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Thursday, October 22, 2020

No more “Hard-to-please markets”

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Nowadays, “meticulous customers,” those who are hard to please because they want only products of good quality, is an outdated concept. What companies expect to serve now are kings who require standardized products.

I often buy out of convenience fruits and vegetables from a place near my house, sometime a kilogram of orange, sometime a bunch of longan. Once, I saw the seller using a brush dipped into a bowl containing a certain liquid and applying it on the rind of a watermelon. When asked, she replied the application was to keep the fruit fresh longer. Asked whether it was toxic, she smiled saying I was a hard-to-please person. Everybody at the market was using it, she said, and everybody ate it and nobody had died like people suffering Covid-19 in North America. If I felt hesitating, I should take another without the liquid applied, she advised me.

Hard-to-please or requiring standards?

When cooking, I often listen to the FM channel of the Voice of Vietnam. Many times, I listened to trade specialists discussing the European Union-Vietnam Free Trade Agreement (EVFTA) and Vietnam’s farm produce export to markets such as Japan and the United States.

What is weird to me is those specialists when mentioning Vietnam’s exports routinely dubbed the above markets “meticulous.” “Easy markets” in this context would be Laos, Cambodia, China or Vietnam.

The U.S., the EU or Japan are markets that have imposed a host of regulations on goods origins, quality, environmental protection and even human rights. For instance, the U.S. bans imports produced by children or prisoners. These countries are still using food preservatives; however, the quantities of the chemicals in use which are safe to the consumer are their standards.

After a bilateral free trade agreement is concluded, the two parties involved are to agree on standards which are the benchmarks for the production of subsequent goods to be exchanged between the two sides. On the Vietnamese side, the products for export to be made will conform to the standards so that when labeled with the phrase “Made in Vietnam,” customers in a foreign country will be free from any worries about their quality or food safety, just like Vietnamese will be with “Made in Japan” goods.

Once fully implemented, EVFTA is expected to give a strong boost to Vietnam’s export, helping her diversify her commodities for export as well as her export markets, in particular farm produce and some others gaining competitive advantages.

The EU is one of Vietnam’s key trading partners with bilateral trade amounting to US$56.45 billion in 2019. Of this figure, exports from Vietnam accounted for US$41.5 billion and imports from Vietnam US$14.9 billion.

On August 1, 2020, when EVFTA became officially valid, the EU began its process of eliminating import tariffs levied on Vietnamese goods, effective for about 85.6% of the tax lines, or some 70.3% of Vietnam’s export sales to the EU. Seven years after that date, the EU will wipe out 99.2% of the tax lines, equivalent to 99.7% of Vietnam’s export sales to the EU. For the rest of 0.3%, the EU is committed to giving import tariff quotas having a zero tax rate within the quotas.

According to the Ministry of Planning and Investment, EVFTA is to help raise Vietnam’s export sales to the EU by 20% by 2020, 42.7% by 2025 and 44.37% by 2030 compared with no agreement at all. At the same time, the country’s import value from the EU will also rise, albeit at a slower pace than that of export—some 15.28% by 2020, 33.06% by 2025 and 36.7% by 2030.

China’s Global Times recently published an article which indicated “calmness” toward EVFTA, arguing that as Sino-Vietnamese economic relations are worth hundreds of billions of U.S. dollars and China is an easy market, there is nothing to worry about the FTA. The article also indicated that Vietnam will be dependent in the long run on China’s materials, such as cotton and fabric fiber.

Reading carefully EVFTA, one may notice that Vietnam will enjoy greater benefit than the EU will, which should be considered by Vietnamese enterprises “a golden opportunity.” However, to bring that opportunity into full play, it is necessary to get rid of the notion of “easy markets” and “meticulous markets.” Products once in the market must meet set standards or even be higher than them. In a big game which attracts a lot of players, no customers are hard-to-please. Only when a manufacturer is able to meet all the requirements of customers will it expect to forge lasting partnerships.

A funny story about a bag of coffee

One of my Vietnamese friends is working for the Brussels branch of the World Bank. A techie, he is as eloquent about coffee as a coffee expert is. Once he carried 10 kilograms of coffee beans to Brussels intending to make Vietnamese coffee more known there. A few days later, my friend came back to the place where he had entrusted the coffee to see whether somebody showed interest in his “Made in Vietnam” coffee. There it was, he was shown where it was: the bag was near the garbage bin. He was told that Vietnamese was leading the world in coffee production, but they still didn’t know how to process the coffee.

My friend said most Europeans require standards for their food. They buy coffee and process it into specific flavor—sour, bitter and both sour and bitter at the same time. Customers are kings whose every taste must be met.

Many European supermarkets sell Vietnamese coffee that is in the form of instant coffee with a lot of sugar. The truth is, however, Europeans are afraid of sugar. What’s more, they don’t know where this kind of coffee originates from. If you cannot sell your coffee well, don’t blame others for the failure. As my friend didn’t understand that truth, his bag of 10 kilograms of fresh coffee beans should be a bitter lesson to learn.

My friend also told the story of his old aunt, a coffee trader who knew thoroughly what the best coffee beans are. She might trade tens of tons of coffee at a time. Yet during her spare time, she still hand-picked the best beans with a pen which she would sell them to her coffee connoisseurs.

Later, she bought a screening machine which selected beans using laser light. The machine was able to categorize coffee beans into high, medium and low quality. The premium coffee was carefully processed and some might be sent to Europe. The lowest one was sold to sidewalk coffee shops.

It has been more than a century since coffee was first introduced to Vietnam by the French. Yet Vietnamese coffee has yet to build its own coffee brand on the international market. It is partly due to Vietnamese’s complacence about their own coffee.

While many Vietnamese have taken time to try to find out the “true meaning” of their coffee, people in African Ethiopia are growing, tending, harvesting and processing coffee beans in accordance with French standards that have prevailed on the international market.

It is hoped that Vietnamese coffee will successfully build its prestige in European markets propelled forward by EVFTA. This is possible if the mindset that there are hard-to-please customers will be gone. Instead, there exist only kings who are customers insisting on the standards for the products they buy.

That is possible only when Vietnamese coffee conforms to European norms, and local companies and people no longer easily accept a fruit seller who brushes some kind of unknown chemical to her goods. Then, EVFTA will become really a golden opportunity for Vietnamese.

By Hieu Minh

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