantage due to contractual missteps from the negotiation phase to the signing of agreements.
Therefore, experts emphasized the critical role of contract management and risk management in foreign trade. Firms are encouraged to gain a thorough understanding of the nature of international trade contracts, along with the potential political and cultural risks. Verifying the legal status and financial health of contractual partners, along with compliance with local laws, is essential in mitigating risks.
Additionally, the conference shed light on practical challenges businesses face, such as sustainability criteria demanded by international markets, including the EU Deforestation Regulations, US trade defense measures, and net-zero emission targets. These challenges underscore the necessity of businesses adopting careful strategies in partner evaluation, contract drafting, payment methods, goods insurance, and staying updated on market dynamics and regulatory changes.
Highlighting the volatile nature of international trade, exacerbated by geopolitical risks that inflate operational costs, the conference served as a clarion call to businesses. Adaptation through strategic transformations, particularly towards green manufacturing and comprehensive risk management, is not just beneficial but essential for Vietnamese firms aiming to sustain and grow their exports in a rapidly changing global marketplace.
The event, which saw the participation of nearly 200 delegates from various import-export companies and business associations, underscores the collective effort and commitment required to navigate the complex international trade environment effectively.
