« May 2007 Table of Contents
International Sourcing: Vietnam
Fisheries officials project new species, value-added products, national brand
By Nell McShane Wulfhart
May 01, 2007
Massive changes in Vietnam's economy in the past decade have
impacted its seafood industry, mostly in a positive way. The
opening up of the country to foreign investment has stimulated
improvements across the board in Vietnamese life, including
standards of living. The U.S. embargo on Vietnamese products
was lifted in 1995, and the countries established normal
diplomatic and trade relations the next year. Since then,
privately owned enterprises have exploded and the poverty rate
has dropped dramatically. Additionally, Vietnam joined the
World Trade Organization in January, which is viewed by many as
the final hurdle on the country's road to modernization.
Vietnam's seafood exports rose exponentially in the last
decade, from 206 metric tons in 1997 worth $760 million to 739
metric tons in the first 11 months of 2006, worth nearly $3.1
billion. Fourth in Vietnam's list of exports behind crude oil,
textiles and footwear, seafood exports account for about 9
percent of total exports, and this number is rising. Worldwide,
Vietnam ranks seventh in seafood exports and sixth in
The foundation of this success rests on two species that
dominate the export market, shrimp and basa ( pangasius
"Anyone can raise shrimp, but Vietnam's climate and farming
conditions are perfect for large-scale basa farming. Our basa
has a nice texture and sweet flavor; it's a good, plain
whitefish," says Tran Vu Khanh of Hiep Quang Co. in Ho Chi Minh
City, which raises basa in the Mekong Delta and imports and
distributes agriculture materials for fish farming.
Basa are raised in pens on the Mekong River, where the
fast-moving current plays a large role in their fast growth.
Cephalopods (octopus, squid and cuttlefish), grouper and tuna
make up the bulk of the remaining Vietnamese seafood exports to
the U.S. market.
Truong Dinh Hoe, vice secretary general of the Vietnam
Association of Seafood Exporters and Producers (VASEP),
attributes the sector's rapid development to several
"More open government policies, improved export conditions,
changing demands in the world market, the development of
aquaculture and the transfer of seafood companies from
near-total state ownership to private ownership have all played
a part in the extreme development of the seafood industry,"
VASEP's 210 members comprise around 70 percent of Vietnam's
total seafood exports. These seafood companies are mainly
located in the Mekong Delta, the heart of Vietnam's seafood
Matthew Fass, president of Maritime Products International
in Newport News, Va., agrees with Truong.
"Steady growth in overall [seafood export] quantity has been
evident. I think this is simply a reflection of the steady
growth of seafood popularity around the world, along with
continued business development in Vietnam, which is due to some
generally favorable conditions - a history with seafood
experience, some good natural conditions for industry
development and a hard-working labor force," says Fass.
High profits in the fisheries sector, says Tran, led many
farmers to "trade the rice farm for the fish farm. Even those
employed in the cities moved to the countryside and began
Aside from fish farming, fisheries officials have a lot in
store for the country's seafood sector: ramped up value-added
product development, new species and a national brand are
projected for the near future.
Although Vietnam has about 1,440 miles of coastline, and
small fishing boats can be seen everywhere near the water,
harvests have been on the decline. Bowie Leung, director and
country manager of exporting company Siam Canadian (Vietnam)
Ltd., says this is due to "the decline in wild catch items, the
high price of raw materials and the instability of the
The government has tried subsidies to improve harvest
statistics, but the commercial fishing sector doesn't support
harvesting far from shore. In addition, regulations and
government protections are few, and resources have been
depleted. Harvests are only done on a small scale and this
seems unlikely to change in the near future. Vietnam's wild
harvest measured 1.4 million metric tons in 2003. The Ministry
of Fisheries does plan to increase fishing incentives for
harvesting species like tuna.
Aquaculture is where most of the seafood industry's energy
is aimed, and it seems to be paying off. By 2010, tra and basa
farming in the Mekong Delta region is expected to generate
revenues of approximately $750 million annually, and an export
turnover of $600 million, according to Vietfish International ,
a VASEP publication.
Even with these numbers, only half of the area suitable for
aquaculture in Vietnam is being used; nearly 2 million acres
can be developed for aquaculture use, according to the U.S.
Vietnam Trade Office in Washington, D.C.
In addition, companies like FAQUIMEX (Ben Tre Forestry
Aqua-Product Import Export Co.) are working toward sustainable
aquaculture development. FAQUIMEX recently formed a Sustainable
Shrimp Production Union, which is designed to ensure quality
control compliance with international standards, restrict
disease outbreaks, limit environmental damage and increase
productivity. Its model is being applied to basa farming
The biggest change in Vietnam's seafood exports to the U.S.
market has been the antidumping duty placed on Vietnamese basa
in 2003. The Department of Commerce enforced antidumping duties
of up to 64 percent on basa and tra and 26 percent on frozen
shrimp from Vietnam, a move protested by many. U.S. importers
are now paying nearly triple for basa than before the
antidumping duty was established.
Vietnamese exporters, like Bowie Leung of Siam Canadian,
lament its effects.
"Business in the United States was growing until the
antidumping tax came into effect, now exports to the United
States are dropping and dropping. I just hope these problems
can be resolved soon," says Bowie.
Others are more optimistic. Tran says the tariff forced
Vietnam to look to other markets, which are now developing at
a higher rate.
"Due to the antidumping crisis, basa is more important in
markets other than the United States. Spain is now the biggest
market for Vietnamese catfish, and it is more popular in the
European Union countries, in general. The [U.S.] antidumping
laws actually did us a favor," says Tran.
Although some U.S. companies are still importing from
Vietnam, the basa tariffs have significantly decreased exports
to the U.S. market.
"In my opinion, the pangasius case is a very poor example of
the worst of special-interest trade issues that do far more
overall harm than good," says Fass of MPI. "It is not
impossible to envision some scenarios where some product or
overall growth happens so fast from Vietnam that other
'interests' in the United States take steps to push things back
- especially depending on how the economy may be going here and
the mood and political makeup of our elected leaders both at a
local and federal level."
Buyers go direct
Most of Vietnam's seafood exports to the U.S. market are
going to the West Coast for logistical and market-demand
For the most part, U.S. buyers are sourcing directly from
Vietnam. According to VASEP, many Vietnamese companies are
processing and packing locally, then shipping the product to
buyers in the states where it is distributed. Product is often
re-packed and then distributed to end users. U.S. companies
often use an on-site agent to do their buying, says Bowie,
whose company, does quality-control work in several Vietnamese
The current instability of exports to the American market
makes it difficult to accurately predict the future of
Vietnam's seafood exports to the United States. However,
according to Fass, Vietnam should be commended for its efforts
in the face of enormous setbacks.
"We have seen the industry as a whole always keep an open
ear to things that need to be done to continuously make
improvements. In some ways, I think Vietnam deserves some extra
praise for this because they really suffered under the unique
circumstance of being hit with a major antidumping case with
pangasius very soon after export markets opened to the United
States. This case was
accompanied by some extremely harsh (and
incorrect) rhetoric that attempted to paint a misleading
picture in many ways," says Fass.
"Yet, rather than take a confrontational attitude, I think
Vietnam continued to ask what it could do better in every
reasonable way (even if this just meant better and more open
communication) and has continuously been very open to
suggestions - including good transparency with key buyers and
even government officials (such as Food and Drug Administration
representatives or politicians) when anybody has wanted to
visit things on site. Quality has not taken a back seat to
other issues in Vietnam and this has been a wise course."
P rocessing practices updated
Truong suggests that improvements in both "software"
(hygiene management and quality inspection) and "hardware"
(facilities) have contributed to Vietnam's increased seafood
exports to the European and Asian markets.
"Both of these had to improve very fast in order to meet the
high and varied standards of different markets. However, more
and more importers have confidence in Vietnam because of the
improved conditions in both of these areas," Truong adds.
Seafood sector businesses, especially large ones like Minh
Phu, Camimex, Jostoco and Agifish, have invested in modern
technologies to raise production capacity and diversify export
"Workers' skills and technologies have both developed.
Better freezing machines, for example, have cut the time to
freeze materials from six hours to one or one-and-a-half
hours," says Truong.
Another contributing factor for the growth in the country's
seafood sector is the low labor cost. A fisheries worker in the
Mekong Delta might make approximately $60 a month. Although the
country's ascension to the WTO will probably improve worker
compensation in the future, its large labor force and low
salaries are currently helping to make Vietnam a serious player
in the worldwide seafood processing market.
Accompanying these advantages, however, are myriad concerns
about the future. Environmental anxieties around both
aquaculture and wild harvests abound. Inadequate investment
capital in some areas of marine farming and dependence on
weather conditions are also factors. Depletion of marine
resources by commercial fishermen targeting the same coastal
areas repeatedly is a significant problem.
Inadequate management of tra and basa farming has led to
unhealthy competition between farmers, affecting aquaculture
production, while oversized farms have negatively affected
aquatic agriculture. The emphasis on fish farming has taken a
toll. One hectare (about 2.5 acres) of shrimp farming uses 7.5
metric tons of feed
per crop, while fish farming needs 450 to
460 metric tons, creating an enormous volume of wastewater.
The government is beginning to address these issues through
legislation, but it may be a long time before significant
changes make the industry more sustainable and stable.
Despite these problems, and the still unresolved antidumping
conflict, the future looks bright for Vietnam's seafood
The Viet Nam News noted that "seafood exports to Europe will
increase by 10 to 15 percent this year, according to the
National Fisheries Quality Assurance and Veterinary Directorate
(Nafiquaved), following key inspections by foreign
While it may take time for exports to the U.S. market to
reach former levels, the European market is steadily growing.
Truong, of VASEP, confirms this, adding that "with increasing
demands for sushi products, Japan is also a growing market for
Vietnamese seafood." Vietnam's seafood exports to Japan have
dropped from 60 percent 10 years ago to 30 percent today.
Truong continues, "Vietnam is now looking to balance market
shares over the three markets of the European Union, United
States and Japan."
He contends that it is difficult to predict the future of
Vietnam's seafood industry - certainly, it is unlikely that
exports will continue to grow at such a rate. The seafood
sector has developed so quickly that Vietnam is now facing some
unforeseen challenges, namely "how to compete in the world
market, gain importers' confidence and maintain stable
quantities and reasonable prices," says Truong. Wild harvests
will only decrease, he adds.
More value-added products should appear in the U.S. market
in the next few years and there is likely to be an increase in
local processing, which will benefit both importers and
exporters. According to Vietfish International magazine, the
next four years have been designated by the Ministry of
Fisheries as geared towards exportation of high-value
Bowie, of Siam Canadian, suggests that in the face of
current trends, organic shrimp and basa are items that may
Hiep Quang Co.'s Tran predicts increased production of
species other than shrimp and basa, namely mahimahi and
grouper, both of which are gaining in popularity in the U.S.
market. Studies have demonstrated the suitability of these
species for farming in Vietnam. "So far, [exports of these
species] are small," says Tran, "but they have great
Fass says that although his company is focused mostly on
frozen products, "I have to believe the trend is up for fresh
imports today - even with some of the logistical difficulties
U.S. importers can likely look forward to more unified
branding of Vietnamese exports. The Minister of Fisheries, Ta
Quang Ngoc, told the Vietnam News Agency recently that
Vietnamese aquatic products have in large part been distributed
through intermediaries, and that the time had come to establish
a national brand.
"I expect steady growth from Vietnam in every measurable
way, such as volume, new species and product development (such
as value-added products). I would also expect a constant
emphasis on product quality. I think there should be a bright
future for development in this market as long as the focus does
stay squarely on quality and continued product development,"
The 2007 goal is an export market of $3.6 billion, according
to VASEP. If the new year follows all indications, it seems
Vietnam is likely to achieve it.
Nell McShane Wulfhart is a freelance writer in Vietnam