When xiaomi launched in india market

Xiaomi Vietnam has not issued a comment on the news reported by some local press agencies that it is building an assembly factory in Vietnam.

The Hanoitimes – Both governments are advised to take a proactive approach to trade and investment and realize this potential.

The year 2020 marks the 42nd anniversary of India-Vietnam bilateral trade. Vietnam and India have shared strong bilateral relations historically, and for the past two decades, trade between the two countries has risen considerably. These economic ties have materialized into several Indian investments in Vietnam in various sectors.

India’s Prime Minister Narendra Modi and Vietnam’s counterpart Nguyen Xuan Phuc

The enormous volatility in the global trade environment has pushed businesses into diversifying their supply chains away from China, which has increased the importance of the India-Vietnam trade route for international business.

India, which is one of the fastest-growing economies in the world, currently ranks fifth globally in terms of GDP. The ASEAN-India Free Trade Area (AIFTA), which Vietnam is a part of, was established in 2009 as a result of convergence in interests of all parties in advancing their economic ties across the Asia-Pacific.

Vietnam’s manufacturing industry has rapidly emerged as a highly effective location for incoming electronics and telecom manufacturers who are relocating from China due to increased costs and the US-China trade war. The country has bolstered investor confidence with quick and efficient containment of the Covid-19 pandemic. Vietnam is becoming a leading choice for major companies looking to set up their new manufacturing hubs and diversify their supply chains.

India has significant expertise in IT services, pharmaceuticals, and oil & gas, all of which can significantly benefit Vietnam. Additionally, there are export opportunities in zinc, iron, steel, and man-made staple fibers from India to Vietnam.

A large middle class in India’s 1.3 billion population and its customs-duty exemption for ASEAN products make it a lucrative destination for Vietnamese exports. There is a notable scope for the development of services related to wholesale & retail trade, transportation & storage, business support along with trade opportunities in cotton and knitted clothing.

Bilateral trade

Over the past two decades, bilateral trade between Vietnam and India has steadily grown from US$200 million in 2000 to US$12.3 billion in the financial year 2019-2020.

The two countries aimed to raise bilateral trade to US$15 billion by 2020, but Covid-19 related trade disruption resulted in a 9.9% trade shrinkage to US$12.3 billion in the last financial year. Vietnam has emerged as the 18th largest trading partner of India, while the latter ranks seventh among Vietnam’s largest trading partners.

Exports from Vietnam to India include mobile phones, electronic components, machinery, computer technology, natural rubber, chemicals, and coffee. On the other hand, its key imports from India include meat and fishery products, corn, steel, pharmaceuticals, cotton, and machinery.

After India announced its decision to opt-out of the Regional Comprehensive Economic Partnership (RCEP), the India-ASEAN FTA is expected to be reviewed to compensate for the potential trade loss.

India’s trade with Vietnam. Source: India’s Ministry of Commerce and Industry. Chart: Asia Briefing Ltd

Foreign direct investment

The rising importance of Vietnam in global supply chains has the potential to strengthen India-Vietnam ties further. India is estimated to have invested nearly US$2 billion in Vietnam including funds channeled via other countries. Over 200 Indian investment projects in Vietnam are primarily focused on sectors including energy, mineral exploration, agrochemicals, sugar, tea, coffee manufacturing, IT, and auto components. Several major Indian businesses such as Adani Group, Mahindra, chemicals major SRF, and renewables giant Suzlon have shown interest in venturing into Vietnam.

India’s salt to IT conglomerate Tata Coffee recently inaugurated their 5000 MTPA freeze-dried coffee production plant in Binh Duong province of Vietnam last year. This US$50 million coffee facility was commissioned within 19 months of the ground-breaking ceremony.

Another example is HCL Technology Group, which is considering establishing a US$650 million technology center in Vietnam and plans to recruit and train over 10,000 engineers within the next five years.

With the implementation of major infrastructure projects like Tata Power’s Long Phu – II 1320 MW thermal power project worth US$2.2 billion, the investment figures are expected to rise considerably. The thermal power project was first coined in 2013 and was originally expected to be fully operational by 2022, but the revised seventh Power Development Plan (PDP7) indicates an eight-year delay, shifting its launch to 2030.

This delay appears to be due to Vietnam’s shift toward renewable energy. Nevertheless, opportunities remain for Indian investors in the renewable energy industry, specifically in solar and wind due to increased power demand. Reports indicate that the Tata group is in talks of investing further in solar- and wind-power projects.

Opportunities for Indian investors

Vietnam provides several lucrative reasons to invest such as increased access to markets, favorable investment policies, free trade agreements, economic growth, political stability, low labor costs, and a young workforce. As per a Standard Chartered report on trade opportunities, Vietnam’s exports to India have the potential to grow by 10% annually, or approximately US$633 million. This projected growth is primarily focused on goods export (53% ) and services (46% ).

Pharmaceutical

Vietnam’s domestic pharmaceutical industry is currently able to meet just 53% of the country’s demand, representing significant opportunities for Indian investors as India is among the leading global producers of generic medicines supplying 20% of total global demand by volume. There is an enormous potential for Vietnam to purchase generic medicines from India, but the former is actively trying to get Indian pharmaceutical companies to manufacture in Vietnam instead of importing.

Agriculture

Vietnam is seeking alternate buyers for its agricultural exports, after the reduction in demand from China due to the pandemic. Lifting India’s trade barriers on the import of agricultural products can open a new market for Vietnamese agricultural exporters. Also, there is a significant potential for investment in breeding technology, irrigation technology, and storage facilities. Vietnam’s topography, climate, and fertile soil make it suitable for coffee plantations. The TATA group has expressed plans of investing in the installation of agricultural machinery to serve demand in the Mekong Delta.

Tourism

The tourism industry in Vietnam is a largely untapped market sector for Indian businesses, which is likely to gain strong traction after the pandemic. The country received over 15.5 million international arrivals in 2018, a seven-fold increase from 2.1 million in 2000. Over 31,400 Vietnamese visited India the same year, a 32% increase from the previous year. India is a preferred destination for Vietnamese pilgrims and medical tourists.

India’s low-cost carrier Indigo launched direct flights linking India’s Kolkata with Vietnam’s Hanoi and Ho Chi Minh City in November 2019. Following this launch, Vietnamese low-cost carrier, Vietjet Air started direct flights connecting India’s New Delhi with Hanoi and Ho Chi Minh City. Improved connectivity will help Vietnam in diversifying its tourism portfolio, which currently is largely dependent on Chinese and South Korean tourists.

Supporting industries

Vietnam is an attractive destination to produce and export, thanks to its assortment of free trade agreements with several countries, allowing products to be exported to these countries with attractive low tariffs. There is a need for the development of the local supporting industry to support major manufacturers, and Indian businesses have the potential to fill the gaps in this sector.

This article was first published by Vietnam-briefing, which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices in China, Hong Kong, India, Indonesia, Singapore, Malaysia, Thailand, the Philippines, and Vietnam.

The Hanoitimes – Vietnam is currently among top 25 destinations for Indian pharmaceutical products.

The US$7-billion pharmaceutical market of Vietnam is a promising consumer of India which is known as the “Pharmacy of the World”.

India  – “the Pharma of the World”. Source: Embassy of India, Dublin

Vietnam’s pharmaceuticals demand is expected to grow 8% annually till 2024.

While Vietnamese drug manufacturers are able to meet half of their domestic demand, they depend on imports for approximately 60% of pharmaceutical end products, 90% of active pharmaceutical ingredients and most of the raw materials for the production of pharmaceuticals.

India is the largest producer of generic drugs, supplying more than 60% of global demand for various vaccines. Over 80% of the antiretroviral drugs used globally to combat HIV-AIDS are manufactured by Indian pharmaceutical firms.

The total size of the industry was estimated at around US$43 billion in 2019-2020 and is likely to reach US$55 billion in 2022.

India has the advantage of a large raw material base, skilled workforce and increasing investment in research and development, that has enabled India to become a manufacturer of world-class medicines for its domestic consumption as well as overseas market.

Touching upon the importance of the pharmaceutical sector in trade and healthcare partnership between India and Vietnam, Indian Ambassador to Vietnam Pranay Verma urged businesses and all other stakeholders on both sides to explore new opportunities for promoting engagement in pharmaceutical sector.

India’s Ambassador to Vietnam Pranay Verma. Photo: Embassy of India in Hanoi

Speaking at “India-Vietnam Seminar on Promotion of Trade and Investment in Pharmaceutical Sector” held in Hanoi on January 21, the ambassador pointed out several reasons for the promising cooperation.

Pharmaceuticals is a sector which occupies an important place in the bilateral trade relations between India and Vietnam.

Vietnam is a key consumer of Indian pharmaceuticals with an annual trade worth US$ 225 million. Vietnam is currently among top 25 destinations for Indian pharmaceutical products.

Notably, Mr Pranay Verma laid stress on the cooperation that has been duly recognized the “India-Vietnam Joint Vision for Peace, Prosperity and People” adopted by the Prime Ministers of India and Vietnam on 21 December 2020.

Their Joint Vision identifies deepening cooperation between the two countries in targeted areas including holistic healthcare, vaccines and pharmaceuticals as important elements of our future partnership over the coming years.

In addition, two countries remained engaged in augmenting their healthcare responses to the pandemic.

The third reason is the low-price and high-quality drugs and vaccines that India supplies to both developing and developed economies across the world.

India’s cheap and quality medicines have been particularly helpful for developing countries in meeting more effectively the burden of healthcare.

In fact, India’s pharmaceutical capabilities are not just for India, it is for the entire humanity to benefit from, he noted.

The ambassador also underlined India’s globally acknowledged capabilities as a producer of high-quality, low-cost medicines and vaccines as the fourth reason. India’s engagement was fully demonstrated during the Covid-19 pandemic as India became a major provider of pharmaceuticals to more than 150 countries.

He also highlighted India’s launch of the largest ever vaccination drive in the human history on January 16, 2021 to fight the Covid-19 pandemic with two “Made in India” vaccines.

In the first phase, 300 million high-priority people – which include sanitation and healthcare workers, elders, people with serious illnesses – who are particularly vulnerable to the pandemic are being given the vaccine shots.

The fifth reason is the engagement in pharmaceutical sector with Vietnam has remained at the forefront of the bilateral trade relations.

Many hospitals, doctors and people in Vietnam have shown their faith in Indian drugs and vaccines which are life-saving and so affordable.

“We should help nurture these supply lines, which are really the lifelines for those who need them; not stymie them with regulatory or procedural obstacles,” the ambassador stated.

The last but not least is Vietnam’s supportive policies in local manufacturing of drugs and medicines and in attracting investment in its pharma sector.

The ambassador believed that various Free Trade Agreements that Vietnam has signed will encourage its pharma companies to become more quality-oriented and competitive, to be the part of the global pharma supply chain.

Penalists at the seminar. Photo: Embassy of India in Hanoi

At the seminar held by the Embassy of India in Hanoi in association with the International Investment Promotion Alliance (INVEST-GLOBAL), Vietnam Association of Foreign Invested Enterprise (VAFIE) and Indian Business Chamber (INCHAM), participants talked of the importance to take advantage of policies and incentives offered in India and Vietnam.

Views were expressed by the participants on the need for greater Indian investment in pharma sector in Vietnam and the need to enhance awareness in Vietnam of India’s strength as the leading manufacturer of pharmaceuticals.

In their remarks, Prof. Nguyen Mai from VAFIE as well as Dr. Doan Duy Khuong from the Vietnam Chamber of Commerce and Industry (VCCI) emphasized the need to enhance the presence of Indian pharmaceutical companies in Vietnam, particularly through investment.

Representatives from Ministry of Finance as well as Ministry of Health provided details of incentives for investment in health sector, particularly high-tech projects, offered by Vietnam and upcoming new circulars that would further facilitate trade in pharmaceutical products for Vietnam.

Indian companies are increasingly looking at the lucrative Vietnamese market

In mid-December, major Indian IT provider HCL Technologies announced its official foray into Vietnam, where it aims to boost employment, provide resources and skilling local talent to serve its global clients.

HCL began operations in Vietnam in July with the goal of hiring more than 3,000 local university graduates and experienced professionals over the next three years. The company has set up its first delivery centre in Hanoi. From there, HCL will deliver advanced technology solutions to its global client base across several industries and verticals, including banking and financial services, healthcare, infrastructure, engineering, and cybersecurity.

Another Indian company Sethia Hemraj Rice Oil Co., Ltd. is also ramping up its presence in the country. Surbhi Bachhawat Sethia, vice general director of the company, is upbeat about the fast-paced growth of Vietnam relying on an export-led growth model, combining trade liberalisation and foreign direct investment (FDI) to spur exports. It has been enjoying growth since the 1990s despite the constant ups and downs in the global market.

She noted that as Vietnam is one of the largest producers of paddy, the company felt there is good scope to set up a Rice Bran Oil manufacturing project in Vietnam. Additionally, the punctual, hardworking, and friendly work force facilitates foreign investments pouring in. The supportive local and central governments have succeeded in creating a business-friendly environment for ever-increasing FDI.

“Before choosing to invest in Vietnam, we also did thorough research across Southest Asia, in Indonesia, Thailand, and Cambodia. Some did not have stable political conditions or favourable tax policies, while others had smaller potential for success in comparison with Vietnam. However, the language and communication are still huge barriers that discourage some investors from investing in Vietnam,” she added.

Most recently, many Indian firms have explored investment opportunities in Vietnam through the India-Vietnam Business Forum held in Ho Chi Minh City in January. Speaking at the forum, Ambassador of India to Vietnam Pranay Verma said India values Vietnam as an important partner in its Act East Policy. Indian investment in Vietnam stood at $900 million as of December 2020, which could go up to $1.9 billion if investments through third countries are also included.

The ambassador pointed out that one potential sector for Indian investors in Vietnam is the pharmaceutical industry. Meanwhile, both India and Vietnam are focusing on renewable energy generation. India has made global initiatives in this regard and is looking to cooperate with Vietnam.

The ambassador also proposed the two sides to look at startups, since both countries have young populations keen on innovation. Startups play an important role in both countries. Additionally, the ambassador highlighted climate change and smart city development as other potential areas for cooperation.

On the same note, Ambassador of Vietnam to India Pham Sanh Chau said that India and Vietnam have different strengths to complement each other and are not in direct competition. This is seen in reciprocal investment projects such as HCL Group from India investing in Vietnam and FPT Group investing in India. HCL’s $650 million investment project in Vietnam is highly potential as it focuses on training high-quality human resources in the IT industry.

He further noted that Indian and Vietnamese companies can cooperate in the textile and yarn field. Vietnam currently ranks third in the world in terms of textile and garment exports after China and India. With supply chain shifts, Vietnam and India need to find room to develop cooperation. While Vietnam has a great demand for yarns and fabrics, India has strengths in both natural and synthetic fibres. This woulud be a valuable addition to Vietnam which depends heavily on imported raw materials.

Tran Duy Dong, Vice Minister of Planning and Investment, said, “Vietnam welcomes investment from India in many fields and the two sides will strengthen investment connections with each other. The Ministry of Planning and Investment will join other ministries in India to promote two-way investment, economic development, and connectivity between the two countries.”

Since 2016 when Vietnam and India established a comprehensive strategic partnership, India has become one of the 10 most important trade partners of Vietnam and Vietnam is the fourth-largest trade partner of India in ASEAN.

“The results achieved are not commensurate with the potential of the two countries. To promote economic recovery as soon as the pandemic is controlled, businesses of both sides need to seize opportunities for cooperation in production and business, as well as participate more deeply in the global value chain. Vietnam welcomes Indian businesses to invest in Vietnam in the fields of manufacturing, automotive supporting industries, IT, renewable energy, and high-tech agriculture,” he stated.

The strategic relationship between the two countries is not limited to investment. India considers Vietnam a potential trade partner. The latest Standard Chartered Trade Opportunity Report also revealed that Vietnamese businesses could increase exports to India by $633 million annually. Meanwhile, Indian exporters could boost trade with Vietnam by an estimated $475 million, raising the bilateral trade volume to $1.1 billion.

The Hanoitimes – The promotion aims to relieve pressure for Vietnam’s agricultural sector, as exports to China are poised to plunge due to the impact of the Covid-19 outbreak.

Vice Minister of Industry and Trade Cao Quoc Hung has held various meetings with Indian government agencies and business associations to promote exports of Vietnamese agro-fishery-forestry products, according to the Ministry of Industry and Trade (MoIT).

Vice Minister of Industry and Trade Cao Quoc Hung at a grocery store in India. Source: MoIT.

The activities aim to relieve pressure for Vietnam’s agricultural sector, as exports to China, one of Vietnam’s major buyers of farm products, are poised to plunge due to the impact of the Covid-19 outbreak.

At a meeting with Indian Importers Chambers of Commerce and Industry (IICCI) on February 12, Hung briefed the agency on the advantage and competitiveness of Vietnamese fruits and agricultural products, especially dragon fruit and catfish.

To date, dragon fruit is the only Vietnamese fruit licensed for export to India, while catfish is one of Vietnam’s highly competitive seafood products.

However, with the complicated Covid-19 situation in China, the consumption of such products are declining, said Hung.

In the fields of textile and footwear, Hung said Vietnam is seeking alternative sources for input materials beyond China and hoped India would help Vietnam in this regard.

Chairman of IICCI Atul Kumar Saxena said trade relations between Vietnam and India have been strengthened recently.

Saxena added that India with a large market and high consumption power is an opportunity for Vietnamese agricultural products, especially dragon fruit and catfish, which are fast becoming favorite among Indian customers. He suggested Vietnam continue promoting commercial activities with India.

Hung asked IICCI to advise the Indian government against the use of trade protection measures towards Vietnamese pepper, cashew and incense, among others.

This would be key to ensure bilateral trade turnover will hit the US$15-billion mark in the shortest time possible, Hung asserted.

In a separate meeting on February 12, Chairman of the Trade Promotion Council of India (TPCI) Mohit Singal said Vietnamese dragon fruit has better quality compared to those from other countries. However, the majority of Indian customers do not know about the product.

Singal added Vietnamese lychee is delicious, but has not been granted access to the Indian market and recommended the Vietnamese government work with its Indian counterpart for opening the market for lychee.

According to Singal, every year India holds 40 – 50 trade fairs for agricultural and food products, which present opportunities for Vietnamese enterprises to promote their products.