Vietnam Showcases Agricultural Exports at Italian Trade Show

The Vietnam Briefing last wrote about trade between Italy and Vietnam back in 2018. At the time, both countries were gearing up for the introduction of the EU Vietnam Free Trade Agreement (EVFTA). Now in force, the EVFTA has changed the face of Vietnam-Italy trade. Here’s how.

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Earlier this month, the Vietnamese embassy in Italy went all out showcasing Vietnam’s agricultural goods at a trade show in Italy’s northern province of Emilia Romagna.

On display were dragon fruit, pomelo, and mangosteen among a range of other fruits, spices, and processed foods that Vietnam is looking to export not just to Italy but all over the world.

Agricultural exports from Vietnam to Italy, and the EU more broadly, are becoming increasingly more popular as a result of the EVFTA. This is true of the reverse too.

For Italy and Vietnam, this is good news. As two of the world’s biggest food-loving nations, yet with vastly different national cuisines, increasing trade in fresh and processed foods is providing both countries with a wealth of new tastes, flavors, and textures.

But two-way trade between Vietnam and Italy is about more than just food. Over US$6 billion in goods move between these two nations every year and that number is set to grow moving forward.

Trade rules and regulations between Italy and Vietnam

EU-Vietnam Free Trade Agreement (EVFTA)

The EVFTA is an ambitious pact set to eliminate almost 99 percent of customs duties between the EU and Vietnam. This agreement is expected to increase Vietnam’s GDP by 4.6 percent and its exports to the EU by 42.7 percent by 2025, according to the Ministry of Planning and Investment (MPI). The European Commission also forecast the EU’s GDP to increase by US$29.5 billion as a result of the agreement.

EU-Vietnam Investment Protection Agreement (EVIPA)

Currently in the works is the EVIPA. This agreement would help to protect European enterprises investing in Vietnam and vice-versa. Currently, the agreement still needs to be ratified by a number of European nations, including Italy.

Italian FDI projects in Vietnam

There are an estimated 6,000 Italian businesses operating in Vietnam in a broad range of industries and sectors. A number of trade and support organizations, such as the Italian Chamber of Commerce, also work to facilitate greater trade and business engagement between the two markets.

Moving forward, Italy is looking to provide Vietnam with expertise in automation and renewable energy. It has also been suggested that Italian firms should look at developing a presence in the green energy, agriculture, and music industries in Vietnam.

So far this year Italian firms have launched three new projects in Vietnam with a combined registered capital of US$61 million.

See also: Vietnam FDI Tracker: Latest Update April 2023

Italy’s exports to Vietnam

Italian exports to Vietnam in 2022 totaled US$1.8 billion. Topping the exports are machine, equipment, tools, and instruments; textiles, leather, and footwear materials; and pharmaceutical products.

Italy’s exports to Vietnam in 2022

Description	Value (Ú$)
Machine, equipment, tools, and instruments	548,408,028
Other products	413,383,006
Textile, leather, and footwear materials and auxiliaries	202,970,067
Pharmaceutical products	172,900,362
Fabrics	124,461,852
Chemical products	78,724,385
Iron and steel products	40,154,316
Chemicals	32,621,374
Plastic products	27,918,117
Wood and wooden products	25,318,033
Essential oils and resinoids; perfumery cosmetic or toilet preparations Plastics	21,894,007
Plastics	16,958,671
Computers, electrical products, spare parts and components thereof	16,190,576
Rubber products	13,286,848
Paper	9,371,902
Electric consumer products and parts thereof	8,256,393
Iron and steel	8,073,574
Animal fodders and animal fodder materials	7,781,918
Parts and accessories of motor vehicles	6,922,632
Pharmaceutical materials	6,736,572
Other base metals	4,086,236
Tobacco materials	332,825
Total	1,786,751,695

Source: General Customs Department of Vietnam

Machine, equipment, tools, and instruments

Italy is the second largest producer of machine tools in Europe after Germany. A huge manufacturing base has helped to propel Italy to one of the biggest economies in the world. Across the board, it produces a range of machinery and tools that are in high demand in countries thirsty to develop their manufacturing bases.

Textiles, leather, and footwear materials

For a long time, Italy has been at, or very close to, the center of the fashion world. The boot-shaped nation has produced well-known luxury brands like Gucci and Prada among a range of others. As the wealth of Vietnam’s elite has increased, so too has Vietnam’s demand for high-end luxury goods. Italian fashion brands are well-placed to take advantage of this emerging paradigm.

See also: Vietnam’s Luxury Market: An Appetite for High-End Products

Pharmaceutical products

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

Meanwhile, Italy is home to some of the world’s leading pharmaceutical manufacturers and has a strong reputation for producing high-quality and innovative drugs. Many of these pharmaceutical companies have established a presence in Vietnam, either through joint ventures, direct investments, or distribution deals.

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

See also: Spain, Poland, Italy, Hungary Pharma Companies Gain Equal Access to Vietnam Market

Vietnam’s exports to Italy

Vietnam’s exports to Italy far outweigh its imports from Italy. This is in large part due to Vietnam’s emerging role as a manufacturing powerhouse. It also supplies vast quantities of construction materials to the EU. In particular, its biggest export to Italy is iron and steel.

Vietnam’s exports to Italy in 2022

Description	Value (US$)
Iron and steel	698,784,063
Telephones, mobile phones, and parts thereof	595,628,220
Footwear	420,312,330
Other products	419,175,261
Machine, equipment, tools, and instruments	411,402,030
Textiles and garments	344,287,782
Other means of transportation, parts, and accessories thereof	307,083,982
Coffee	295,627,999
Computers, electrical products, spare parts and components thereof	247,027,600
Handbags, purses, suitcases, headgear, and umbrellas	103,561,982
Fishery products	98,899,460
Plastics	77,717,671
Iron and steel products	57,603,575
Chemicals	51,641,175
Textile, leather, and footwear materials and auxiliaries	48,170,445
Cashew nut	41,632,845
Toys and sports requisites: parts and accessories thereof	41,479,454
Yarn	39,492,951
Wood and wooden products	29,926,955
Plastic products	21,335,659
Rubber	20,101,118
Rubber products	18,785,923
Bamboo and rattan products	16,106,253
Ceramic products	11,521,114
Fruits and vegetables	7,955,433
Pepper	5,102,390
Total	4,430,363,668

Source: General Department of Customs

Iron and steel

Vietnam is a major producer of construction materials. It has access to an abundance of raw materials and refining and manufacturing facilities around the country. These relatively cheap exports, however, may be under threat. The EU is set to introduce the Carbon Border Adjustment Mechanism later this year, which could see the price of Vietnam’s iron and steel increase.

See also: How the EU Carbon Border Adjustment Mechanism Impacts Vietnam

Telephones, mobile phones, and parts thereof

Vietnam’s low cost of production has made it an attractive destination for electronic device manufacturing. This is particularly important in the mobile phone industry where operating margins and keeping prices competitive are crucial.

As the Italian market for mobile phones continues to grow, there is a rising demand for high-quality and affordable devices. Vietnamese companies have recognized this trend and are exporting their products to Italy, seizing the opportunity to expand their market reach and increase their profits.

Footwear

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

Big brands producing footwear in Vietnam include the likes of Nike and Adidas. Both of these firms have extensive manufacturing networks throughout Vietnam where they produce a range of athletic footwear. As a sports-loving nation, soccer in particular, demand for athletic footwear is high. This makes sourcing products from Vietnamese manufacturers a competitive choice for Italian brands.

See also: Where are Nike’s Factories Located in Vietnam?

Outlook of Vietnam-Italy trade

When the Vietnam Briefing last looked at trade between Italy and Vietnam just over five years ago, two-way trade was just over US$4.4 billion. Fast forward to today, and two-way trade has reached US$6.2 billion. This is a substantial jump that can in large part be attributed to the EVFTA but also increased engagement between these two nations.

Moving forward, as the EVFTA continues to see tariffs come down on a range of products, trade between these two nations should become even stronger. This may be further fortified by the EVIPA once ratified by the EU’s member states, Italy included.

Overall, Vietnam and Italy have become important trading partners, and this should continue long into the foreseeable future.

With offices in Udine, Milan, and Conegliano, Italian firms looking to invest in Vietnam should consult the experts at Dezan Shira and Associates. They can be reached via email at: italiandesk@dezshira.com.

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