Rubber trade with China booms

Unofficial, small trade border transactions continue to flourish in Vietnam's rubber export to China although their number has fallen recently, industry insiders say.
Unofficial, small trade border transactions continue to flourish inVietnam's rubber export to China although their number has fallenrecently, industry insiders say.

Rubber demand and prices haveincreased in the first months of this year, and this has enabledVietnamese enterprises to reduce their dependence on small-scale bordertransactions, said Dinh Van Tien, head of the Vietnam Rubber Group'sImport-Export department.

Many Chinese firms were also choosing to import from companies making high quality products, he added.

Largecompanies with modern technology typically export their products to theU.S, EU, Japan, India and the Republic of Korea, Tien said.

"Official export is the best way to ensure long-term business and limit risks in payment," he said.

TranThi Thuy Hoa, general secretary of the Vietnam Rubber Association toldthe Sai Gon Tiep Thi (Sai Gon Marketing) newspaper that rubber export toChina through small trade has fallen of late, with many membersannouncing they are now able to officially export rubber to Chinesepartners.

Last year, as many as 165 of a total of 208 companies engaged in exporting rubber to China were dependent on small trade.

"Weare focusing our production on long-term contracts," said Huynh TanSieu, head of Binh Long Rubber Limited Company's planning and investmentdepartment.

He said administrative procedures with Chinesetraders at the Luc Lam Border Gate are very simple, but the same can notbe said of Chinese trade policy.

Chinese authorities apply a tax of 25 percent on official rubber imports but nothing for small trade transactions.

WhileVietnamese enterprises will like to engage in bigger transactions,small trade is the preferred choice of Chinese enterprises, Sieu said.

"Infact, Chinese authorities can control this (informal trade) in a veryshort time. Then everything will become normal," said Le Van Xuong, anofficial with the Binh Long Rubber Company.

The current situationoffered no incentives for small companies to upgrade their technologybecause all their products can be sold through small trade," he said.

Meanwhile,the General Customs Department reported that rubber exports to China inthe first two months of the year declined 8.8 percent compared to lastDecember.

The department said it has recorded shipments of around 70,000 tonnes at 2,746 USD per tonne.

China is the biggest importer of Vietnamese rubber importer, accounting for 62 percent of exports./.

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