In recent years, many Vietnamese enterprises have tended to focus heavily on foreign markets and pay little attention to the domestic market. This is a strategy that can bring great opportunities but also carries many risks if not carefully considered. When enterprises only focus on international markets and ignore the domestic market, they may miss out on an abundant source of resources and stability that the domestic market brings. So what is the cause of this situation and what is a reasonable solution to balance business strategies?
The Attraction of International Markets
There is no denying that international markets offer many attractive benefits to businesses:
- Higher brand value: Exported goods are often priced higher than domestic consumption, creating better profit margins. Some items such as agricultural products, handicrafts, textiles or exported wood are often highly appreciated by foreign markets and are willing to pay higher prices than the domestic market.
- Large, stable demand: Developed markets have strong consumption demand, especially for typical products such as coffee, pepper, wooden furniture or handicrafts. Many Vietnamese businesses have taken advantage of this to boost exports, expand market share and increase revenue.
- Trade incentives: Free trade agreements (FTAs) such as CPTPP and EVFTA help businesses access foreign markets with preferential tax rates, increase competitiveness and create incentives for exports.
- More stable business environment: Some businesses believe that the business environment in developed countries is clearer, less volatile and more transparent than the domestic market. This makes them focus resources on exploiting international markets instead of investing in the domestic market with many variables.
Some typical industries that tend to focus on foreign markets rather than domestic ones include:
- Wood and furniture industry: Exporting wood to the US, Europe and Japan brings higher profits, causing many businesses to neglect the domestic market, where consumers still prefer imported goods.
- Agricultural products: Coffee, pepper, cashew nuts, rice are mainly exported, while the domestic market is passive in distribution, making it difficult for businesses to return when the export market fluctuates.
- Textile and footwear industry: 80% of Vietnamese textile products are exported, but when the international market fluctuates, businesses face difficulties because they have not yet built a strong domestic brand.
- Technology – software industry: Companies such as FPT, TMA mainly export software, causing the domestic market to be dominated by foreign software.
- Aquaculture industry: Shrimp and pangasius are mainly exported, but when facing difficulties with taxes and import quotas, businesses find it difficult to find a foothold in the country because the domestic market has not been properly exploited.
Domestic Market – Untapped Potential
When businesses rely too much on exports, they may face great risks when the international market fluctuates:
- Dependence on foreign markets: When importing countries change their policies, increase taxes or restrict imports, businesses will immediately face difficulties. For example, the seafood industry was once in trouble when the US imposed anti-dumping taxes on Vietnamese pangasius.
- Losing market share in the homeland: While Vietnamese businesses export, foreign brands flood in and dominate the domestic market. When it comes to returning to their home market, Vietnamese businesses do not have enough brand recognition and distribution channels to compete.
- Difficulty in rebuilding customer trust: When the international market is in trouble and businesses return to seek domestic opportunities, domestic customers may be familiar with foreign brands, making it difficult for Vietnamese businesses to regain market share.
Solutions to Balance Strategy
Instead of focusing only on exports, Vietnamese enterprises need to have a parallel development strategy, exploiting both domestic and international markets. Some possible solutions:
- Building a strong domestic brand: Invest in brand recognition, focus on product and service quality to build trust with domestic customers.
- Improve supply chain and distribution: Leverage technology to optimize logistics systems, expand online and offline sales channels.
- Value positioning instead of price competition: Instead of racing to reduce prices, businesses need to focus on added value such as quality, customer service and shopping experience.
- Take advantage of support from domestic policies: Many policies support Vietnamese businesses to develop the domestic market, such as the program “Vietnamese people prioritize using Vietnamese goods”, funds to support innovation…
Conclusion
The international market opens up many opportunities, but it cannot be the only option. A strong brand must not only be known abroad but also win the trust of domestic consumers. Vietnamese enterprises need to see the domestic market not as a secondary option, but as an important foundation to help them develop sustainably in the long term. Balancing between export and domestic is the key to ensuring stable and solid development.
