Chinese businesses trying to overtake pepper market: VN Pepper Association

The Vietnam Pepper Association (VPA) has warned that Chinese businesses have made moves to corner the domestic pepper market

The price of pepper in the domestic market has fluctuated since late July. On July 28, the price rose from VND80,000 per kilo to VND86,000 in the morning, but dropped unexpectedly to VND82,000 per kilo in the afternoon.

VPA members said they have evidence to prove that Chinese businesses are controlling the Vietnamese pepper market. Some Vietnamese pepper export companies receive Chinese businessmen who buy pepper at any price set by local exporters and urge them to sign contracts. 

VPA members said they have evidence to prove that Chinese businesses are controlling the Vietnamese pepper market. Some Vietnamese pepper export companies receive Chinese businessmen who buy pepper at any price set by local exporters and urge them to sign contracts. 

The Chinese repeatedly ask Vietnamese exporters to fulfill contracts, but they refuse to pay deposits, saying that it is difficult because of banking procedures (deposits must be paid within three days after the contract signing).

As the orders are with many Vietnamese export companies, information spreads that the demand for pepper is high.

Chinese businessmen visit pepper growing areas and promise to sell pepper to merchants at prices lower than market prices, thus acting as both seller and buyer to create ‘virtual fits of fever’ in the market.

The merchants accept the deals immediately because of the goods prices, believing that they would make big profits after reselling pepper to exporters.

However, Chinese businesses only sell pepper at low prices in small quantities and for a short time. Later, they say they don’t have pepper to sell anymore and push the prices up. 

Vietnamese merchants and exporters have to buy pepper at high prices from Chinese businesses to fulfill the contracts signed between merchants and exporters and between exporters and Chinese businesses.

Hai Quan newspaper reports that Vietnamese pepper export companies have not been able to contact Chinese businesses recently.

VPA said the “trick” is often used by Chinese businessmen. They usually place big orders with Vietnamese exporters. As a result, the exporters neglect other markets. However, later, Chinese businessmen break the contract, and Vietnamese exporters ‘lose lock, stock and barrel’.

Dat Viet newspaper has cited a survey that stated 26 out of 38 people in surveyed countries do not like the Chinese way of doing business, saying they seek benefits for themselves at the expense of others.

In related news, Chinese businessmen earlier this year flocked to Vietnam to collect rubber wood and control 80 percent of rubber wood market share in the Central Highlands.