CHAPTER 2: SITUATION OF CROSS-BORDER E-COMMERCE
2.2 EVALUATE THE CROSS-BORDER E-COMMERCE PROMTION IN
Cross-border e-commerce has appeared and developed in Vietnam since about the 2000s. Over the past two decades, Vietnam has had activities and directions to adapt to this new business field and expand the market and international cooperation. The cross-border e-commerce promotion activities of Vietnam are evaluated based on the following criteria: Strengths, weaknesses, opportunities, challenges.
2.2.1 Strength
Firstly, Vietnam's information technology infrastructure has developed in recent years. The Vietnamese government has focused on information technology in e- commerce management by improving the quality of the internet system and building an online administrative system. Statistics of Ookla (2020) show that the broadband internet in Vietnam has reached a speed of 47.66 Mb/s, ranked 59 in the world. Besides, Vietnamese businesses regularly update the development trends, applying information technology in businesses. Almost all Vietnamese businesses use electronic devices with network connections to transact with partners, use other online platforms such as websites, e-mail, and online public services to connect to customers. That is one of the strengths that the Vietnamese government and businesses need to promote in the future.
Secondly, Vietnamese products are gaining popularity in the international market.
In 2019, Vietnam maintained high import-export growth momentum, export-import turnover exceeded 500 billion USD. Through e-commerce platforms, Vietnamese products are highly appreciated. Amazon's representative commented that Vietnam has great potential in accessing international markets, especially the United States when the rate of exports to the US market through e-commerce platforms increased by 40.2%
(2019). That is data showing the development potential of cross-border e-commerce in
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Vietnam. The Amazon representative identified favored Vietnamese products on the international e-commerce platform as Textiles and garments, furniture, coffee, spices, handicrafts, and home appliances. Regarding the textile and garment industry, Vietnam is the world's leading exporter of them, in which clothing is the most potential item.
Vietnam's textile and garment products are cheaper than other suppliers in the market, and this is a compact product that optimizes transportation costs. According to Statista (2019), Vietnam is the fourth largest exporter of clothing, accounting for 6.2% of the world's clothing export turnover. Wooden furniture also brings a lot of value to Vietnam.
In 2019, the export value of goods to the US market accounted for 50% of Vietnam's global export value. It can be seen that this product is prominent in the US. For coffee, Vietnam has the advantage of being the country that grows the world's two best quality coffees, Robusta and Arabica. Coffee is also an agricultural product, so it is easy to preserve and limit the loss of quality. According to Statista, in 2020, Vietnam exported 2.3 million tons of coffee to foreign markets, ranking 2nd global in coffee exports. That is also the commodity sold on the Amazon e-commerce board. A representative from Amazon FBA Freedom said that to bring Vietnamese products to global customers, sellers need to optimize products, add product value, packaging quality and focus on customer experience. Vietnam has many imperative products to export so Vietnamese sellers need to improve the value of their products, not compete with low prices.
2.2.2 Weakness
Cross-border e-commerce promotion activities brought Vietnam many opportunities and achievements. However, there are several limitations that Vietnam has to face in that promotion.
Firstly, the quality of human resources is not high. As analyzed, to perfect e- commerce promotion, the e-commerce industry in general and Vietnamese e-commerce businesses need to choose high-quality human resources. According to the survey of VECOM (2019), the human resources in this field are weak in both quantity and quality:
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Professional knowledge and foreign language skills are limited. This factor has a great influence on the cross-border e-commerce promotion of businesses.
Secondly, Vietnamese businesses are not ready to make great investments in cross-border e-commerce. Although the number of businesses establishing websites to sell or participate in cross-border e-commerce has increased, most businesses website only approach the information of partners, e-commerce skills of businesses are still weak (Le Hong Nhung, 2019). According to the survey of enterprises participating in e-commerce activities of VECOM in 2020, out of nearly 5,000 responding businesses, only 49% of enterprises have websites for e-commerce, 11% of enterprises participate in trading floors. However, the proportion of enterprises signing contracts through exchanges is small. 51% of these businesses do not know how to use their websites, 35% replied that the online service system works unstable. In addition to the above- mentioned issues, the number of Vietnamese enterprises having their websites is still not much.
Thirdly, the logistics system is inefficient. Import-export enterprises face difficulties in the delivery of goods. In addition, the coordination between import-export businesses and logistics service providers is still not high.
Lastly, the payments system in cross-border e-commerce transactions is facing many difficulties. The reason is the use of international credit and debit cards from banking system or e-wallet applications are not popular. For Vietnamese businesses selling through e-commerce platforms or websites, some limitations are customers do not have a payment system synchronous with the website or the website of the business does not support the payment process. That interferes with the buying process, causing anxiety for consumers when participating in cross-border e-commerce activities.
2.2.3 Opportunity
a) Opportunities from FTAs
Vietnam has 13 FTAs in effect and is currently negotiating 03 FTAs. Among them, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
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(CPTPP) is the first new-generation FTA that Vietnam has joined, followed by the Trade Agreement freedom from Vietnam - European Union (EVFTA). The participation in the FTAs has created motivation and brought many positive impacts to the national economy: The import-export market has been expanded and diversified; a more developed financial services market with the participation of many foreign investors;
Legal systems have also been improved to meet the requirements of integration and implementation of commitments in FTAs.
In all countries which Vietnam has signed a free trade agreement (FTA) has recorded outstanding growth. Export growth in many markets reached high value such as Exports to China reached $41.2 billion, up 16.6% compared to 2017; Export to the ASEAN market reached 24.74 billion USD, gain 13.9%; Exports to Japan reached
$18.85 billion, increased 11.8%, exports to South Korea reached $18.2 billion, increased 22.8%. Recognizing the importance of expanding international cooperation in promoting cross-border e-commerce, the government actively makes policies and strategies. The purposes are to promote good relationships in the world and give the necessary tasks to perform such as perfect the e-commerce platform for Made in Vietnam, expand export- import.
b) Vietnam signs agreements on cross-border e-commerce promotion
To build the cross-border e-commerce system, the Government has strategies to cooperate with potential partners of Vietnam. In 2019, Vietnam Trade Promotion Agency cooperated with Amazon Global Selling (AGS) to organize the "Cross-Border E-Commerce Conference" in Vietnam. AGS offers investment strategies assisting sellers in Vietnam to reach potential customers, boost exports through online channels. In addition, the Department of Trade Promotion signed an agreement with Amazon to support domestic businesses and sellers to boost their sales and export to international markets in 2020. According to the agreement, the Department of Trade Promotion and Amazon Global Selling will carry out the following cooperation programs: Exporting
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through e-commerce, develop Vietnamese brands on Amazon, train Vietnamese human resources in e-commerce.
In 2021, the Vietnam Trade Promotion Agency and Alibaba.com officially signed a Memorandum of Understanding giving commitments and technical assistance to trade promotion organizations and about 10,000 SMEs in Vietnam on digital transformation.
It is expected that by 2024, Alibaba.com will reach a total transaction value of more than USD 100 billion, support 10 million SMEs around the world, and more than 10,000 enterprises from Vietnam. These activities focus on helping Vietnamese businesses to do online business and reach customers globally, specifically in three main areas: faster participation in e-commerce platforms, especially Alibaba.com; Propose solutions to drive business growth; and appropriate services to help SMEs enhance online commerce.
c. Demand of international market for Vietnamese products
Vietnamese products exported to international markets receive positive feedback, especially commodities such as ceramics, furniture, coffee, and other potential export products. Although Vietnamese businesses face many difficulties when competing with international goods, this is a great opportunity to satisfy the foreign customer's demand.
2.2.4 Challenge
Firstly, the legal system has many shortcomings in management, causing difficulties in controlling commercial activities. Some typical cases mentioned by the Ministry of Industry and Trade are: Article 25.1 of Decree 52 defines e-commerce websites as websites established by traders, organizations, and individuals for their trade promotion. It can be considered that this is a new sales channel (on the internet) besides a traditional sales channel, not a new business. However, traders must take registration procedures before starting websites (submit the business registration, certificate of quality, etc.). This article prevents traders from doing business and promoting e- commerce.
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According to a survey conducted by the Department of E-Commerce and Digital Economy, most information on the e-commerce management portal is related to businesses that do not carry out administrative procedures (registration procedures, operation notification), accounting for approximately 78% of respondents. There has been no negative impact on the economy from enterprises that do not register their e- commerce websites. Thus, it can be considered that administrative procedures in the e- commerce field do not have management benefits, even becoming a barrier for traders when doing trade promotion activities.
Secondly, the impact of the Covid-19 pandemic. Although the Covid-19 epidemic has been controlled in Vietnam, many countries and major partners of Vietnam such as the EU, the United States, Japan, South Korea, the epidemic is still evolving. That has greatly affected the trade of goods and import-export turnover. Currently, several countries have reopened their borders but still restrict economic activities, import-export activities in particular. Therefore, many Vietnamese enterprises do not have new orders.
In addition, the progress of customs clearance is slow due to increased inspection and disease control at both the import and export ends, which has increased time and business costs. During the epidemic, exporting goods across the border took a long time, and increased logistics costs affecting the profits of businesses.
SUMMARY OF CHAPTER 2
In chapter 2, the research focuses on analyzing the current situation of e- commerce in Vietnam. The author gave the points related to the current situation such as the promotion activities of businesses, the direction of the Government. From the above analysis, the author assesses the strength, weakness, opportunity and challenges of Vietnam, building a premise for the recommendations and solutions in chapter 3.
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