Market overview

Vietnam has been Japan's premier developing country for foreign direct investments (FDI) for many decades. Combined with the relative closeness in terms of distance and culture, it is easy to see why Vietnam has been the traditional destination for Japanese firms when expanding abroad.

There is a widespread, yet risky assumption that Japanese trading companies like Sojitz has invested in Vietnam and built deep source of goodwill in Vietnamese society, this naturally transfer to an advantage in exporting to Vietnam as its middle class grows.

Current market realities tell a very different story.

Japanese firms (and society) have an informational gap regarding Vietnam's modern retail landscape, partly due to its overreliance on Vietnamese partners for intelligence gathering. Japanese firms cannot rely on the "halo" effect when exporting products to Vietnamese, but rather, to compete against objective metrics: global agricultural certifications, performance, efficiency, premium quality, traceability, etc.

When positioned well and value is explicit and defensible, Japanese products of all kinds are still of very high demand in Vietnam. As an upper-middle income country with a GDP growth goal of 10%, Vietnam is undergoing a radical transformation, leading to opportunities to export products once considered out of the Vietnamese's price range. It is advisable for Japanese firms to consider Vietnam as a market in its own right, in line with regional competitors' such as South Korea, China and Taiwan.

Following the pattern of national development, Vietnamese consumers are consuming less rice and have demand for imported protein, fruit and specialty items. Japanese cuisine, which used to be a luxury in Vietnam, is rapidly becoming accessible for the middle-class. This will benefit the high-margin speciality of Japanese agricultural sector. Some example products include: Japanese apples, pears, peaches, grapes, strawberries, Wagyu beef, artisanal matcha, craft sake, etc.

Vietnam's rapidly expand manufacturing sector demand high-precision machines, where Japan holds a traditional advantage. This also includes special raw materials like high-grade steel, technical plastics, chemical compounds, etc. This is not including countless consumer and tech products. The irony is that some of them are produced in factories located in Vietnam, but faced steep tariffs as part of the special economic zones terms.

One of the most overlooked aspect of Vietnamese growth is the demand on Japanese creative product, or in common terms: anime, manga, gaming, merch, partly caused by an unusually high rate of internet connectivity (with an internet speed sometimes faster than Japan!). However, Japanese efforts at pushing its creative products to Vietnam has been lackluster compare to similar push to Thailand, Indonesia, etc.

This does not negate the traditional challenges of operating in a developing market. Due to the heavy enforcement of anti-corruption laws, Vietnamese bureaucracy can be excruciatingly slow and confusing, especially after the historic 2025 redrawing of administrative divisions. Anti-counterfeit and piracy laws have only very recently been enforced. Many strategies that Japanese companies in developed markets, such as open-account credit terms, direct-to-retail distribution, face hefty difficulties in Vietnam.

Customs, regulations and standards

Japan and Vietnam share four overlapping trade agreements (CPTPP, RCEP, AJCEP, and VJFTA), in stark contrast to America's 5%–20% tariffs when exporting to Vietnam. For Japanese small and medium enterprises, FTAs could give them significant advantage.

Vietnam lacks a centralized, authoritative body of information for customs, nor is there a "pre-vetted importer list" that Japanese firms can rely on. Vietnamese customs are heavily influenced by a scatterwork of decrees and circulars, which may be released without notice, coupled with ever-changing regulations and discretionary policies. Without pointers, Vietnamese customs can be almost undecipherable.

It can be reasoned that Japanese exporter's most important challenge is to perform the custom paperworks in both Vietnam and Japan to claim the tariff reduction. This can be complicated. Generally speaking, Japanese small and medium enterprises can't do direct-to-retail export. The paper work is traditionally done by the sogo shosha (総合商社, general trading companies) and otsunaka (乙仲, licensed customs brokers), and once exported, it is handled by Vietnamese distribution companies. It is best to reference Japan Customs website on import/export procedures (in Japanese).

For exporting to Vietnam, the following paperworks are required:

• Rules of origin declaration and certificates of origin (especially important for CPTPP)
• Health certifications from the relevant ministries in Vietnam
• Vietnamese language sub-labeling for many products

Information on these can be found in the "Taxes, fees, regulations" section.

To find more information about Vietnam's customs and regulations, below are the suggested links by the Japan External Trade Organization (JETRO):

• Ministry of Industry and Trade
• Ministry of Foreign Affairs
• Ministry of Planning and Investment
• Ministry of Natural Resources and Environment
• Central Institute for Economic Management
• Vietnam Trade Promotion Agency
• Vietnam Immigration Department - Ministry of Public Security
• Vietnam Customs
• General Statistics Office
• Embassy of the Socialist Republic of Vietnam in Japan

Sentiment towards Japanese products

Vietnamese consumers are still willing to pay for a premium to the Japanese brand and generally speaking have a positive sentiment to Japan. However, the "Honda Super Cub halo" now has cracks. Partly, this is caused by increased awareness of Japan's economic and societal issues. Partly, this is caused by the rapid rise of living standards of Vietnamese people, which naturally raise the expectations of the customers. Partly, this is caused by interactions with Vietnamese nationals that are heavily framed through the technical trainee and blue-collar labor systems. But, most notably this is caused by Vietnamese products' quality convergence with Japanese products.

This is best illustrated with an example. Consider this clipping from VnExpress, a major online newspaper in Vietnam:

Top 10 best-selling cars in the Vietnamese market for July: VinFast and Japanese brands

VinFast occupies 6 spots in the top-selling list, with the remaining 4 spots held by Mitsubishi, Toyota, and Mazda.

khiemttt 07:14, Aug 12 (1,250 Likes)

Congratulations to VinFast for remaining number one. Vietnam truly needs strong brands like this to further drive the development of the domestic automotive industry as a whole. Especially with VinFast—being an all-electric brand—it aligns perfectly with the global trend.

khoadang11 06:46, Aug 12 (1,159 Likes)

Vietnamese electric vehicles are dominating the market, while the Japanese brands are left to split the remaining small share. When your time has come, nothing can stop you! I hope to see this Vietnamese enterprise continue to thrive.

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