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Future Opportunities in

Vietnam’s Market for

Fish and Seafood

*Abbreviated

Prepared for:

The Embassy of Canada in Vietnam

&

Office of Southeast Asia Regional Agri‐Food Trade Commissioner

Agriculture and Agri‐Food Canada

Prepared by:

Stanton, Emms & Sia

80 Raffles Place, Level 36‐01

UOB Plaza 1,

Singapore 048624

Tel: +65 6334 7030

Fax: +65 6223 2010

Email: [email protected]

Website: http://stantonemmsandsia.foodandbeverage.biz

June 2010 (updated version)

This report contains market information collected by Stanton, Emms & Sia. The Government of Canada assumes no liability for the accuracy and reliability of the market information and

intelligence provided herein. *For the complete report, Canadians are invited to contact Ms. Dang Anh Thu at the Embassy of Canada in Vietnam : dang‐[email protected]

Future Opportunities in Vietnam’s Market for Fish and Seafood

1 Stanton, Emms & Sia (March 2010)

Addendum : Vietnam fish and seafood market update (11 June 2010)

Vietnam’s imports of fish and seafood grew to C$ 328.6 million in 2008, up by over 27% from

the figure of C$ 257.4 million in 2007. At the time of writing this report update in June 2010,

the import trade data for 2009 was not available.

Segment 2007 2008 % change Commentary

C$ ‘000 C$ ‘000

Fresh/chilled whole fish

3,066 7,679 151% Imports under this segment increased mainly due to growth in imports of Atlantic and other salmon for use by the higher end food service industry and, to a lesser extent, sale through higher end retail outlets.

Frozen whole fish

114,154 175,669 54% Imports under this segment increased mainly due to growth in imports of frozen salmon, tuna, and other whole frozen fish segments, mainly for use by the fish and seafood processing industry. Frozen salmon imports also increased due to increased demand for this product for repacking and sale through retail channels.

Fish fillets and meat

52,274 22,530 (57%) Imports of fish fillets and fish meat decreased because higher market prices for such products in 2008 caused users to switch to lower priced frozen whole fish rather than higher priced semi processed products. The market prices of semi processed products increased by between 30% and 50% in 2008.



Segment 2007 2008 % change Commentary

C$ ‘000 C$ ‘000

Dried, salted and smoked fish

2,163 4,555 111% Higher imports of dried fish from Asian countries are the main reason for the increase in imports under this segment.

Crustaceans

64,500 98,347 53% Imports under this segment rose due to higher imports of frozen crustacean (mainly crab) meat and shrimps and prawns for use by the fish and seafood processing industry.

Molluscs

21,207 19,831 (6.5%) Imports of molluscs declined due to a sizeable reduction in the import of frozen cuttlefish from Thailand for use by the fish and seafood processing industry.

As can be seen from the information in the table above, most of the changes in the imports of

fish and seafood in Vietnam between 2007 and 2008 are related to changes arising in the

supply of imported products for Vietnam’s fish and seafood processing industry. The only

exceptions to this trend appear to arise from higher demand for:

fresh/chilled salmon for use by higher end food service industry, largely as a result of an

increase in foreign visitor arrivals and increased business‐related entertainment; and,

frozen salmon for use by the food service industry (entertainment‐related) and packers who

have salmon cuts and heads in their private label range of retail packaged products (related

to an increase in the number of expatriates and higher incomes amongst the Vietnamese

middle income groups, especially in Ho Chi Minh City).



1. Introduction

This report for Canadian exporters is prepared by Stanton, Emms & Sia for the Embassy of

Canada in Vietnam and the ASEAN Agri‐Food Trade Commissioner, Agriculture and Agri‐Food

Canada.

The goals of this report are to provide the ASEAN based Agri‐Food Team of Trade

Commissioners and Canadian exporters with a first view into likely opportunities for Canadian

products in the Vietnam market, based on a review of the following matters:

the state of Vietnam’s domestic fishery industry;

development strategy for Vietnam’s fishery industry;

the fish and seafood processing industry and its activities;

Vietnam’s trade in, and consumption of, fish and seafood;

Vietnam’s imports of live, fresh/chilled and frozen fish and seafood;

market characteristics, including demand traits and the state of the distribution channels

for imported fish and seafood;

the regulatory environment for imported fish and seafood in overview;

the competitive state of the market and the involvement of Developed World suppliers;

and,

future best prospects and opportunities for Canadian exporters of fish and seafood.

The final trade data releases for imports into Vietnam in 2008 and 2009 were not yet officially

published at the date of this study, i.e. March 2010. For this reason, reference has been made

to exports to Vietnam in 2008.

It should also be noted that the official data may not reflect all imports from China because

trade sources comment that there is some grey trade between these two neighbouring

countries, which may involve China‐origin fish and seafood products.

2. Vietnam today and tomorrow

Vietnam has a population of around 86 million persons today, of which 33% officially reside in

the urban areas. Its population is growing at a relatively slow rate of around 1.2% per annum.

According to the government, there is now a growing trend towards migration from the rural

areas to the cities.



Vietnam’s economy has been one of the fastest growing in the world since 2000. Provisional

data for 2009 indicates that the economy grew at 5.3%, the lowest rate since 1999. In the

previous 5 years, the economy had been growing at rates in excess of 6% per annum (see Table

below).

Vietnam’s Economic Growth – 2004 to 2008

2004 2005 2006 2007 2008 % % % % %

7.8 8.4 8.2 8.5 6.2

Source: Asian Development Bank

According to the World Bank, its GDP per capita on a PPP (purchasing power parity basis) was

around US$ 2,700 in 2008.

Its GDP per capita on a nominal basis is reported at close to US$ 1,000. Despite its rapid

economic growth, these GDP figures place it in ASEAN’s group of lowest income countries.

Income disparities are very high between rich and poor and the urban and rural areas today.

Between 10% and 15% of its population now rank in its middle and upper income groups. The

main consumer markets for imported food and drinks are located in Ho Chi Minh City (Total

population: More than 10 million persons). In comparison, the capital city, Hanoi, currently has

a much weaker consumer market than this city.

While this is the case, there are now forecasts that put Hanoi’s economy in a catch‐up phase

with Ho Chi Minh City. This phase could see economic growth in the Greater Hanoi area

(Conurbation population: Around 10 million persons and increasing) ranging from between 9%

and 12% per annum over the next 3 years.

Tourism is also becoming much more important to the Vietnamese economy. This development

is underpinned by a more aggressive tourism development policy. This has recently been

updated and now targets attracting 12 million tourists per annum by 2015. Visitor arrivals in

2008 were reported at around 4.3 million.



Vietnam is now benchmarking its tourism development on the successful policies in Malaysia,

which now has tourist arrivals of over 20 million persons per annum.

Vietnam is forecast to be one of the fastest growing countries in the world over the next 3 to 5

years. Current forecasts indicate that the economy will likely grow at between 5% and 12% per

annum, depending on whether or not the global economy will crash again. The “less

aggressive” range of forecast growth rates are between 6% and 8% per annum, which are still

high.

The Asian Development Bank’s latest economic forecasts for Vietnam are 6.5% in 2010 and

6.8% in 2011, in an environment of Dong denominated inflation at about 10% per annum in

both years. This forecast is underpinned, in part, by increased consumer spending on the back

of higher disposable incomes, and on increased remittances from overseas Vietnamese.

Vietnam is currently the fourth largest market for imported fish and seafood products in the

ASEAN region. Its demand for such products is larger than both the Philippines and Indonesia,

which have larger populations than Vietnam (see Chart below).

ASEAN’s Imports of Fish and Seafood in 2006 (Latest Complete Regional Data)

US$ 2.89 Billion

Source: ASEAN Secretariat



3. Vietnam’s domestic fishery industry

3.1 Industry production

Vietnam produced around 4.8 million tonnes of fish and seafood in 2009. It has the world’s 3rd

largest aquaculture industry, which has very recently overtaken marine and inland capture as

the country’s main aquatic products supply base (see Chart below).

Vietnam’s Production by Fishery Industry Sub‐Sector in 2009

– 4.788 Million Tonnes

*Note: Inland capture is estimated at about 5% of total production. Source: Government of Vietnam (Provisional data release)

According to government sources, the value of fish and seafood production in 2009 increased at a rate faster than the whole of the agriculture and rural industry sector. The industry sales grew at 4% in 2009, when compared to total agriculture/rural industry value growth of only 2.1%.



The industry has a number of different segments (see Chart below).

Vietnam Fishery Production in 2008 by Broad Category – 4.6 Million Tonnes

Source: Government of Vietnam

Government sources comment that:

between 150 and 160 marine species are of commercial importance in Vietnam. Prawns/shrimps are the most important species, followed by cephalopods, tunas, scads, croakers, snappers, sardines, lizardfish and jacks;

between 55% and 60% of the fish stocks that can be exploited by local fishermen are warm water pelagic species, with the balance being warm water demersal species; and,

the most important aquaculture species are catfish, carp and prawns. The country’s fishery and aquaculture industries are very large, complex and highly fragmented in structure. Government sources comment that:

they are very important from both the economic and social standpoint. The livelihoods of millions of people in inland and coastal areas are dependent on these industries;

today, aquaculture employs between 1.4 and 1.5 million people, either directly or indirectly; and,

the marine fishing industry operates between 80,000 and 100,000 vessels, with the exact number not being known. Direct and indirect employment by this industry and the inland capture industry is currently estimated at around 3.5 million persons.



Government data indicates that the industry’s direct production value (based on wharf pricing

and farm gate pricing, as relevant) equates to between 3% and 4% of Vietnam’s GDP.

Although the industry has this status in the economy, trade sources comment that it faces a range of challenges arising from poor industry planning, the fragmented structure of the industry, overfishing, environmental degradation and weak capacity and capabilities in enforcing Vietnam’s fishing laws. 3.2 Development strategy for Vietnam’s fishery industry

Development of the fishery industry, including aquaculture, has been the intense focus of the

Vietnamese government for more than 10 years. This situation exists because the industry is a

significant contributor to the country’s economy as a source of jobs/household incomes,

rural/coastal community drivers and export earnings.

The first Fisheries Sector Master Plan was initiated in 1997 following on from an aid project that

was funded by some EU countries. Several countries, including Norway, Denmark and the

Netherlands, continue to assist the Vietnamese government with aid programs for the industry.

This first plan underpinned the government’s decision to aggressively invest in the

development of an offshore fishing fleet and capabilities. It principally focused on assisting

households to buy and operate their own vessels. It is also one reason why Vietnam’s fishing

industry is so highly fragmented today, with large numbers of small fishing boats being at the

core of the industry.

The current plan, known as the “Master Plan for Development of the Fisheries Sector 2006‐

2010”, is in the process of being updated at the time of writing (February 2010). Government

sources comment that this update already includes plans to construct more modern fishery

ports along the Vietnamese coast over the period from 2010 to 2020.

Under the 2006‐2010 plan, the government set the goal of increasing fisheries production at a annual rate of 3.8% annually over the 5 years to 2010. The plan also envisaged growth in the value of exports at a rate of about 10.6% a year, with the goal of increasing total value to about US$ 4.5 billion per annum in 2010. Some of these goals have already been achieved, for example, fish and seafood exports were valued at C$ 4.95 billion in 2008. The government is also confident that the target for growth in production output will also be met by the end of 2010.



The key goals of the government over the coming 10 years will be to:

ensure that Vietnam’s food security has a stronger foundation in fish and seafood than it

does today through development of a more modern and productive fisheries industry into

the long term;

build better incomes for rural area and coastal communities that are involved in fisheries

and so improve the economic circumstances in the areas where these communities are

based;

sustain a growing export‐oriented seafood processing industry that is working in an

efficient, effective and profitable manner;

stimulate new investment, both local and foreign, in Vietnam’s fisheries and seafood

processing industries; and,

reduce or eliminate the use of imported fish and seafood in Vietnam under circumstances

where there is a viable local alternative and within the confines of the various trade

agreements that Vietnam as signed on a multilateral, unilateral or regional basis.

These goals are being built into the next 5 to 10 year plans for the fisheries and seafood

processing industries.

3.3 The fish and seafood processing industry

Vietnam has a large and complex fish and seafood processing industry. According to

government sources, there are around 900 medium to large businesses (companies, co‐

operatives and state‐owned enterprises) involved in processing fish and seafood. In addition to

this, there are thousands of small processors that operate at a localised level and produce

traditional products for their communities.

The industry has a particular focus on exports, which are reported to be lucrative for Vietnam

processors that operate in an efficient and effective manner, while maximising on their

production capacity. Some key points to note are as follows:

currently, there are around 400 processors that are approved to export their products to

major markets such as the EU, USA, South Korea, Canada and Russia;



trade sources comment that a study conducted within the past 5 years found that this

group of exporters are well organised, with more than 70% being HACCP certified, with the

balance being GMP certified.

Since that study, the number of companies that are HACCP certified will have grown

because of demands from buyers in the Developed World export markets;

the larger and most modern production facilities are based in the south of the country, particularly in Khanh Hoa and in the Mekong Delta area;

the larger businesses within this group of exporters have had increasing demand for

imported inputs for use by their processing plants. This demand has developed because of

shortfalls in raw material supplies to facilitate their operations on a profitable basis;

sources within the industry comment that the export‐oriented sector currently suffers from

over‐investment in production capacity.

Industry capacity is estimated at between 4.5 and 5 million tonnes per annum. Local

production of fish and seafood is unable to service this level of demand so some processors

have turned to imports to boost their production. Other less dynamic processors work on a

part time basis or mothball their plants on a seasonal basis and only operate when local

inputs are available.

No one in Vietnam has a clear overview of the scale of the problems in operating below

capacity. One trade source believes that many of the larger plants were operating at below

50% of their commissioned capacity before the onset of the 2008 global economic crisis;

and,

the other players in the industry, i.e. the smaller operations produce fish sauce, dried products, fishmeal and frozen and chilled products for the local market. These businesses only use local inputs, e.g. squid, fish, shrimp and seaweed.

4. Overview of Vietnam’s trade in, and consumption of, fish and seafood

Vietnam’s domestic fish and seafood market is mainly oriented around locally produced fish

and seafood. Imports of fish and seafood are small, relative to local production. Imported

products are also involved in the export market because they are inputs to exported products,

e.g. canned fish, e.g. tuna, and frozen products, e.g. surimi (see Table below).



Overview of Vietnam’s Trade and Consumption of Fish and Seafood in 2008

‘000 Tonnes

Local production 4,600 Imports of fresh/chilled, frozen and dried 160

4,760 Exports of all products (Provisional Figure) 1,250

Local consumption 3,510

Per capita consumption 40.8 Kg Source: Government of Vietnam, official external trade data and trade sources

At over 40 kilograms per head, this makes Vietnam a considerably larger domestic fish and

seafood market than Canada. It should be noted that the FAO reports Vietnamese fish and

seafood consumption per capita at a lower level of around 25.4 kilograms per annum. This is

slightly higher than FAO reports for Canada, which was reported at 24 kilograms per capita per

annum.

Trade sources comment that:

there has been a large increase in per capita consumption of fish and seafood since 2001,

when per capita consumption was less than 20 kilograms per annum. This increase in

consumption has also taken place at a time when Vietnam’s population was increasing at a

rate of around 1.3% per annum;

some families in Vietnam get 50% or more of their dietary protein from different kinds of

aquatic products;

fish and seafood consumption is not uniform across the whole of Vietnam. Consumption is

very high in coastal and delta areas and much lower inland and in the cities. In the cities, the

diet is becoming broader based, with increasing consumption of a variety of different kinds

of meat and poultry; and,



the key drivers in increased consumption of fish and seafood has been growth in production

due to:

o government stimulus and private sector investment in the fish and seafood industry;

and,

o increases in household disposable incomes at a time when Vietnam was experiencing

economic growth at between 6% and 9% per annum.

5. Vietnam exports of fish and seafood

Vietnam exported fish and seafood products valued at more than C$ 4.95 billion (provisional

data) in 2008. According to the FAO, Vietnam is the world’s 8th largest exporter of fish and

fishery products.

The Chart below provides an overview of the structure of Vietnam’s fish and seafood exports in

2008.

Vietnam’s Fish and Seafood Exports in 2008 – C$ 4.95 Billion

Source: Government of Vietnam (Provisional Data)

Trade sources comment that frozen fish fillets are the dominant product being exported today.

The main fish species being processed for export are Catfish (local origin) and Tuna, which



together account for more than C$ 1 billion in exports or around 80% of fish (not seafood)

exports.

The balance of exports are primarily frozen commodity fish and seafood items, with the main

product lines being:

frozen shrimps and prawns, which were valued at C$ 1.43 billion (provisional data) in 2008.

These exports comprise close to 95% of the crustaceans category highlighted in the Chart

above;

frozen cuttlefish and squid, which were valued at C$ 282.8 million in 2008. These exports

comprise about 57% of the molluscs category highlighted in the Chart above; and,

frozen octopus, which were valued at C$ 123.5 million in 2008. These exports comprise

about 25% of the molluscs category highlighted in the Chart above.

One sector of the industry, namely that involved in exporting fish fillets and meat from

Vietnam, has been driving the country’s export growth over the past 5 years (see Chart below).

Trends in Exports of Fish and Seafood Products from Vietnam – 2003 to 2008

Source: Government of Vietnam (2008 is provisional data)



This export‐oriented industry is very important to the Vietnamese economy. According to the

government, the industry exported to around 120 countries and territories in 2008. Its main

markets are as follows. These markets accounted for 41% of Vietnam’s exports in 2008.

Japan – C$ 718 million in export value;

USA – C$ 607 million;

South Korea – C$ 275 million;

Russia – C$ 237 million; and,

Germany – C$ 198 million.

Trade sources comment that the fish and seafood processing industry underpins Vietnam’s

growing demand for whole fish, shrimps, prawns, cuttlefish, squid and fish meat, whether from

local or foreign supply sources. As mentioned earlier in this report, imports have been

increasing because of shortfalls from the local caught and aquaculture industries.

6. Vietnam’s imports of fish and seafood

Vietnam has a sizeable and growing market for imports. Imported fish and seafood was valued

at about C$ 310 million in 2008, up from C$ 153 million in 2003 (see Chart below).



Vietnam’s Imports of Fish and Seafood by Value – 2003 to 2008

Source: Official External Trade Statistics

Imports have been growing at rapid rates. On the basis of value, Vietnam’s imports of fish and

seafood grew at an average annual rate of 17% per annum between 2003 and 2008. In 2008,

Vietnam imported around 155,000 tonnes of fish and seafood, with the bulk of imports being

frozen fish (see Chart below).

Overview of Exports to Vietnam by Fish and Seafood Category in 2008 ‐ 155,308 Tonnes

Source: Official Export Trade Statistics

Imports come from a variety of locations across the world, and include coolwater (temperate)

and warm (tropical) species (see Chart below). China exports cool and warm water species.



Imports by Origins in 2008 – 155,308 tonnes (Estimated)

Source: Derived from Official Export Trade Statistics

The structure of demand is positive for Canada because Vietnam definitely has demand for a

range of cool water fish and seafood. This demand is quite broad based in terms of market

segments. It equated to around 51,000 tonnes valued at C$ 126.9 million in 2008 (see Chart

below).

Imports of Coolwater Fish and Seafood by Categories in 2008

C$ 126.9 million

Source: Derived from Official Export Trade Statistics



7. Fish and seafood market profiles

7.1 Overview of trends in development of the market categories

The Table below provides an overview of the development of Vietnam’s fish and seafood

market segments based on the country’s official trade statistics for imports.

Trends in Imports of Fish and Seafood to Vietnam – 2003 to 2007

Category 2003 2004 2005 2006 2007

C$ ‘000 C$ ‘000 C$ ‘000 C$ ‘000 C$ ‘000

Whole fish, fresh chilled 7,006 7,788 7,957 8,269 3,066Whole fish, frozen 24,480 41,258 64,698 73,787 114,154 Fish fillets and meat 5,301 10,122 40,708 51,315 52,274 Fish, dried, salted, smoked 1,306 671 2,547 4,558 2,163Crustaceans 110,393 133,714 107,242 78,232 64,500Molluscs 3,717 10,775 17,859 21,213 21,207

Total 152,203 204,328 241,011 237,374 257,364

Annual growth rate ‐ 34.2% 18.0% (1.5%) 8.4%

Source: Vietnam’s Official Import Statistics (Latest available data)

The trends in the above Table are indicative of an immature market that is developing in a stop‐

start type mode based on:

drivers that include new industry development and increased local consumption and export

market development; and,

constraints, including immaturity in the market, price sensitivity, weaknesses in production

planning and scheduling, and the impact of weaknesses in the phytosanitary and sanitary

environments on exportability of processed products from Vietnam.

7.2 Whole fish, fresh/chilled



7.2.1 Overview of imports and trends

Vietnam’s official data indicates that imports of whole fresh/chilled fish were valued at C$ 3.1

million (CIF value) in 2007, down in a variable manner from C$ 7 million in 2003. The Table

provides an overview of the volumes of fish that were imported under this category between

2003 and 2007.

Vietnam’s Fresh/Chilled Whole Fish Import Trends – 2003 to 2007

Fish type 2003 2004 2,005 2,006 2007

Tonnes Tonnes Tonnes Tonnes Tonnes

Trout 14 n 61 37 ‐Salmon 109 436 472 657 153Other salmonidae 122 NA NA NA NAHalibut 4 ‐ 6 48 ‐Plaice 0 287 ‐ ‐ ‐Sole 5 2 ‐ 9 ‐Other flat fish 2 N 45 N NTuna 54 192 192 15 34Herring 1 ‐ ‐ 1 ‐Cod N 8 N 1 1Sardine ‐ ‐ 2 1 ‐Haddock ‐ ‐ ‐ 1 NCoalfish 31 ‐ ‐ ‐ ‐Mackerel 49 8 4 98 NDogfish and sharks ‐ 13 9 ‐ ‐Eel ‐ ‐ ‐ N NOther fish 158 35 69 197 30Fish livers and roes 422 172 166 133 N

Total 971 1,153 1,026 1,198 218

NA: Tonnage is not reported by the Vietnamese Government. N: Negligible. Source: Vietnam’s Import Statistics

The main fresh/chilled fish that have been imported to Vietnam in a reasonably consistent

manner over the past 5 years are:

Salmon (relevant to Canada);



Tuna; and,

Mackerel (relevant to Canada).

These types of fish account for the bulk of Vietnam’s fresh/chilled fish every year.

The following sections provide a review of trade in the key products in this category based on a

review of export data sourced from exporting nations.

7.2.2 Review of trade in fresh/chilled salmon

Imports of fresh/chilled salmon amounted to about 600 tonnes valued at C$ 2.8 million in 2008,

up from 233 tonnes valued at about C$ 1.3 million in 2004.

Over the past 5 years, Vietnam has been supplied with fresh/chilled salmon by Norway,

Australia and New Zealand. Small quantities have also been supplied from the USA, Japan and

France (consolidated re‐exports out of the EU). Canada has not been involved in the market

over this period.

The Chart below provides an overview of trends in supply from the key countries.



Vietnam’s Imports of Fresh/Chilled Salmon – 2004 to 2008


Vietnam Imports of Fresh/Chilled Salmon: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008

2006 2007 2008

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

Norway 6,533 82.3 5,375 94.5 6,570 96.6Australia 13,411 0.2 5,795 0.7 3,662 3.4New Zealand 6,826 15.6 6,709 3.1 ‐ ‐USA 5,258 1.9 2,960 1.6 ‐ ‐ All imports 6,570 100.0 5,385 100.0 6,470 100.0 Source: Derived from Official External Trade Statistics

There is very little fresh/chilled salmon in Vietnam’s retail channels today. Retailed salmon is

generally frozen, mainly because there is still no demand driver for “expensive” fresh/salmon in

retail channels.



In addition to this, there are problems with the speed of sales turnover for fresh “exotic” foods,

and there are also huge problems, i.e. holes, in Vietnam’s cool chain to retail outlets.

Retail Pricing of Fresh/Chilled Salmon in Vietnam

Product Dong Per Kilogram C$ Per Kilogram

Fillet 379,500 21.50 Side strips 43,500 2.46 Salmon head 21,900 1.24 Source: Higher end supermarkets (February 2010)

Fresh/chilled salmon has a small market in the restaurants, mainly in 4 and 5 star hotels, and

also in sushi and sashimi outlets and some higher end Japanese restaurants, which do not like

to use frozen salmon.

Trade sources comment that Norway’s strengths in Vietnam lie in 4 factors:

its competitive strength as a fish and seafood exporter;

its product and service quality, which is appropriate to food service industry needs;

its solid presence in the market. Exporters in other countries do not have the “staying

power” that has been exhibited by Norwegian exporters in the recent past; and,

its Asian region strategy of promoting to develop its market into the long term.

This has developed a market from zero‐base for Norwegian salmon in difficult conditions over

the past 10 years to now when it exports around 400 tonnes valued at about C$ 2.7 million.

7.2.3 Review of trade in fresh/chilled mackerel

Although the Vietnam government data highlights that there is a market for fresh/chilled

mackerel, trade sources do not have any information on this market.

Local fresh/chilled mackerel (warm water species) is retailed at Dong 99,000 (C$ 5.60) per

kilogram in supermarkets that serve middle to upper income group consumers.



It is thought likely that the poor state of distribution channels for imported fresh/chilled

seafood would result in the small number of Japanese and Korean restaurants in Vietnam using

frozen mackerel (Saba) on their menus, if they have demand for the product.

There is also reported to be demand from Vietnamese restaurants because cool water mackerel

is used in Vietnamese cuisine, although, as these outlets tend to have price sensitive buyers,

they are highly likely to be using frozen mackerel.

A review of exports of fresh/chilled mackerel to Vietnam indicates it was only supplied once to

the country over the period between 2004 and 2008. This export trade involved Canadian

exporters and the supply of 24 tonnes of product in 2004.

7.3 Whole fish, frozen


Vietnam’s official data indicates that imports of whole frozen fish were valued at C$ 114.2

million (CIF value) in 2007, up in a consistent manner from C$ 24.5 million in 2003. This is the

largest category in Vietnam’s fish and seafood market.

The Table provides an overview of the volumes of fish that were imported under this category

between 2003 and 2007.



Vietnam’s Frozen Whole Fish Import Trends – 2003 to 2007

Fish type 2003 2004 2005 2006 2007


Pacific salmon NA ‐ ‐ ‐ ‐Sockeye (Red) salmon 538 ‐ ‐ 773 241Other Pacific salmon ‐ 903 140 652 1,087Trout ‐ ‐ 15 239 836Atlantic salmon 131 175 119 4 114Other salmonidae ‐ 92 524 894 627Halibut 89 16 20 13 57Plaice ‐ 15 ‐ N NSole ‐ ‐ ‐ 24 NTuna 3,576 4,493 15,445 27,766 45,909Herrings 293 700 192 52 48Cod 24 26 N N 56Sardines 33 31 93 N 93Coalfish ‐ 28 30 1 123Mackerel 88 278 2,112 1,431 778Dogfish and sharks ‐ ‐ 56 92 2,395Eels 1 11 N N 9Other fish 6,060 12,644 14,102 10,280 16,024

Total 10,833 19,412 32,848 42,221 68,397

N: Negligible. Source: Vietnam’s Import Statistics

The main frozen whole fish that have been imported to Vietnam in a reasonably consistent

manner over the past 5 years are:

Tuna, of various types;

Salmon of various types (relevant to Canada); and,

Mackerel (relevant to Canada).



There is also demand for a range of other frozen fish that are not separately reported in

Vietnam’s trade statistics. These products include frozen Capelin, which is reported to have

good demand in the middle and upper income group retail market, and other frozen seafish.

These types of fish account for the bulk of Vietnam’s frozen fish supplies every year.



7.3.2 Review of trade in frozen Atlantic salmon

Imports of frozen Atlantic salmon amounted to about 1,765 tonnes valued at C$ 4.1 million in

2008, up from 380 tonnes valued at about C$ 1.1 million in 2004.

Over the past 5 years, Norway and Chile have been the most consistent suppliers of frozen

Atlantic salmon to Vietnam. The third player in the market is Denmark, although its activities

have not been as consistent as Norway or Chile. Small quantities have also been supplied from

the Hong Kong (re‐exports), USA, France and Sweden. Canada has not been involved in the

market over this period.


Vietnam’s Imports of Frozen Atlantic Salmon – 2004 to 2008




The market for frozen Atlantic salmon is generally price sensitive with demand for value‐for‐

money products, and demand growing when there is access to such products.

Norway leads the market because it has generally been the lowest cost and best quality

supplier. It also benefits from the strong links that it has built with importers and users.

Vietnam Imports of Frozen Atlantic Salmon: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008

2006 2007 2008

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

Norway 3,265 50.3 2,574 76.2 2,568 63.4Denmark 5,839 1.5 ‐ ‐ 1,465 22.5Chile 5,213 47.5 4,275 22.2 2,605 9.3 All imports 4,252

100.0 2,399 100.0 2,317 100.0

Tonnes 1,158 1,869 1,764 Source: Derived from Official External Trade Statistics

A sample of the prices of some frozen salmon in Vietnamese supermarkets is provided in the

Table below.

Frozen Salmon Retail Pricing in Vietnam (February 2010)

Product Dong Per Kilogram C$ Per Kilogram

Salmon fillet 249,500 14.13 Salmon side strips 63,800 3.61

Product Dong Per Retail Pack C$ Per Retail Pack

Frozen salmon head:

500 to 600 gm 21,500 1.22

600 to 700 gm 25,200 1.43

Source: Middle income supermarkets and hypermarkets



Trade sources comment that salmon first entered the supermarkets in Ho Chi Minh City in

2002.

7.3.3 Review of trade in frozen Pacific salmon

Imports of frozen Pacific salmon amounted to about 3,229 tonnes valued at C$ 6.3 million in

2008, up from 576 tonnes valued at about C$ 2.5 million in 2004.

It should be noted that imports of Sockeye salmon were very small at less than 2 tonnes in

2008, down from over 200 tonnes in 2004. No information is available on the reason for the

reported collapse in demand, although it is thought that it may arise from changes in business

strategy of some fish processors.

The main supplier involved in this market is Japan, which is reportedly supplying product for

processing in Vietnam for export back to Japan. The other countries involved in this market

have an inconsistent involvement, even second place USA.


Vietnam’s Imports of Frozen Pacific Salmon – 2004 to 2008

Source: Official External Trade Statistics (All Species)



Japan leads this market because it is supplying low cost inputs for processing. The other

countries, the USA, Chile and Canada are supplying higher cost products to the restaurant

sector (see Table below).

Vietnam Imports of Frozen Pacific Salmon: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008

2006 2007 2008

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

Japan 1,557 64.8 1,621 94.9 1,717 85.9USA 3,764 19.9 3,140 3.4 3,563 9.3Chile 4,325 2.0 3,113 0.8 3,295 4.1Canada 7,552 1.0 1,751 0.8 ‐ ‐ All imports 2,608 100.0 1,691 100.0 1,948 100.0

Tonnes 2,180 2,581 3,229 Source: Derived from Official External Trade Statistics

There is no Pacific salmon in Vietnam’s middle and upper income group supermarkets and

hypermarkets.

7.3.4 Review of trade in frozen mackerel

Imports of frozen cool‐water species of mackerel amounted to about 12,915 tonnes valued at

C$ 13.8 million in 2008, up significantly from 1,933 tonnes valued at about C$ 3.5 million.

Imports of warm‐water mackerel are small, largely because this fish species is caught locally

and local supplies meet local demand at the present time.




Vietnam’s Imports of Frozen Mackerel – 2004 to 2008

Source: Derived from official External Trade Statistics (Cool‐water species only)

Japan dominates the market because it is the lowest priced and best quality supplier of cool

water mackerel to the users in the fish processing industry and food service industry, and to

retail channels where the product has a market amongst Japanese expatriates and some locals.

In contrast, Norwegian and Canadian mackerel is much higher priced and has its market in

Japanese restaurants (see Table below for pricing and market shares).

Vietnam Imports of Frozen Mackerel: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008

2006 2007 2008

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

Japan 621 67.3 782 76.5 1,202 63.3South Korea ‐ N 294 4.7 479 27.3Norway 1,844 4.5 1,630 2.8 2,200 3.7Canada 1,764 23.2 1,906 14.8 2,497 2.3 All imports 1,001 100.0 954 100.0 1,070 100.0

Tonnes 5,011 4,515 12,915 N: Negligible imports.



Source: Derived from Official External Trade Statistics (Cool‐water species only)

Frozen mackerel (Saba) is the only large sized frozen whole fish that is being retailed in Vietnam

today. It is generally graded by size for sale in middle to upper income supermarkets and

hypermarkets. The importers have links to Japan, i.e. they are Japanese‐Vietnamese invested

fish and seafood processors who are sourcing from Japan and South Korea. The retail price

range per whole fish is as follows:

600 to 650 gm – Dong 46,500 (C$ 2.63);

700 to 750 gm – Dong 55,600 (C$ 3.15); and,

800 to 850 gm – Dong 64,500 (C$ 3.65).

Frozen mackerel (Saba) is also being used by Japanese restaurants and also some Vietnamese

restaurants that have dishes using mackerel on their menu.

7.3.5 Review of trade in other frozen whole fish

Imports of other frozen whole fish amounted to about 35,076 tonnes valued at C$ 44.2 million

in 2008, up from 4,390 tonnes valued at about C$ 8.1 million in 2004.

This category which encompasses a wide range of different species, has been growing because

of demand from Vietnam’s export‐oriented fish processing industry. The key driver of demand

has been a growing shortage of locally available seafish.

Vietnamese buyers have been searching for appropriate quality frozen whole fish at the lowest

possible price for their operations. Imports are being sourced from an increasing number of

nations. Buyers procured products from 25 supply countries, many of which are in the Asia

Pacific and Asian subcontinent regions, in 2008 (see Chart below).

Vietnam’s Imports of Other Frozen Wholefish – 2004 to 2008




As can be seen from the Chart above, Canada is involved in this market. It is a second‐line

player that has had a consistent presence in it over the past 5 years.

This market is a highly price sensitive segment. The buyers involved in this market have a very

high propensity to switch suppliers when there are adverse price movements in the global

market (see Table below for average landed costs and supply country market shares).

Vietnam Imports of Other Frozen Whole Fish: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008

2006 2007 2008

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

Indonesia 1,844 11.7 1,260 24.5 628 28.9Japan 1,521 2.5 1,044 8.2 1,268 23.8Thailand 1,869 5.4 694 14.7 746 9.1South Korea 1,160 1.5 1,494 2.4 1,259 8.3China 682 23.8 935 10.0 1,236 5.6India 1,341 16.1 1,930 10.8 1,947 4.5Pakistan ‐ N 1,430 1.8 2,207 3.2Mauritius 3,315 12.2 2,344 4.9 1,943 3.2New Zealand 1,114 1.9 1,185 4.3 1,578 2.2Singapore 3,696 7.2 3,088 5.1 2,506 1.7Canada 1,985 6.9 1,411 4.2 1,513 1.0



All imports 1,780 100.0 1,412 100.0 $1,261

100.0

Tonnes 9,637 14,322 35,076 N: Negligible imports. Source: Official External Trade Statistics

The buyers have been driving up imports on the back of higher volumes of lower cost imports

over the past 3 years (see Table above). There has also been a sizeable switch away from some

supply countries because their pricing has escalated over this period, e.g. China and India.

7.4 Fish fillets and meat

Vietnam’s official data indicates that imports of fish fillets and meat were valued at C$ 52.2

million (CIF value) in 2007, up from C$ 5.3 million in 2003.

The Table provides an overview of the volumes of product that were imported under this

category between 2003 and 2007.

Vietnam’s Fish Fillets and Meat Import Trends – 2003 to 2007

Product 2003 2004 2,005 2,006 2007


Fresh/chilled fish fillets 136 71 100 169 3Frozen fish fillets 189 965 4,156 2,945 2,782Frozen fish meat and mince 1,112 2,152 8,765 16,753 15,397

Total 1,437 3,188 13,021 19,867 18,182


Trade sources comment that:



Vietnam has no demand for imported fresh/chilled fish fillets because there is a readily

available supply of local fresh fish. Additionally, demand for non‐indigenous fish is highly

underdeveloped at present, even within the hotel sector;

demand for frozen fish fillets is commodity driven and is not developing in any particular

direction. The trade data indicates that imports of such products came from 33 countries

and territories in 2007. The top 5 supplying industries in that year were based in the

following countries:

o Norway, with a 19% share (540 tonnes valued at C$ 2.3 million). This country has been

marketing cod, mackerel and some other fillets for use by the restaurant trade;

o Japan, with an 11% share (299 tonnes valued at C$ 1.3 million). This country is supplying

a variety of fish fillets for use by Japanese restaurants in Vietnam;

o China, with a 9% share;

o Indonesia, with a 7% share; and,

o Poland, with a 7% market share.

2008 export data indicates that Vietnam’s demand for frozen fish fillets shrank in that year;

and,

7.5 Fish, dried, salted, smoked

Vietnam’s official data indicates that imports of dried, salted and smoked fish were valued at C$

2.2 million (CIF value) in 2007, up in an erratic manner from C$ 1.3 million in 2003. This is the

smallest category in Vietnam’s fish and seafood market.





Vietnam’s Dried, Salted and Smoked Fish Meat Import Trends – 2003 to 2007

Product 2003 2004 2,005 2,006 2007


Flours, meals and pellets of fish for human consumption 8 6 3 7 7Livers and roes 42 N N 23 53Fish fillets N 24 N 4 NSmoked salmon 6 8 30 3 6Smoked herrings 4 ‐ N ‐ NOther smoked fish 4 1 3 12 35Cod, dried ‐ ‐ ‐ 6 ‐Other dried fish 68 24 179 425 150Cod, salted 2 ‐ ‐ ‐ NOther products 3 13 62 42 17

Total 137 76 277 522 268


The variable trends in imports of dried, smoked and salted fish to Vietnam are indicative of

markets that are highly immature and not supported by any specific demand drivers. There is

currently no inherent demand for any imported dried, smoked or salted fish in the market.

Smoked salmon is mainly imported to Vietnam from:

Norway – About 60% share; and,

Singapore, re‐exports – Between 25% and 30%.

The balance of smoked salmon supplies are imported from Australia and New Zealand.



7.6 Crustaceans


Vietnam’s official data indicates that imports of crustaceans were valued at C$ 64.5 million (CIF

value) in 2007, down in a consistent manner from C$ 110.4 million in 2003.



Vietnam’s Crustacean Import Trends – 2003 to 2007

Product 2003 2004 2,005 2,006 2007


Rock lobster/crawfish frozen 292 600 1,001 499 144Lobsters, frozen N 3 14 36 63Shrimps/prawns, frozen 7,580 11,418 7,230 6,246 6,380Crabs, frozen 807 1,194 1,098 1,449 1,608Other products, frozen 1,477 623 881 391 20Rock lobster/crawfish, not frozen 10 16 25 9 3Lobsters, not frozen ‐ N ‐ N NShrimps/prawns, not frozen 142 89 878 223 459Crabs, not frozen ‐ 168 125 13 4Other products, not frozen 402 938 11 430 7

Total 10,710 15,049 11,263 9,296 8,688




Vietnam is principally a market for frozen crustaceans because of readily available supplies of

locally produced live or fresh crustaceans and the significant weaknesses that exist in its cool

chain for fresh/chilled imported products. This has resulted in a situation where:

over 90% of imports are frozen shrimps/prawns and crabs; and,

imports of fresh/chilled products are minuscule and have not developed any solid demand

over the past 5 years.



7.6.2 Review of trade in frozen shrimps/prawns

Imports of frozen shrimps/prawns amounted to about 6,257 tonnes valued at C$ 40 million in

2008, down from 10,222 tonnes valued at about C$ 91.8 million in 2004.

The decline in imports is directly related to a collapse in supplies from India and China, which

were the market leaders in 2004. The leading supply countries in 2008 were Denmark, Thailand,

Malaysia, Indonesia, India and Canada (see Chart below).

Vietnam’s Imports of Frozen Shrimps/Prawns – 2004 to 2008




According to the Vietnamese government, the changes in demand for imported prawns and

shrimps has occurred because of an increase in local prawn and shrimp production at a time

when the landed cost of imports was increasing from countries such as China.

Trends in Prawn and Shrimp Production in Vietnam – 2002 to 2008

2002 2003 2004 2005 2006 2007 2008

Tonnes 275,639 334,556 382,638 435,100 457,600 488,100 494,600 % change 12.8% 21.4% 12.6% 13.7% 5.2% 6.7% 1.3% Source: Government of Vietnam

The market for imported frozen shrimps/prawns is generally price sensitive (see Table below).

Vietnam Imports of Frozen Shrimps/Prawns: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008

2006 2007 2008

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

C$ Per Tonne

% Market Share

Denmark 4,154 19.0 4,937 24.0 5,942 25.8Thailand 6,074 9.1 6,308 17.4 5,306 23.3Malaysia 7,382 2.4 4,007 1.7 5,088 11.9Indonesia 10,423 8.5 11,021 12.7 11,286 9.8India 8,639 28.7 6,556 18.6 7,293 6.4Canada 3,790 5.6 5,375 4.0 3,447 5.0USA 14,446 2.0 13,053 0.9 7,266 3.9 All imports 7,322 100.0 7,138 100.0 6,399 100.0

Tonnes 7,230 6,246 6,380 Source: Official External Trade Statistics

The retail pricing of shrimps and prawns varies significantly in middle and upper income group

supermarkets, depending on whether the products are fresh/chilled, frozen, unbranded,

branded, cooked, uncooked, with or without shell. Some indicative retail prices for local prawns

are provided in the Table below.



Retail Pricing of Prawns in Vietnam in February 2010

Product Brand Dong Per Kilogram C$ Per Kilogram

Local fresh /chilled prawns, variable sizes

Unbranded and sold loose at deli‐type counter

121,000

6.86

Frozen medium sized prawns

Unbranded in 500 gm retail packs

77,000

4.36

Frozen medium sized prawns

Unbranded in 200 gm retail packs

103,200

5.85

Frozen cooked large prawns

“Tom Hap” branded 500 gm retail pack

143,200

8.11

Frozen uncooked large prawns

“Tom Hap” branded 500 gm retail pack

139,000

7.88

Source: Middle and upper income group supermarkets

7.6.3 Review of trade in frozen crabs

Imports of other frozen crabs amounted to about 1,078 tonnes valued at C$ 8.6 million in 2008,

up from 653 tonnes valued at about C$ 7 million in 2004.

Imported crabs are a minuscule part of a much larger market that revolves around local crab

supplies:

there is no formal data available on crab production in Vietnam, although the government

claims that Vietnam is the leading crab producer in ASEAN. Available estimates indicate that

Vietnam’s production of crab probably amounted to around 100,000 tonnes in 2008. If this

estimate is correct, imports only have a 1% share of the market today; and,

crab production is also reported to be in a growth phase. In 2002, Vietnam’s crab

production was estimated at around 60,000 tonnes.

7.7 Molluscs

Vietnam’s official data indicates that imports of molluscs were valued at C$ 21.2 million (CIF

value) in 2007, up from C$ 3.7 million in 2003. The Table provides an overview of the volumes

of product that were imported under this category between 2003 and 2007.



Vietnam’s Molluscs Import Trends – 2003 to 2007

Product 2003 2004 2,005 2,006 2007


Oysters in all forms 15 31 4 11 9Scallops, live fresh/chilled 2 95 555 158 NScallops in other forms 11 29 42 215 68Mussels, live fresh/chilled 21 5 4 4 7Mussels in other forms 32 18 3 2 1Cuttlefish and squid, fresh/chilled 250 340 135 192 147Cuttlefish and squid, in other forms 158 1,338 2,691 3,937 5,093Octopus, fresh/chilled 64 25 103 ‐ NOctopus in other forms 102 188 15 312 323Other molluscs, fresh/chilled 5 9 8 6 3Other molluscs in other forms 71 NA NA NA 244

Total 731 2,078 3,560 4,837 5,895

NA: Tonnage is not reported by the Vietnamese Government. N: Negligible. Other forms include frozen, dried and smoked. Source: Vietnam’s Import Statistics

This market is mainly being driven by industrial demand from Vietnam’s food processing

industry for frozen squid and cuttlefish.

Trade sources comment that imports of these products represent 80% and 90% of all imports

under this category. The bulk of frozen squid and cuttlefish are imported from Developing

World countries (see Chart below).



Vietnam’s Imports of Frozen Cuttlefish and Squid – 2004 to 2008


Some indicative retail prices for these products, which are usually sold unbranded without any

mention of country of origin, are detailed in the Table below.

Retail Pricing of Molluscs in Vietnam in February 2010

Product Origin Pack Size Dong Per Pack C$ per Pack

Scallops, not in shell, frozen,

Not stated 200 gm 28,500 1.61

Sea Cucumber, frozen Not stated 500 gm 22,400 1.27

Mussels, frozen Not stated 300 gm 31,200 1.77 Source: Supermarkets

The Table below provides some pricing for molluscs that are available in these specialty food

channels in February 2010.

Product Origin Package Dong C$

Frozen half shell mussels, medium sized

New Zealand Per Kilogram 268,000 15.18

Frozen mussel New Zealand Per Kilogram 274,000 15.52



meat

IQF scallops in 10 kilogram packs

USA Per Kilogram 700,000 39.66

Fresh and frozen oysters, depending on type

France Per Kilogram 550,000 to 1,200,000

31.00 to 68.00

Source: Trade sources (Wholesale pricing excluding VAT)

8. Vietnam’s fish and seafood distribution channels

8.1 The retail channels

Vietnamese consumers generally like to buy their fish and seafood from traditional fish (wet)

markets. There is a general belief that the fish and seafood in supermarkets is not fresh, is

limited in terms of personal choice and is sold at expensive fixed prices.

Although supermarkets and hypermarkets now exist all over Vietnam, they are not yet conduits

for high volumes of fish and seafood, especially fresh fish.

8.2 The food service industry

Vietnam’s food service industry is large and highly fragmented. The bulk of outlets are very

small operations that use local inputs, e.g. fish and seafood that is purchased from the local

traditional market. These outlets will never use any form of imported fish and seafood.

The middle and upper income group restaurants are a very small segment within this industry.

8.3 Channels to seafood processing companies

An overview of Vietnam’s fish and seafood processing industry, its structure and activities was

provided in an earlier chapter in this report.

Trade sources comment that the bulk of seafood processing companies that have demand for

imported fish and seafood are importing the products direct from fish and seafood exporters.

This practice has been in place for many years and originally developed under the state‐owned

import‐export companies and state‐owned frozen seafood companies.



8.4 The capabilities of Vietnam’s fish and seafood distributors

Trade sources comment that most of Vietnam’s fish and seafood distributors and some of its

frozen food importers and distributors do not operate to requirements that comply with

international standards and best practices today.

9. Vietnam’s regulatory environment for imported fish and seafood in overview

Vietnam has established a protectionist tariff regime towards imports of fish and seafood. The

maximum bound MFN tariff under its WTO commitments will be 30% ad valorem, down from

the original 50%. Only breeder fish and seafood are duty free under these commitments.

According to the government, when all of its WTO tariff commitments are implemented in

2014, its average tariff rate on the fish and seafood category will be around 17.5%, which is

high and generally punitive under Vietnam’s market conditions.

A summary of the bound tariffs that will apply to Canada’s key export products, i.e. the MFN

tariffs, and the import duties that will apply under the ASEAN‐Australia‐New Zealand Free Trade

Agreement are overviewed in the Table below.

Vietnam’s Tariff Commitments to the WTO and AANZFTA

HS Code Product MFN Bound Tariff

Date of Tariff Binding

AANZFTA Tariff Implementation Date

030212

Fresh/chilled salmon

10% 2012 7%

0%

2016 2018

030322

Frozen Atlantic salmon

10% 2014 7%

0%

2016 2018

030319

Frozen Pacific salmon

12% 2011 7%

0%

2016 2018

030374

Frozen mackerel 13% 2012 10%

5% and thereafter

2020

2022

030613

Frozen shrimps and prawns

12% 2011 7%

0%

2016 2018

030614 Frozen crabs 15% 2012 10% 2020



5% and thereafter

2022

030612

Frozen lobsters 20% 2010

7%

0%

2016 2020

030710

Oysters 12% or 15%

2011 7%

0%

2016 2018

030721 Scallops, live and fresh/chilled

20% 2010 7%

0%

2016 2018

030729 Scallops, frozen

15% 2011 7%

0%

2016 2018

030799

Mussels 15% or 20%

2010 and 2011 7%

0%

2016 2018

Source: Government of Vietnam

It should be noted that actual tariffs are currently higher than the bound tariffs listed in the

above Table because Vietnam is still in the process of implementing its WTO commitments. The

latest implementation date of relevance to the above products is 2014.

As will be noted from the above Table, Vietnam’s commitments under the ASEAN‐Australia‐New Zealand Free Trade Agreement will provide medium to long term benefits to products imported to Vietnam from Australia and New Zealand, versus the MFN tariff that will apply to Canadian origin products. For example, Canadian live or fresh/chilled scallops will be levied an import tariff of 20% in perpetuity from 2010 onwards. On the other hand, Australian and New Zealand products will be levied a 7% duty in 2016 and then will become zero rated in 2018. This will almost certainly have an impact on Canadian ability to export such products to Vietnam under prevailing market conditions, e.g. price sensitivity and freight charges (more relevant to Australia). It should be noted that the Vietnam Association of Seafood Exporters and Processors is very unhappy with the tariff situation and have made strong representations to the government that imports of unprocessed fish and seafood should be reduced to 5% as a maximum, or ideally 0%. On paper, Vietnam now has a relatively easy process governing its imports of fish and seafood

products. While this is the case, the reality of the situation can be more complex. A key

challenge in Vietnam lies in the fact that policies, regulations, practices and on‐the‐ground

procedures do change from time to time, even import duties. In view of this, it is wise for



exporters to work very closely with their importers to ensure that their export – import

transactions flow smoothly.

Some key points on the regulatory environment for fish and seafood imports are as follows:

the Department of Animal Health is responsible for the food health and safety aspects of

Vietnam’s regulations covering fish and seafood imports. This department is part of the

Ministry of Agriculture and Rural Development.

The National Agro‐Forestry and Fishery Quality Assurance Directorate (NAFIQAD), which is

also under control of this Ministry is responsible for quality, hygiene and residue testing and

inspection of imported fishery/aquatic products.

Imports of fish and seafood can only be undertaken by a Vietnam company that is officially

approved as a trader in fish and seafood poultry products.

Such traders are also required to register with the National Agro‐Forestry and Fisheries

Quality Assurance Directorate (NAFIQAD) for sampling tests and certification on hygiene

and food safety of “human food grade” fish and seafood products that are being imported;

all imports of fish and seafood are subject to inspection at the port of entry. These

inspections are undertaken by the Quarantine Regional Office of the Department of Animal

Health. This office issues a quarantine clearance certificate after it has inspected the

products and found them to be fit to enter Vietnam’s customs territory and market;

exporters also have to be approved exporters in their home country and meet the legal

requirements as an exporter of fish and seafood in that country; and,

procedures at the port of entry are now quite standard involving presentation of

documents, document inspections, quarantine inspections of the products, certification for

entry into Vietnam’s customs territory, payment of import duties and other fees, and

release of the products from the customs area, if they have passed quarantine inspection

and the customs process.

10. Overview of the involvement of Canada and its main competitors

10.1 Overview of the origin of Vietnam’s fish and seafood imports



Vietnam’s demand for imported fish and seafood from Developed World countries was

substantial at 41% of total import values for such products in 2008 (see Chart below).

Vietnam’s Imports of Fish and Seafood in 2008 – C$ 309.8 million


This provides Canadian exporters with a sizeable target market valued at close to C$ 130 million

in 2008. The top 5 Developed World suppliers are Japan, Norway, South Korea, Denmark and

the UK. Canada was the 6th largest supplier by value in 2008 (see Chart below).

Vietnam’s Imports from the Developed World by Key Supply Countries in 2008


The Table below provides an overview of the structure of imports from the top 10 Developed

World supply countries in 2008.



Overview of the Market Activity of Canada’s Key Direct Competitors in Vietnam in 2008

Country Total Structure of Imports (%)

Value C$ ‘000

Fresh/Chilled Whole Fish

Frozen Whole Fish

Fish Fillets and Meat

Fish, Dried, Salted, Smoked

Crustaceans Molluscs

Japan 34,451 ‐ 85 4

‐ 4

7

Norway 14,454 19

36

43

‐ 2

‐

South Korea

13,110

‐

78

‐

‐

2

20

Denmark 12,917 ‐ 18

8

‐

74

‐

UK 9,088 ‐ ‐ 10

‐ 90

USA 7,289 4

36

16

‐ 35

9

Spain 3,060 ‐ 20

47

‐ 12

21

Australia 2,936 ‐ 5

10

‐ 76

4

New Zealand

2,712

‐

53

12

‐

12

23

= Nil or negligible. Source: Official External Trade Statistics

The strategic focus of the key supply countries to Vietnam are as follows:

Japan – Frozen whole fish;

Norway – Frozen fish fillets and meat, frozen whole fish and fresh/chilled whole fish;

South Korea – Frozen whole fish and molluscs;

Denmark – Crustaceans and frozen fish;

UK ‐ Crustaceans and frozen fish fillets and meat;



USA ‐ Has a broad based target involving frozen whole fish, crustaceans, and frozen fish

fillets and meat;

Spain – Has a broad based target involving frozen fish fillets and meat, frozen whole fish,

molluscs and crustaceans;

Australia ‐ Crustaceans and frozen fish fillets and meat; and,

New Zealand – Frozen whole fish and molluscs.

Some key points to note about the strategy of some of Canada’s key competitors are as follows:

Norway’s strengths lie in 4 things:

o its inherent competitive strength as a fish and seafood producer, e.g. capacity,

capabilities, funding, marketing strategy, etc;

o its quality, which is appropriate to food service industry needs;

o its solid presence in the market at the level of its relationship with the best quality

importers; and,

o its Asian region strategy of promoting products to develop their markets into the long

term. It originally developed links in Vietnam through the aid funding of some

development projects in the fisheries industry.

These strengths have developed markets for Norwegian products from zero‐base in difficult

conditions over the past 10 years. Today, it is the second largest supplier of fish and seafood

to Vietnam, with a market valued at C$ 14.5 million in 2008;

trade sources comment that the key drivers of the position of Japan and South Korea are

their exporters’ close relationships with fish and seafood processors, some of which have

Japanese and Korean investments in them.

This provides their exporters with demand‐pull and controlled trading links, e.g. because

the processors have to use inputs from Japanese suppliers so that their products comply

with Japanese import regulations.



As mentioned earlier in this report, Japan is Vietnam’s leading export market valued at C$

718 million in 2008. South Korea is the third largest export market, valued at C$ 275 million

in that year.

11. Conclusion for Canada and its exporters

Vietnam’s economy is now forecast as likely to remain one of the fastest growing economies in

the world over the next 5 years. Some economists are also forecasting that the Hanoi city

economy could become the world’s fastest growing urban area economy at some stage over

the next 5 years, largely because:

its economic development has been held back by bureaucracy in recent years; and,

it is foreseen that a “catch up” phase of development is coming, relative to the much more

advanced Ho Chi Minh City economy.

This forecast appears to be supported by the opinions of the city government. The Hanoi

government has recently commented in press releases that it expects the city’s economy to

grow by between 9% and 10% in 2010.

Outwardly, the Vietnamese economy, although growing at rapid rates, appears to be that of a

very low income economy based on official data. This data reports a GDP per capita of around

US$ 1,000 (on a nominal basis), one of the lowest in the world, and about US$ 3,000 (on a

PPP/purchasing power parity basis) in 2009.

Vietnam has a huge stock of US$ circulating outside the banking system, a very large cash

economy, sizeable grey trading activity, and government recording and reporting systems that

do not capture, measure and report all economic and business activity, even the true state of

food imports, at present. This situation has led to potentially a large under‐reporting of GDP,

although no one is able to estimate how large this under‐reporting is today.

One thing that is highly evident to businesses operating in Vietnam is that Ho Chi Minh City and

Hanoi are islands of wealth in a country with a very large low income rural area population. On

a positive note, the World Bank has recently reported that poverty in Vietnam is at an historic

low of 14% in 2008, down from around 33% in 2000. Some key points to note about the city

economies are as follows:



Ho Chi Minh City (Population: 8 million persons) was officially reported to have a provisional

GDP per capita of around US$ 2,800 (nominal basis) in 2009. On a PPP basis, economic

commentators advise the figure would be between US$ 8,000 and US$ 10,000; and,

Hanoi’s (Population: 5 million persons) GDP per capita is officially estimated at between US$

1,800 and US$ 2,000 (nominal basis) in 2009. There are no official PPP estimates for Hanoi’s

GDP but if the national PPP factor is relevant to the city, then Hanoi’s PPP GDP figure for

2009 would be around US$ 5,500 in that year.

Based on the US$ 5,000 PPP GDP threshold (which is the investment decision criteria set by

many brand‐driven multinationals), this would make the two cities and their combined 13

million or so populations viable for a wide range of retail packed processed foods and non‐

indigenous fast foods. Market observations indicate that this is already the case in Ho Chi Minh

City.

Vietnam’s urban area markets are now at a similar stage of development to those of Singapore,

Malaysia and Thailand in the late 1980s and early 1990s. Ho Chi Minh City is currently at a more

advanced stage of development than Hanoi’s market, which could be about 5 years behind

developments in the south of the country.

Fish and seafood is well entrenched in the diet, which makes the introduction and acceptance

of many types of non‐indigenous fish and seafood items relatively easy. Smoked fish could be

an exception to this, although Vietnam has a lot of European foods in its diet so the

introduction of products such as smoked salmon, herring or mackerel may not be too

problematic.

These economic and consumer market scenarios will provide opportunities for Canadian fish

and seafood exporters over the next 3 to 5 years.

Canadian producers with other products related to opportunities in the markets profiled in this

briefing, and who would like more market information or contacts, may contact the Agri‐Food

Trade Commissioner at the Embassy of Canada in Vietnam at: vietnam‐

[email protected].

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