Huge market with big power of importer
As the biggest rice consumer worldwide (about 208.6 million ton/ year), accounted for 30% of the total rice, China plays a big role in the world rice market. Its imported policies related to rice can make a big impact to the rice supply and demand, rice price and directly affect to the rice exporting activities from main suppliers.
Prior to 2010, generally speaking, China gains a trade surplus in rice. In 2011, to make use of the reduction of rice price, China has imported a large amount of rice for national reservation, which push the imported rice to 578 thousand tons, exceeded exported rice for the first time. In 2014, China has imported 2,579 million tons (mainly for long grain rice), which makes an increase of 13.6% in comparison with 2013 (1.2% of total rice consuming yearly).
There are some locations with huge demand of imported rice, such as Guangzhou, Guangxi, Jiangsu, Zhejiang, and Beijing, Yunnan. In 2014, Guangzhou imported about 1.35 million tonnes, Guangxi and Yunnan imported 191,000 and 600,000 tonnes of rice respectively.
All the big imports from China are for the purpose of national reservation. Experts has provided an estimation for the rice national stock in China is now 117 days, much higher than the world average of 71 days.
China manages its rice imports through quotas. In 2015, the apportion of quotas has been adjusted to the quotas by state rather than yearly quotas. After using up the quotas by state, the company will apply for the next quotas. The criteria for quota application are more complicated: the quota applicants must buy and use up the rice domestically before applying for the imported quotas. Since September 2014, China customs office has declared the new regulation for rice length standard is 6.6 mm, all rice longer than 6.6 mm will be considered long grain rice and less than 6.6 mm will be short grain rice. The quotas, then, will be applied for each of the rice.
According to the International Trade Center, in 2011, Vietnamese rice market share was surprisingly increased from 8.81% in 2010 to nearly 32% and continue to rise up to 60% of total official rice import in China. The advantage of low price, easy sales conditions and geographical convenience are the factors that Chinese importers preferred to choose Vietnam rice. However, the new policy to reduce exported rice price in Thailand – which is originated from the purpose of national reservation clearing – and the new trend on agricultural investment in Cambodia from China have both created a fierce pressure for Vietnam rice. This has been proved by an increase in market share of Thailand rice from 22.34% in 2013 to 32.52% in 2014, and that from Cambodia has increased from 1.81% to 2.57%, whereas, Vietnam rice market share has a continuous drop from 60% in 2012 to 58% in 2013 and 50% in 2014.
Meanwhile, another competition is coming from ‘the new rising rival’ – Cambodia rice. China is providing better conditions for Cambodia in rice exporting activities. Cambodia is expecting to receive the quotas from China to 200,000 tons in the period 2015 – 2016. A worth saying matter is the 5% exported broken rice from Cambodia sometimes is 75 US Dollars higher than the same Vietnamese rice because of the more consistency rate of rice size, in comparison with mixed white rice but no brand name from Vietnam. The new investment tendency from Chinese enterprises into Cambodia agriculture is opening an easier path for rice and other rice products to China market.
… requires new strategies and exporting motivations
The new competition pressure from China market required new breakthrough motivation in Vietnamese rice exporting activities, both from production, international relations and trade.
It is necessary to push signing a rice agreement at Governmental or Ministerial level between the two countries to facilitate better conditions for rice exporting to China, in a sustainable and standard way. Furthermore, an improvement in trade exchange, cooperation between food office bodies (such as the Vietnam and China Food Associations, trade and promotion agencies) to create an effective system in market and technology information exchange will be a good strategy.
Another important strategy is to standardize the value chain across the border from Vietnam to the main consuming market in China, with the vanguard of good exporting companies, owning a sustainable material area, which will guarantee the supply for support and be willing to cooperate with official Chinese importers. This strategy will increase the value added to the exporting rice from Vietnam, and guarantee the stable consuming channels, which will create a Vietnam rice brand name in the middle-range and upper market in China. This is what Thailand has done and Cambodia is trying to do.
Finally, Vietnam should also utilize Hong Kong market as a transfer market for Vietnam rice to China, through trade and promotion activities, building up a sustainable relationship between Vietnam exporters and Hong Kong importers.
