Food and beverage vietnam market entry handbook 2016 EU commission

This Handbook is intended to act as a reference for those agrifood producers planning for, or in the process of entering, the Vietnamese market. This Handbook provides step bystep guides on the operationalization of the market in Vietnam, including relevant information such as analysis of the Vietnamese market for different product categories, market access and market entry procedures, IP protection, referrals to professional buyers and a signposting and referral system providing useful contacts and ways to penetrate the Vietnamese market.

Prepared by:

October 2016

The Food and Beverage Market

Entry Handbook: Vietnam

a practical guide to the market in Vietnam for European

agri-food products

EUROPEAN COMMISSION

Consumers, Health, Agriculture and Food Executive Agency

Promotion of Agricultural Products Unit

E-mail: Chafea-agri-events@ec.europa.eu

This document has been prepared for the Consumers, Health, Agriculture and Food Executive Agency (Chafea) acting under the mandate from the European Commission

It reflects the views only of the authors, and the Commission / Chafea cannot be held responsible for any use which may be made of the information contained therein

More information on the European Union is available on the Internet (http://europa.eu)

Luxembourg: Publications Office of the European Union, 2016

PDF ISBN 978-92-9200-739-3 doi:10.2818/258039 EB-06-16-143-EN-N

© European Union, 2016

Reproduction is authorised provided the source is acknowledged

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TABLE OF CONTENTS

TABLE OF CONTENTS 4

LIST OF FIGURES 6

LIST OF TABLES 7

I THE FOOD AND BEVERAGE MARKET ENTRY HANDBOOK: VIETNAM 8

i How to use this handbook 8

1.1 Key economic figures “at a glance” 11

1.2 Food trade statistics, specifically showing opportunities and existing or likely competitors to EU food exports 14

1.3 General information on distribution and logistics infrastructure 15

2 THE VIETNAMESE FOOD AND BEVERAGE MARKET 16

2.1 Market Size and Share 16

2.2 Growth Drivers and Trends 20

2.3 Market Access and Entry 22

2.4 Key Markets by Geography 26

2.5 Customs, SPS Requirements and Labelling 27

2.6 The Status of Geographical Indications (GIs) and Intellectual Property (IP) Protection 37

3 MARKET SNAPSHOTS FOR SELECTED PRODUCTS 42

3.1 Wine 44

3.2 Spirits 57

3.3 Beer 66

3.4 Fresh and Processed Meat 75

3.5 Olive Oil 83

3.6 Fresh Fruits and Vegetables 87

3.7 Processed Fruits and Vegetables 95

3.8 Dairy Products 98

3.9 Processed Cereals 110

3.10 Bread, Pastry, Cakes, Biscuits and other bakery products 117

3.11 Chocolate and derived products and Confectionery 123

3.12 Honey 132

3.13 Gum Resin and Plant Extracts 137

3.14 Cotton and Live Plants 143

4 COMMUNICATION 151

4.1 How does the consumer get influenced: By whom and How? 151

4.2 Example of current communication campaigns made by main investor 155

5 DOS AND DON’TS 157

6 SYNOPSIS 162

6.1 S.W.O.T Analysis 162

6.2 Key Criteria for Success 165

7 SUPPORT SERVICE DIRECTORY 167

7.1 European Union Organizations 167

7.2 Other Organisations and Service Providers 172

7.3 EU and Vietnamese Chambers, Bodies and Associations 177

7.4 Calendar of Trade Events and Exhibitions 179

ANNEX I: GI PRODUCTS REGISTERED IN VIETNAM 184

ANNEX II: DATABASE OF PROFESSIONAL BUYERS 203

LIST OF FIGURES

Figure 1 Map of Vietnam 10

Figure 2 Top EU-Agri Food Exports to Vietnam and their respect market shares in 2015 17

Figure 3 Average Tariff Rates for Industrial Products, Agricultural Products and Fisheries in Vietnam 19

Figure 4 Illustration of Distribution Channels in Vietnam 23

Figure 5 Total Wine Consumption 2007-2017

Figure 6 Vietnamese Wine Imports from the EU (2010-2014) 48

Figure 7 On trade/Off trade market share in alcoholic beverages, Vietnam 55

Figure 8 Vietnamese Imports of Spirits from the EU (2010-2014) 60

Figure 9 Recorded alcohol per capita consumption

Figure 10 Vietnamese Beer Imports from the EU (2010-2014) 69

Figure 11 Beer Market and Brand Shares (2013) 71

Figure 12 Distribution of Beer in Vietnam by Respective Beer Brands 74

Figure 13 Vietnamese Imports of Meat and Edible Meat Offal 77

Figure 14 Vietnamese Imports of Processed Meat 78

Figure 15 Top Fruit and Vegetable Imports in Vietnam (2015)

Figure 16 Major Vietnamese Fruit Exports (2015)

Figure 17 Milk Consumption per capita (2012) 98

Figure 18 Vietnam Dairy Exports to World (2013-2015)

Figure 19 Percentage Share of Food Service Outlets in Vietnam

Figure 20 Vietnam's Imports of Cereal Products (2013-2015) 113

Figure 21 Chocolate and Confectionery's Retail Value Sales (2011-2016) 123

Figure 22 Chocolate and Confectionery's Retail Value Sales (2011-2016) 125

Figure 23 Chocolate and Confectionery's Retail Volume Sales 126

Figure 24 Vietnamese Imports of Chocolate and Confectionery from the EU (2011-2016) 127

Figure 25 Vietnamese Exports of Chocolate and Confectionery to the EU (2011-2016) 128 Figure 26 Vietnam Imports of Lac, Natural Gums, Resins, Gum-Resins and Oleoresins (2005-2010) 138

Figure 27 Vietnam Exports of Lac, Natural Gums, Resins, Gum-Resins and Oleoresins 139 Figure 28 Vietnam’s Cotton Consumption in Million Metric Tons 143

Figure 29 Growth in Value of Indonesian Imports of Cotton from the EU (%p.a.) 146

Figure 30 Vietnam's Imports of Live Plants from the EU (2011-2015) 147

Figure 31 Growth in Value of Vietnamese Imports of Live Plants from the EU (%p.a.) 147 Figure 32 Vietnam's Exports of Cotton Flax, hemp and Planting Materials (2011-2015) 148

Figure 33 Growth in Value of Vietnamese Exports of Cotton to the EU (%p.a.) 148

Figure 34 Vietnamese Exports of Live Plants to the EU 149

LIST OF TABLES

Table 1 Key Economic Figures 11

Table 2 Vietnam's Grocery Retail Outlet by Channel, units 25

Table 3 Responsibilities of Ministerial Bodies in Food Standards and Regulations 31

Table 4 Sanitary and Phytosanitary Inspection and Export Certificates 34

Table 5 Geographical Indications Applications Filed with NOIP and Certificates Granted from 2001 to 2014 38

Table 6 Product Classification Table 43

Table 7 List of GI Wines from the EU protected under the EU-Vietnam FTA 51

Table 8 Vietnam: Spirits Sales by Category (2008-2013) 59

Table 9 List of GI Spirits from the EU protected under the EU-Vietnam FTA 62

Table 10 List of GI Beers from the EU protected under the EU-Vietnam FTA 70

Table 11 List of GI Meat and Meat Products from the EU protected under the EU-Vietnam FTA 80

Table 12 List of GI Olive Oils from the EU protected under the EU-Vietnam FTA 85

Table 13 List of GI Cheese from the EU protected under the EU-Vietnam FTA 102

Table 14 Social Media Platforms in Vietnam 153

Table 15 SWOT Analysis 164

Table 16 Key criteria to success 166

Table 17 EU Member States 172

Table 18 Service providers 176

Table 19 Institutions 179

Table 20 Calendar of events and exhibitions 183

Table 21 Major retailers 205

Table 22 Convenience stores 209

Table 23 Journalists 211

Table 24 Bloggers 211

I THE FOOD AND BEVERAGE MARKET ENTRY HANDBOOK: VIETNAM

This Handbook is intended to act as a reference for those agri-food producers planning for, or in the process of entering, the Vietnamese market This Handbook provides step-by-step guides on the operationalization of the market in Vietnam, including relevant information such as analysis of the Vietnamese market for different product categories, market access and market entry procedures, IP protection, referrals to professional buyers and a signposting and referral system providing useful contacts and ways to penetrate the Vietnamese market

i How to use this handbook

Depending on your stage of market entry, company profile, and product range, different sections within this handbook will be helpful to a different extent for your business strategies

For those wishing to learn more about the Vietnamese food and beverage market in general Section 2 provides an overview of the business climate This section contains

information on: the food and beverage market, market access procedures, customs procedures, SPS and labelling requirements, and the status of Geographical Indications and Intellectual Property protection The information contained within this section is of a general nature and so may not be relevant for those in the more advanced stages of market entry

If Section 2 got you interested in the market but you want to find out more information relevant for your product then check out the Market Snapshots for Selected Products This content illustrates the market situation, market access procedures, SPS requirements etc specific for this product or product category This information will provide more industry specific information to consider as part of any market entry or market expansion strategies

If you already have decided that the Vietnamese market is where you want to be, but you need some support, then the Support Services Directory can point you in the right way Contact information for a service provider, business facilitation support

organisation, or from a business contact, could help put you in touch with the right parties who can help you to build your brand in the Vietnamese market

1 VIETNAM FACT SHEET

Figure 1 Map of Vietnam

1.1 Key economic figures “at a glance”

Socialist-oriented market economy

GDP by sector For the first half of 2016, the agriculture, forestry and fishery

sectors accounted for 16.73% of growth; industry and construction accounted for 33.45%; services accounted for 39.61%;

Average goods sales tax applied (excluding subsidies) were 10.21%

Table 1 Key Economic Figures

Source: The World Bank, IMF, EUROSTAT, Statistics Office of Vietnam, Vietnam Customs Vietnam is a developing economy with bright middle- and long- term growth prospects Key economic indicators consistently showed positive performance during the last decade and Vietnam’s GDP grew at an average of 7.26% between 2000 and 2010.1 The current outlook reflects a successful - albeit ongoing - evolution from a centrally-planned economy into a more dynamic, market-oriented system Nevertheless, Vietnam remains far from becoming a liberal economy: government subsidization and stated-owned enterprises are still major determinants At the same time, strict central control can still encumber free growth in this so-called “socialist oriented market economy.”

Recent economic development has nonetheless delivered positive societal impacts Rapid urbanization and improvement of living standards have reduced levels of poverty and exclusion from 20.7% in 2010 to just over 13% in 2014.2 The Vietnamese population is now, on average, better educated and has a higher life expectancy than most countries with a similar per capita income

Still, while the government aims to further industrialise the country, agriculture nonetheless accounts for 30-35% the labor force This sectoral composition can restrain productivity levels and create gaps in supply of trained workers for other sectors It is estimated that, despite occupying up to a third of Vietnam’s labor force, the domestic agriculture industry only accounts for one-fifth of GDP.3 Efforts are currently in place to improve Vietnam’s competitiveness regionally and internationally

In 2010, the Government of Vietnam released its Socio-Economic Development Strategy for the Period of 2011-2020 The strategy is a logical continuation of the “Doi Moi”

policy, which during the last twenty years gradually empowered private enterprise and market forces The current plan aims to work towards sustainable growth and development, mainly by tackling remaining issues such as an existing network of largely underdeveloped infrastructure, bureaucracy and serious corruption claims 4 These measures aim to create favorable conditions for the private sector to become a driving

growth force in the coming years Vietnam’s ranking in the World Bank’s Ease of Doing Business annual review was 90 (out of 189 economies).5

Foreign investments are particularly encouraged by the Government of Vietnam However, this is caveated by several sectors wherein the government maintains local protectionism and favoritism, in particular for agriculture Controlling inflation is also an important objective to maintain sustainable growth Inflation is expected to grow from 3% to 4% in 2017, thereby deflating demand slightly over the next year Nevertheless, the current outlook remains positive.6 In spite of cultural tendencies predisposing towards financial savings, Vietnamese consumers are very optimistic, ranking the fifth most optimistic country globally 7

Rising disposable incomes have further increased consumer demand for international products; consumer expenditure on Food and Beverages (F&B) is growing well ahead of several other product categories From 2010 to 2015 disposable income increased (in real terms) by 32%, creating new opportunities for European exporters In turn, consumer spending increased 33% over the same period, driven in large part by expenditures from a burgeoning middle-class.8 Vietnam’s middle- and high- income groups are expected to double in size by 2020; these consumers are willing to pay more, particularly for healthy and ecological products.9 By some estimates, for example, nearly one third of consumers cite health as their biggest and second biggest concern driving food choices and habits 10

6 “Vietnam Economy” available at http://www.adb.org/countries/viet-nam/economy#tabs-0-1

7 “Vietnam Consumer Confidence Index continues maintaining at high level in Q1’2016“available

at http://www.nielsen.com/content/dam/nielsenglobal/vn/docs/PR_EN/Vietnam%20CCI%20Q1'2016_EN_Final.pdf

8 “Consumer Lifestyles in Vietnam” available at in-vietnam/report

http://www.euromonitor.com/consumer-lifestyles-9 “Vietnam and Myanmar: Southeast Asia’s New Growth Frontiers” available at

https://www.bcgperspectives.com/content/articles/consumer_insight_growth_vietnam_myanmar_southeast_asia_new_growth_frontier/?chapter=2

10 “Vietnam Consumer Confidence Index continues maintaining at high level in Q1’2016” available

at

During the next decade, Vietnam’s economy will see even deeper integration into the regional and global economy, as well as increasing demand for foreign products at least partly in tandem with an influx of foreign investment Continued macroeconomic liberalization and further government cooperation will be essential to sustaining this trajectory

http://www.nielsen.com/content/dam/nielsenglobal/vn/docs/PR_EN/Vietnam%20CCI%20Q1'2016_EN_Final.pdf

1.2 Food trade statistics, specifically showing opportunities and existing

or likely competitors to EU food exports

Vietnamese consumers dispense a sizeable portion of their income on food items.11 More than half of total expenditures are for food, mostly basic food items like rice, salt, sugar, meat, vegetable oil, and sauces The average household spends very little on high-value processed food products Nevertheless, recent consumer surveys point to an increase in spending on high-value F&B

Trade data indicate that Vietnam imported over 8.03€ billion in consumer-oriented agricultural products in 2014, which includes more than 3.46€ billion in edible fishery products, the single largest category.12

Of the EU’s 2015 export basket to Vietnam, agricultural products accounted for 12.9% of the total value.13 On the other hand, Vietnamese agri-food exports to the EU accounted for 7.6% of total Vietnamese exports to the EU These amounted to approximately 2€ billion The top five EU agri-food exports to Vietnam and their respective market shares

in 2015 were pet food (9.1%); malt (7.7%); spirits, liqueurs and vermouth (7.3%); and milk powders and whey (7.1%)

In 2015, the main exporters to Vietnam and their respective market shares were: China (34.7%); South Korea (14.5%); Japan (6.6%); Singapore (6.3%); and the European Union (5%).14

Presently, the best prospects for consumer-oriented agricultural products in the Vietnamese market include dairy products, chilled and frozen meat, frozen poultry, fresh fruits, dried fruits and nuts, snack foods, confectionary foods, packaged foods, condiments, juices, and alcoholic drinks.15

11 “Vietnam Exporter Guide” available at

27-2015.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Hanoi_Vietnam_3-12 Ibid

13 “European Union, Trade in Goods with Vietnam” available at

http://ec.europa.eu/eurostat/web/internationaltrade/data/database?p_p_id=NavTreeportletprod_WAR_NavTreeportletprod_INSTANCE_yMiooQ47vf0e&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_count=1

14 “Vietnam” available at http://www.trademap.org/Country_SelProductCountry.aspx

15 “Vietnam Exporter Guide” available at

27-2015.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Hanoi_Vietnam_3-1.3 General information on distribution and logistics infrastructure

The first step to doing business in Vietnam is to identify a local import partner or representative, or to otherwise develop a relationship with one of the established food trading and distribution companies Such distribution companies are able to extend the distribution network to not only supermarkets, hotels and restaurants, but also wet- and open-air markets, independent and specialty retail shops.16 Currently, there are only a handful of well-organized food trading and distribution companies in Vietnam suited for imports of EU agri-foods These companies tend to be somewhat transient, so it is advisable to visit Vietnam and research the company’s customer lists and achievements before market entry

Vietnam’s retail food landscape is largely dominated by traditional wet markets and small independent stores ideal for small-quantity, high-frequency food purchases.17 With low rental and operations costs, traditional retailers benefit from offering convenience, package-size flexibility and low prices, especially for fresh food Modern grocery retail accounts for only 15% of overall grocery sales in Vietnam whereas traditional retailers account for 85% However, the modern retailers channel is expected to grow at a compound annual growth rate (CAGR) of 11.5% until 2019

Vietnam’s limited distribution infrastructure and facilities for perishable products are significant constraints to market entry for EU products Vietnamese distribution systems are often equipped with out-of-date technology, and companies often utilize inadequate

or fragmented cold chains where foodstuffs are at higher risk for improper handling Sea and air are the more used shipping options for entry of goods in Vietnam Haiphong,

Da Nang and Saigon are most frequented international seaports, and Noi Bai and Tan San Nhat are busiest international airports in Vietnam

16 “Vietnam Exporter Guide” available at

27-2015.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Hanoi_Vietnam_3-17 “Sector Analysis: Vietnam: Agriculture and Food” available at

http://um.dk/~/media/UM/Markedsinformation%20Publications/Files/Publikationer/Markeder%20og%20sektorer/Vietnam/Vietnam%20Sector%20Analysis%20Agriculture%20and%20Food%20July

%202015.pdf

2 THE VIETNAMESE FOOD AND BEVERAGE MARKET

2.1 Market Size and Share

Vietnam has a population of approximately 92 million people (13th largest in the world), which is expected to grow to 100 million by 2020 at an annual growth rate of 1.2%.18Vietnam is one of the fastest growing countries in ASEAN, with an average GDP growth rate of around 6% between 2000 and 2014 Its economy is projected to continue to grow by 6.2% in 2016.19 Projections for economic and population growth signal increased opportunities for EU imported goods in the Vietnamese market

As Vietnamese consumers spend more as a portion of overall income than comparators and are benefitting from aggregate income growth, they are increasingly likely to spend

on high-value foods such as dairy products (UHT and fresh milk, yogurt, cheese etc.) meats, eggs, fresh fruits, imported vegetables, confectionary, snack foods, and packaged food items Across these product categories, the EU is recognized as a reliable producer and exporter in terms of quality, safety, nutrition, and taste

Vietnam’s total imports of agricultural, fish and forestry products were estimated at around 24.01€ billion in 2014 Whereas EU Member States have traditionally been significant trading partners for Vietnam, they are likely to face new and increased competition from entering and established agri-food producers in the region and internationally Leveraging product reputation and in-demand categories of EU agri-food exports will be vital for maintaining healthy trade with Vietnam as it continues to grow

EU-Vietnam Bilateral Trade

Vietnam is a relatively self-sufficient country in terms of food production As disposable incomes continue to grow - in turn driving technology and infrastructure improvements - imports are, however, expected to rise Importantly, the market for high-value food products in Vietnam is substantial and is growing across a wide variety of categories European products stand to benefit from such growing trends, and must position themselves appropriately to maximize potential business opportunities

In 2015, total trade in goods between the EU and Vietnam amounted to 38€ billion.20Total EU imports from Vietnam amounted to approximately 30€ billion, while total exports from the EU to Vietnam accounted for approximately 8€ billion It is important to note that over the period 2011-2015, the EU’s exports to Vietnam increased by 25% These figures exclude trade in services and bilateral investment flows

18 “Doing Business in Vietnam” available at

http://www.ey.com/Publication/vwLUAssets/Doing_Business_in_Vietnam/$FILE/Doing_Business_in_Vietnam_16000319.pdf

19 “Guide to the EU-Vietnam Free Trade Agreement” available at

http://eeas.europa.eu/delegations/vietnam/documents/eu_vietnam/evfta_guide.pdf

20 “European Union, Trade in Goods with Vietnam” available at

http://ec.europa.eu/eurostat/web/internationaltrade/data/database?p_p_id=NavTreeportletprod_WAR_NavTreeportletprod_INSTANCE_yMiooQ47vf0e&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_count=1

The EU is Vietnam’s second largest trading partner after China.21 After the US, the EU is second largest export market for Vietnam Since 2015, Vietnam has been the EU’s second largest trade partner among the 10 ASEAN member countries (after Singapore) and, amongst them, the largest exporter of goods to the EU

In 2015, the main exporters to Vietnam and their respective market shares were: China (34.7%); Korea, Republic of (14.5%); Japan (6.6%); Singapore (6.3%); Hong Kong, China (5.2%); and the European Union (5%).22

As it relates to the EU’s exports to Vietnam, agricultural products accounted for 12.9% of its total exports in 2015 23 These exports amounted to approximately 1€ billion On the other hand, Vietnamese agri-food exports to the EU accounted for 7.6% of total Vietnamese exports to the EU These amounted to approximately 2€ billion

The top five EU agri-food exports to Vietnam and their respective market shares in 2015 were:

1 Raw hides, skins and furskins (12%);

2 Pet food (9%);

3 Malt (8%);

4 Spirits, liqueurs and vermouth (7%); and

5 Milk powders and whey (7%)

Figure 2 Top EU-Agri Food Exports to Vietnam and their respect market shares in 2015

Source: COMEXT-EUROSTAT

21 “Guide to the EU-Vietnam Free Trade Agreement” available at

http://eeas.europa.eu/delegations/vietnam/documents/eu_vietnam/evfta_guide.pdf

22 “Vietnam” available at: http://www.trademap.org/Country_SelProductCountry.aspx

23 “European Union, Trade in Goods with Vietnam” available at:

http://ec.europa.eu/eurostat/web/internationaltrade/data/database?p_p_id=NavTreeportletprod_WAR_NavTreeportletprod_INSTANCE_yMiooQ47vf0e&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_count=1

The EU-Vietnam Free Trade Agreement

On December 2, 2015, European Commission President Jean-Claude Juncker and former Vietnamese Prime Minister Nguyễn Tấn Dũng announced that the EU and Vietnam had concluded negotiations on a free trade agreement (FTA) The Vietnam agreement is considered among the most ambitious and comprehensive FTAs that the EU has concluded to date with a middle-income country.24 As such, it sets a new benchmark for Europe’s engagement with emerging economies The FTA is expected to enter into force

in 2018

The EU-Vietnam FTA has already achieved widespread coverage with 65% of EU exports

to Vietnam entering duty- free from ratification The remaining trade – with the exception of a few products – will be liberalized after 10 years The EU will liberalize 71%

of its imports from Vietnam from entry-into-force of the agreement and 99% will enter duty-free after seven years

Custom duties will be removed over a transitional period (of a maximum period of seven years for Vietnamese goods and 10 years for EU goods) so that domestic producers can gradually adapt Consumers from both sides will benefit from lower prices and exporters from strengthened competitiveness Some examples of EU agricultural exports that will benefit from tariff elimination in Vietnam include the following:

• Frozen pork meat will be duty free after 7 years;

• Dairy products will be duty-free after 5 years;

• Food preparations will be duty-free after 7 years;

• Chicken will be fully liberalized after 10 years;

• Liberalization as at entry into force for salmon, halibut, trout and rock lobster

Other fisheries are scheduled for liberalization after 3 years;

• Wines and spirits will be liberalized after 7 years; and

• Beer will be liberalized after 10 years

24 “Political and Economic Relations” available at:

http://eeas.europa.eu/delegations/vietnam/eu_vietnam/political_relations/index_en.htm

Figure 3 Average Tariff Rates for Industrial Products, Agricultural Products and Fisheries in Vietnam

Source: Guide to EU-Vietnam Free Trade Agreement

Figure 3 above reveals the average tariff rates for industrial products, agricultural products and fisheries in Vietnam and the process by which tariffs will be eliminated on

EU products over the ten-year transitional period It is important to note that average tariffs on agricultural products will be reduced from 67.7% from entry into force of the agreement to 2.6% in the tenth year The average tariffs on fisheries will be reduced from 86.7% from entry into force of the agreement to no tariffs in the seventh year

EU GIs in Vietnam

Over the last ten years, only 47 Geographical Indications (GIs) have been registered in Vietnam Recently, however, GI registrations have become more popular; foreign GI associations are now more likely to register GIs in Vietnam as law-enforcement are becoming more sophisticated and more aware of IPR, particularly for foreign rights holders

Currently Vietnam has registered 2 GIs from the European Union countries These are Cognac from France (Registration No 00003) and Scotch Whiskey from Scotland (Registration No 0023) Furthermore, the EU-Vietnam FTA contains comprehensive provisions on the mutual protection of GIs Vietnam has agreed to protect169 GIs from the European Union countries

2.2 Growth Drivers and Trends

Vietnam’s retail food sector is growing rapidly, fueled by a combination of strong economic growth, rising income levels (particularly disposable income), a large young population, a growing middle class, and increasing exposure to a Western lifestyle.25More and more urban consumers are opting for an international shopping experience, shifting from the traditional “Wet” markets to supermarkets and shopping malls This trend has been a driving force in increasing imports of Western food products

Rising income levels

Rising disposable incomes in Vietnam have resulted in an increased demand for premium products Despite a recent slowdown, Vietnam experienced strong period growth in disposable income between 2006 and 2011 The highest income class, with tax designation as “Social A” class, is expanding and seeking more premium products Consumption of indulgences such as ice cream and wine are increasing, as well as higher-priced health and wellness options - especially functional foods and beverages These consumers are also willing to pay considerably more for basics, such as vegetables, that are deemed free of contaminants.26

A youthful population and a rising middle class

Vietnam’s consumer market is still in the early stages of development but has been one

of the fastest growing markets in Southeast Asia due to a youthful population, continuing strong economic growth, and rising disposable income Over 50% of the population is 25 years or younger.27 International fast food chains continues to strengthen its presence in Vietnam, appealing to young consumers There is also a growing middle class in Vietnam, where both parents are working and less time is available for food shopping

An increase in the number of “working” women

Vietnam now boasts an increase in the number of women in the workforce with increased disposable incomes to purchase higher-value food products for their children

and families

Growing health consciousness pervades many food categories

Government health improvement campaigns are helping to increase consumption of healthy foods, boosting fresh foods like nuts, seafood, fruits and vegetables. 28 In frozen and packaged food, health and wellness is also gaining in popularity, as consumers become more sophisticated in their understanding of healthy eating and manufacturers increasingly advertise the health benefits of their products Still an emerging trend, healthy eating has plenty of room for growth

Shift from Traditional “Wet” Markets to Supermarkets and Shopping Malls

25 “Vietnam Exporter Guide” available at

27-2015.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Hanoi_Vietnam_3-26 “Market Opportunity Report: Vietnam” available at natural-resources-and-industry/agriculture-and-

http://www2.gov.bc.ca/assets/gov/farming-seafood/statistics/exports/market_opportunity_report_vietnam.pdf

27 “Doing Business in Vietnam” available at

http://www.ey.com/Publication/vwLUAssets/Doing_Business_in_Vietnam/$FILE/Doing_Business_in_Vietnam_16000319.pdf

28 “Market Opportunity Report: Vietnam” available at natural-resources-and-industry/agriculture-and-

http://www2.gov.bc.ca/assets/gov/farming-seafood/statistics/exports/market_opportunity_report_vietnam.pdf

Coming from a low base, demand for imported packaged and frozen foods will likely grow, as Vietnamese continue to gain exposure to popular food items from the West through modern grocery shops.29 In addition, improvements to cool chain technologies will expand distribution of frozen foods and seafood throughout the country Lastly, there are opportunities for EU producers to replace China, which is losing share as a result of

contamination scandals, as the supplier of a number of food items

29Ibid.

2.3 Market Access and Entry

This section provides details on the requirements for entry into the Vietnamese market, explaining where market access restrictions exist and what procedures are needed to overcome them

Market Entry

Market entrants to Vietnam will need to first identify a local partner, representative, or importer with good understanding of the domestic market This will need to be a trusted and co-interested party who, in turn, will be able to advise on distribution and liaise with public officials (customs, food inspection, and others) in order to develop reliable market entry avenues

Vietnam is a market where personal relationships are important.30 This requires an investment primarily of time and personal presence Likewise, product training for the agent's workforce is essential, as are regular updates on developments, modifications, competitor activity, etc Therefore, regular visits to the market, especially during the early phase, are an important part of a successful interaction with the agent / distributor Legal issues can be very complex, a local lawyer is considered essential Presently foreign companies are commonly subjected up to 15 bureaucratic inspections per year,

as well as to some occasional, unclear and complex administrative licensing procedures.31

Corruption is not only a widespread obstacle, but “a part of the game” that has to be accepted by most companies, since it is much easier way than a lingering and unproductive controversy Favoritism is sometimes practiced by authorities towards local state-owned enterprises.32

Distribution Channels

Distribution of imported foods in Vietnam follows one of the four basic models as follows: 1) Exporters ⇨ Importers/Distributors ⇨ Big Modern Retailers

2) Exporters ⇨ Importers/Distributors ⇨ Wholesalers ⇨ Retailers

3) Exporters ⇨ Local Agent ⇨ Importers/Distributors/Wholesalers ⇨ Retailers

4) Exporters ⇨ Big Modern Retailers (Metro, Saigon Coop, Big C, Maximart, Citimart, Fivimart)

30 “Doing Business in Vietnam” available at www.iberglobal.com/files/vietnam_ukti.pdf

31 “Agrofood Research Report” available at:

http://www.flandersinvestmentandtrade.com/export/sites/trade/files/news/341141118112431/341141118112431_1.pdf

32 Ibid

Figure 4 Illustration of Distribution Channels in Vietnam

Source: USDA Foreign Agricultural Service Global Agricultural Information Network: “Vietnam

Retail Foods Sector Report”

The first and second modes are the most common channels of distribution in Vietnam Most food importers in Vietnam are also distributors They often directly move their imported products to big retailers in urban areas, and let wholesalers and their agents help distribute their products to the thousands of small retailers in both urban and rural areas Due to relatively low purchasing power, most modern retailers source through importers and distributors Only a few big chains like Metro, Big C, Coopmart (Saigon Co-op), Fivimart, Maximart and Citimart have tried buying directly from foreign suppliers

Retail Channels

Local chains still dominate the market but foreign-invested retailers are also very quickly expanding, creating a competitive environment in the modern Vietnamese retail sector.33Vietnam’s retail food landscape is largely dominated by traditional wet markets and small independent stores ideal for small-quantity, high-frequency food purchases With lower rental and operation costs, traditional retailers benefit from offering convenience, package-size flexibility and low prices, especially for fresh food Traditional retailers for the virtual totality (c 95%) of grocery sales, with a now emerging modern retail grocery presence Modern retail channels account for around 20 % of total sales in Vietnam

33 “Vietnam Retail Foods Sector Report” available at

14-2013.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Retail%20Foods_Hanoi_Vietnam_11-Vietnam Traditional Wet Market

Modern retailers (supermarkets, hypermarkets, mini-marts, convenience stores, and department stores) appeal to a growing number of consumers in many key urban areas (Hanoi, Ho Chi Minh City, Hai Phong, Danang, Can Tho, Nha Trang, Quang Ninh, Binh Duong)

In Vietnam, Big C is the only brand name of hypermarkets Metro Cash & Carry stores

give the impression of hypermarkets but are not Metro’s clients are mostly industry and wholesalers while hypermarkets’ are final customers Big C is present only in Hanoi, Ho Chi Minh City, Hue, Da Nang, Vinh, Nam Dinh and Vinh Phuc Because of its size, Big C stores are usually located on the outskirt of the city

Supermarkets, whose retail prices are a bit higher compared with a hypermarket, are better fitted for regular, personal consumers Some of the most famous supermarket names in Vietnam are: Intimex, Co.opmart, Fivimart and Citimart Supermarkets in Vietnam offer more or less similar goods and services

Supermarket brands, Vietnam

In Vietnam, the modern retail trade concept has grown tremendously in recent years, going from only 2 supermarkets in the early stage (1996/1997) to more than 420 in

2012 Before 1996, open-air wet markets and non-staple food small private shops were the norm, yet in the most recent decade, Vietnam’s urban economy has begun a steady transition away from the traditional trade to modern trade Most of the supermarkets and shopping centers (department stores) are based in Ho Chi Minh City and Hanoi Today, Hanoi has more than 38 stores, while Ho Chi Minh City has more than 65 modern stores

Vietnam’s Grocery Retail Outlets by Channel, units

Table 2 Vietnam's Grocery Retail Outlet by Channel, units

2.4 Key Markets by Geography

Vietnam occupies the eastern coastline of the Southeast Asian peninsula, and shares land borders with China to the north, and Laos and Cambodia to the west Its coastline provides direct access to the Gulf of Thailand and the East Sea

Hanoi, the capital of Vietnam, is located in the north of the country and Ho Chi Minh City

is situated in the south Other major cities include Hai Phong, Da Nang, Hue, Vinh, Quy Nhon, Nha Trang, Can Tho, and Da Lat Ho Chi Minh City (formerly Saigon) is the largest commercial centre (with a population of over 7 million) Industrial parks are situated around both Ho Chi Minh City and Hanoi

Vietnam has developed two independent and dominant core-periphery urban systems.34Vietnam’s rapid economic growth is driven by Ho Chi Minh City and Hanoi: two urban systems with high growth and industrial concentration within these cities and their surrounding areas The finding that economic growth is led by a single or a few core economic nodes is consistent with the experience of other rapidly developing countries in incipient or intermediate stages of urbanization While growth is concentrated in these two core urban systems, Hanoi and Ho Chi Minh City manifest different economic growth trajectories

Infrastructure

Vietnam’s limited distribution infrastructure and facilities for perishable products is a significant constraint to importing products The distribution systems are often equipped with out-of-date technology, and transport products using inadequate or fragmented cold chains and with improper handling

Sea and air are the more used shipping options for entry of goods in Vietnam Haiphong,

Da Nang and Saigon are most popular international seaports, and Noi Bai and Tan San Nhat are busiest international airports in Vietnam

34 “ Vietnam Urbanization Review” available at:

http://www.citiesalliance.org/sites/citiesalliance.org/files/CAFiles/Projects/Final_669160ESW0P1130Review000Full0report.pdf

2.5 Customs, SPS Requirements and Labelling

Customs Procedures

To deal with the local bureaucratic procedures, foreign companies are advised to appoint agents or brokers, preferably former customs agents who can help you keep track of market regulations.35 During customs procedures, the declaration person (shippers, import representatives, or customs brokers) should perform the following basic steps:

1 Fill in and submit the customs declaration:

The customs declaration is made in prescribed e-customs form From May 4/2014, the customs authorities have begun applying new Vietnam Automated Cargo Clearance and

Port Consolidated System (VNACCS) and declaration forms also vary widely

2 Ramification results

After obtaining the results from the system, goods can be classified as ‘green’, ‘yellow’,

or ‘red.’ The next step will be to go through import treatments which have three types:

Green Lane

Categorized into conditional and unconditional:

Unconditional Green: in theory, you just down load ports, without having to do anything further

Conditional Green: must present additional supporting documents such as certificate of origin (C/O), quality control certificates (e.g phytosanitary), tax bill You must go to the customs department to carry out the procedures

Yellow Lane

You must present the dossiers with the following documents:

 Customs declaration

 Commercial invoice

 Other documents: C/O, quality control certificates

 The procedures are somewhat like conditional green lane described above

Red Lane

This lane is to check the actual goods after checking paper records This is the highest level of inspection, it involves more procedures and is more costly, time-consuming and effort intensive for both shippers and customs

First of all, you still have to have the record as required in Yellow Lane above After receiving approved customs records, the customs officials will continue to inspect the goods You must sign up to inspect the goods, go to the port to bring your goods into the inspection area, then contact customs officials to carry out the inspection

There are two forms: inspection by scanners, and manual inspection After the inspection is complete, the declaration procedure is finished

35 “Vietnam Customs” available at

http://www.customs.gov.vn/Lists/HaiQuanVietNam/Details.aspx?ID=468#Cục_Hải_quan_Hà_Nội=

3 Payment of taxes

Exporters are required to pay the necessary taxes for importing purposes The import tax rates vary depending on the type of product.36 For example, consumer products and luxury goods are highly taxed while machinery, equipment, and raw materials, tend to receive lower taxes and even tax exemptions Imports are subject to import tax, value-added tax (VAT) and, for certain goods, special consumption tax (SCT) VAT rates range from zero to ten percent, with ten percent being the most common rate SCT is levied on the production and importation of 11 categories of products and 6 types of services that are considered to be luxurious or non-essential, which includes alcohol/wine and beer.37The SCT rates for alcohol/wine and beer range from 25%-45%

4 General Inspection Procedure for Imported Products (Entry Point

Inspection/Testing)

You can use logistics services provided by local companies to take care of this step, please consult them in advance to prepare all necessary documents as this process can take up to 15 business days

Step 1: Before importing food products into Vietnam, the importer must obtain

Receipt(s) of Announcement on the Conformity to Technical Regulations and/or Announcement on the Conformity with the Food and Safety Regulations

Step 2: At least 24 hours prior to the arrival of the consignment, the importer

must register for food safety inspection with the competent authority Imported food products are only permitted to be transported to warehouses for preservation and pending customs clearance after the importer registers for food safety inspection Customs clearance will only be effective once the Notice of Satisfaction of Import Requirements is granted Together with food safety state inspection, products of animal/plant origin will be subject to animal quarantine or plant quarantine formality

Food quality and safety control examinations for goods using Harmonized System codes

(HS) are based on Vietnamese Standards (TCVN, Tieu Chuan Viet Nam) and

Technical Standards In case there is no Vietnamese reference, CODEX standards are

applied The entry point inspection entities are technically referred to as the State

Testing Agencies or the State Controlled Agency (STA or SCA) which carries out

inspection and clearance related to quality control on behalf of all Government Ministries The STA or SCA normally concentrate on the Maximum Residue Limit (MRLs) for their testing

Imports of foods originating from animal, plants, and marine sources must be inspected for sanitary and phytosanitary standards by competent quarantine agencies under the Ministry of Agriculture and Rural Development (MARD) At the wholesale/retail distribution level, several city and provincial government agencies are involved in monitoring the quality and safety of food products, including offices of the Ministry of Health, the Department of Animal Health, the Ministry of Industry and Trade, and the Police Force

The General Department of Customs also inspects goods to determine and collect import duties and assess violations of compliance with required Customs formalities on behalf of all concerned agencies (Ministry of Finance, Ministry of Industry and Trade, Ministry of Health, Ministry of Agriculture, etc.)

Location of Inspection

Entry-point inspections by STAs and Customs inspections may take place at a seaport, river port, airport or even at a public warehouse or importer’s warehouse - if it is certified and approved by STAs and Customs If the importing company would like to have cargo inspected in its warehouse, the company must submit a request to the Customs authorities and STAs for approval

For imports of meat and dairy products, locations of inspection must be at entry-point destinations (seaport, river port, and airport) or at STA/Customs-certified warehouses Entry-point inspections at importer's warehouses are no longer accepted

Import Duties & Fees

The total cost of import duties and inspection fees levied is calculated by the General Customs Department and the STA Vietnam is now working to implement GATT Article 7 and therefore generally uses transaction value for import duty calculations with only a few exceptions On January 21, 2015, Vietnam’s Government issued Decree 8/2015/ND-

CP to supersede the Decree 40/2007/ND-CP issued on March 16, 2007, on “regulation on the calculation of customs value for imported/exported goods.” The new Decree took effect on March 15, 2015 As stated in Article 20 of the Decree, the customs value for the calculation of import taxes is the total cost that the importer has to actually pay for the shipment at the first entry point of destination, with reference to Common Trade and Customs Convention and/or any other International Commitment that Vietnam has signed

The first entry point of destination (FEPD) is defined as follows:

 By ship or airplane: the FEPD is the unload port or the airport stated in the

invoice

 By train: the FEPD is the international station at the border gate

 By land and waterway transport: the FEPD is the border gate where the goods

firstly come to Vietnam

Inspection fees are calculated based on the total retail value of the cargo inspected The fee for food quality inspection is 0.1% of the retail value of the goods, but the total amount cannot be less than VND 300,000

Customs has developed a specific procedure that it believes combats fraud Each year it issues an import value database, based on a database of usual and historical import prices that it maintains If enterprises declare prices lower than the reference price, Customs consults with the firm After consultation, if an indication of trade fraud is found, the case file is forwarded for further investigation as per regulations Within 15 days from the date of applying for customs clearance of the case, the Customs office must inform the importer of the determined customs value for import duty

Document Package:

When importing, all necessary documents must be compiled into one dossier and presented with a Vietnamese-language translation of the sales and purchase contracts The necessary documents include:

 Customs declaration application / Registration for inspection form

 Copy of the trade contract or letter of credit (L/C)

 Bill of Lading

 Invoice

 Packing List

 Certificate of Origin (must be original)

 Documents certifying the safety and quality of the foods (Export Certificates)

 Certificate of free sales

*Note: Additional documents may be required, based on the nature of the shipment

Food Standards and Regulations

It is a real challenge for any F&B exporter to fully understand the complexity caused by overlapping and frequently-changed regulations on food standards and safety in Vietnam This is one of MOH’s legal circulars implementing the Vietnam Government’s Decree 38/2012/ND-CP implementing the Vietnam Food Safety Law The table below outlines the responsibilities of MARD, MOH, and MOIT

Responsibilities for Management of the Sector:

Managing food safety during production, primary processing, processing, preservation, transportation, export, import and trading of food additives,

substances assisting food processing, bottled water, mineral water, functional food and other food in accordance with the provisions of the Government

MOH is responsible for regulating most pre-packed and processed food products

Responsibilities for Management of the Sector:

Managing food safety during production, collection, slaughtering, primarily processing, processing, preservation, transportation, export, import and trading of cereals, meat and meat products, aquaculture and aquatic products, vegetables, bulbs, fruits, eggs and egg products, fresh milk used as an input, bee’s honey, and honey products, genetically modified foods, salt, and agricultural foods in accordance with the provisions of the Government

Ministry of Industry

and Trade (MOIT) General Responsibilities: Presiding over the formulation, promulgation of policies, master plan, and

regulations on food safety within the sector

Responsibilities for Management of the Sector:

Managing food safety during production, collection, slaughtering, primary processing, processing, preservation, transportation, export, import and trading of alcohol, beer, beverages, processed milk, vegetable oil, products used as materials for

production of powder, starch, and other food in accordance with the provisions of the Government

Table 3 Responsibilities of Ministerial Bodies in Food Standards and Regulations 38

*Note: Food Quality/Standards Registration locally produced and imported foodstuffs

must obtain a Food Quality/Standards Registration Certificate (RC) The Vietnam Food

Administration (VFA) of the Ministry of Health (MOH) is responsible for issuing

these certificates for imported foods The Ministry of Health imposes excessive documentation requirements with respect to imported food products Importers are required to apply for registration for each food item imported The process requires a certificate of analysis (CA) so detailed that some companies may feel like it violates their confidentiality

SPS Requirements in Vietnam

Phytosanitary and Sanitary Inspection & Required Export Certificates

Phytosanitary and sanitary health inspections for imports of animals and animal products (including dairy products), plants and plant products, and edible fishery products must

be done before customs clearance The Ministry of Agriculture and Rural Development’s Plant Protection Department (PPD) and Department of Animal Health (DAH) handle all sanitary and phytosanitary inspections for these products

Importers of food and agricultural products have to provide Vietnamese authorities with

a number of supporting documents39 (See SPS Table below) Depending on the product, these may include a certificate of free sale (CFS) (Prime Minister's Decision No 10/2010/QD/TTg), from the competent authorities of the exporting country, stating that the product is produced and freely sold in the country of origin The list of agricultural goods to which this requirement applies is part of Circular No 63/2010/TT-BNNPTNT from the Ministry of Agriculture and Rural Development The products affected are mostly non-food agriculture and fishery products but all products containing genetically modified materials, products that were irradiated, and products that were produced by new technologies require a CFS when imported to Vietnam

Several WTO Members have used the SPS Committee on various occasions to raise a specific concern with Vietnam about its ban on imports of offal products as from 7 July

39 “Vietnam” available at

https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=120527,118699&CurrentCatalogueIdIndex=0&FullTextHash

Sanitary and Phytosanitary Inspection and Export Certificates

Agency

HACCP or equivalent Food Safety and Hygiene MOH/VFA Certificate of analysis(

test results) Food Quality and Standards MOH/VFA

HACCP or equivalent

Food Safety and Hygiene MOH/VFA Certificate of analysis Food Quality and Standards MOH/VFA Results of clinical test Food supplemental value

functioned to improve human health

MOH/VFA

Special foods/Nutritious foods for infants Certificate of GMP or

HACCP or equivalent Food Safety and Hygiene MOH/VFA Certificate of analysis(

test results) Food Quality and Standards MOH/VFA

Special Foods/ GM Foods and irradiated foods Certificate of GMP or

HACCP or equivalent Food Safety, Quality and Standards MOH/VFA Certificate of analysis(

test results)

Food Safety and Hygiene MOH/VFA Certificate of free sale Food Quality and Standards MOH/VFA

HACCP or equivalent Food Safety and Quality MARD Certificate of free sale Food Safety and Hygiene MOH/VFA Certificate of analysis(

test results) Food Safety and Hygiene MOH/VFA

GMP or equivalent

Food Quality and Standards MOH/VFA Certificate of free sale Product Quality and Safety MARD/DLP Test results Product Quality, Safety and

Hygiene

MARD

processing Certificate of free sale Product Quality Standards MARD/PPD

( Plant Genetics including seeds, fruit, vegetable, grain,oilseeds, forest products, etc.)

Processed plant products

requirements depending

on the product and place

or origin

and Human Health Protection MARD/DAH

Animals and animal products( except animal

genetics, meat and poultry products) Health Certificate Animal Health Protection and Human Health Protection MARD/DAH

GMP or equivalent Food Safety and Hygiene MARD/DAH Health Certificate Animal Health Protection and

Human Health Protection MOH/VFA,MARD/DHA

DAH,MOH/VFA Certificate of analysis(

test results) Food Safety, Quality and Standards MOH/VFA Health Certificate Animal Health Protection MARD/DAH Certificate of inspection

of export animals Animal Health Protection MARD/DAH Animal pedigree

Hygiene

MARD/DAH

Swine offal products( for heart, liver and kidney

Aquatic animal products except live aquatic

equal document Aqua Health Protection MARD/DAH Health Certificate

Table 4 Sanitary and Phytosanitary Inspection and Export Certificates

Note: MoH - Ministry of Health, VFA - Vietnam Food Administration, MARD - Ministry of Agriculture and Rural Development, DLP - Department of Livestock Production, PPD - Plant Protection Department, DAH - Department of Animal Health, NAFIQAD - National Agro Forestry Fisheries Quality Assurance

Source: U.S Department of Agriculture, Foreign Agricultural Service (2011), Vietnam Food and Agricultural Import Regulations and Standards -

Certification, 2011 FAIRS Export Certificate Report, GAIN Report Number VM1052, 18 July

Labelling

Vietnamese law imposes strict requirements on the labelling of goods, including specific requirements on labelling timeline for use of prepackaged food and special provisions for functional food, food additives, irradiated food, and genetically modified food.40 These regulations apply to goods that are produced in Vietnam and those that are imported into Vietnam for consumption in the Vietnamese market

Labelling language must be in Vietnamese and cover all mandatory contents Depending

on the requirements of each type of food, the contents written in a foreign language can

be added but they must be the same with the Vietnamese ones and their font size is not larger than the relevant ones in Vietnamese

The mandatory labelling contents include:

 product name;

 composition;

 product weight;

 production date;

 timeline for use;

 direction for use and storage instruction;

 name of the person or the organization responsible for the goods;

 origin;

 number of receipts of conformity statement or certificate in accordance with the provisions of food safety; and

 recommendations or warning on food safety

Depending on the category of products, the timeline for use shall be recorded with the phrase:

 "hạn sử dụng" [expiry date],

 "sử dụng đến ngày" [use until date] or

 "sử dụng tốt nhất trước ngày" [best used before date]

Food imported for consumption and circulation in the Vietnamese market must be

labelled in either of the following ways:

1) Additional labels (stickers) which include the compulsory information in Vietnamese and are attached to the original labels These additional labels must be attached on the product or on the commercial package of the product and not obscure the label contents The content on the additional label must not misrepresent the content of the product label; or

2) Labelling in Vietnamese including the full mandatory labelling contents

Additional labels are exempted for imported food samples for testing or research purpose; food for display at exhibition, shows; and raw materials, food additives, food processing aids, and food packaging containers imported for internal production, not for selling in the market

40 “Vietnam: Food and Agricultural Import Regulations and Standards-Narrative” available at

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Hanoi_Vietnam_10-27-2015.pdf

For functional food, food additives, irradiated food, and genetically modified food, apart from the mandatory labelling contents, the following provisions must also be

included on the label:

1) For functional food, the phrase "thực phẩm chức năng" [functional food] must

be recorded and it is not permitted to express in any form that its effects replace medicine;

2) For food additives, the phrase "phụ gia thực phẩm" [food additives] and other information on the scope of use, doses, and use methods must be recorded; 3) For irradiated food, the phrase "thực phẩm đã qua chiếu xạ" [irradiated food] must be recorded; and

4) For genetically-modified food, the phrase “thực phẩm biến đổi gen” [genetically modified food] must be recorded

Packaging

Pursuant to the Law and Food Safety and Law of Standard and Technical Regulation, the Ministry of Health issued three national technical regulations on food safety and hygiene for packages, containers and equipment directly in contact with food as follows41:

 QCVN 12-1:2011/BYT on food safety and hygiene for synthetic resin packages,

containers and equipment in direct contact with food

 QCVN 12-2:2011/BYT on food safety and hygiene for rubber packages

containers and equipment in direct contact with food

 QCVN 12-3:2011/BYT on food safety and hygiene for metallic packages

containers and equipment in direct contact with food

According to the Law on Food Safety, food packages, containers and equipment in direct contact with food must register an Announcement of Conformity with technical regulations with Ministry of Health before being circulated on the market Decree 38/2012 and Circular 19/2012/TT-BYT dated November 9, 2012 providing guidelines on the Announcement on Conformity with Technical Regulations and Food Safety

Regulations stipulate in detail the registration procedures of the Announcement of Technical Regulation Conformity for food as well as food packages, containers and equipment in direct contact with food

41 “Vietnam: Food and Agricultural Import Regulations and Standards-Narrative” available at

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20Narrative_Hanoi_Vietnam_10-27-2015.pdf

2.6 The Status of Geographical Indications (GIs) and Intellectual

Property (IP) Protection

Vietnam became the WTO's 150th Member on 11 January 2007 From the date of its accession to the WTO, Vietnam agreed to comply with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights without recourse to any transitional period It is also a member of the World Intellectual Property Organization (21 July 1976) and is a signatory to the Paris Convention (2 July 1976)

The Civil Code of 1995 (revised in 2005 by Law No 33/2005/QH11) is the basis on which the whole universe of IPRs is regulated by IP legislation in Vietnam42 The Law on Intellectual Property (Law No 50/2005/QH11 of 29 November 2005) was amended and supplemented in 2009 (Law No 36/2009/QH12) This Law covers comprehensively the full range of full IPRs Implementing provisions are generally regulated by decrees and circulars

Definitions of GIs in Vietnam

GIs have been recognized in Vietnam since the promulgation of the updated IP laws in

200643 They are defined in Vietnamese law as follows:

A geographical indication means a sign which identifies a product as originating from a specific region, locality, territory or country’ (Article 4 of the IP Law 2005, Paragraph 22)

GIs include the geographical name and the signs, symbols or images associated with it The following subject matter cannot be protected as a GI however:

 Names or indications which have become generic names of goods in Vietnam;

 GIs of foreign countries where they are no longer protected or no longer used;

 GIs identical or similar to an existing protected mark, where the use of such a GI

is likely to cause confusion as to the origin of the products; and

 GIs which mislead consumers as to the true geographical origin of products bearing such GIs

Protection

Vietnam's Law on Intellectual Property provides protection of GIs, including appellations

of origin for all products, through registration at the NOIP Once registered, the protection has an indefinite duration from the date of grant of the certificate by the National Office of Intellectual Property The concept and the protection requirements of a

GI in Vietnam's legislation (Articles 4 and 79 of the IP Law) correspond to Article 22.1 of the TRIPS Agreement, and additional protection for GIs for wines and spirits is provided through Article 129.3 of the Law

From 2001 to 2012, 62 applications were filed for the protection of GIs, mainly for agricultural products, foodstuff, and handicraft Applications for GIs are mainly presented

http://www.conventuslaw.com/report/south-by Vietnamese local authorities Of the 34 GI certificates issued during the same period,

3 (out of 5 applications) concern foreign GIs.44

In 2014, NOIP granted 6 registrations of geographical indications for reputed and unique products, including 1 foreign GI, bringing the total number of GIs protected in Vietnam

up to 46 Among these, 42 were Vietnamese GIs.45 The table shows the number of local and foreign applications filed with the NOIP and certificates granted from 2001 to 2014

Geographical Indications Applications Filed with NOIP and Certificates Granted from 2001 to 2014

Table 5 Geographical Indications Applications Filed with NOIP and Certificates Granted from 2001

to 2014

Source: NOIP Vietnam: “Intellectual Property Activities Annual Report 2014”

Of the four foreign certificates that have been issued by NOIP, two are for products from the EU The first product is Cognac from France (Registration No 00003) and Scotch Whiskey from Scotland (Registration No 00023) The EU-Vietnam FTA also creates extensive provisions on the protection of European GIs in Vietnam.46 For example, Champagne will be fully protected after a transition period of 10 years, during which all uses incompatible with the GI protection, including translations and transliterations in Vietnamese script will be phased out Many other EU GIs will be automatically protected from entry into force of the FTA

46 “Guide to the EU-Vietnam Free Trade Agreement” available at

http://eeas.europa.eu/delegations/vietnam/documents/eu_vietnam/evfta_guide.pdf

Enforcement

Should your GI be infringed in Vietnam, there are three main avenues of enforcement which can be pursued; administrative actions, civil litigation, and criminal prosecution.47This being said however, private mediation via legal professionals is often more effective and should be considered as a viable first action in the event of an infringement

on-going IPR infringement

Administrative actions involve different government bodies, depending on the nature of the infringement, if the correct enforcement bodies are contacted and involved, they are usually quickly able to assess the situation and issue appropriate penalties These include cease and desist orders, revocation of business licenses, monetary fines, and/or the confiscation and destruction of infringing goods These penalties may not be as severe as those available through civil litigation or criminal prosecution, however they do offer a practical, realistic chance of stopping infringers quickly, and in some cases

obtaining damages

Civil litigation

Civil litigation is usually only used in the event of larger scale infringements and very few cases are brought before Vietnamese civil courts This is partially due to the lack of proper IP training and human resources within the judicial system, resulting in somewhat unpredictable case outcomes Vietnamese authorities are working to improve the civil system however, working in cooperation with international organizations and

government agencies

In civil actions, right holders can request provisional measures such as preliminary injunctions, as well as claim actual damages or loss of earnings Where actual loss cannot be determined however, the maximum award is currently set at approximately

18,000€

Criminal prosecution

As with civil actions, criminal prosecutions are relatively rare in Vietnam, however they

also provide for the harshest penalties for infringers

For GI infringement, criminal charges may be brought against infringers for the reproduction or distribution of work to the public which is both intentional, and equivalent to a ‘commercial scale’ The term ‘commercial scale’ has yet to be officially defined in law however and there is not yet sufficient case law to give an accurate

estimate

Criminal cases usually take around 12 months, with a further 12-month appeal proceeding Penalties for copyright infringement include a monetary fine of up to 38,000€ and imprisonment for up to three years As such, favorable rulings can provide

a valuable deterrent to potential future infringers

47 “Geographical Indications in Vietnam” available at east-asia-ipr-basics-series-geographical/#sthash.WIsNBOTe.dpuf

http://www.conventuslaw.com/report/south-However, criminal proceedings for GI infringement will only be actioned on the request

of the ‘victim’ as defined by Vietnamese law As ‘victims’ in Vietnamese law, for the purposes of legal proceedings, must be individuals, company owned marks cannot be defended in the criminal courts As such, it is unlikely that SMEs will be able to make use

of the criminal court system for the protection of GIs unless an individual GI producer can be presented as the plaintiff

Foreign individuals not permanently residing in Vietnam, foreign organizations and individuals not having a production or trading establishment in Vietnam may file applications for a GI registration through a lawful representative in Vietnam

The GI application shall consist of the following documents:48

a) A request made in prescribed form (as prescribed in the Circular No 01/2007/TT-BKHCN);

b) Documents, samples, information identifying the GI as provided for in Articles 106 of the IP Law 2005 of Vietnam (e.g a description of particular characteristics and quality of products bearing the geographical indication and a map of the geographical area subject to the geographical indication, …);

c) Power of attorneys, if the application is filed through a representative; d) Documents evidencing the right to registration, if acquired by the applicant from another person;

e) Documents evidencing the priority right, if claimed;

f) Receipt of fees and charges

All documents of the application shall be in Vietnamese, except for the documents mentioned at point c, d, e and other documents supporting the applications, which can

be made in another language but shall be translated into Vietnamese at the request of NOIP

Upon receipt of an application, the NOIP shall check the application’s documents before deciding whether or not to receive the application If the application contains at least the documents specified at point a, b and f above, it will be accepted, otherwise, it will be rejected

Documents, samples and information identifying a geographical indication (as outlined in point (c) above) registered for protection in a geographical indication application include:

48 “Application Process” available at

http://www.noip.gov.vn/web/noip/home/en?proxyUrl=/noip/cms_en.nsf/(agntDisplayContent)?OpenAgent&UNID=C982CD420D1471284725767F003844E9