Unleashing Vietnam – EU e-commerce potential

Unleashing Vietnam – EU e-commerce potential

While the European Union presents a vast cross-border e-commerce market, the participation of Vietnamese businesses exporting to Europe through international trading platforms remains significantly lower than in other markets.

E-commerce is reshaping global trade dynamics, especially post-COVID-19, according to a report released at a seminar called ‘E-commerce Trends in the World and Implications for EU-Vietnam Trade’ organised by the Vietnam Institute for Development Strategies and the Konrad-Adenauer-Stiftung Institute Vietnam (KAS) on Thursday.

While the global trade growth rate has been declining, averaging only 2-5 per cent annually in the past few years and even dropping by 1.3 per cent in 2023, e-commerce has experienced a rapid surge, with an average growth rate of around 20 per cent following the pandemic, according to the report.

Online retail sales now constitute 20 per cent of total global retail sales — up from 17 per cent in 2019 — and are projected to reach 24.5 per cent by 2025, with cross-border transactions contributing significantly to global e-commerce revenue (22 per cent).

The EU stands as the world’s third-largest e-commerce market, according to the report. The percentage of internet users in the EU engaging in online shopping has risen from 66 per cent in 2018 to 76 per cent in 2023.

After three years of the EU – Việt Nam Free Trade Agreement (EVFTA), trade between Việt Nam and the EU has seen notable progress. Export growth to the EU averaged 8.1 per cent from 2021 to 2023, while Vietnamese businesses are successfully venturing into e-commerce with the EU.

“The EU and Việt Nam have made significant strides in promoting bilateral trade through the EVFTA. E-commerce serves as a powerful tool to leverage this agreement, fostering increased trade and mutual benefits,” said Florian Feyerabend, KAS Resident Representative.

“We anticipate that new trade trends, particularly e-commerce, will further strengthen and accelerate trade relations in the near future,” he added.

The region offers diverse online platforms benefitting Vietnamese businesses, especially SMEs. Major EU e-commerce markets like Germany, France and Italy are witnessing a surge in cross-border online trade.

Yet, at present, the participation of businesses exporting to Europe via international trading platforms lags far behind other markets.

For instance, out of over 10,000 Vietnamese businesses using e-commerce platforms like Amazon for exports, a mere 10 per cent target the European market.

The main hurdle stems from the EU’s high demands regarding strict quality standards, environmental considerations and a more intricate purchasing culture, along with stringent legal barriers. Additionally, Việt Nam’s support policies for businesses remain ambiguous, the report showed.

To expand the presence of Vietnamese businesses in the EU e-commerce market, the report suggests the Government implement tailored incentives for cross-border e-commerce businesses on trading platforms while enhancing programmes to help businesses take advantage of the EVFTA through e-commerce, fostering connections between Vietnamese and European enterprises.

It is also necessary to establish comprehensive national standards for origin tracing systems, improve legal frameworks for source verification and boost cross-border trade activities, logistics operations and investments in cross-border logistics development.

Sita Zimpel, project director of ASEAN SME II at GIZ, said that Vietnamese enterprises looking to tap into the fast growing e-commerce market need to observe strict compliance requirements, particularly the emerging imperative of ethical business conduct.

“Transparency and traceability are key obligations for sellers, while platform responsibility, which includes countering illegal products also from abroad, is equally crucial,” she added. 

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