VCN – Exports from Vietnam to Canada have grown significantly for three consecutive years. Agricultural products continue to dominate the Canadian market in 2021 with cashew nuts, pepper, and shrimp taking up to 90%, 50% and 30% total share of the market, respectively.
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According to the Vietnam Trade Office in Canada, in 2021, despite challenges from the COVID-19 pandemic, Vietnam managed to reach US$5.3 billion in goods export to Canada, a 20.8% increase compared to last year, which was even higher than Canada’s total import growth (12.84%)
After Vietnam and Canada officially became members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the country witnessed three consecutive years of positive growth since 2019. All export sectors to Canada have risen considerably compared to 2020. Machinery and electric products remain the primary contributor to total exports with a value of over US$1.5 billion, an 8.9% increase. Shifting supply chains plus the impressive production capacity of Vietnamese enterprises has led to Canadian businesses becoming more and more interested in the industrial products in the country.
Textile, footwear, and handbag products have regained their growth momentum with a 16.6% increase to over US$1.4 billion. In general, the market share of the garment sector increased 17.7%, reaching over US$930 million. Wooden furniture exports also saw a 6.5% increase with US$234 million. Furniture products made in Vietnam can easily be found at large supermarket chains such as COSTCO, IKEA, LEON’S. This signifies a business joint-venture between the two countries in which Canada exports wood materials to Vietnam for manufacturing, while Vietnam finalizes and exports the finished products back to Canada.
Agricultural and aquatic products continue to dominate the Canadian market with cashew nuts accounting for 90% of the market, while shrimp and pepper account for 30% and 50%, respectively. Other fresh fruits exported to Canada, including grapefruit, dragon fruit, mango, rambutan, coconut, longan, lychee, reached up to US$8 million per year. Grapefruit and dragon fruit have great export potential thanks to their high quality, long-term preservation, and capability to travel long distances by sea.
Mr. Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Company stated that, from the perspective of seafood exporters, especially with shrimp products, it is crucial that Vietnamese businesses maintain their export flows to the US, Japan, and EU markets.
Additionally, businesses need to look into other potential markets such as Canada, China, Korea, depending on the current situation and developments, some markets might have bigger potential than others. Nevertheless, certain crucial markets are still putting up export barriers although the growth potential for Vietnamese shrimp businesses is apparent. Therefore, organizations need to be aware of this and plan their exports accordingly.
The Vietnam Trade Office in Canada also highlighted the shortage and delay of containers in recent years, which led to declines in agricultural products from Vietnam to Canada despite the large demand in the market. The shipping cost of a single container from Vietnam to Canada has risen from CAD 3,000 to CAD 25,000. The shipping time also increased from 25 days up to 45 days, even 90 days on some occasions. The cost of air transportation also went up to 9-12 CAD/kg, which caused difficulties for many importers.
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Vietnam is currently Canada’s largest trading partner in Southeast Asia. Nevertheless, Vietnamese products still have great export potential as the market share only makes up 1.7% of Canada’s total import value. The fact that the Canadian government continues to promote market diversification strategy while considering Vietnam an important trading partner in Asia has created many opportunities for Vietnamese businesses to approach this market.
By Thanh Nguyen/ Nhat Minh