Vietnam-Brazil Trade Dynamics: A Guide to Market Entry

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The visit by Vietnam Prime Minister to Brazil in September 2023 holds significant importance for both Vietnam and Brazil in terms of economic and diplomatic relations. Here are some key points outlining Vietnam-Brazil Trade Dynamics and how Vietnam and Brazil could benefit from doing business with each other and why this visit is considered an important milestone:

What Benefits of Doing Business between Vietnam and Brazil?

Complementary Economies: Vietnam and Brazil have complementary economies. Brazil is known for its strengths in agriculture and natural resources, while Vietnam excels in manufacturing and exports of electronics, textiles, and other manufactured goods. This complementarity creates opportunities for trade and cooperation.

Growing Trade Relations: Trade between Vietnam and Brazil has been steadily increasing.

Gateway to Markets: Brazil can serve as a gateway for Vietnam to access not only the Brazilian market but also the broader Latin American market. Likewise, Vietnam can provide Brazil with access to the ASEAN market, which includes over 650 million people and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) market with over 800 million people.

Investment Opportunities: Both countries recognize the potential for investment. While trade has flourished, investment cooperation remains relatively modest. Expanding investment ties can lead to economic growth, job creation, and technology transfer.

Cultural and People-to-People Ties: Both nations share cultural values like openness, hospitality, and a love for sports. These similarities can enhance cooperation and understanding between Vietnamese and Brazilian businesses.

Why Vietnam Prime Minister’s Visit is Important?

High-Level Diplomacy: The visit by Vietnam’s Prime Minister to Brazil demonstrates the commitment of both countries to strengthening their diplomatic ties. Such high-level visits can lead to the signing of agreements, joint initiatives, and increased cooperation across various sectors.

Economic Cooperation: During the visit, discussions on investment opportunities, trade promotion, and economic cooperation took place. These discussions could lead to concrete agreements and partnerships between Vietnamese and Brazilian businesses.

Potential for Investment: The visit highlights the potential for Brazilian businesses to invest in Vietnam and vice versa. Vietnam’s economic growth and stability make it an attractive destination for foreign investment.

Enhancing Trade: Both nations expressed their desire to further expand trade relations. This visit can serve as a catalyst for exploring new trade opportunities and removing barriers to trade.

Cultural and People-to-People Exchanges: The visit also emphasized cultural and people-to-people exchanges. Strengthening cultural ties can promote mutual understanding and facilitate business relationships.

Bilateral Agreements: Discussions during the visit may lead to the signing of bilateral agreements or the strengthening of existing ones, further solidifying the relationship between Vietnam and Brazil.

The visit by Vietnam Prime Minister to Brazil represents an important milestone in the bilateral relations between the two countries. It provides an opportunity to deepen economic ties, explore new business opportunities, and enhance cultural and diplomatic relations, ultimately benefiting both Vietnam and Brazil in various ways.

Vietnam-Brazil Trade Dynamics:

Trade between Vietnam and Brazil in the first four months of 2023 amounted to $2.32 billion, a 2.4% decrease compared to the same period in 2022.

Vietnam’s exports to Brazil reached over $855 million, increasing by 14%, while imports from Brazil were $1.4 billion, down by 10% compared to the previous year.

Some Vietnamese export products to Brazil saw significant growth, including textiles (14%), machinery and equipment (25%), bags and luggage (27%), transportation vehicles and parts (79%), various types of steel (345%), miscellaneous metals and products (107%), and various textile fibers (12%).

However, certain products experienced a decline in exports to Brazil, such as seafood (-33%), rubber (-41%), raw materials for textiles and footwear (-48%), and phones and components (-13%).

Rising transportation and logistic costs have impacted export activities.

The ongoing COVID-19 pandemic and geopolitical issues like the Russia-Ukraine conflict have negatively affected trade and consumption, impacting production and export activities in Vietnam, including trade with Brazil.

Brazil is Vietnam’s largest trading partner in Latin America and among the top three in the Americas, following the United States. In 2021, bilateral trade between Vietnam and Brazil reached $6.36 billion, a 34% increase from 2020.

Investment cooperation between the two countries is still limited, and there is room for enhancing investment activities to better cater to each other’s markets.

How Brazilian Traders or Investors Could Enhance Business with Vietnam?

Explore Investment Opportunities: Brazilian investors should consider exploring investment opportunities in Vietnam. Despite robust trade relations, there is limited direct investment from both sides. Investing in sectors that align with the demands of the local market can strengthen business ties.

Improve Logistics: To facilitate trade, efforts to enhance logistics infrastructure in Vietnam are essential. This will help reduce transportation costs and make exports more competitive, especially in comparison to competitors like China, Thailand, Indonesia, Malaysia, the Philippines, and Singapore.

Air Connectivity: Proposing direct flight routes connecting Brazil, particularly Sao Paulo, with Vietnam can create a more accessible trade route. Sao Paulo serves as a major gateway to South American markets, and improved air connectivity could boost trade between the two countries.

Diversify Export Products: Brazilian traders should explore a wider range of export products to Vietnam. Understanding the diverse preferences of Vietnamese consumers can help Brazilian exporters tailor their offerings to the market.

Address Geopolitical Challenges: As geopolitical issues can impact trade, both Brazilian and Vietnamese businesses should stay informed and adapt to changing circumstances. Collaborative efforts in this regard can help mitigate risks.

While trade between Vietnam and Brazil has been significant, there is room for growth and diversification of trade and investment activities. Enhancing logistics, expanding investment cooperation, and addressing logistical and geopolitical challenges are key steps that can lead to stronger business ties between these two nations.

Consider the risk management through international trade law firms in Vietnam, and compliance of investment in Vietnam when setting up company in Vietnam.

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