Vietnamese enterprises once felt as happy as a sandboy when they found a new big client – China. The market has emerged as one of the biggest rice importers of Vietnam since the beginning of the year. However, they now taste bitterness when doing business. Experts have warned that this would bring Vietnamese rice into disrepute in the world market.
Chinese take abnormal actions
In the first four months of 2012, Chinese merchants flocked to Mekong Delta, the rice granary of Vietnam, to seek to buy high quality and fragrant rice. The merchants came to see Vietnamese exporters, signed contracts and opened letters of credit (L/C) for official imports.
According to VFA, the association’s members have signed the contracts with Chinese businessmen on exporting 1.2 million tons of high quality rice (5 percent broken rice) and fragrant rice, which was four times higher than the 252,000 tons of rice it bought in the whole year 2011.
To date, VFA has exported 700,000 tons. However, Chinese merchants have suddenly stopped collecting Vietnamese rice, leaving a lot of signed contracts broken.
A rice exporter has confirmed that the rice export to China across the border gates has been slowing down since mid-May, resulting in the big inventory volumes of both 5 percent and 25 percent broken rice. Vietnamese rice exporters have been in a state of anxious suspense, since Chinese merchants may refuse the deliveries once rice docks at Chinese ports, or they may cancel the contracts.
Dark designs harbored
Truong Thanh Phong, VFA Chair, said VFA has discovered some Chinese merchants, who came to Vietnamese rice export companies, asking to mix white normal rice with fragrant rice. Phong emphasized that this is an abnormal request, which may result in the disrepute of Vietnamese rice in the international market.
Also according to Phong, Chinese merchants are harboring dark designs. The mixed rice would be sold in China as Vietnamese fragrant rice. Chinese consumers would find out the fraudulence and they would turn their back to the Vietnamese rice which they think has low quality. If so, Chinese merchants would have the “stick” to cancel the contracts signed earlier this year with Vietnamese enterprises.
The white normal rice is now priced at 8000 dong per kilo, and if mixing 50 percent of the normal rice into fragrant rice to sell as fragrant rice, Chinese merchants would make a fat profit.
However, analysts have pointed out that Chinese merchants do not aim to make fat profit, but they strive to lower the prestige of Vietnamese rice, which would indirectly sabotage the rice production.
Phong said that VFA has discovered the problem timely, before the fraudulence would seriously affect Vietnamese rice export markets.
He emphasized that there are many abnormal things in the Chinese merchants’ rice collection policy. They change their decisions regularly. They unexpectedly stop collecting rice and then suddenly collect rice again, which aim to force the Vietnamese rice price down.
Tran Thanh Van, deputy director of Gentraco has affirmed that his company would follow the advices of VFA to keep cautious when doing business with Chinese, and would not lend a hand to Chinese merchant to make a chaos in the market.