CHALLENGES AND RISKS IN INTERNATIONAL TRADE: KEY CONSIDERATIONS FOR BUSINESSES

In the context of deepening globalization, international trade has become a critical growth gateway for many Vietnamese enterprises. Expanding into overseas markets not only creates opportunities to increase revenue and enhance brand positioning, but also enables businesses to integrate more deeply into global supply chains. However, alongside these opportunities come numerous challenges and inherent risks. If these risks are not properly identified and managed, enterprises may pay a high price in terms of financial losses, reputational damage, or even their continued presence in international markets.

From logistics and international payment risks to exchange rate fluctuations and legal, technical, and policy barriers, international trade remains a complex arena that demands thorough preparation and professional risk management. This article provides a comprehensive analysis of the challenges and risks in international trade, while offering practical insights to help import-export enterprises—especially newcomers—build a solid foundation for sustainable and effective global operations.

1. Why Businesses Must Clearly Understand the Challenges and Risks of International Trade

A shipment of agricultural products rejected by the EU due to non-compliance with SPS standards.

A consignment delayed at the Suez Canal, tripling logistics costs and causing late delivery under contract.

A letter of credit rejected by a bank due to a single punctuation error in the cargo description.

These are not hypothetical scenarios, but real “tuition fees” that many Vietnamese enterprises have paid when engaging in international trade.

While international trade offers rapid growth and market expansion, it also entails a dense system of risks spanning logistics, legal compliance, payments, exchange rates, policies, and geopolitics. Success in import-export activities does not come from luck, but from the ability to identify and manage risks in a structured, professional manner with a long-term strategic vision.

2. Overview of International Trade in the Era of Deep Integration

International trade refers to the exchange of goods and services across countries and territories, involving multiple stakeholders:

Governments, which establish legal frameworks and negotiate trade agreements
Enterprises, which directly conduct import-export activities
Banks, financial institutions, and logistics providers, which manage cash flows and cargo movements

In today’s interconnected global economy, events in one region can trigger ripple effects across entire global supply chains. New-generation free trade agreements such as EVFTA and CPTPP have created significant opportunities for Vietnamese businesses. However, as tariff barriers are reduced, non-tariff barriers—such as technical, environmental, labor, and food safety standards—have become increasingly stringent.

As a result, logistics has become a decisive factor in determining profitability. Disruptions at strategic points like the Suez Canal or geopolitical tensions in the Red Sea can completely overturn business plans.

3. The Three “Gatekeepers” of International Trade: Government – Banking – Logistics

3.1 The Role of Government and Policy Risks

Governments shape and regulate import-export activities through:

Legal frameworks, including customs and trade laws
Free trade agreements that open markets and reduce tariffs
Protective measures such as anti-dumping duties, safeguard measures, and technical barriers

The greatest risk arises from sudden policy changes. A notable example is the tightening of scrap import regulations in 2018, which left thousands of containers stranded at ports and caused severe raw material shortages for manufacturers. Enterprises that fail to stay updated on policy changes face significant legal and financial risks.

3.2 The Role of Banks and International Payment Risks

Banks are the financial backbone of international trade, providing:

Payment methods such as T/T, L/C, D/P, and D/A
Trade finance services, including loans, guarantees, and document discounting
Exchange rate risk management tools

A common misconception among new exporters is that letters of credit are entirely risk-free. In reality, an L/C is only secure if documents strictly comply with UCP 600 and ISBP 745. Banks examine documents, not goods, and even minor discrepancies can result in payment refusal.

3.3 The Role of Logistics and Operational Risks

Logistics serves as the lifeblood of the supply chain, encompassing transportation, warehousing, and customs clearance. In Vietnam, logistics costs remain relatively high, accounting for approximately 10–15 percent of export product value, which significantly affects competitiveness.

Common risks include selecting unsuitable forwarders, incorrect Incoterms, demurrage and detention charges, and loss of control over transit time and costs.

4. Major Challenges in International Trade Today

4.1 Global Supply Chain Disruptions

Tensions in the Red Sea and the Suez Canal have doubled or even tripled freight rates on Asia–Europe routes in a short time. Transit times have increased by 10–14 days, disrupting delivery schedules and sharply increasing costs.

4.2 Legal and Technical Barriers (TBT and SPS)

As tariffs decline, countries increasingly rely on technical barriers such as labeling, packaging, certifications, and sanitary and phytosanitary requirements. These pose significant challenges, particularly for Vietnamese agricultural and seafood exports.

4.3 Cultural Barriers and International Human Resource Management

Differences in business culture directly affect negotiations, contracts, and operations. A “yes” from a US partner may differ greatly from a “yes” from a Japanese partner. Misunderstanding cultural nuances can lead to serious disputes.

4.4 Intensifying Global Competition

Vietnamese enterprises face not only domestic competition but also strong regional competitors such as China, Thailand, Malaysia, and India in terms of price, quality, and service.

4.5 Internal Capability Limitations

This is the most critical and dangerous challenge. A lack of risk management systems and comprehensive import-export expertise is a leading cause of failure in international trade.

5. Common Risks in International Trade

5.1 Price and Product Risks

Volatility in raw material prices, exchange rates, and freight costs can lead to heavy losses if quotations are inaccurate. Quality disputes often arise when contracts lack independent inspection clauses.

5.2 Logistics and Transportation Risks

Transportation incidents, natural disasters, piracy, or errors such as incorrect Incoterms selection can result in loss of control over goods and documents.

5.3 International Payment Risks

Non-payment, document discrepancies, and trade fraud can cause enterprises to lose their entire receivable.

5.4 Exchange Rate and Financial Risks

Currency fluctuations can erode profit margins if businesses fail to adopt appropriate hedging measures.

5.5 Political and International Policy Risks

Geopolitical conflicts, trade wars, and economic sanctions can reshape markets in a very short time.

6. Risk Mitigation Strategies in International Trade

Enterprises should establish a risk management strategy based on the following pillars:

Diversifying markets, partners, and transport routes
Mastering Incoterms 2020, UCP 600, and ISBP 745
Drafting comprehensive contracts with inspection, arbitration, and force majeure clauses
Purchasing cargo insurance and export credit insurance
Applying supply chain management technologies
Training import-export personnel with a holistic and strategic mindset

7. Conclusion: Knowledge and Risk Management as Critical Survival Factors

Most billion-VND losses in international trade stem from insufficient knowledge and inadequate risk management strategies. In a constantly evolving global market, businesses cannot afford to “learn by doing” with real money and real cargo. Investing in knowledge, systems, and people is the only sustainable path for long-term success in international trade.

If you’re looking for the best import-export solutions, feel free to contact us for detailed consultation. If you need legal support or assistance with customs procedures in import-export activities, please contact Smart Link Logistics for fast and efficient consultation. With over 15 years of experience in the transportation field, we are proud to accompany you throughout your journey.

Hotline: + 84 902 964 982 to know more about our services

If you require assistance with international import and export of goods, please contact our team at Smartlink Logistics. We are available to provide you with professional guidance on our services and the necessary customs procedures.

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