According to Professor Dr Bui Chi Buu, Director of the Southern Institute for Agricultural Science and Technique, the fact that Chinese businessmen have been scrambling for farm produce in Vietnam should not be seen as good news.
You may have heard that Chinese businessmen recently come directly to Vietnam to collect farm produce, while Vietnamese enterprises cannot collect materials for their production. What would you say about that?
It is obvious that China has a big policy on the issue. As far as I know, it may happen that China would buy a foreign group which is dominating the pork and animal feed market in Vietnam. China is also eyeing other farm produce companies as well.
In the relation with Vietnam, China is following an economic policy which is like the one they once did with Thailand and Malaysia. Collecting farm produce at high prices though cross border is a part of its policy. Chinese businessmen push the prices up and collect all the materials, and then export across the border. The noteworthy thing is that Chinese businessmen purchase and export farm produce, but they do not pay tax.
Do you mean that the massive farm produce collection would not be good for the national economy in the long term?
Yes, I do. This will bring harm, because Chinese businessmen would be able to control the farm produce prices in Vietnam. I have to remind you that Chinese businessmen only like purchasing products and exporting across the borders, while they do not want to sign protocols. As such, when troubles occur, it would be Vietnamese farmers, who suffer.
You may know that in the past, vegetables and fruits left unsold and piled up at the border gates. Chinese businessmen once came to Vietnam to collect buffalo’ toenails. As a result, just within a short time, the number of buffaloes in Vietnam decreased dramatically.
In the past, Chinese businessmen only purchased some kinds of products, but now they purchase everything. Is this because they have high demand?
You are not right. Chinese businessmen purchase farm produce selectively. They do not purchase everything. Chinese economy is growing very hot, at 8 percent per annum. Therefore, it seriously lacks materials, while Vietnam is a good market. However, as I said above, China has never signed protocols with Vietnam, while it only wants to made trade across the border.
Vietnamese enterprises cannot compete with Chinese businessmen in collecting materials. Do you think that this shows the weakness and shortcomings of Vietnamese enterprises?
I have to say that Chinese enterprises are very good at organizing their agent networks, while Vietnamese enterprises are still bad at this. However, there is a good thing here is that the competition of Chinese enterprises has forced Vietnamese businessmen to reconsider their business strategies.
What do you think are the factors that the State and Vietnamese enterprises should pay attention to when doing business with China?
In doing trade with Vietnam, China always has long term strategies, and it does not “live from hand to mouth” as many people think. Vietnam is now a member of the World Trade Organisation WTO, and it cannot prohibit Chinese businessmen to purchase Vietnamese products. The State should ask China to sign a protocol to commit long term farm produce collection plan. However, the negotiations have not succeeded in the last 15 years.
Vietnam still has not taken full advantage of WTO commitments
In the past, Vietnam once licensed enterprises to grow anise trees and build factories which process attar of star aniseed. After that, foreign enterprises jumped into the market and collected all the materials, thus forcing domestic factories to shut down. However, after that, foreign companies did not collect materials any more, thus making Vietnamese farmers suffer.
In long term, the Chinese scrambling for farm produce would bring many bad things. When the prices are good, they appear to scramble for materials. But when farmers want to sell, they disappear.
The State should give more support to agriculture. Vietnam’s WTO commitments allow the state to give 10 percent support to agriculture, while we have used 2-3 percent only. Besides, we do not have to open the agriculture sector fully. Foreign invested enterprises which have export licenses are not allowed to set up networks to collect farm produce directly from farmers.