Risks of Exporting to the Chinese Market

China, with a population of over 1.4 billion, has always been a potential export market for many countries, including Vietnam. However, exporting to China has challenges and risks. Below are some of the main risks enterprises need to pay attention to when exporting to the Chinese market.

Price competition: Challenges from cheap products between Southeast Asia countries

One of the biggest risks when exporting to China is fierce price competition compared to other Southeast Asian countries. These countries with the same climate as Vietnam such as Thailand, Cambodia, Philippines, Indonesia, etc. will have the same strengths in tropical fruits such as mango, plum, banana, dragon fruit, etc. The abundant supply of fruits from these countries creates competitive jobs in quality and price when countries in the Southeast Asian region sign the ACFTA Agreement with the same export support taxes.

To be more attractive than other Chinese importers, reasonable prices are also a plus. However, price competition is endless. Many costs are not reflected in the price, such as damaged shipping costs, additional taxes, etc, so this leads to the situation where exported goods are sent but the money collected does not cover the costs, or even errors.

Therefore, to solve this situation, Vietnamese businesses need to have a reasonable and flexible pricing strategy. Instead of focusing solely on low-price competition, businesses can enhance product value through factors such as quality, unique characteristics, food safety certification, or product sustainability.

Risks of tax and import policies

China's strict import regulations can directly affect the costs and competitiveness of exporting businesses. Businesses that are not yet able to control tax regulations, standards, and product quality are likely to encounter difficulties in customs clearance procedures, leading to a prolonged period, affecting both the business flow and the risk of damaged goods, with the value of each container increasing to billions of VND. In addition, Vietnamese businesses may face risks when handling the wrong flow and declaring it completely, which may result in an increased tax rate of up to 35% on revenue.

Problems with transferring and applying the chain

Another important risk when exporting to China is the transportation problem. Unreliable, small, or inexperienced transport units will be quoted low prices, but the total price is not low because they often do not guarantee service quality as well as on-time delivery, and may have to compensate partners. In addition, the damage to goods during operation, even the loss of goods, are also factors that affect the quality of service and profits of the enterprise.

To solve this problem, businesses need to choose a reputable, experienced operator with a wide network in China. At the same time, learning the skills to balance shipping routes and costs will help optimize logistics costs and minimize potential risks. In addition, businesses can also consider using cargo insurance services to protect their goods during transportation.

Exporting to China brings great opportunities but also has many formulas for errors and risks. Vietnamese businesses need to identify factors such as price competition, taxes, transportation, and legal issues to have appropriate strategies. Timely grasping changes in the main list, choosing reputable partners, and building reasonable pricing strategies will help businesses minimize risks and maximize opportunities in the Chinese market.