News# 53 - China builds en masse ecommerce warehouses near Vietnam


The proliferation of e-commerce warehouses popping up near the Vietnam-China border, coupled with the explosion of cross-border e-commerce, is intensifying competition for Vietnamese goods.

With the emergence of giant warehouses, logistic facilities in China are being constructed en masse near the Vietnam-China border. An Chi (25 years old), the owner of an online leather goods store in Hanoi, expresses concerns about her business activities in the upcoming time due to these developments.

According to this small business owner, the appearance of these giant warehouses will facilitate rapid and easier access for Chinese goods to the Vietnamese market. While this might be good news for many buyers, for online businesses, Chinese goods can create competitive pressure and disrupt the domestic e-commerce market.

"Chinese sellers prioritize quantity, often lowering product prices significantly, even close to factory prices. For example, for the same style of leather wallet, they are willing to sell 20-40% lower than us. It's challenging for businesses to compete when profit margins are thinning," Chi complains.

The arrival of Chinese goods

Instead of having to rely on intermediary shipping companies between the two countries, the explosion of cross-border e-commerce has opened the door for Chinese sellers to flood leading Vietnamese e-commerce platforms like Shopee, TikTok Shop, or Lazada.

With superior logistics systems, goods can now be shipped from China to Vietnam in a much shorter time frame, comparable to delivery times from Ho Chi Minh City to Hanoi.

Pham Bao Trung, the Business Director at Metric, believes that the presence of warehouses near the border will stimulate the scale of Vietnam's e-commerce, thereby generating attractive revenue for sellers by expanding shopping space. This is also an opportunity for Vietnamese sellers to explore potential products and reach international customers.

Meanwhile, domestic consumers can easily access a diverse range of products in terms of variety, quality, and price. Improving delivery speed through border-adjacent warehouses also lays the groundwork for denser Chinese product offerings.

Applying technology to warehouse operations helps facilitating the rapid arrival of Chinese cross-border e-commerce orders in Vietnam. According to eMarketer, the cross-border e-commerce trend continues to explode worldwide, including in Vietnam. It is estimated that Vietnam's cross-border retail e-commerce revenue (B2C) will reach 11.1 billion USD by 2026 and may become the 5th strongest export industry by 2027.

Currently, Metric's data analytics platform shows that cross-border e-commerce revenue on platforms does not experience significant spikes but rather focuses on specific product categories. However, with advantages such as fast delivery speed, reasonable prices, and convenient return policies, the competitive potential of cross-border Chinese sellers is significant.

According to Dr. Do Quang Huy, an e-commerce expert and Director of Ecotop Company, delivery times from foreign online shops to Vietnam have significantly shortened. Conversely, domestic logistics operations still face frequent disruptions due to technological limitations and infrastructure.

"Some deliveries are delayed, even within Hanoi, taking 3-4 days to arrive. Some orders are canceled due to failure to deliver, while buyers receive no calls," Mr. Huy recounts.

The expert asserts that current transportation companies do not operate consistently. Some prioritize large partners and overlook smaller-scale sellers, forcing them to bring goods to post offices for shipping, resulting in additional "dead time."

Additionally, human involvement in the delivery chain also poses risks of congestion and overload if businesses experience fluctuations in personnel.

Holding the shares in domestic market

In a discussion with an expert in the fulfillment industry (handling orders), referred to as Mr. K.T - suggested not to disclose his name - stated that China not only grasps and controls technology but also has abundant, skilled, and innovative labor force. This factor enables the country to have a large output for experimentation, research, innovation, and trend creation.

Looking at the broader picture, the "logistics miracle" of China has a significant impact on Vietnam's economy as we share nearly 1,500 km of border with this neighboring country.

In the context where Vietnam still depends on raw materials, and even technology from China, the easy penetration of Chinese goods and the shift in Vietnamese consumer buying habits could significantly affect domestic industries such as textiles, and household goods.

Despite the immediate benefits, Metric representatives warn that without adaptation, small and unprofessional domestic sellers will likely be pushed out of the game.

In the view of this representative, the right direction for Vietnamese sellers at this time is to optimize internal capabilities, focus on product strengths to adapt to this wave, and survive and grow. For example, sellers can promote unique local products that are not available elsewhere, maintain consistent product quality, and build their brand image correctly.

"Clearly, we have many advantages in understanding the market and consumer tastes, as well as easy access to rapid and systematic market research tools," says the Metric Business Director.

On the other hand, e-commerce expert Do Quang Huy believes that apart from certain specialized products, it is difficult for Vietnam to export back to China due to too few competitive advantages.

"Chinese retail prices online are equivalent to prices imported by Vietnamese people. The D2C model (direct-to-consumer manufacturer supply) with the characteristic of bypassing distribution channels leads to heavy price discounts," says e-commerce expert Do Quang Huy.

Domestic sellers also cannot freely sell as before. In fact, many small retailers cannot compete in some product categories such as household goods, bags, wallets, etc., and have to switch to other industries.

To compete on the domestic front, Mr. Huy emphasizes that Vietnamese retailers, with their understanding of local culture and lifestyles, need to leverage the power of a large number of KOL/KOC (Key Opinion Leaders/Key Opinion Consumers) to direct users.

In reality, sellers can also capitalize on strong product lines such as agricultural products, organic cosmetics, or promote easily manufacturable products in Vietnam.

Furthermore, sellers should focus on design, leverage product strengths, build brand stories to build trust with consumers. Meanwhile, Vietnamese businesses should collaborate to leverage each other's advantages, engage in healthy competition, and grow together.


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