VNU Journal of Science: Economics and Business, Vol. 33, No.

5E (2017) 70-75

Developing Trade Relations between Vietnam-Germany

Duong Thi Tinh*

University of Economics and Business Administration - Thai Nguyen University,
Tan Thinh Ward, Thai Nguyen City, Vietnam
Received 21 July 2017
Revised 15 December 2017; Accepted 25 December 2017

Abstract: More than 40 years of establishing diplomatic relations and developing trade between
Vietnam and Germany, it can be seen that Germany is the biggest trading partner of Vietnam in
Europe and the largest importer of Vietnam’s exports to the EU. Although the trade between the
two countries has not reached expectations, and the results are still inferior to the potential, the
prospects for trade between the two countries are great and need to be further developed due to the
favorable context and the advantages of the free trade agreement between Vietnam and the EU.
This paper analyzes the current state of trade relations between Vietnam and Germany, assesses
the advantages and disadvantages, and suggests policy implications for developing trade relations
between the two countries in the future.
Keywords: Vietnam-Germany, trade relations, development prospects, policy implications.

1. Introduction * process of economic transition but also supports

Vietnam in the process of reforming the legal
Vietnam and Germany officially established
system within the framework of the German-
diplomatic relations on September 23, 1975.
Vietnamese Legal State Dialogue with about 70
After 42 years from the date of the
seminars, professional exchanges, and field-
establishment of official diplomatic relations,
trips each year. In addition, Germany also
relations between the two countries in all fields
supports Vietnam’s accession to international
have been constantly developing. It can be said
organizations and promotes the signing of the
that the German Federal Republic is now
Vietnam-EU Free Trade Agreement. On the
Vietnam’s largest partner in Europe. Vietnam,
side of Vietnam, it has actively supported
and the Federal Republic of Germany, are both
Germany in terms of regional cooperation in the
member countries in the process of regional
Asia-Pacific region and EU-ASEAN.
integration. Although comparisons between the
In the commercial relations between
European Union (EU) and the ASEAN
Vietnam and Germany, since 1990 the two
community are not adequate, the two sides have
countries have signed many important
similarities in overall objectives, especially in
agreements providing the legal basis for long-
the economic field with the emergence of the
term bilateral cooperation, such as the
ASEAN Economic Community by the end of
Agreement on Investment Promotion and
2015. Germany not only helps Vietnam in the
Protection signed in Hanoi on April 3, 1993.
_______ The Agreement on Maritime Transport was
*
Tel.: 84-978875866. signed in 1993 and the Double Taxation
Email: [email protected] Avoidance Agreement was signed in Hanoi on
https://doi.org/10.25073/2588-1108/vnueab.4134
70
 D.T. Tinh / VNU Journal of Science: Economics and Business, Vol. 33, No. 5E (2017) 70-75 71

November 16, 1995. The two countries agreed between the two countries Vietnam - Germany
to establish a strategic partnership in October as the basis for giving the most accurate
2011 to boost closer cooperation in the future, assessment.
especially in five key areas: strategic political - Descriptive statistics methodology, which
cooperation, trade and investment, justice and is intended for statistical analysis of data and
law, development and protection of the descriptive characteristics of data and collected
environment, education, science, technology, data through export and import activities. The
culture and communication and society [3]. method of comparative analysis, clarification of
Even today, Vietnam and Germany both have differences or comparison between years to
the potential to develop trade and to the extent assess the current status, is used as the basis for
of adding large trade, trade relations between proposing solutions to develop trade between
Germany and Vietnam has developed rapidly the two countries in the future.
and dynamically in the EU. Import-export
turnover between the two countries has 3. Results of the current situation of trade
increased annually. Germany is not only
relations between Vietnam - Germany
Vietnam’s largest trading partner but also an
important transit gateway for Vietnamese goods After 42 years of establishing diplomatic
to other European countries. Germany is a large relations, trade relations between Vietnam and
market, has sustainable development and an Germany have been strengthened and
open trade policy. As a member of the EU, developed. Although the import-export turnover
Germany also applies the EU common trade with Vietnam only accounts for a small part of
policy for Vietnam. In addition, Vietnam has Germany’s total foreign turnover value,
created conditions for the German Chamber of Germany still regards Vietnam as a potential
Commerce and Industry to come into operation in market and an important trading partner at the
Vietnam with the objective of creating a bridge moment and in the future. In the period 2011-
for economic and trade cooperation between the 2016, Vietnam’s export turnover to Germany
two countries. Thus, Vietnam and Germany have has increased annually, accounting for an
a lot of prospects to fully exploit the potential for average proportion of 20.4% of Vietnam’s total
cooperation in developing trade relations between export turnover to the EU and 3.7% of export
the two countries in the future. turnover to the world. Germany remains
Vietnam’s largest export market in the EU, the
sixth largest market in the world.
2. Method of research
In the period 2011-2016, Vietnam’s trade
- Method of collecting information: Data balance for the market in Germany has always
and information on trade relations between been in a state of trade surplus and has been
Vietnam and Germany were collected and increasing over the years. This is a great
synthesized from legal documents, reports and success for Vietnam. However, export growth
officially published data of the General is more stable than imports, and the growth rate
Statistics Office, Ministry of Trade and Industry of Vietnam’s exports to Germany is showing
in Vietnam and other documents related to the signs of slowing down compared to other EU
cooperative relationship between the markets and other markets in Vietnam. In 2016,
two countries. export turnover reached the largest value with a
- Synthesis and processing of the trade surplus of 3,154,762 thousand USD,
information: All collected data and information which is the highest in the period but with the
is classified and divided into an entity to lowest growth rate of 4.5% compared
synthesize, build theoretical foundations and with 2015.
assess the actual situation of trade exchange
72 D.T. Tinh / VNU Journal of Science: Economics and Business, Vol. 33, No. 5E (2017) 70-75

Table 1. Import-export turnover between Vietnam - Germany

Unit: $1000
Content 2011 2012 2013 2014 2015 2016
Vietnam
2,372,736 3,366,901 4,736,996 5,174,944 5,705,257 5,959,381
export
Vietnam
1,742,399 2,198,556 2,954,013 2,606,560 3,147,720 2,804,619
import
Balance 630,337 1,168,345 1,782,983 2,568,384 2,557,537 3,154,762

Source: General Statistics Office Yearbook [4].

100
26 34 Import growth rate
50 29 (%)
30 41 40 20
0 9
-11 10 4.5 Export growth rate
-10
-50
2011 2012 2013 2014 2015 2016 (%)

Figure 1. Vietnam’s export-import growth rate to Germany [4].

In 2011, Vietnam’s main exports to 705.5 million USD, up 17.52%. Contributing to

Germany in the order of total value were the growth rate of exports to the German market
footwear, textiles, coffee beans, furniture, in 2015 were transport means and spare parts,
seafood, leather products, etc., and Vietnam’s with a remarkable growth rate, an increase of
main imports from Germany were machinery, 103.77%, although the turnover only reached
technical equipment, automobiles, textile 85.2 million USD. At the same time, in 2015,
machinery, pharmaceuticals, and chemicals. In exports to Germany had a positive growth rate
2014, Germany continued to hold the position of 53.3%. A number of commodities had good
of Vietnam’s largest trading partner in the growth rates including cashew nuts, which
European Union with a total trade volume of increased 59.27%, reaching 68.9 million USD
7.8 billion USD. Vietnam’s exports to Germany and pepper increased 36.66%, reaching 45.9
are textiles, footwear and agricultural products, million USD. On the contrary, the negative
such as coffee, pepper, seafood, furniture, and growth rate was only 46.4%, of which the
electronics. Vietnam mainly imports from export of chemical products showed the greatest
Germany machinery, automobiles, spare parts decrease, at 43.33%, and cameras and
and machinery equipment as well as products of components decreased 36.28%, equivalent to
the chemical industry. By the end of 2015 with 3.3 million USD and 6.4 million USD
the 40th anniversary of establishing diplomatic respectively.
relations with Germany, Vietnam exported 29 In 2016, Vietnam’s exports to Germany
items to Germany and earned over 5.7 billion were 5.9 billion USD, up 4.5%, and imports
USD, an increase of 10% compared to 2014. from Germany were 2.8 billion USD, down
Among the items which were exported to the 11.9% compared to 2015. Thus, Vietnam had in
market in Germany in 2015, phones and 2016 a positive balance of trade with Germany
components reached the highest turnover, of 3.1 billion USD. Vietnam mainly exports to
accounting for 30.9% of total turnover, reaching Germany items such as phones and
1.7 billion USD, up 30.12%. In the second rank components, footwear, textiles, coffee, seafood,
in terms of turnover was footwear, reaching machinery and equipment. Of these, cellular
 D.T. Tinh / VNU Journal of Science: Economics and Business, Vol. 33, No. 5E (2017) 70-75 73

phones and accessories are the main items with its market share in this market. However, the
the highest turnover of 1.7 billion USD, growth rate has slowed down. Therefore,
accounting for 29.2% of total turnover. Vietnam needs new strategies to understand the
However, there was a slight decrease of 1.12% needs of the German market, thereby
compared to 2015. The second highest turnover penetrating and promoting exports to the
was footwear, reaching 764.6 million USD, up German market, taking advantage of the
8.38%, followed by textiles and garments, up increase in German import demand as well as
3.96% to 726.2 million USD. Overall, by 2016, developing trade relations between the two
exports to Germany had a positive growth rate countries in the future.
of 55.1%, of which iron and steel had a strong
growth, up 156.59%. By contrast, the number
of goods with a negative growth rate accounted 4. Advantages and drawbacks of trade
for 44.8% and tea had the sharpest decrease relations between Vietnam and Germany
of 64.05%.
The picture of trade between Vietnam and
In general, it can be seen that the bright spot
Germany shows many advantages and
in trade exchange between Vietnam and
prospects to thrive in the future.
Germany in the period 2011-2016 is that
Firstly, the import-export turnover between
Vietnam always exports more than it imports
Vietnam and Germany tended to increase between
and Vietnam’s export growth rate to Germany
2011 and 2016, even after the global financial
is always higher than the growth rate of import
crisis, the difficult context of the EU debt crisis
of German goods into Vietnam. This result
and the picture and the influence of the world
shows that Vietnam is quite successful in terms
economy in the context of integration.
of exporting to the German market and keeps
Table 2. List of Vietnamese goods exported to Germany in 2016
No. List 2016 (1,000 USD) 2016/2015 (%)
Total 5,959,381 4,5
1 Phones of all kinds and components 1,743,415 -1,12
2 Footwear of all kinds 764,676 8,38
3 Textiles and garments 726,200 3,96
4 Coffee 493,812 37,62
5 Computers, electronic products and components 417,283 -10,88
6 Machinery, equipment, spare parts 283,387 31,60
7 Seafood 176,324 -6,62
8 Handbags, purses, suitcases, hats and umbrellas 136,892 -9,39
9 Plastic products 113,530 -3,32
10 Wood and products 110,946 -12,80
11 Cashew 103,404 50,07
12 Transport means and spare parts 96,843 13,65
13 Products from iron and steel 82,826 -8,72
14 Pepper 65,930 4,98
15 Rubber 48,606 13,06
16 Toys, sports equipment and parts 46,416 17,73
17 Rattan products, bamboo, rush carpet 32,015 -2,60
18 Rubber products 27,565 12,22
19 Raw materials for textiles and leather footwear 16,016 -2,54
Source: General Department of Customs Vietnam [4].
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This is a solid foundation for trade between goods which are derived from abundant natural
Vietnam and Germany to continue and develop resources and human resources, are cheap in
future trade when the EVFTA is signed [2]. price, and are rawitems in structure. Therefore,
Secondly, Germany is the biggest export Vietnam should have a strategy in production as
and import market of Vietnam in the EU. well as in export, of the effective application of
Germany’s trade with Vietnam has a great science and technology, modern production lines,
influence on trade between the EU and raising the added value of export goods and
Vietnam. As a result, as the leader of the EU ensuring harmony between increasing exports to
economy, trade between Germany and Vietnam Germany and balancing domestic natural
will continue to grow and promote Vietnam’s resources and protecting the environment.
trade with the whole of the EU. Thirdly, Germany has strict requirements in
Thirdly, the import and export items terms of financial services, distribution services
between Vietnam and Germany are and technical, environmental and food hygiene
complementary, and supportive so it is less and safety requirements when importing goods
competitive. Vietnam has a comparative into the German market. The free trade
advantage in agricultural commodities such as agreement between the EU and Vietnam will
coffee, fisheries, timber and labor-intensive help reduce and eliminate tariff barriers, but
goods such as textiles, footwear, telephones and Germany’s requirements for imported goods are
components while Germany has the advantage almost unchanged. Therefore, Vietnam needs to
with technology-intensive items and learn experience from German companies in
transportation vehicles, chemicals, developing and enhancing the efficiency of
pharmaceuticals, machinery and equipment. their services in order to improve their
Thus, trade between Vietnam and Germany has competitiveness not only in Germany but in
been based on complementary trade and will other markets in the world. At the same time,
continue to benefit both countries, especially catching and having solutions to adapt to trade
when the EVFTA is signed, facilitating trade barriers is still a requirement if Vietnamese
barriers between the two sides to be reduced enterprises want to penetrate the market in
and eliminated. Vietnam will be an attractive general and the German market in particular.
market for EU goods and services because
Vietnam is a country that has had an impressive
growth in exports over the last several years and 5. Conclusion and implication for the
has great consumption [1]. In contrast, development of trade relations between
Germany is also a potential market for the Vietnam and Germany
traditional, key export items of Vietnam.
However, Vietnam also has to face It can be said that the good relationship
drawbacks when building trade relations between the two countries - Vietnam and
with Germany. Germany are growing both in width and depth.
Firstly, Vietnam attained a trade surplus in And despite the evaluation from many sides
2011-2016 but the growth rate of exports to that the economic relationship between
Germany has slowed down compared to other Vietnam and Germany is not exactly
EU export markets in the EU. In this context, in commensurate with political-cultural
order to maintain this market in the long run, cooperation, the achieved results in the field of
Vietnam needs to recognize and evaluate the trade remain modest compared tothe potential
causes and develop a strategy to penetrate and and desire of both parties. In order to strengthen
develop its exports to Germany. trade cooperation and create a breakthrough in
Secondly, Vietnam’s advantageous products the future, Vietnam should take the initiative in
are exported to Germany every year, mainly maximizing advantages of the Vietnam-EU free
 D.T. Tinh / VNU Journal of Science: Economics and Business, Vol. 33, No. 5E (2017) 70-75 75

trade agreement in the future. Especially, quality improvement, environmental protection

enterprises must pay attention to the quality of and to raise awareness of the process,
export goods to the potential but difficult procedures and conditions of export to meet the
market. Vietnamese productsmust meet all standards which are required by Germany.
requirements to enter the German market in Vietnamese companies also need to
particular and the EU in general, including: consider and develop strategies to produce and
(1) Legal requirements that export products market their products through wholesale and
must meet to enter the market; (2) Additional retail distribution channels and participate in
requirements for distributors to demonstrate international trade fairs to penetrate the market.
compliance with consumer’hobby, abide by Vietnam needs to considerpricing, customer
environmental and food safety standards such demand and the marketing policy or business
as food laws, labeling, packaging and strategy of other enterprises as well as
containerrequirements, requirements to promoting the image and brand of Vietnam’s
meetfood additives’ regulations, pesticide products in the international market, taking part
regulations and contaminants. Therefore, at a higher level in the global value chain step
Vietnamese businesses are required to know by step.
about international trade expertise, to
innovatetheir business strategies, to focus on
export of specialized and quality goodsand to References
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enforcement engagement institutions”, Enterprise
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Germany. If Vietnamese firms are able to meet pp.20-21.
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needs to be prepared to implement its ASEAN and EU economic integration, the 40th
commitments, propagandize to businesses, and anniversary of diplomatic relations between
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opening up and improving the business Publishing House, Hanoi, 2015.
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\