France, Vietnam Ministers Meet to Discuss Growing US$5.2 Billion in Two-way Trade

The long and storied history between Vietnam and France is well and truly in the past as these two nations talk about expanding on what is already billions of dollars in bilateral trade. Here are the details.

The year 2023 marks an important milestone in the history of Vietnam-France relations. It is the 50th anniversary of the signing of the Paris Agreement on ending the war and restoring peace in Vietnam. At the same time, it is also the anniversary of 50 years of diplomatic relations, and of 10 years since the signing of the Vietnam-France strategic partnership.

This makes the meeting of Minister of Industry and Trade, Nguyen Hong Dien, and Olivier Becht, the French Minister for Foreign Trade, on February 28, 2023 all the more important. In particular, the two nations- have pledged to further boost bilateral trade.

So what do the trade relations between the two countries look like now?

Trade relations between France and Vietnam

France was one of the first Western countries to support Vietnam’s reform process in the 1980s. Since then, the country has been among Vietnam’s key official development assistance providers.

In terms of investment activities, France is currently ranked third among European countries investing in Vietnam. Vietnam also ranks second among the countries receiving French overseas development assistance (ODA) in Asia.

The EVFTA is also helping to boost trade between France and Vietnam.

French investment in Vietnam

Total investment in Vietnam by France since 1993 is over US$18.4 billion. Recently, two-way trade turnover between Vietnam and France more than tripled from about US$1.6 billion in 2009 to US$5.3 billion in 2019.

There are more than 300 French enterprises operating in a range of industries and fields in Vietnam. At the same time, there are also pioneering Vietnamese enterprises that have been implementing investment and business activities in France.

In 2021, French enterprises had investment projects in 35 provinces and cities in Vietnam. In January 2023, France added two new projects with total registered capital of $US10.65 million – bringing the all-time total number of French FDI projects in Vietnam to 660, worth US$3.8 billion.

See also: Vietnam Starts New Year with US$1.6 Billion in FDI: MoPI

France’s exports to Vietnam

Vietnam’s consumer market is large with nearly 100 million people, rapidly rising incomes and purchasing power, as well as an appetite for high-ends goods. France produces many world-famous products and brands that Vietnamese consumers find highly appealing, including dairy products and cosmetics.

Pharmaceutical products

Vietnam has a growing demand for high-quality pharmaceutical products.

Meanwhile, France is home to some of the world’s leading pharmaceutical companies and has a strong reputation of producing high-quality and innovative drugs. Many of these pharmaceutical companies have established a presence in Vietnam, either through joint ventures, direct investments, or distribution deals. For example Sanofi, Servier, Ipsen, and Pierre Fabre.

The Vietnamese government has been actively promoting the development of the healthcare sector and use of foreign capital in healthcare infrastructure. This includes the expansion of health insurance coverage, the development of new hospitals and clinics, and the promotion of preventive care. This bodes well for French pharmaceutical companies.

See also: Vietnam FDI Tracker

Wood and wood products

France is known for producing high-quality wood furniture, flooring, and other decorative items. Moreover, French wood products are often admired for their unique designs and high level of craftsmanship. Vietnamese consumers appreciate the attention to detail and quality that goes into French wood products, making them highly sought after.

Additionally, France has a long tradition of sustainable forest management, which means that the wood used in its products is often sourced from well-managed forests. This is an important consideration for some Vietnamese consumers, who are increasingly concerned about the environmental impact of the products they purchase.

With the growing affluence of the Vietnamese middle class, there is a growing demand for high-quality wood products. French companies have been quick to respond to this demand, offering a range of high-quality wood products that cater to the needs of Vietnamese consumers.

Chemical products

French chemical companies offer a wide range of products that cater to different industries and applications. This makes them an attractive option for Vietnamese businesses looking for high-quality chemical products.

Moreover, French chemical companies are often at the forefront of technological developments in the industry. They invest heavily in research and development, which enables them to offer innovative and advanced products.

Furthermore, French chemical companies comply with stringent regulations and standards, both at the national and international levels. This is particularly important in industries such as pharmaceuticals and cosmetics, where product safety and quality are paramount.

Several famous French chemical brands have established a strong presence in Vietnam. These include: Air Liquide, Arkema, BASF, Total Energies, and Solvay.

France’s top 10 exports to Vietnam in 2022

Source: Vietnam General Department of Customs

Vietnam’s exports to France

Agriculture, aquaculture, textiles and garments, leather and footwear, wooden furniture, electronic components and consumer goods are Vietnam’s export strengths.

Telephones, mobile phones, and parts thereof

Vietnam has a low cost of production compared to many other countries, which makes it an attractive location for manufacturing electronic devices. This helps to keep the prices competitive, which is important in a highly competitive industry like mobile phones.

Apart from this, Vietnam has a skilled workforce in electronics manufacturing, which is crucial for producing high-quality mobile phones and components.

France is a growing market for mobile phones, and the demand for high-quality, affordable devices is increasing. Vietnamese companies are taking advantage of this trend by exporting their products to France.

Textiles and garments

Vietnam has made significant improvements in the quality of its textiles and garments over the years. Many Vietnamese manufacturers have invested in modern equipment and technology to produce high-quality products.

The French fashion industry is well-known for its style and elegance, and Vietnamese textiles and garments are well-suited to meet the needs of French consumers.

Footwear

Vietnamese footwear manufacturers produce a wide range of products, including casual and sports shoes, sandals, and boots. These are often produced for big brands based in France that choose to utilize Vietnam’s low-cost, skilled labor.

Vietnam’s top 10 exports to France in 2022

Source: Vietnam General Department of Customs

The future of trade between Vietnam and France

Most recently, the European Union-Vietnam Free Trade Agreement (EVFTA) which came into force in August of 2020, has been a huge driver of growth between France and Vietnam. This will continue as, in line with the tariff schedule outlined in the agreement, tariffs continue to fall.

Furthermore, to enhance cooperation between Vietnam and France, officials in Vietnam are urging France to ratify the Vietnam-EU Investment Protection Agreement (EVIPA).

The EVIPA is an agreement between the EU and Vietnam to protect investors and investments between the two and to ensure investors are treated fairly. Once ratified this should provide a welcome boost to cross border investment through safeguarding investors and their investments.

Two-way trade between France and Vietnam has been growing steadily over the years. With continued efforts to strengthen trade and economic cooperation, both countries are expected to see further prosperity and greater economic integration.

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