I.

OVERVIEW OF PERFORMANCE OF INTERNATIONAL TRADE IN THE WORLD

AND ASIA PACIFIC

Definition of International trade

-The exchange of goods and services between countries giving rise to a world
economy, in which prices, or supply and demand, affect and are affected by
global events

-Two contrasting views: free trade and protectionism

+Free trade :the simpler of the two theories: a laissez-faire approach, with no

restrictions on trade

+Protectionism: regulation of international trade is important to ensure that

markets function properly

Impact of International trade

Effect on firm performance:

+Help firms’ diversity risk

+Increases a firm’s productivity

+Offer higher wages and benefits

+Issue of offshoring happening when production is relocated to countries

where labor is cheaper

Effect on economic growth:

+Full utilization of a country’s idle and under-employed resources

+A vehicle for the transmission of new ideas, new technology and new
managerial and organizational skills

+Stimulates and facilitates the flow of financial capital from developed to

developing countries

+An anti-monopoly weapon by foreign domestic producers to achieve greater

efficiency

Trends in International trade

Although increasing, trade in services accounts for a much lower share
(almost US$5 trillion)

A very large part of world trade is clustered around three regions: North
America, Europe and East Asia
 With around US$ 3 trillion traded, energy related goods (oil, gas, coal and
petroleum products) represent a very substantial share of world trade in
goods. Other significant sectors include chemicals, machineries,
communication equipment and motor vehicles.
Situation of international trade in Asia-Pacific

Merchandise trade in trouble

Trade in the Asia-Pacific region experienced a major slump in 2015

2015-2016 capped a five-year period in which the Asia-Pacific region’s trade

grew below the pre-crisis average

Trade in commercial services sliding downhill

The performance of the Asia-Pacific region’s commercial services sector,

following the global trend, dropped dramatically in 2015 compared with the
previous year, due to the global economic slowdown and prevailing economic
uncertainty

INTERNATIONAL TRADE SITUATION AND IMPLICATIONS IN VIETNAM

Foreign Trade Overview

-Vietnam eliminated many non-tariff barriers under the 2001 United States-
Vietnam Bilateral Trade Agreement (BTA)

-one of the Asian economies most open to international trade

-Vietnam is currently classified as the third largest rice exporter in the world

-The other exports mainly constitute textiles, clothing and footwear

products and crude oil, whereas imports are mainly made up of tool machinery,
refined oil and steel.
-The main export customers of Vietnam are the USA, Japan, the EU, Australia
and China
Export Potential in Vietnam

Vietnam, Vietnam mainly exported commodities such as raw materials, fuels,

agricultural, forest, aquatic products and other labor-intensive products while
importing mainly manufactured goods such as equipment and machinery,
intermediate input and materials for export processing, consumer goods, etc
Vietnam’s Strong Points and Weak Points in International Trade  
Country Strong Points Country Weak Points
The country's strong points are: The country's weak points are:
- Positive economic prospects in terms of - Weak investment and financial
growth, despite the global crisis; freedom;
- A young, cheap, rapidly growing and more - The lack of guarantees for
and more technologically qualified property rights;
manpower; - A high level of corruption (in
- A certain social-political stability; the legal system, as well as for
- A government committed to liberalizing the civil service).
economy and to introducing reforms based
on the free market.
Composition of Trade in Services in Vietnam

Transport is the most imported service in Vietnam that accounted for two-
third of the services imported in Vietnam

Travel, insurance and pension services  are the second and third imported
services in Vietnam
 Total exports growth in Vietnam

Source: ITC, calculations based on ITC’s Trade Competitiveness Map data

Export/Import turnover a measure of a total value of the garments
exported/import quarterly or annually

Calculation: M = P x Q ,

Growth in export turnover:

Calculation: ΔM = Mt - M0

Growth rate of export turnover:

Calculation: g (%) = ΔM / M0 x 100%

The larger the ΔM and g, the greater the change in the size of exports, proving
that countries are increasingly improving their export sales.

Marginal Export Growth in Vietnam

 From 2009 to 2013, Vietnam’s total export in value increased by 134.9%.

Trade Performance Index

fresh food: 25

mineral: 100

Electronic components, miscellaneous manufacturing, basic manufactures,

textiles, non-electronic machinery and wood products: >25
IT and consumable electronics, clothing, leather products <7

Sectoral diversification in products for Vietnam’s exports and imports

Sectoral diversification in products for Viet Nam's exports

IT & consumable electronic was the sector accounted for the greatest average
share in country’s exports with 23.2% in 2012-2016

Clothing came in second with 12.8%

Fresh food was the third largest average share with 11

Sectoral diversification in products for Viet Nam's imports

Electronic components was the sector accounted for the greatest average
share in country’s imports with 14% in 2012-2016

Chemical came in second with 13.5%

Basic manufactures was the third largest average share with 11.4%
Sectoral diversification in destination for Viet Nam's exports
Unclassified products was the sector accounted for the greatest average share
in country’s exports with 98.5% in 2012-2016.For which, Mexico, Japan,
Switzerland were the top importing countries. Electronic components came in
second with 26.8%, for which China, Japan, Malaysia, USA, Hongkong were
the top importing countries. IT & Consumable electronic was the third with
21.1%, for which China; Hongkong, Germany, USA, Korea were the top
importing countries.
Sectoral diversification in destination for Viet Nam's imports

IT & consumable was the sector accounted for the greatest average share in
country’s imports with 23.9% in 2012-2016. For which, China, Korea,
Honkong were the top supplying countries. Unclassified products came in
with 23.6%, for which Russian Federation, Japan, Singapore, USA, China were
the top supplying countries. Electronic components was the third largest with
18.9%, for which Korea, China, Japan were the top supplying countries
Case study 1: Vietnam’s Consumable Electronics
 The biggest export markets for Vietnamese electrical products in 2012 were
China, Hong Kong, Germany, 30.6% of total exports

MARKET STRUCTURE
 In the industry, electronic intergrated circuits and telephone sets both
make up of the most exported products to Viet Nam’s major export markets.
Intergrated circuits account for 37.98% of the total exports to China from 2008
to 2015, valuing 4.9 billion dollars. Exported telephone sets into US’ market make
up of 49.16%, 7.2 billion dollars worth.

Case Study 2: Vietnam’s International Trade Of Textile

Number of workers by gender through years

Unit: workers
Year 2010 2011 2012 2013 2014 Q2/ 2015
Total 1,629,55 1,651,39 1,793,40 1,848,87 1,999,05 3,833,589
6 4 9 5 1
Male 329,049 366,978 363,801 406,511 454,687 803,996
Female 1,300,507 1,284,415 1,429,608 1,442,364 1,544,36 3,029,593
4

The textile and apparel industry in Vietnam has been experiencing fast and
very sustainable growth in the last few years, and its role in the socio-economic
development has been of paramount importance in a developing country like
Vietnam.
In The International Market
The international market recognizes Vietnam’s dominance in exporting textile
and garment, now ranked among the top-five textile exporting countries, with
perhaps only China surpassing our net export of garment to the US
 Traditional export market includes the United State, EU member states, and
Japan, with the largest being the United State at 55% of all textile of garment
export from Vietnam, in 2014.

Vietnam Textile and Garment export structure by market in the first 8

months of 2014

The US Japan South Korea Germany Spain

The UK Canada China Netherlands Taiwan
 Free Trade Agreement is a very important factor for Vietnamese textile
success in the international market. Below is the export revenue recognized by
Vietnam’s textile industry (in billion USD), in total, and in the US, along with FTAs
we signed over the years.

INDUSTRY STRUCTURE
.The chain structure includes: Fiber (cotton, polyester, viscose), Yarn
(filament, staple yarn), Fabric (weaving/knitting, dyeing/finishing), and
Garment/Apparel (shirts, jackets, sportwear, etc).