What prevents Vietnamese enterprises from exploring the Chilean market?

DNHN - Chile is a land of gold for businesses in search of an entirely new market, as it is a large market with ample room for growth. However, market entry is also extremely difficult.

As a developed foreign trade economy with strong financial institutions, diverse foreign economic policies, and a tendency towards Asia, Chile is a market that Vietnamese businesses should consider when the presence of most Vietnamese goods is still low. In the meantime, because Chile is a member of the CPTPP and ratified this Free Trade Agreement earlier this year, Vietnamese businesses can take advantage of tax incentives (Chile commits to eliminate 95.1% of tariff lines as soon as the Agreement goes into effect, which is equivalent to 60.2% of Vietnam's import turnover, and will eliminate tariffs on 99.9% of tariff lines in the following year).

The majority of Chile's imports consist of Vietnam's principal exports, such as footwear, textiles, clinker and cement, furniture products, and rice. Vietnam imports wood and wood products, aquatic products, common metals, scrap, animal feed, animal and vegetable fats and oils, and vegetables from Chile.

Vietnam is the largest ASEAN exporter to Chile at present. Chile is currently Vietnam's fourth-largest trading partner and third-largest export market in Latin America, despite its population of just 19.6 million. Vietnam also serves as a gateway for Chilean goods to enter the ASEAN market.

The fact that Vietnam primarily imports raw materials for production and exports finished goods and consumer goods to Chile is an advantage.

Difficulties Vietnamese companies face when entering the Chilean market

The Chilean market has not yet attracted the interest of Vietnamese businesses for the reasons listed below, even though it is a potential market with ample space.

The difficulty posed by geological conditions:

Compared to other markets, the distance between the two countries is relatively great because each country is located in one half of the hemisphere and there are no direct flights between the two sides, making business travel difficult. In contrast, high freight rates restrict import-export relations in general.

Lack of promotional information regarding the parties' goods:

Due to a lack of product promotion, propaganda, and regular information updates, the Vietnamese and Chileans have limited knowledge of each other's goods.

Language barriers:

The majority of Chilean businesses conduct transactions in Spanish, while only a minority of Vietnamese businesses do so. In Chile, only a small number of businesses can use English for official transactions.

No direct distribution channel:

The parties are still required to import and export the majority of their goods through a third-party company.

Trade opportunities for Vietnamese businesses that want to enter the Chilean market

 Minister of Industry and Trade Nguyen Hong Dien met with Ms. Claudia Sanhueza, Deputy Minister in charge of international economic relations at the Ministry of Foreign Affairs of Chile, on the morning of the 16th of July, in the context of activities related to his attendance at the Trade Ministers Meeting of the CPTPP members in Auckland, New Zealand.

Minister Nguyen Hong Dien and Ms. Claudia Sanhueza discussed bilateral economic and trade cooperation issues of mutual concern during their meeting. Minister Nguyen Hong Dien proposed that the Chilean side organize a business delegation in the fields of agricultural products, food, textiles, footwear, and furniture to travel to Vietnam to participate in the series of events "Connecting the international supply chain" (Vietnam International Sourcing 2023) taking place from September 13 to 15. In addition, the Ministry of Industry and Trade will organize a delegation of approximately 18 companies from the national trade promotion program to work in Chile in October. Minister Nguyen Hong Dien wished to receive the assistance of relevant Chilean agencies in connecting businesses on both sides and organizing the Vietnam - Chile Business Forum as part of the business trip.

Ms. Claudia Sanhueza, concurring with Minister Nguyen Hong Dien's statement, stated that she always values and seeks to expand cooperation with Vietnam in a variety of fields, especially in the areas of economy, trade, and investment. The Chilean Deputy Foreign Minister stated that he will collaborate closely with the Ministry of Industry and Trade of Vietnam and relevant domestic agencies to promote exchanges on the issues raised by the Vietnamese side, particularly in the successful coordination of the upcoming 5th meeting of the Vietnam - Chile Free Trade Council.

Phong Linh