Share of total EU-Asean Trade in 2015. Vietnam following behind Singapore, Source: Bloomberg.com
Vietnam may continue to take market share of the European Union trade from other Southeast Asian countries this year. The country accounted for 19.1 percent of the $227 billion (201.4 billion euros) in total trade between the EU and ASEAN nations last year, an increase from 15.8 percent in 2014 and could increase again 2016.
The country’s market growth combined with the finalization of the free trade pact indicates a more dynamic trade relationship in the future, according to the EU.
Vietnam has been steadily growing since 2014 when it overtook other ASEAN countries as the United States’ biggest exporter leaving traditional manufacturing hubs behind.
Vietnam was also able to capitalize on shifting production patterns in Asia as labor costs in China rose.
The ability to capitalize production led to Samsung Electronics Co.’s investment, it now assembles and exports smartphones from Vietnam. Several Vietnamese supply chain companies have now joined forces with the Vietnamese arm of Samsung.
Although Singapore is still the EU’s biggest partner in Southeast Asia, it’s market share has dropped along with Thailand, Malaysia and Indonesia who lost market share to Vietnam. Vietnam’s makes a very appealing trade partner with the EU by exporting electronic products, coffee and clothes. It is now the second country in ASEAN after Singapore that the EU has signed a free trade pact with.
Vietnam’s rise as a key player in overseas trade
The EU has begun to target Vietnam and Singapore in a new business initiative aimed at giving European SMEs more exposure and opportunities in Southeast Asia. This means that countries such as Thailand and Indonesia risk being completely overtaken by Vietnam, as the country has managed to capitalize on many advantages. This will provide Vietnam with international growth potential, whether through trade or online.
As Thailand and Malaysia were enjoying its traditional manufacturing perks, Vietnam was struggling to catch up, but now it seems that the country is benefiting from slower initial growth. Samsung’s investment made a significant contribution, and now Vietnam is on track to becoming a key player in trade with the European Union.
A version of this appeared in Bloomberg Technology on June 16. Read the full article here.