Support needed for Vietnamese products on e-commerce platforms: expert

Vietnam should improve its policies supporting the development of bonded warehouses and invest heavily in logistics infrastructure, including data management technologies, to promote local products on e-commerce platforms as Chinese goods flood the local market through these channels, said Nguyen Xuan Hung, an expert at the Vietnam Logistics Business Association.

Given the growth of e-commerce, it is crucial for Vietnam to invest in logistics infrastructure and improve the related legal framework if the country wants to compete with regional and international rivals, Hung said in an interview with Your Tre Newspaper (youth).

Customs warehouses needed

According to Hung, Chinese goods are usually stored in warehouses in Pingxiang and Hekou, which are located on the border with Vietnam, which helps shorten the transportation distance to Vietnam.

Because most orders are worth less than VND1 million ($40), they are exempt from import taxes and specialized inspections, significantly reducing costs and transportation times.

These warehouses also use automated logistics processes to minimize errors and increase productivity.

The average cost of shipping 15,000 orders from China to Vietnam by container truck is VND20 million ($800), which translates to a cost of VND1,400 for each order.

The Vietnamese e-commerce market remains fragmented, and logistics companies serving domestic e-commerce entrepreneurs are still underdeveloped.

Although Vietnamese retailers have successfully embraced new technologies such as live streaming of promotions, their logistical capabilities lag behind.

This shortage forces companies to hire additional workers to fulfill orders, which often causes order fulfillment to be delayed by several days.

By comparison, e-commerce platforms in countries like China can process thousands of orders per hour.

Transportation costs in Vietnam are also higher compared to China, making life even more difficult for local entrepreneurs.

Chinese logistics companies, including Best, SF Express and J&T Express, have been quick to tap the Vietnamese market, setting up warehouses and automated sorting centers that give them a competitive edge over local rivals. These bonded warehouses significantly speed up delivery times.

Amazon has also expanded its global reach by opening bonded warehouses in various countries, allowing for faster order fulfillment and lower costs for both sellers and buyers.

Currently, Vietnam lacks regulations on the establishment of bonded warehouses specifically for e-commerce platforms. Existing rules only allow bonded warehouses for the re-export of imported goods in industrial and export zones.

Hung suggested that the government review these regulations to support the development of bonded warehouses, emphasizing the need to standardize production and operational processes.

He also called for increased collaboration between businesses and technology companies to optimize supply chains. In addition, government support in the form of tax incentives and land-use fee cuts is key to supporting growth in the sector.

The volume of Chinese goods sold to Vietnamese consumers via e-commerce platforms has increased dramatically. Photo:Bong Mai / Tuoi Tre

Strong logistics industry in China

Hung said the support policies for Chinese logistics enterprises and e-commerce platforms have greatly reduced product prices and enhanced the competitiveness of China’s logistics sector.

Many warehouses receive government incentives if they meet certain criteria.

An example is Shizhong, a district of Zaozhuang city in Shandong province, where the local government subsidizes 10 percent of overseas warehousing costs if a warehouse built or rented by an e-commerce company exceeds 500 square meters and the annual investment exceeds 300,000 renminbi ($42,032).

Similarly, Yunhe District in Zhejiang Province is offering incentives for building bonded warehouses.

Enterprises that obtain more than two million orders annually and demonstrate an annual growth rate of more than 15 percent receive a subsidy of 0.5 renminbi (US$0.07) per order, with the total annual subsidy capped at 150,000 renminbi (US$21,016) per enterprise.

According to Hung, China has seen exceptional growth in logistics over the past two years, especially thanks to the direct-to-consumer sales model in which intermediaries have been gradually eliminated.

One way to achieve this is to partner with digital marketing companies to host live streams on Facebook and TikTok.

Goods from China are sorted at a sorting center in Bac Ninh Province in northern Vietnam. Photo:Bong Mai / Tuoi Tre

Vietnam’s Distributed Logistics Systems

Hung admitted that Vietnam’s logistics system is fragmented, with orders often passing through multiple intermediaries before reaching consumers.

Most Vietnamese companies only ship orders once or twice a day, which causes delays for orders placed after that time, which are then carried over to the next day.

Vietnamese logistics companies also face significant challenges, including high land lease costs, complex regulations and a lack of government incentives.

Hung suggested that one potential solution to these problems is for local businesses to work together to create a large-scale centralized logistics model that could share infrastructure and reduce costs.

Vietnam’s e-commerce sector has huge potential. There are over 70 million internet users, 75 percent of whom are online shoppers. This creates a significant opportunity for the development of e-commerce platforms and online shopping apps.

The Vietnamese market is highly competitive, with platforms such as Shopee, Lazada, Tiki, Sendo and TikTok Shop dominating the market.

According to a report by data measurement and analytics company NielsenIQ Vietnam, Vietnamese consumers shop online an average of four times a month, twice as many as in 2023 and twice as many as the monthly frequency of supermarket visits.

On average, they spend more than eight hours a month shopping online.

E-commerce sales in Vietnam are forecast to reach nearly $30 billion this year, up 45 percent from a year earlier.

This would account for about 14 percent of the country’s total retail sales of consumer goods and services, according to the Vietnam Industry and Trade Information Center under the Ministry of Industry and Trade.

Like us on Facebook or follow us on twitter to get the latest news from Vietnam!