Coffee sold to Westerners for 200 USD, Vietnam enjoys 2 USD

Vietnamese coffee is only sold for 2 USD/kg while exported to foreign countries, they sell for 200 USD/kg, meaning we only get 1% of that value but the effort is huge", Mr. Nguyen Van Nam, Director of the Institute for Brand Strategy and Competition Research, shared.

Illustration photo. Source Internet

Export a lot but low value

“Why does Vietnam export a lot but the value is low?” is the question raised by many experts at the Investment Promotion Forum, within the framework of Vietnam Expo 2017.

Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department, assessed that 176 billion USD in export revenue, an increase of 9%, is a very hard-working figure, considered a hot growth of exports. However, that is only an increase in quantity and output, not in quality.

According to Mr. Hai, exports mainly rely on agricultural products and handicrafts, followed by minerals and crude oil. With agricultural products, output leads but the value cannot be raised to a higher level. Coffee is second but no one knows that their products contain Vietnamese coffee beans because the products they receive carry other brands.

Industrial products are mainly processed, which means importing raw materials from abroad and assembling and sewing to produce products. “We can also participate in the global supply chain such as shoes and phones, which have made-in-Vietnam elements, but the value created in Vietnam is still very low,” said Mr. Hai.

Mr. Hai said that in the product value chain there is a "key link", but currently Vietnam's industrial production has not "reached" that link, but is only a "dependent link".

Mr. Hoang Nam Tien, Chairman of FPT Software, pointed out that while exporting more than 30 billion USD worth of phones, Vietnam also imports 25 billion USD, so the added value Vietnam makes is very little. In our main industry, such as rice, the added value of farmers is 50%, the rest is imported fertilizers and pesticides.

Chairman of the Farmers' Association, Mr. Lai Xuan Mon, admitted that Vietnam's exports are large in volume but have extremely low value. He cited that pepper and cashew nuts rank 1-2 in the world in terms of output but rank 6th in value.

According to Mr. Mon, high exports and low value make farmers' lives extremely difficult. "We need to find the root of the problem of increasing export quantity but ensuring quality. But if the quantity increases and the quality is ensured but the people's lives do not increase, it is considered worthless," said Mr. Mon.

Mr. Nguyen Van Nam, Institute for Brand Strategy and Competitiveness Research, said that we care about export turnover but also have to consider the sustainability factor. Because, as the Institute Director said, this is "like a traffic participant who wants to go fast but must ensure safety".

Standing on the shoulders of giants

Discussing measures to increase the value of exported goods, Mr. Pham Hong Viet, Chairman of the Board of Directors and General Director of Hanoi Rubber Corporation, suggested that to compete with big names, first of all, is to participate in their own production chain at the stage with high added value.

However, it is necessary to participate from the beginning, from when they develop the product. Mr. Viet believes that if they fail from the beginning, it may be a failure, a price that the business must accept.

According to Mr. Vo Tri Thanh, former Deputy Director of the Central Institute for Economic Management, not every enterprise participates in all stages of the value chain. Each enterprise only needs to do 1 to 2 stages, but must have a firm grasp of what it can do and what it can change, that is, increase added value according to function.

“Businesses should keep doing what they are doing, but they need to improve productivity. Just changing the way they manage can increase productivity by 10-15%,” Mr. Thanh said.

In order to increase export value, Mr. Hoang Nam Tien, Chairman of FPT Software, shared that on average, each employee makes about 550 million VND/year. For every 100 USD exported, 84-86 USD is made by Vietnamese people. Thus, the added value of this industry is very stable.

According to Mr. Tien, if rice is exported at 7-8 million tons, it will be okay, but if it is exported at 10 million tons, there will be a surplus. The software industry is very special, the software market has a turnover of 994 billion USD. Last year, businesses only made 230 million USD out of the total value of 944 billion USD of the market, this is an unlimited market, the limitation is capacity.

“The 4th industrial revolution is shifting to digital, the whole world is shifting to increasingly high demand at least in the next 15 years. I think that researching software is a completely possible direction to choose,” Mr. Tien commented.

According to Vietnamnet