The Middle East and Africa have a great need to import spices from Vietnam. However, importers always suggest that Vietnamese exporters pack and label under their brand because the affirmation of the Vietnamese brand in this market is very blurred…
According to the Vietnam Pepper Association, in the first 6 months of the year, Vietnam’s pepper export accounted for 14.5%, cinnamon 4.3% of the market share in the Middle East, and 5.9% and 3.6% of the market share in Africa, respectively.
Organic cinnamon exports have great potential in the Middle East and Africa. (Photo: Internet)
HIGH DEMAND FOR SPICE IMPORTS
Mr. Truong Xuan Trung, Commercial Counsellor of the Vietnam Trade Office in the UAE, said that the UAE is a small market with a population of only 10 million but this is considered a “hub” for goods to travel to European, Asian, and African continents. This is also an opportunity for businesses to import into the UAE and re-export to these countries.
Agriculture in the UAE only accounts for 1% of the country’s GDP, and 80% of the food and drink is imported. So, it is a relatively good import market for Vietnamese products.
It is worth noting that the UAE has a large and famous spice market, imported largely because the country does not produce spices for consumer needs.
In the Saudi Arabia market, according to Mr. Tran Trong Kim, at the Vietnam Trade Office in Saudi Arabia, the demand for spices is quite high. In the first 6 months of 2022, Vietnam’s spice exports to this market reached $549 million. Pepper from Vietnam has a turnover of over $10 million per year, $5.8 million in June 2022 alone.
Ms. Nguyen Thi Hien Giang, Director of Lam Thanh Hung Trading Co., Ltd., said that Iran is the world’s largest importer of spices and also a major producer and exporter of spices. This is a great opportunity for Vietnamese enterprises to cooperate.
According to Ms. Giang, in addition to exporting, we need to think about imports, and “goods exchange” because the spices of Iran and Vietnam can support each other. Iranian spices are highly medicinal such as Saffron, parsley powder (antibiotics, cardiovascular prevention…), dill seeds (good for digestion, stroke prevention), etc.
Iranians care not only about the color and taste of spices but also especially care about their health benefits. Therefore, spice products imported into Iran must meet Iranian national quality standards, ISO certificates, health certificates, quarantine certificates, food safety certificates, etc.
IT IS NECESSARY TO NEGOTIATE PAYMENT METHOD TO AVOID RISK
The Middle East and Africa are not too demanding markets, but Mr. Trung noted that all foods should be safe and hygienic, ensuring quality and Halal standards because these are very important for Muslim consumers. Halal certification is a pass for Vietnamese products to be consumed in Islamic markets.
In addition, when exporting to this market, enterprises should be aware of the types of tariffs. In the UAE, tariffs are revised continuously, so enterprises should double-check these before exporting.
The tariff for all imported goods is 5% (except for some pharmaceutical products), 50% for alcohol, and 100% for cigarettes.
In particular, Mr. Trung noted that enterprises, in export contracts, UAE partners always require TT payment (Telegraphic Transfer), so there are a lot of risks.
It is recommended that businesses build some brands for their typical products. (Photo: Internet)
Since the beginning of the year, the Vietnam Trade Office in the UAE has encountered more than 30 fraud causes related to TT payments. Therefore, the Trade Office Representative recommends that when exporting to the UAE, the payment terms in the contract should try to require the partner to pay L/C. And it is necessary to ask the help of the Trade Office to verify the business before signing the contract, otherwise, it is very difficult to reclaim money when the risk occurs.
Mr. Kim added that payment should be in the form of irrevocable L/C with a deposit. Due to some problems in the past time with transportation charges, the company has difficulty in delivering goods, there are still some outstanding contracts… Many enterprises are initiating lawsuits.
In particular, enterprises should not deal with partners who require Vietnamese enterprises to pay brokerage fees, lawyer fees, or contract approval fees in advance. These are fraudulent attempts to steal money from a business, even small amounts of money, which often happen in Saudi Arabia.
In addition, in order to sustainably export spices to these markets, Mr. Kim said that building the brand name is very important. In fact, some importers always suggest that Vietnamese exporters pack, label under their own brands, and put into the market. The affirmation of the Vietnamese brand in this market is very blurred.
“It is recommended that businesses build some brands for their typical products to test the market in parallel with the production according to the brand and customer orders,” Mr. Kim suggested.
On the other hand, Saudi Arabia is aiming for a green, healthy life and sustainable environmental development, so organic and environmentally friendly products are beginning to be highly appreciated and demanded in the coming time. Vietnamese enterprises need to study production following this direction to increase export value.
In addition, the Middle East people have the habit of “seeing and touching”, which means looking at the goods with their own eyes, so businesses need to send samples to customers first. Businesses can send to the Trade Office to place at the Vietnam export products showroom.
“This is not a very strict market, businesses only need to comply with food hygiene and safety regulations such as antibiotic limits allowed for spices. Specific information should be well aware to ensure that products exported to Saudi Arabia are compliant, ” Mr. Kim stressed.