[Newsletter | March 2021] – 10 Biggest Difficulties in Exporting to the US for Vietnamese SMEs (Part 1)

The US – the top economy in the world – is a fragrant cake for any international business leaders, including heads of Vietnamese Small-to-Medium-sized Enterprises (or SMEs). They tend to export local specialties which are unique to US customers or products at much lower prices compared to the US producers. However, competing in this well-developed market seems not easy at all when US trade policies are highly structured, and domestic incumbents dominate and occupy the market share. As a result, before entering the US market, Vietnamese SMEs should be aware of potential difficulties in order to prepare themselves well. Come with Noble Network to go through the 10 biggest difficulties in exporting to the US! 

1. US Protectionism 

US Protectionism is created through government policies designed to restrict international trade in ways that promote the domestic industries. There are several methods which can cause barriers for exporting to the USA under US Protectionism such as increasing tariffs on imported goods (higher prices), limited import quotas on an imported product, financial support to export and domestic manufacturing (promote local economies), restricted import licensing, etc. Protectionism policy has been supported by many US Presidents, including: George Washington, Thomas Jefferson, Henry Clay, Andrew Jackson, James Monroe, Abraham Lincoln, William McKinley, Theodore Roosevelt, and most recently Donald Trump. With “America First” policy, President Trump strongly enforced US Protectionism, creating a lot of pressure on international trade between the US and other countries. Although Vietnamese SME leaders cannot easily drive changes in US trade policies, they can greatly benefit from conducting detailed research on how policies are applied in their specific product area. Further, often the US government will grant restriction exceptions in specific situations. It is helpful to know how to discover these situations and to master the procedures for exploiting them. 

2. Insufficient or inadequate market research and analysis

Deeply understanding a market before entering it is an essential step but not everyone can do this well. There are two main sources of information for the researchers: primary and secondary. It takes a lot of time, money and effort to go to the US to conduct primary research about the market, competitors, suppliers, customers, investors, policies. Vietnamese SMEs can help reduce those costs through secondary sources thanks to taking advantage of the research or publications available on the internet about the US. However, secondary research is sometimes unreliable because the information may be out of date, or heavily influenced by opinions and agendas, and not based on the facts. As a result, to export to the US, the manufacturers should learn thoroughly about the market from trustworthy sources of information, credible experts, or local business leaders to limit the regretful losses.

3. Unfamiliar exporting procedures/paperwork 

One of the biggest difficulties to entering the US market for the Vietnamese SMEs is that they are unfamiliar with the exporting procedures and paperwork. For SMEs who are new to US markets and learning for the first time, it can be complex and confusing when buried in lots of information regarding Federal and State Laws legal documents and procedures. Furthermore, each industry requires different paperwork to legally enter the market. For instance, the fishery industry requests different documents compared to the tobacco industry. Moreover, because Vietnam has not joined the Apostille Convention or the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents, it is more complex to transfer commonly used legal documents back and forth between Vietnam and the US. Therefore, an experienced advisor plays an important role to help the Vietnamese SMEs negotiate these problems. 


See also  [Newsletter | March, 2021] - 10 Biggest Difficulties in Exporting to the US for Vietnamese SMEs (Part 2)

4. Meeting export product quality standards or specifications 

Even though price competition is a Vietnamese advantage, SMEs often encounter problems understanding, meeting and sustaining US quality requirements when first learning how to address US markets. Or sometimes, there are differences in US quality standards compared to those of other countries which require Vietnamese enterprises need to modify their supplies, equipment and procedures. To deal with this issue, the leaders should put more effort into investigating the desired specifications, and identify equipment, tooling and training investments before committing to producing products sold in the US. Continuous improvement and updating with the latest changes should be expected to be well-prepared for competition and to sustain all of the legal certificates for production, exporting and sales. For example, while fighting COVID-19, several US companies and institutions desperately sought our help during 2020 to source personal protective supplies from Vietnam. The volumes, prices, laws, and specifications for these products changed dramatically through the year. Manufacturers who were able to keep up and meet these changes were at capacity production levels the entire year.

5. Culture differences between the Vietnamese and the US

Culture shapes the image of a country and the people present it through their lifestyle. The differences in cultures between Vietnam and the US sometimes result in challenges for the business leaders of both countries. For instance, the US highly respects punctuality while it is quite flexible for the Vietnamese, coming late for several minutes is still acceptable. Or when the US considers eye contact as polite in communication, the Vietnamese are pretty shy to look directly at others for more than short moments. Another example is that explicit sentences are preferred by the American business leaders, meanwhile, the Vietnamese friends usually use implicit wording. If there is no research about the culture before, serious misunderstandings will surely happen during conversations. Accordingly, besides learning about the culture of foreign partners, Vietnamese and US business leaders need to sympathize and accept these differences in culture in order to maximize the value of relationships. Being a company composed of both Vietnamese and American experts, Noble Network is continuously learning to appreciate the differences between our respective cultural values. We also find great joy in sharing what we have learned with our Members and clients. 

(To be continued…)

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