Vietnam's strong economy entices NZ exporters

Corazon Miller
Source: 1News

Vietnam is being touted as a good option for Kiwi exporters looking to diversify where they sell their goods, as the rocky international market hits many of our traditional trading partners hard.

The South East Asian nation's economy is now one of the strongest in the region - thanks in large part to its management of Covid-19. A recent Ministry of Foreign Affairs and Trade report has highlighted how Vietnam has grown in the space of just one generation, from being one of the poorest countries in the world to an "almost" middle-income country.

The report prepared by the New Zealand High Embassy in Ha Noi says Vietnam's growth has surpassed many of its closest neighbours.

"Between 2016 and 2021 Vietnam led ASEAN in terms of growth per capita... this growth rate is higher than that of other major ASEAN markets such as Singapore, Malaysia, or the Philippines," the report said.

This month New Zealand Trade and Enterprise has taken advantage of that healthy economy, as it launched its Made with Care campaign - pushing the export of New Zealand's produce on the Asian market. The campaign will see a range of Kiwi goods, from apples, to kiwifruit and peanut butter, sold in some of Vietnam's largest supermarkets.

Trade Commissioner Joseph Nelson says Vietnam is a "frontier market" presenting new opportunities, and challenges, to Kiwi exporters looking to diversify.

"As Vietnam has come out of its Covid waves, we are seeing a really strong bounce back in the economy. GDP is expected to be between 6.5% to 7.5% next year," he says.

"All the markets in South East Asia are bouncing back quite strongly, but Vietnam definitely is the best performing market at this point."

And it's expected to keep growing.

KPMG Vietnam's Warrick Cleine says since the free trade agreements were set up between New Zealand and Vietnam the value of two-way trade has grown significantly to about US$2 billion this year.

He says there are three key things in the Vietnamese market that will be attractive to New Zealand businesses.

"One is that consumer market... two is that geo-politically it is in a less dangerous place... and Vietnam has a great free-trade network."

At present, food and beverage products make up almost two-thirds of New Zealand exports to Vietnam. And there's appetite for more, as consumers there have become more health conscious post Covid.

As the economy there has grown, so too has its middle-class, and their preference for quality produce.

Fonterra has tapped into this interest. Its team in Vietnam suggested using New Zealand butter to replace oil that's traditionally used to roast coffee beans there.

The idea was bought by one of the nation's biggest coffee producers, Trung Nguyen Legend, which is now selling the unique blend.

The company's head of global foodservice Paul Harvey says the addition of butter has made for a "great flavour and taste" and has the "added benefits of health and wellness".

While Fonterra is a big company, Harvey says the Vietnamese markets are not just for well-established businesses.

"I'd suggest to other companies thinking about their expansion strategy [to look to Vietnam]. It is a country sizeable in size, easy to do businesses, and consumers are looking for innovation," he says.

And while the markets are shaky, he's optimistic Vietnam will do well.

"The Government has handled Covid well; fiscal policy has been strong; inflation is still in check; consumer spending is on the rise; borders are open again - so it's a great opportunity now for people to be thinking about this country."