Overview of related research works
In Vietnam, there have been a number of studies on exporting agricultural products in general and exporting fruits in particular, such as:
Author Assoc Prof.Dr Dinh Van Thanh (2010) in the study
The article explores strategies to enhance the participation of Vietnamese agricultural products in the global value chain, drawing on international experiences It proposes policies and solutions aimed at improving this participation within the framework of a socialist-oriented market economy, while addressing the challenges posed by globalization and economic integration.
In the study "Added Value of Agricultural Products for Export of Vietnam," Prof Dr Luong Xuan Quy and Prof Dr Le Dinh Thang emphasize that enhancing the added value of agricultural exports relies on both endogenous and exogenous factors Key elements include increasing agricultural production revenue, minimizing intermediary costs, improving product quality, and ensuring sustainable consumption conditions in the global market However, the thesis's analysis of the current state of agricultural production, processing, and export is limited to specific data points.
Since 2004, the competitive landscape for Vietnam's key export agricultural products has evolved significantly However, a comprehensive evaluation of their development amidst the ongoing industrialization and modernization efforts in the country remains to be provided by the author.
In the topic "Output solutions for fresh fruit products of the Mekong Delta" by the author Assoc Prof Dr Vo Thanh Thu is the project leader
In 2001, the effects on fresh fruit consumption in the Mekong Delta for both domestic and international markets were examined, highlighting the current state of traditional distribution channels The study proposed solutions to enhance the consumption of fresh fruit, although it did not approach the topic from a service-oriented perspective.
In his article "World Fruit Market and Vietnam's Export Prospects until 2018," Dr Nguyen Van Lich highlights the promising potential of six key fruits from Vietnam, emphasizing the robust foundation for the success of the Vietnamese fruit industry.
In her 2015 article, Ha Thi Ngoc Oanh explores strategies to enhance the competitiveness of fruit exports from the Mekong Delta amid international economic integration The author introduces a formula for assessing the competitiveness of fruit products across different regions and countries Furthermore, the thesis outlines both qualitative and quantitative criteria for evaluating this competitiveness However, it notes a gap in the comprehensive study of services associated with fruit goods in a systematic manner.
Research on Vietnam's agricultural exports has primarily concentrated on major products like rice, coffee, and rubber, with limited focus on the burgeoning fruit sector While some studies have explored specific fruits or traditional regions, they often lack comprehensive analysis and updated data amidst increasing global competition This thesis aims to provide a fresh perspective on Vietnam's fruit exports, targeting emerging markets such as Japan, the EU, and the US.
Research objectives
Research objectives
On the basis of assessing the current situation of Vietnam’s fruit export,the thesis is implemented to propose solutions to promote Vietnam’s fruit toJapan.
Missions
To achieve this goal, the thesis focuses on solving the following three tasks:
1.Give an overview of some theoretical and practical issues about fruit export activities.
2 Assess the status of fruit export of Vietnam to Japna in the period 2015-2020
3 Proposing a number of solutions to promote Vietnam's fruit exports to Japan in the period of 2021 - 2030.
Research Methods
Methods of data collection
The study relies on three primary sources of information: data from the Internet, analysis reports from the Ministry of Agriculture and Rural Development, and various scientific research articles.
Methods of data analysis
I have used some traditional methods such as meta-analysis, statistical methods:
Meta-analytical approach: Reviewing and evaluating specific content to make an assessment of Vietnam’s fruit export.
Statistical analysis approach: Using the collected data to evaluate the analysis of Vietnam’s fruit exports to Japanese market.
The structure of dissertation
In addition to the table of contents, list of acronyms, list of tables, list of images and appendices, my dissertation is divided into four chapters:
Chapter 1: Literature and empirical review of fruit export.
Chapter 2: General introduction to Japanese fruit market and important trade agreements between Vietnam-Japan
Chapter 3: The situation of Vietnafruit’s fruit export to Japan from 2015 to 2020.
Chapter 4: Solutions to promote Vietnam’s fruit exports to Japanese market in 2021-2030.
LITERATURE AND EMPIRICAL REVIEW OF FRUIT EXPORT
General theories of export
Exporting plays a crucial role in international trade, highlighting the trade connections between countries both regionally and globally Today, export activities span a wide range of sectors and industries, encompassing everything from capital goods to consumer products, as well as intricate machinery and even intangible goods, which are increasingly significant in the market.
Exporting goods and services to other countries involves the sale of products in exchange for currency, facilitating the movement of goods beyond customs borders This activity not only generates profits for the involved parties but also significantly contributes to a nation's development Exports generate foreign currency revenue, enhance socio-economic growth, boost domestic production capabilities, encourage commodity production, aid in economic restructuring, and ultimately improve the living standards of the population.
Export involve the movement of goods and services across the customs border According to the Commercial Law of Vietnam 2005, export is defined:
Exporting goods refers to the process of moving goods out of Vietnam's territory or to designated special areas within Vietnam that are treated as separate customs zones, as outlined in Article 28, Section 1, Chapter 2 of the Vietnam Commercial Law 2005.
Export activities occur on both spatial and temporal scales, encompassing a vast and diverse market that extends beyond a few nations to a global level The increasing demand for world economic integration has led to a surge in international trade, with exports being bolstered by the involvement of organizations and economic groups like ASEAN and WTO These entities facilitate cooperation among countries and establish favorable trade agreements, enhancing the dynamics of global trade.
Export activities span various industries, initially focusing on agricultural and industrial goods like footwear, agricultural products, handicrafts, and garments However, the significance of service exports has grown, now recognized as a vital contributor to the domestic economy Today, the range of exported products is extensive, encompassing consumer goods, labor, knowledge, machinery, and high-tech items.
Export activities are shaped by various factors including political climate, legal frameworks, cultural influences, and economic conditions Nations must carefully consider these elements to ensure successful exports and navigate potential challenges A comprehensive approach, from research and market analysis to distribution and payment processes, is crucial for effective export management.
Exporting generates significant economic advantages for businesses and governments alike It facilitates company growth in production and operations, accelerates industrialization and modernization through foreign currency inflows and foreign direct investment (FDI), and fosters international collaboration and economic integration among nations.
Participating in foreign markets indirectly through a third party for export activities offers both advantages and disadvantages To optimize the benefits while minimizing challenges and limitations, it is essential to anticipate these factors effectively.
Using intermediaries in export activities has some disadvantages:
(i) Pay the cost of the middleman
(ii) Loss of direct relationship with the market, especially the foreign market, thus not attaching production to the market
(iii) The outcome of a transaction depends on that intermediary
However, the benefits of using intermediaries are also enormous:
(i) Being able to use the experience, capital and facilities of third party.
(ii) Concentrating capital and human resources on the most important activities of the company.
(iii) Learning the business experience of intermediaries in international business In general , when using intermediaries in export activities, we must calculate carefully Enterprises should apply only if:
(iv) Entering a foreign market for the first time or entering a new market without knowing much about that market.
The classification of intermediary traders is based on the legal system of the countries In the market, we often encounter the following types of intermediaries:
Agent: an agent is an intermediary trader who provides commercial services to customers in order to collect remuneration called agency fees.
Broker: A broker is an intermediary between a seller and a buyer helping the two parties sign and perform a contract.
A prevalent approach in international trade involves the direct export of goods from the seller in the exporting country to the buyer in the importing country In this model, manufacturers sell their products directly to foreign customers, utilizing their organization, branches, or subsidiaries in the foreign market, thereby generating profits.
Direct export offers exporters the advantage of direct market access, allowing them to gain a deep understanding of the local politics, culture, legal frameworks, and social dynamics This knowledge facilitates quicker export activities and ensures that product quality aligns with customer needs Additionally, exporters retain all profits by eliminating intermediaries, leading to higher earnings and valuable experience in navigating the international market, which equips them to proactively address emerging challenges.
Exporting enterprises face significant challenges, including the risks, time, and costs associated with market expansion and managing their own export activities Small businesses, in particular, struggle to enter new and challenging markets due to their lack of established brand recognition and reputation.
Countertrade is a unique exchange method where the exporter simultaneously acts as the importer, and the seller also serves as the buyer In this approach, goods function as both the medium of exchange and the ultimate objective of the trading activities.
Counter-trading involves the exchange of goods with equal value, where the primary goal is to acquire a quantity of goods rather than earn foreign currency Although currency is not directly involved, it serves as a form of equivalence in these transactions One significant advantage of counter-trading is its ability to mitigate risks associated with exchange rate fluctuations in the foreign exchange market Various forms of counter-trade exist in international trade, including barter, clearing, counter-purchase, debt transfer, chargeback, and product acquisition.
When engaging in counter-trade, it is crucial for the involved parties to implement effective measures to ensure contract performance This can be achieved by utilizing a reciprocal letter of credit, employing a third party to oversee the goods or ownership documents, and establishing a special bank account for transactions.
1.1.2.4 Temporary import and re-export
Temporary import and re-export involves the export of goods that were previously imported without any processing in the country of re-export This practice aims to generate a higher amount of foreign currency than the original cost of importation.
Overview of fruit export
Besides some gnereal characteristics of exports, there are some special ones for exporting fruits. a Seasonality
The planting and harvesting of fruits are influenced by seasonal changes, with the main season yielding an abundant variety of fruits at lower prices Conversely, during the off-season, fruit availability diminishes, quality may vary, and prices typically rise Weather conditions also play a crucial role in these processes.
Fruit quality is significantly affected by climate and weather conditions Favorable rainfall and wind in a given year can lead to robust tree growth, resulting in high yields and lower prices Conversely, adverse weather, such as severe droughts and floods, can lead to scarce, low-quality fruit, driving prices up Additionally, preservation challenges further complicate the situation.
The quality of fruit significantly impacts consumer health, making preservation a top priority for buyers In developed countries, strict requirements regarding quality, hygiene, food safety, and origin are increasingly imposed on imported goods For fruit exports, the preservation and processing stages are crucial, as they directly influence the market price of exported fruits To enhance the value of exported fruits, special attention must be given to these preservation methods Additionally, due to the perishable nature of fruit, careful consideration is essential during the distribution phase of the export process.
The popularity of exported fruits can vary significantly between countries, with certain fruits being well-received in one nation while facing rejection in another Additionally, the import prices for these fruits can differ drastically, being high in some countries and considerably lower in others.
1.2.2 Factors affecting fruit export a Seedlings
Having good varieties, plants will withstan effects from the environment and pests, which will lead to high yield and good quality. b Natural conditions
Climate plays a crucial role in fruit production, significantly influencing whether crops thrive or fail Favorable weather conditions facilitate easier cultivation and harvesting, leading to higher economic returns In contrast, unfavorable climate can negatively impact both the yield and quality of fruit, resulting in less successful harvests.
Soil quality is a crucial factor influencing fruit production, as different regions, in conjunction with their unique climate zones, yield distinctive fruits For instance, Nghe An is known for its oranges, while Hung Yen is famous for its longan.
Geographical location and topography significantly impact fruit transportation In the past, the lack of advanced science and technology posed challenges due to the perishable nature of fruits, limiting trading opportunities However, with the rapid advancements in science and technology today, these transportation challenges have been largely addressed, facilitating the global trade of fresh fruits.
The fruit industry has been significantly transformed by advancements in science and technology These innovations play a crucial role in developing high-quality fruit varieties with increased yields Additionally, technological progress enhances the efficiency of fruit collection, processing, and preservation Furthermore, improved transportation methods streamline logistics, making commercial activities more effective and responsive to consumer demand.
The global trend in consumption is shifting towards a preference for fresh and off-season products, heavily influenced by consumer income levels In developed nations, the demand for fruit consistently surpasses that in developing countries The quality of fruit products plays a crucial role in market competitiveness, as it is vital for establishing brand reputation, securing export opportunities, attracting new customers, and fostering long-term relationships To successfully enter new markets, businesses must produce high-quality products that align with international standards Additionally, market competition is assessed by the number of businesses involved in trading these products and the competitive dynamics both domestically and internationally.
To safeguard consumers from substandard imports, countries implement stringent technical barriers that complicate fruit exports These regulations aim to protect domestic markets from potentially harmful products However, recent free trade agreements have created significant opportunities for fruit exports, despite the challenges posed by these strict standards.
Fruit exports are influenced by various factors beyond the obvious, including the political environment, taxation and customs laws, exchange rates, the overall economic situation, cultural differences, and consumer preferences Additionally, brand quality plays a crucial role in determining the success of fruit exports.
Brand association plays a crucial role in both domestic and international markets, as a strong brand reputation is essential for achieving stable business performance Developing a robust brand name not only enhances product recognition but also ensures that exported fruits can secure a competitive position in the global marketplace Implementing supportive policies further aids in this branding endeavor.
The government must assist farmers and businesses in enhancing production, improving product quality, and promoting their goods in domestic and international markets Additionally, it is essential to facilitate access to advanced technologies that will further elevate fruit production.
To support businesses in overcoming challenges, policies can be implemented that address taxes, capital, subsidies, training, science and technology, and agricultural extension These initiatives will enable enterprises to operate more stably, expand their scale, enhance processing capacities, and ensure the production of quality products that meet food safety and hygiene standards required by the market.
International experience of some countries in exporting fruits
1.3.1 Experience from exporting Thai durian.
Thailand boasts ideal weather and soil conditions for cultivating tropical and subtropical fruits, making it a key player in Asia's fruit supply and export market Notable exports include durian, mango, banana, orange, coconut, guava, mangosteen, rambutan, and lychee The fruit market in Thailand is highly developed, with Thai fruits consistently in high demand internationally This thriving fruit production sector generates an impressive export value of approximately $301.75 million annually.
Durian, a popular fruit in Southeast Asia, is primarily grown in countries like Thailand, Malaysia, Vietnam, Indonesia, the Philippines, and northern Australia Chinese consumers have favored durian for its unique taste and nutritional benefits for decades Thailand's dominance in the Chinese market is largely due to China's exclusive importation of fresh Thai durian Additionally, Thailand exports both fresh and processed durians to various markets, including Hong Kong, Indonesia, Taiwan, and the United States, expanding its global reach.
Exporting durians from Thailand requires adherence to specific regulations and standards, primarily GAP (Good Agricultural Practices) and GMP (Good Manufacturing Practices) To export fresh durians, farmers must meet GAP requirements, which are evaluated by the Department of Agriculture This department not only provides essential knowledge but also compiles a list of approved farmers to submit to the Ministry of Agriculture for GAP certification Farmers seeking certification can directly contact the Department of Agriculture Notably, GAP certification for long-cycle crops like durian remains valid for three years before it needs to be renewed.
Fresh durian is categorized into four classes based on quality: the special class, which features the highest quality durians often exported to Japan and Taiwan, requiring a weight of up to 4 kg and an appealing shape; class AB, which consists of good-quality durians suitable for export to China, where various market preferences exist; class C, designated for lower-quality durians primarily exported to Indonesia during its off-season; and the lowest quality class, which is typically processed in factories or sold in neighboring countries and domestic markets in Thailand.
When Thailand's durian is backlogged a lot, the government has interesting initiatives such as organizing durian buffets for visitors to experience Thai durian at tourist attractions that attract many tourists.
1.3.2 Israel's dragon fruit production experience
Since 1985, Israel has transformed its agricultural sector by promoting sustainable practices and allowing private land ownership, which has spurred investment and land consolidation The country has eliminated incentives and subsidies, fostering competition and driving technical innovation through the adoption of modern technologies and innovative research As a result, Israel has emerged as one of the world's leading exporters of high-quality dragon fruit.
First , is the policy of applying advanced technology to dragon fruit production Agricultural production in Israel uses greenhouse technology.
Greenhouse farming plays a crucial role in Israel's advanced agricultural technology, particularly in the cultivation of dragon fruit These high-tech greenhouses utilize modern innovations to establish optimal ecological conditions, enabling the growth and development of dragon fruit trees By employing intensive farming techniques, they effectively minimize or eliminate negative external factors, resulting in the production of high-quality dragon fruit.
Second , Israel's dragon fruit production uses drip irrigation technology Slow and steady drip irrigation leads to significant growth stimulation in plants.
Figure 1.1: Israel's drip irrigation system
Dragon fruit production in Israel has embraced information technology since the 1990s, with significant government investments enabling farmers to utilize advanced applications throughout all stages of cultivation, harvesting, preservation, and consumption This technological integration allows farmers to manage production across 5-6 thousand hectares without direct fieldwork By using a tablet or smartphone with internet connectivity, farmers can monitor essential factors such as fertilization and watering levels The system analyzes this data and provides recommendations for optimal growth conditions, ensuring the best quality dragon fruit production.
Fourth , at Hebrew University, two agricultural scientists Ilan Sela and
Haim D Rabinowitch has pioneered TraitUP technology, enabling the insertion of genetic material into seeds while preserving their molecular integrity This innovative approach allows scientists to introduce pest and disease resistance, as well as enhance soil and climate adaptability in dragon fruit trees, ultimately leading to the development of improved varieties of this fruit.
Fifth , agricultural production in Israel uses post- harvest preservation technology The Israeli government has established the Research Institute of
Food Science for agricultural research Here, scientists have introduced many preservation technologies to help dragon fruit stay fresh for a long time and retain high nutritional value.
First, focusing on investing in research and development of high-quality, high-yielding plant varieties that are suitable for consumers' tastes.
To enhance fruit export markets, it is essential to establish new policies that align with the country's strengths and the current dynamics of export markets The development and execution of these policies will play a crucial role in promoting successful fruit exports.
Third, restructuring the fruit export market in a relatively balanced market sharein order to reduce risks for those countries that focus too much on a certain export market area .
To enhance the value of exported fruits, it is essential to strategically shift the focus towards a higher proportion of fully processed products, while simultaneously reducing the reliance on raw materials and semi-processed items.
Fifth, focusing on building consumption strategies, promoting and developing fruit brands on the basis of competitive
GENERAL INTRODUCTION TO JAPANESE FRUIT
The scale of Japan's economy
The Japanese economy stands out as a highly developed capitalist market, marked by significant industrialization It holds the distinction of being the first Asian nation to achieve developed economy status, establishing itself as a formidable player on the global economic stage.
In 2020, Japan's economy held the position of the third largest globally in nominal GDP, following the US and China, and ranked second in Asia When measured by GDP at purchasing power parity, Japan stood as the fourth largest economy, trailing only the US, China, and India Notably, Japan is the first and only Asian nation to be a member of the G-7.
Figure 2.1: Comparing GDP of Japan to some countries in 2019
Japan’s domestic demand for fruits
The declining and aging population in Japan significantly influences fruit and vegetable consumption trends Additionally, the rise of processed foods has impacted the demand for fresh produce The rapid growth of affordable fast-food outlets has introduced convenient dining options, providing consumers with low-cost food choices that maintain acceptable quality.
Japan's aging population is driving a significant shift in food demand, with a strong focus on health and safety Japanese consumers are increasingly prioritizing foods with healthy ingredients, even amidst economic slowdowns, leading to a sustained interest in nutritious options Additionally, there is a growing trend towards imported agricultural products, as surveys indicate that many Japanese people consume fruits and vegetables frequently, with a notable percentage enjoying them daily or several times a week.
Recent USDA data indicates a decline in fresh fruit consumption among Japanese consumers, particularly among the youth, who favor processed snacks and desserts However, there is a growing demand for fresh fruit among the elderly, who prefer sweet, easy-to-peel options This trend presents a significant opportunity for Vietnam's tropical fruits, including bananas, mangoes, dragon fruits, and litchi, which are now permitted for export to Japan Despite the substantial demand in the Japanese market, domestic production falls short, highlighting a gap that Vietnamese exporters can fill.
Japan’s scale of fruit production and demand from imported fruits 45 2.4 Japanese food import regulations
Japan's fruit and vegetable market, once led by local producers, has shifted towards increased imports in response to the declining competitiveness of domestic production, ensuring a steady supply to satisfy growing domestic demand.
Figure 2.2: Fresh fruit production in Japan in 2016
Japan's food self-sufficiency remains low, with a rate of only 39% in 2017, unchanged from 2016 The production area and volume of fruit production saw a significant decline of 25% compared to the previous year, contributing to the decrease in self-sufficiency However, the market value for fruits and vegetables is estimated to exceed 400 billion Yen and has been experiencing growth in recent years.
Figure 2.3: Some fruit production from 1975-2016
Japanese litchi production accounts for only about 5% of the market share, making it a premium commodity, particularly the lychees from Miyazaki Province, which can be sold directly from farmers to consumers at nearly $10 each In contrast, Vietnam has the opportunity to leverage its seasonal advantages and processing technology to supply fresh, frozen, or canned lychees to Japanese customers, potentially meeting the demand for this scarce fruit.
Table 2.1: Imports of fruits and vegetables of Japan by country in the period 2016 - 2020
The United States remains the top exporter of fresh fruits and vegetables to Japan, although China and several other Asian and Southern Hemisphere countries have emerged as significant suppliers in this market.
China is recognized as a leading supplier of low-cost fruits and vegetables, making it difficult for other countries to compete However, numerous instances have arisen where Chinese produce faced bans or import restrictions due to concerns over pesticide residue and food safety.
Australia, Chile and South Africa are countries in the southern hemisphere that have a competitive advantage in supplying some fruit and vegetable products to the Japanese market.
Japan has become Vietnam's second largest market for fruit and vegetable exports, following China, with a notable rise in the consumption of bananas, pineapples, papayas, mangoes, and avocados due to heightened health awareness Since the ban on Vietnamese dragon fruit was lifted on October 20, 2009, exports to Japan have surged, with the wholesale price deemed more profitable than in the EU, the United States, and other regions In 2017, Binh Thuan exported 3,000 tons of dragon fruit to Japan annually, with shipments reaching the market within seven days, a significant increase from the previous export volume of 800 tons per year to just one of Japan's four main islands.
2.4.1 Regulations on food hygiene and safety
Under the Law on Food Safety and Quarantine, it is essential to provide the required documentation when submitting a quarantine application to the Ministry of Health, Labor and Welfare (MHLW) and other control agencies.
Quarantine is initiated by authorities to assess food safety standards during the initial inspection If the imported food complies with legal requirements, the importer receives a registration certificate, which must be submitted to the customs office alongside other import documents Conversely, if the product fails to meet safety standards, it will be either rejected or returned to the shipping company.
In Japan, the use of both artificial and natural food additives that are not approved is strictly prohibited Imported products containing unacceptable additive residues will be banned from sale The Japanese Ministry of Health, Labor and Welfare assesses food safety in line with CODEX standards, allowing only those additives that have been prescribed by the Food Safety Commission and approved by the Ministry Furthermore, approved additives may be limited to specific product categories and usage levels.
On May 29, 2006, Japan introduced new regulations concerning residues of agrochemicals, feed additives, and veterinary drugs in food Before these regulations took effect, the Ministry of Health, Labour and Welfare (MHLW) established interim maximum residue levels (MRLs) for 758 out of approximately 10,000 official agrochemical MRLs currently recognized.
Food exceeding the maximum residue limits (MRLs) on the confirmation list violates the Food Sanitation Law, resulting in refusal at the port and heightened surveillance of approximately 30% for such imports.
MRLs, products that can be ordered very costly return to normal supervision after a violation, the MHLW requires a record of
To ensure compliance, the MHLW mandates that entities must have 60 clean tests or demonstrate one year without violations After multiple infractions, a requirement of 300 test records and two years without violations must be met before the designation "requires expertise" is applied, ensuring thorough retention and verification of data For cargo lacking official or temporary Maximum Residue Limits (MRLs), the MHLW has set a general maximum allowable tolerance limit of 0.01 ppm for most chemicals.
Table 2.2: Comparing regulations on pesticide residues of some export markets of Vietnamese fruits
(Source: Author collected from various sources)
Chemical residue testing is conducted by MHLW quarantine offices for imported crops and by local government laboratories for both imported and locally produced crops This surveillance aims to ensure compliance with Maximum Residue Limits (MRLs) and food safety regulations for crops and livestock products available in the market Products that exceed MRLs will be prohibited from sale in Japan.
According to Article 16 of the Food Sanitation Law, the sale, manufacture, or importation of utensils, containers, or packaging that contain hazardous substances is strictly prohibited This regulation aims to protect human health by preventing the use of items that could potentially harm individuals or adversely affect health through contact with food and food additives.
The Japanese Ministry of Health, Labor and Welfare has specified specifications for synthetic resins, metal containers and containers/packs made of glass, ceramic, enamel or rubber.
In Japan, private businesses are responsible for covering all recycling costs, while importers of foreign products must also contribute to these expenses Additionally, some Japanese importers may request that their overseas suppliers assist with specific labeling requirements Ultimately, it is the importer's duty to ensure that all packages and containers for imported goods are properly labeled.
Food labels must be printed in Japanese language and comply with the following laws and regulations:
- Law on Standardization and Labeling of Agro-Forestry Products
- Law for the Promotion of Effective Use of Resources
- Law on Intellectual Property Protection (eg Law Against Unfair
Trade agreements between Japan and Vietnam
The Vietnam - Japan Economic Partnership Agreement (VJEPA) was signed on December 25, 2008 and took effect from October 1, 2009.
This is Vietnam's first bilateral FTA, in which both Vietnam and Japan give each other more preferences than the ASEAN-Japan FTA.
In 2018, Japan committed to reducing the average tax rate on Vietnamese goods to 2.8% By 2020, 505 agricultural product tax lines, representing approximately 24% of Vietnam's export value to Japan, will undergo annual tax reductions, with timelines varying from 3 to 15 years based on product categories Following the implementation of the Agreement or a designated roadmap (up to a maximum of 10 years), 23 of the top 30 export items from Vietnam to Japan will benefit from a 0% tax rate.
- Honey: Japan will grant Vietnam an annual import quota of 100 tons , this quota will increase gradually until Vietnam's exports reach 150 ton.
- Vegetables: As soon as the Agreement comes into effect, Japan will eliminate import tax on durian imported from Vietnam Within 5-7 years
(2016 at the latest), Japan will reduce the tax rate for spinach, pepper and sweet corn to 0%
- Coffee and tea: Japan will gradually reduce and bring import tax on roasted coffee and green tea to 0% within 15 years (2024);
- Processed agricultural products: Japan will eliminate import tax on curry and curry products within 7 years (2016 at the latest).
- Timber and wood products: As soon as the Agreement comes into effect, Japan will eliminate import tax on sawn timber In 2016, Japan will eliminate import tax on plywood
- Fisheries: as soon as the Agreement comes into effect, Japan will eliminate import tax on
At least 86% of agricultural, forestry and fishery products and 97% of Vietnamese industrial goods exported to Japan will enjoy tax incentives.
Effective immediately upon the agreement's implementation, mineral products will benefit from a 0% import tax Shrimp products will see a reduction in import tax rates to 1%-2%, while processed shrimp products will have their rates lowered to 3.2%-5.3% Additionally, the import tax on frozen squid products will decrease to 3.5% over the next five years.
In 2018, the average tax rate on Japanese goods imported into Vietnam is set to decline to 7% Over the next decade, approximately 88% of tariff lines for Japanese imports will see reductions, with 93% experiencing lower rates within 16 years Notably, the import tax on components used for manufacturing flat screens and DVDs will be reduced to just 3%.
Over the next few years, significant reductions in import tax rates for various products are anticipated Digital cameras are expected to see a decrease to 10% within 2 years, while color televisions may drop by 40% over the next 8 years For auto parts imported from Japan into Vietnam, the tax on gearboxes and engine components will be lowered to 10%-20% within 10 years, with brakes seeing a reduction to 10% in 10-15 years Additionally, screws will face a tax decrease to 5% within 2 years, and sheet steel products will have import tax rates reduced to between 0%-15% over the next 15 years.
THE SITUATION OF EXPORTING VIETNAM’S
An introduction to Vietnam’s fruit production and export
Due to the abundance of ecology, the types of vegetables and fruits of Vietnam are very diverse Fruits have more than 30 different types and are divited into 3 groups:
- Tropical fruits such as: bananas, pineapples, mangos, jackfruits, durians, coconuts, mangosteens, star apples, soursops, guavas, star fruits, custard apples, etc
- Subtropical fruits such as: oranges, tangerines, lemons, grapefruits, persimmons, apples, avocados, litchi, longans
- Temperate fruits such as: plums, pears, peaches, grapes, strawberries.
Bananas, dragon fruits, longans, litchi, and rambutans are among the fastest-growing fruit groups in Vietnam The adoption of modern technology has significantly enhanced fruit quality and yield, enabling year-round cultivation of various varieties This innovation not only meets domestic and international demand but also boosts profits, particularly during the off-season, thus diversifying Vietnam's seasonal fruit exports.
In recent years, the area dedicated to vegetables and fruits has seen a steady growth rate of 6% per year, reaching over 1.8 million hectares in 2018 Of this, nearly 1 million hectares are devoted to fruit trees, producing close to 10 million tons The Ministry of Agriculture and Rural Development (MARD) reports that the South boasts 14 fruit types, each occupying over 10,000 hectares, with mangoes (80,000 hectares) and bananas (78,000 hectares) leading in area Other significant fruits include dragon fruit (53,000 hectares), durian (47,000 hectares), oranges (44,000 hectares), pomelos (44,000 hectares), longan (35,000 hectares), pineapples (33,000 hectares), lemons (27,000 hectares), rambutan (25,000 hectares), and jackfruit.
(20 thousand ha), tangerine (15 thousand ha), avocado (14 thousand ha), na
(11 thousand ha) The Mekong River Delta is the main fruit growing area
(accounting for about 58% of the total fruit tree area in the South), followed by the Southeast (17%), the South Central Coast (15%) and the Central
Table 3.1 Types, Area and Output of some fruits in Vietnam in 2018
The Cuu Long Delta dominates Vietnam's fruit cultivation, representing 38% of the country's total fruit growing area In comparison, the Northeast and Southeast regions account for 18% and 15%, respectively Other areas contribute only 9%, highlighting a significant opportunity for expansion and development in fruit tree cultivation across these regions.
Figure 3.1: Segments of fruits grown areas in Vietnam (2018)
(Source: Ministry of Agriculture and Rural Development)
Vietnam's fruit and vegetable productivity continues to rise annually, with approximately 19 million tons produced each year The Red River Delta stands out as the leading region for vegetable production, contributing over 40% of the country's total output In contrast, the Mekong Delta excels in fruit yield, accounting for around 45% of national production, which amounts to about 4 million tons.
3.1.2 Status of fruit exports of Vietnam in the period 2015 – 2020
3.1.2.1 Scale and value of Vietnam's fruit exports in the period 2015- 2020
While fruit constitutes a small portion of Vietnam's total commodity exports, accounting for approximately 2% of both the total export value and GDP, the export value of this sector is experiencing significant growth, indicating positive trends in Vietnam's fruit export market.
Table 3.2: Vietnam’s export turnover of Fruits and Vegetables from 2015-
Between 2015 and 2020, the value of fruit exports saw significant growth, driven by a rising global demand for tropical fruits This surge in consumption can be attributed to the enhanced flavor profiles of Vietnamese fruits, which have improved production techniques, ultimately creating more opportunities for the fruit industry.
In 2015, fruit export turnover was quite good compared to previous years although the cultivated ed area decreased Despite facing many difficulties in
In 2014, despite challenges like high raw material prices, increased rainstorms, and pest issues, fruit exports showed positive outcomes Fresh and processed fruits led the way, representing 37.6% of the total export turnover in the fruit and vegetable sector.
In 2015, the export of dragon fruit achieved a record turnover of $60 million, marking a 71% increase compared to 2014 This year was particularly positive for dragon fruit growers, as many received GlobalGAP and EUGAP quality certifications, leading to a continuous rise in export contracts.
In 2016, global prices for agricultural, forestry, and fishery products surged, coinciding with a fruitful domestic production season Notable increases in crop yields included pineapple (up 5%), banana (up 3%), mango (up 2.9%), longan (up 7.4%), and rambutan (up 34.4%), resulting in a "good season, good price" scenario Specifically, the export price of rambutan to France reached $7/kg, a rise of $0.20/kg compared to the previous year, while coconut prices ranged from $2,600 to $2,900 per ton.
In 2015, fruit export prices rose by $110-190 per ton, leading to a significant increase in export turnover This surge in exports positively impacted the domestic market, resulting in favorable consumption of local fruit materials at higher prices Consequently, this stimulated production growth and boosted farmers' incomes.
In 2017, the fruit tree sector focused on replacing old orchards with new hybrid varieties, enhancing productivity and aligning with VietGAP and GlobalGAP standards for improved efficiency This transformation contributed significantly to the over $3 billion in export value from vegetables and fruits, particularly highlighting the success of fresh lychee exports during the 2016 crop year, where prices rose to 8,000 - 9,000 VND.
Since 2016, Vietnamese fresh lychees have gained access to numerous new markets, including the US, UK, France, Japan, Australia, Korea, Canada, and ASEAN countries, leading to a significant increase in lychee production As a result, lychee exports reached 90,000 tons, with prices in the US being three times higher than those of Chinese longan, particularly benefiting late-ripening longan and other fruits like lychee, rambutan, and mango.
In 2018, for the first time, the export turnover of vegetables and fruits surpassed the export turnover of rice (US$2.4 billion versus US$2.2 billion) In
2018, more than 10,500 tons of fresh fruits were quarantined for export to the
In recent years, Vietnam's fruit industry has seen significant growth, with exports to the US and Japanese markets doubling compared to 2017 Notably, the output of dragon fruit to the US and mango exports to Korea both experienced a twofold increase In 2018, Vietnam successfully eliminated technical barriers for five fruit products, allowing mangoes to be exported to Australia, dragon fruit to Taiwan (China), and longan and lychee to Thailand Currently, Vietnamese vegetables and fruits have expanded their reach to over 60 countries and territories, with fruit exports alone representing 40% of the total export volume.
In 2019, Vietnam's fruit and vegetable exports surged to 3.81 billion USD, marking an 8.8% increase from the previous year This growth was largely driven by China's expansion of its fruit tree cultivation, aimed at reducing imports While Vietnamese fruits are gaining traction in markets like the US, EU, and Japan, scaling up production to meet the demands of these markets remains a significant challenge.
Vietnam's advantageous geographical location and natural conditions foster the cultivation of a wide range of fruit products, including tropical, subtropical, and temperate varieties This diversity enhances the richness of Vietnam's fruit exports, spanning fresh, processed, and canned options According to a research paper titled "Production and export of Vietnamese fruit based on GlobalGAP and ISO 22000 standards towards sustainable development," the leading export product is Vietnamese dragon fruit, generating $454 million, followed by fresh coconut and coconut products at $165 million, lychee at $45 million, longan at $39 million, and fresh pineapple and its products at $25 million.
Recommendations
4.4.1 Recommendations to the Government and relevant ministries a) Improving capacity of market analysis and forecast.
Analyzing and forecasting Japan's market demand for fruits and vegetables is crucial for businesses, focusing on factors such as product types, volumes, quality, and acceptable import prices Identifying the optimal timing for introducing each fruit and vegetable to the Japanese market is essential To support this, the government should establish market forecasting centers that regularly provide insights, enabling businesses to develop effective strategies and promote negotiations with Japan.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) plays a crucial role in reducing tariffs and regulatory barriers for accessing the Japanese market Despite this progress, current statistics reveal that Vietnam has only four types of fresh fruits approved for export to Japan: mango, banana, dragon fruit, and litchi.
In addition to the four primary fruits, Japan imports a variety of others, including pineapple, passion fruit, avocado, durian, and longan Vietnam possesses a significant competitive advantage in producing these fruits in large volumes, with quality that aligns with Japanese consumer preferences Therefore, it is crucial for functional agencies, particularly the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade, to actively engage in negotiations with Japan to eliminate technical barriers related to the quarantine of Vietnamese fresh fruit exports.
Vietnam faces a higher tax rate of 17.2% on processed pineapple products exported to Japan, compared to ASEAN countries where rates range from 4.5% to 9% This disparity highlights the need for negotiations to encourage the Japanese government to lower import taxes on processed pineapple and other fruit and vegetable products from Vietnam, ultimately supporting local exporting enterprises.
It is necessary to have policies to support enterprises to remove obstacles in trade promotion for enterprises to enter the Japanese market.
The Trade Promotion Agency must assist Vietnamese businesses in gathering essential information about the Japanese market, including importers and potential products It should collaborate with other organizations to facilitate Vietnamese participation in specialized food fairs like FOODEX, enhancing trade promotion and market expansion Additionally, the agency should provide support through paid commercial information services to empower Vietnamese enterprises further.
To enhance agricultural productivity and attract investment, the government should reform land policies by lowering taxes on arable land and facilitating access to prime planting locations for specialized fruit cultivation By promoting large-scale, high-quality farming that meets market demands, the government can encourage both domestic and foreign organizations to invest in agriculture Additionally, it is essential to support research agencies and businesses in expanding their operations and implementing advanced agricultural techniques in specialized farming areas Investing in the development of local varieties and machinery technology while reducing reliance on imported machinery will further bolster the agricultural sector.
The Government must enhance agricultural extension policies by funding training courses to improve farmers' fruit care skills, developing infrastructure in remote areas, and aligning these efforts with the agricultural and rural development strategy The objective is to ensure that all specialized farming regions have access to agricultural extension officers, as well as essential utilities like electricity, water, and road infrastructure Furthermore, the Government should prioritize product quality safety, regulate the use of plant protection chemicals and growth stimulants, and implement effective fruit preservation practices Additionally, it is crucial to establish comprehensive legal frameworks for fruit development, including guidelines for cultivation, processing, and food hygiene and safety management.
The government should prioritize investment in essential economic infrastructure, particularly in electricity systems and roads within processing areas Implementing favorable credit policies for large-scale processing operations is crucial, alongside the expansion of modern machinery to enhance processing productivity and quality Additionally, exporting enterprises require government capital investment to boost branding and marketing efforts, ultimately establishing a strong brand identity for Vietnamese fruit in the global market.
The Ministry of Agriculture and Rural Development is committed to implementing government agricultural extension policies that foster confidence among farmers in specialized farming areas and promote consensus on regional planting strategies To enhance the effectiveness of these policies, it is essential to engage farmers in collaborative agricultural extension activities with agricultural officers, facilitating discussions to assess local prospects Additionally, the Ministry encourages farmers to report operational challenges, particularly concerning seeds, soil quality, and irrigation water, enabling targeted research for solutions To ensure compliance with food safety and hygiene standards for fruits and vegetables, the Ministry aims to raise awareness about the dangers of excessive pesticide and stimulant use Furthermore, agricultural technology research institutions are urged to develop affordable organic fertilizers and microbiological solutions to improve crop quality and yield while reducing reliance on high-concentration chemical inputs.
The Ministry of Industry and Trade should enhance its role in organizing fruit and vegetable fairs in Vietnam, actively inviting global importers to participate This initiative aims to attract new international buyers and expand the market for Vietnamese fruits and vegetables.
The Ministry of Agriculture and Rural Development, alongside the Ministry of Finance, should implement policies that connect farmers with processing and exporting enterprises This includes offering preferential tax reductions for those enterprises that engage in contracts to purchase fruits and vegetables.
The fruit and vegetable distribution system in the US has achieved effective vertical coordination since the early 1980s, ensuring a seamless flow from production to purchasing, processing, and exporting In contrast, Vietnam's distribution system remains fragmented and inefficient, requiring products to navigate multiple stages—from production to traders, then to wholesalers or exporters, and finally to consumers through retail This convoluted process not only incurs additional transportation costs but also leads to increased spoilage, ultimately raising the price of fruit To enhance efficiency and reduce costs, it is essential to establish a cohesive value chain that closely links all stages of distribution.
Establishing connections between manufacturers, traders, scientists, and government entities is essential for streamlining the transportation of goods This collaboration aims to reduce costs, minimize waste, and expedite delivery times, ultimately ensuring that export targets are met efficiently.
To effectively enhance the brand value of exported fruits, it is essential to implement fruit branding alongside the branding of exporting enterprises Exporting businesses should prioritize creating vibrant, engaging websites that are regularly updated with comprehensive information about their operations and exported fruit products This approach not only fosters professionalism but also significantly improves the overall image of the business.
To enhance branding effectiveness in a competitive market, exporters must shift their focus from traditional methods like trade fairs and market research to fostering sustainable relationships with foreign partners By prioritizing customer relationship management, businesses can not only expand their reach but also maintain and develop their brand presence more effectively.
4.4.2 Recommendations for exporting enterprises and farmers a) Exporting enterprises
Exporting enterprises improve understanding of business culture of Japanese enterprises and consumption culture of Japanese consumers.