HO CHI MINH — Unofficial, small trade border transactions continue to flourish in Vietnam’s rubber export to China although their number has fallen recently, industry insiders say.
Rubber demand and prices have increased in the first months of this year, and this has enabled Vietnamese enterprises to reduce their dependence on small-scale border transactions, said Dinh Van Tien, head of the Vietnam Rubber Group’s Import-Export department.
Many Chinese firms were also choosing to import from companies making high quality products, he added.
Large companies with modern technology typically export their products to the U.S, EU, Japan, India and South Korea, Tien said.
“Official export is the best way to ensure long-term business and limit risks in payment,” he said.
Tran Thi Thuy Hoa, general secretary of the Viet Nam Rubber Association told the media that rubber export to China through small trade has fallen of late, with many members announcing they are now able to officially export rubber to Chinese partners.
Last year, as many as 165 of a total of 208 companies engaged in exporting rubber to China were dependent on small trade.
“We are focusing our production on long-term contracts,” said Huynh Tan Sieu, head of Binh Long Rubber Limited Company’s planning and investment department.
He said administrative procedures with Chinese traders at the Luc Lam Border Gate were very simple, but the same could not be said of Chinese trade policy.
Chinese authorities apply a tax of 25% on official rubber imports but nothing for small trade transactions.
While Vietnamese enterprises would like to engage in bigger transactions, small trade was the preferred choice of Chinese enterprises, Sieu said.
“In fact, Chinese authorities can control this (informal trade) in a very short time. Then everything would become normal,” said Le Van Xuong, an official with the Binh Long Rubber Company.
The current situation offered no incentives for small companies to upgrade their technology because all their products can be sold through small trade,” he said.
Meanwhile, the General Customs Department reported that rubber exports to China in the first two months of the year declined 8.8 % compared to last December.
The department said it has recorded shipments of around 70,000 tonnes at US$ 2,746 per tonne.
China is the biggest importer of Vietnamese rubber importer, accounting for 62% of exports.