Vietnam Dominates China’s Banana Market: A New Export Leader Emerges
Dear Investors,
In the first four months of this year, Vietnam exported a staggering 355,000 tons of bananas to China, becoming the leading banana supplier to the country. This volume was 2.4 times greater than that of the second-largest exporter, the Philippines, and represented 48.6% of China’s banana imports.
This marks the first time Vietnam has surpassed the Philippines, which is also the world’s second-largest banana exporter. Despite this surge, the value of Vietnam’s banana exports to China only rose by 3% year-on-year to US$145 million, as the average price fell by 16% to US$407.7 per ton. According to an executive from a banana export company in Dong Nai Province, the price drop resulted from increased competition, with China diversifying its sources and importing significant volumes from other countries.
Vietnam’s success can be attributed to the decline in the Philippines’ banana production and quality. Dang Phuc Nguyen, general secretary of the Vietnam Fruit and Vegetable Association, noted that shipping costs from the Philippines to China have skyrocketed this year, making Filipino bananas 33% more expensive than those from Vietnam. Other Southeast Asian suppliers, including Cambodia, Laos, and Thailand, are also facing rising costs. Even Ecuador, the world’s top banana exporter, is struggling with high transport expenses as it attempts to boost exports to China.
Vietnam: 354,563 tons
The Philippines: 147,683 tons
Cambodia: 98,737 tons
Ecuador: 78,816 tons
Laos: 40,837 tons
Since signing a protocol in 2022 to increase banana exports to China, Vietnam has ramped up its shipments significantly. Additionally, Vietnamese bananas are finding new markets in Malaysia, Singapore, South Korea, Japan, and Qatar.
Overall, Vietnam’s fruit and vegetable exports have soared, reaching nearly US$2.6 billion this year, a 28% increase from the previous year. Bananas now rank as the third-largest export item, trailing only durian and dragon fruit.
Vietnam’s robust banana export growth are benefiting several economies and sectors. The Vietnamese agricultural sector, particularly banana farming and related supply chains, are seeing significant gains. Local economies in banana-producing regions are experiencing enhanced economic activity and job creation. The logistics and transportation industries are also benefiting from increased demand for shipping services. Additionally, economies of importing countries like China, Malaysia, Singapore, South Korea, Japan, and Qatar are gaining access to a reliable and cost-effective banana supply, supporting their food retail and processing industries. This dynamic is fostering stronger trade relationships between Vietnam and these nations, further boosting regional economic integration and development.
Vietnam has six publicly traded companies involved in the banana export market. Some notable ones include:
Hoang Anh Gia Lai Agricultural JSC: Listed on the Ho Chi Minh Stock Exchange, HAGL Agrico is a major player in the agricultural sector, including banana cultivation and export. The company has expanded its banana plantations significantly in recent years to cater to international markets, particularly China and Japan.
Nafoods Group JSC: Also traded on the Ho Chi Minh Stock Exchange, Nafoods Group is another significant exporter of bananas. The company focuses on high-quality fruit production and exports, including Cavendish bananas, to markets in Asia and Europe.
These companies have been expanding their banana export operations to meet growing international demand, especially from countries like China, South Korea, and Japan. They have also been investing in improving their production and post-harvest technologies to enhance the quality and competitiveness of Vietnamese bananas on the global market.
I hope that you found the above insightful and useful.
I wish you profitable returns on your capital.
Eric, The International Investor