Vietnamese seafood to China under pressure (VOV) - China has emerged as the fourth largest importer of Vietnamese seafood lagging behind the US, Japan and the EU, and it is predicted to be a major Vietnamese seafood consumer in the coming years.  However, economists warn Vietnamese businesses will find it more difficult to break into this volatile market as competitive pressure is intensifying. Pressure from China The Vietnam Association of Seafood Exporters and Producers (VASEP) reports China is a huge lucrative market for Vietnamese seafood for a number of reasons. It is close to the country which readily translates into lower transport costs. In addition, Vietnam can optionally transport products via land or sea routes on an economical and timely basis. Furthermore, administrative quality procedures are not as strictly enforced as in other markets, reducing unnecessary administrative and other burdensome costs associated with long delays in transport and endless haggling and over technical matters. Exports to China have surged sharply over the past 5 years, and shrimp exports have made a significant contribution to the common growth. The proportion of shrimp among total seafood exports to China rose from 13% in 2003 to 64% in 2011, 60% in 2012 and 66.6% in 2013. Despite the global shrinking market, exports of key products to China have grown and flourished over the years, with shrimp rising 38.2%, Tra fish 23%, and octopus 4%. China is the fourth largest consumer of shrimp and the fifth of octopus from Vietnam. China has recently introduced new regulations on protection of aquatic resources, but its seafood import-export scheme has not yet been completed. Vietnamese businesses say the primary difficulty in trading with China is in the negotiation stage as the Chinese often bargain a lot and the final price is often the same as the starting price without much dickering. China also strictly exercises tight control over the foreign currency in transactions so there are only a handful of companies allowed to process transactions with US dollars. In addition, China has not widely implemented the L/C payment method. Since 2012, China has required all foreign seafood businesses to register information with Chinese authorities if they want to penetrate this market. For instance, Vietnamese seafood businesses have to register information with the Certification and Accreditation Administration of China (CNCA). Declining market share According to VASEP, cumbersome customs procedures are the biggest obstacle to Vietnamese seafood businesses. Meanwhile, Chinese customs procedures at the border gates are often unpredictable. For instance, China is ready to impose 100% of import tariffs on goods shipped through the Beilun border gate, but cut in half the levels through waterway transport. Combating illegal trading poses yet another inherent risk facing Vietnamese businesses in the sector.  Retail traders often purchase unprocessed seafood products, especially shrimp and octopus, and transport them to China illegally, causing shortages of materials for domestic processors, negatively affecting contracts signed with partners. By doing so, it is difficult to control the level of antibiotic residue on shrimp and other seafood products, badly tarnishing the reputation of Vietnamese seafood and more importantly creating imbalance in the seafood sector’s export structure. China is seeking seafood suppliers to feed its population, creating plenty of opportunity for Vietnamese seafood producers. However, domestic businesses are advised to carefully study their partners if they want to increase their market share in China.  VOV