Keep your business up to speed with the latest news.
Economist urges Vietnam to clear trade bottlenecks
Vietnamese experts are calling for more infrastructure funding in the Southeastern region – an area that is rapidly becoming the country’s engine of growth – due to high freight costs, VietnamPlus reported. Prof Su Dinh Thanh, the rector of the University of Economics of Ho Chi Minh City, said the region, including Ho Chi Minh City and the provinces of Dong Nai, Binh Duong, Ba Ria-Vung Tau, Binh Phuoc, and Tay Ninh, had played a major role in Vietnam’s economic growth.
The country has become a key alternative destination for North American shippers looking to diversify sourcing from China. But infrastructure and labor challenges threaten to increase business costs in Vietnam.
Thanh said that the region contributed more than 30% of the country’s GDP despite having only 23% of the population. He added that poor road infrastructure was causing high freight costs, which were passed on to businesses.
Prof Nguyen Trong Hoai, editor-in-chief of the Journal of Asian Business and Economic Studies, said: “The region has great potential for long-term development, but there are signs of slowing down due to bottlenecks.”
Since relations were normalized in 1995, Vietnam has become an increasingly important US trading partner. It is on track to become one of the US’s top seven goods trading partners for 2022 – bumping the UK from the top seven for the first time since 2004.
The Biden administration was even hoping to upgrade bilateral relations with Vietnam to a “strategic partnership,” according to Brookings Institute. “Given the precariousness of Vietnam’s geopolitical position and economic interdependence with China, it is understandable why the leadership prefers to deepen strategic ties with Washington quietly,” Brookings wrote.
But North American SMEs should keep a particularly close eye on trade opportunities with Vietnam.
K-Beauty firms change branding to conquer US market
Whether it’s food, fashion, film, or K-Pop music, South Korea has been on-trend in the West lately, and now the country’s cosmetics makers are changing tack to capitalize on the fascination with all things Korean.
Korean cosmetic companies are rebranding to broaden their appeal in North America. The country’s cosmetics companies are expanding the presence of “K-Beauty” brands in North American markets while reducing their dependence on China.
Korean cosmetic exporters are also expanding in Southeast Asia and the Middle East.
Popularity among Chinese consumers saw Korean cosmetics exports soar over the past decade. But now sales are tapering off as the Chinese are increasingly attracted to higher-priced Western brands or more affordable domestic cosmetics.
Companies, including AMOREPACIFIC, LG Household & Health Care (LG H&H), and other Korean beauty product manufacturers, are increasingly marketing at millennials and Gen Z consumers in the United States, Canada, and Mexico.
For example, AMOREPACIFIC, Korea’s largest cosmetics company, has undergone a rebranding exercise for its Sulwhasoo brand. This has involved switching the letters in its logo from Chinese to Western characters. It is also incorporating a more ethnically diverse range of models into promotional material and changing the feel to appeal to a younger, trendier base of consumers.
“We can say that AMOREPACIFIC has completely changed the basic identity of Sulwhasoo that it had been promoting since the beginning of the brand’s establishment,” a local cosmetics firm official told the Korea Times.
Kolmar Korea is also boosting its research and development and production capabilities in North America and aims to expand its business in the United States and Canada.
North American beauty firms will probably already have K-Beauty products on their radar, but they look like they are about to become a bigger business.
Trade in green goods bucks global downturn
Global trade may be on a downswing, but the trade in “green goods,” which use fewer resources and pollute less, is bucking the trend, according to UNCTAD’s latest Global Trade Update.
UNCTAD says trade in green goods grew by four percent in the year’s second half, reaching a record $1.9 trillion in 2022.
“This is good news for the planet, as these goods are key to protecting the environment and fighting climate change,” said UNCTAD economist Alessandro Nicita, one of the report’s authors.
UNCTAD’s latest Technology and Innovation Report released last week characterized this moment as the “beginning of a green technological revolution.” Best-performing green goods in 2022 included electric and hybrid vehicles, non-plastic packaging, and wind turbines.
SMEs wanting to become involved in importing or exporting green goods should check out the Greener Manufacturing Show North America, in Atlanta, Georgia, on October 11 and 12.
The Greener Manufacturing Show describes itself as “North America’s must-attend event for any sustainability-focused company looking to design and manufacture their products from more sustainable materials.”
The last edition of the show was held in Cologne last November. It attracted almost 3,000 visitors from industries including automotive, fashion & textiles, packaging, consumer goods products, chemicals, raw materials, electronics, and cosmetics.
Event director Peter Sarno said: “Some of the hot industries that are under a lot of pressure now are the automotive, tire manufacturing, and toy industries. There will also be representation from any industry that uses packaging.”
Propak Asia, the International Processing and Packaging Exhibition for Asia, will also take place in Bangkok between June 14 and 17 this year.
Shanghai World of Packaging (swop) from 22 to 24 November at the Shanghai New International Expo Centre (SNIEC) will also address new materials, technologies, and sustainability alongside more typical packaging products.
West Coast ports see steep fall in traffic
A slowing global economy has led to volume declines at U.S. ports, but the West Coast is much harder hit than the East. The Port of Los Angeles processed 487,846 twenty-foot equivalent units (TEUs) in February – down 43% year-on-year.
Port director Gene Seroka said the decline was “steep.” February’s figures represented the lowest number of containers moved since March 2020. “We may not be at the height of the pandemic, but there are more container vessels sitting idle around the world today than at any time since it began. Spot container rates have declined to nearly three-year lows. Why? The demand just isn’t there,” Seroka told Furniture Today. He said he expected a slight uptick in March.
“February declines were exacerbated by an overall slowdown in global trade, extended Lunar New Year holiday closures in Asia, overstocked warehouses, and a shift away from West Coast ports,” Seroka added.
That shift has been mainly due to contract negotiations between port workers at West Coast ports and employers remaining at a deadlock since last May. Fears that this could lead to potential labor disruptions have led to shippers increasingly favoring the Port of New York and Gulf ports.
And while figures for New York still need to be in, they are widely expected to show the port maintaining its relatively recent lead over Los Angeles and Long Beach. Analysts believe, however, that once the deadlocked contract talks are resolved, freight will move back to Los Angeles and Long Beach due to the superiority of its infrastructure.
The Port of Savannah is another winner in the changing geography of U.S. ports, with the Georgia Ports Authority now handling one of every 8.8 loaded twenty-foot equivalent containers, according to data from PIERS.
The Port of Savannah increased its share of the U.S. container trade by 0.7% last month and experienced its second-busiest February ever, moving 395,000 TEUs.
This was still down last February when the port moved more than 460,000 TEUs amid the post-pandemic economic rebound.
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