02 proposing new market for textile exports for dong tien joint stock company south africa (1)

Group Topic: Proposing new market for textile export for Dong Tien Joint Stock Company- South Africa Class: BUS12A 06 Lecturer: Nguyen Thu Huong OUR TEAM MEMBERS Tăng Thị Thu Quỳnh - 22A4050025 (L) Phạm Lệ Trinh - 22A4050125 Nguyễn Thị Mai - 22A4050204 Lê Đức Huy - 22A4050503 Bùi Thị Như Quỳnh - 22A4050149 Lê Minh Ngọc - 22A4050302 Phạm Như Quỳnh - 22A4050024 INDEX I INTRODUCTION I II II COMPANY BACKGROUND Tử tế tôn trọng người III III REASONS FOR FINDING NEW MARKET Học tập chăm cố gắng IV IV PESTEL ANALYSIS OF SOUTH AFRICA V VI METHOD OF ENTRY CONCLUSION I International trade means the exchange of goods and services between countries, subject to the principle of equal exchange in order to benefit the parties Although international trade has been around for a long time in human history, its economic, social and political importance has only been noticed in detail in the last few centuries The increase in international trade is often seen as the basic meaning of "globalization" Associated with international trade is the form of export, Vietnamese businesses are increasingly expanding with opportunities in international trade, import and export, to increase sales, improve market share and open up new markets many strategic partners from abroad foreign integration avenue Being admitted as a member of the World Trade Organization (WTO) for nearly 16 years, Vietnam has made a long step forward in the world In particular, the integration process is also exploited effectively, linking export growth with effective control of import activities to help the trade balance shift from trade deficit to trade surplus Therefore, the WTO is likened to a big door that is opened for Vietnam to confidently step into the global playing field Dong Tien Joint Stock Company is no exception when it constantly strives to promote production, improve quality and enhance its brand name for successful business, exporting goods to foreign countries such as U.S., EU, JAPAN, CANADA, TAIWAN Realizing that South Africa is a potential market, in the group exercise of group 2, we will present the topic of Dong Tien Joint Stock Company exporting garments to South Africa II COMPANY BACKGROUND Genaral introduction Dong Tien Joint Stock Company (DOVITEC) was formed from a garment factory under Dong Nai Technology Company specializing in producing and trading garment products Founded in 2007, DOVITEC specializes in manufacturing goods and processing garments for export such as jackets, trousers, skirts, high-end underwear, sportswear, etc… especially specialized in sewing sports items specialized for racing, skiing, and climbing Main export markets: U.S, EU, Japan, Canada, Taiwan… Throughout the years, the company has been constantly innovating technology, improving labor productivity, expanding the market, being proactive in production and business to meet all requirements of domestic and foreign customers The company's items are diverse and of high quality Dong Tien Joint Stock Company has been recognized as ISO 9001 high-quality Vietnamese goods SA 8000, ISO 9002 Thereby, it proves its competitiveness and prestige in the market Type of business: Joint-stock company Dong Tien Joint Stock Company was formerly known as Dong Tien Garment Limited Company, which was established in 1990 On April 6, 2007, the company was officially converted into Dong Tien Joint Stock Company Joint stock company is a type of business organization that is owned by its investors In a joint stock company, the company stock can be bought and sold by the shareholders Shareholders should be having possession of at least stock of the company in order to be counted as a partial owner Advantage of Joint stock company: - There is no limit to the maximum number of shareholders - The shareholders have limited liability and are responsible within the amount of capital contributed to the company - It has a tight organizational structure to protect the interests of shareholders and create the best conditions for effective company management - It has the ability to raise capital the fastest Disadvantage of joint stock company: - The management and operation is very complicated - The tax rate is relatively high - The cost of establishing a company is quite expensive and the ability to secure business and finance is limited III REASON FOR FINDING NEW MARKET firstly Businesses have the opportunity to expand to many other countries due to having experience in exporting to foreign markets and being highly appreciated by foreign and domestic customers secondly Foreign markets can bring in greater revenue With a large population size, highconsumer demand while intra-regional production has not yet developed, Africa is considered as a potential export market for Vietnamese goods, including textiles, footwear, fashion accessories of all kinds… South Africa is the leading economic, social and political developed country in Africa and is currently Vietnam's largest trading partner in Africa thirdly Vietnam's signing of free trade agreements (FTAs) has opened up a lot of opportunities for businesses to access and penetrate new markets Regulations to remove tariff and non-tariff barriers make it easier for businesses to enter the market finally Exporting helps businesses bring products abroad, access foreign markets and gradually make a name in foreign markets For the above reasons, ​Dong Tien Joint Stock Company absolutely has the opportunity to export to new markets The African market, especially South Africa, is very potential for Vietnam's textile and garment exports PESTEL IV ANALYSIS OF SOUTH AFRICA POLITICAL ECONOMICS SOCIAL TECHNOLOGY ENVIRONMENT LEGAL Political REGULATIONS ON IMPORT AND EXPORT CERTIFICATE OF ORIGIN Import and export license Certain goods that want to enter South Africa require an import permit, for example used equipment, consumer goods (food, clothing, textiles, shoes, books, etc.), products of wood, all kinds of paper, fuels for automobiles, petrochemical products, other industrial products and imported materials such as equipment and supplies for the production of automobiles Certificate of Origin Certificate of Origin (C/O) or in South Africa called D/O (Declaration of Origin) is made according to Form DA-59 South African Customs will notify the importer if Form DA-59 is required and the importer will notify the exporter Once this form is required, the exporter or supplier must present at least one original along with the original commercial invoice The C/O is not necessarily certified by the Chamber of Commerce and Industry or by the Customs Tax rate regulations Individuals are taxed progressive up to 40% of their taxable income when the income tax rate exceeds 552,001 rand per year Income tax levied on non-South African nationals is based on the source of income, all income arising from sources believed to be generated within South Africa is taxable, regardless of the nationality About regulations on import and export goods, as a member of the WTO, South Africa applies the mostfavored nation (MFN) tax rate to WTO member countries Along with the EU-South Africa Trade and Development Agreement, the exports of many countries, including Vietnam, to South Africa are at a disadvantage compared to goods imported from the EU, especially products such as cosmetics, plastic, textile, Import quotas South Africa imposes import quotas on several items such as petroleum products, plastic raw materials, rubber products including tires and conveyor belts, paperboard, some machinery, and typical items including some garments Along with the EU-South Africa Trade and Development Agreement, the exports of many countries, including Vietnam, to South Africa are at a disadvantage compared to goods imported from the EU, especially products such as cosmetics, plastic, textile, The relationship During nearly three decades since the official establishment of diplomatic relations, the cooperative relationship between Vietnam and South Africa has continuously developed well, with many achievements in important fields such as politics- diplomacy, defense, security, trade, investment, agriculture Vietnam always attaches importance to the traditional friendship relationship with South Africa, identifying South Africa as an important cooperation and development partner of Vietnam in Africa The two parties agreed to strengthen mutual support at international and regional forums as well as effectively promote bilateral cooperation mechanisms The two parties also agreed to further promote economic cooperation to match the good political relations and scale of the two economies Typically, the bilateral trade turnover between Vietnam and South Africa reached nearly $1.4 billion in 2021, proving the relationship between the two sides Opportunities when exporting garments to this market Thanks to the bilateral cooperation agreement and the good relationship between Vietnam and South Africa, it has created favorable conditions for the two parties to support each other in the future Regarding import and export business activities, the Foreign Affairs Committee of the South African National Assembly proposed a number of measures to further develop bilateral economic-trade relations in the context that the two countries are strongly implementing policies of economic recovery after the negative impacts of the COVID-19 pandemic Thereby creating a premise for Vietnamese companies to easily export to this market Difficulty The import of goods from Vietnam into South Africa is still mainly subject to tax competition compared to countries that have signed Free Trade Agreements with South Africa, having difficulties in accessing information, handling tax issues Import procedures into South Africa Risks due to port security, distractions from corruption in South Africa are also concerns for Vietnamese businesses exporting to South Africa South Africa has a relatively complicated import process South African importers must register at South African Customs and obtain an import identification number from SARS This affects many importers, causing delays in the clearance of goods Therefore, it is also a disadvantage for Dong Tien Vietnam enterprises when exporting garments to this country because there will be a certain delay in the customs clearance of goods resulting in making payment late and affecting working capital turnover ECONOMICS Population and economic growth: Africa is becoming the fastest urbanizing continent in the world The South African economy is the second largest in Africa, after Nigeria As a regional manufacturing hub, it is the most industrialized and diversified economy on the continent South Africa is a high-middle-income economy - one of eight such countries in Africa The largest sector of the economy is services which accounts for around 73 percent of GDP Inflation rate: South Africa is the region most affected by COVID-19 in Africa, so the South African government has tightened disease prevention measures before the third wave of the disease As a result, the commerce, catering and accommodation sectors decreased In addition, the region is also affected by the conflict between Russia and Ukraine because African economies are closely linked with Russia and Ukraine through food imports and tourism (Russia and Ukraine account for almost 30% of global wheat exports and the majority goes to Egypt, which is then distributed across the African continent) High food prices leading to high inflation in South Africa in particular The youth unemployment rate: South Africa's unemployment rate climbed to 35.3% in the fourth quarter of 2021, up from 34.9% in the previous period It was the highest jobless rate since comparable data began in 2008 The number of unemployed persons increased by 278 thousand to 7.9 million, employment rose by 262 thousand to 14.5 million and the labor force went up by 540 thousand to 22.5 million The youth unemployment rate, measuring job-seekers between 15 and 24 years old, was unchanged at a record high of 66.5% source Opportunities when exporting garments to this market: - With a large population, high consumer demand while domestic production has not been developed, Africa is considered a potential export market for Vietnamese goods, including textiles, leather, shoes, fashion accessories of all kinds In many African countries, the textile industry is still underdeveloped despite having an abundant source of raw cotton With the population and income of the African people increasing, aesthetic taste and diverse fashion interests; the continent will become a promising consumer market for textiles, leather and footwear African countries, especially South Africa, Nigeria, and Kenya are countries with great demand for textiles and footwear - Vietnamese enterprises can consider the possibility of investing in some major markets in Africa, typically South Africa to take advantage of cheap, available labor and raw materials to produce textiles and apparel Challenges when exporting textiles and garments to this market: Vietnam's trade with markets in the world, typically South Africa, will continue to face many difficulties The COVID-19 epidemic remains an obstacle to the recovery of the global economy due to increasing the spread The regional demand for goods may recover to pre-pandemic levels, but a spike in growth is unlikely - The high unemployment rate in South Africa leads to limited consumption of domestic products as well as imported goods, so this is seen as a barrier for Vietnamese businesses in general as well as joint stock companies Dong Tien garment exports in particular when approaching the needs of the people here social Nelson Mandela’s South Africa is often referred to as the ‘rainbow nation’ Archbishop Desmond Tutu first coined the term to describe South Africa’s multicultural diversity There are 11 official languages in the country and Christianity, Islam, and indigenous beliefs are the major religions The current population of the country is around 59.7 million (Worldometer, 2021) Life expectancy is estimated to be almost 64 years (O’Neill, 2020) However, there are some big challenges South Africa faces today For example, unemployment is high and the public health system is ailing Social mobility and economic growth are often halted by poor and inadequate infrastructure South Africa remains a divided society with growing tensions between immigrants from other parts of Africa and the local communities In South Africa, the textile industry is still underdeveloped despite having an abundant source of raw cotton With the population and income of the African people increasing, the continent will become a promising market for textiles, leather and footwear due to the people's improved income, aesthetic taste and diverse fashion preferences African countries, especially South Africa is country with great demand for textiles and footwear Advantages Disadvantages Abundant human resources Diversity in languages helps businesses increase communication and accessibility South Africa's high demand for clothing is a growth opportunity for businesses Conflicts in South Africa could affect business TECHNOLOGY South Africa is one of the most technologically advanced countries in Africa Online shopping is also on the rise in South Africa The Cape Peninsula University of Technology (CPUT) is one of South Africa's major centers of higher learning with internationally recognised programmes that prepare students for careers in the clothing and textile sector ADVANTAGES Enterprises when working in a place where technology is developed, business activities are increased productivity and efficiency Online shopping is on the rise in South Africa Consequently, there are great opportunities for online retailers CPUT's Department of Clothing and Textile Technology provides an excellent academic starting point for careers that use creative and technical skills in this sector of the economy DISADVANTAGES Enterprises have difficulty adapting to high technology Businesses may not be able to takefull advantage of technology ENVIRONMENT Climate A subtropical location, moderated by the ocean on three sides of the country and the interior plateau's altitude, accounts for the warm temperate conditions South Africa is a relatively dry country, with an average annual rainfall of about 464 mm While the Western Cape gets most of its rainfall in winter, the rest of the country is generally a summer-rainfall region Dong Tien Company can rely on the analysis of climate to have a suitable product strategy when entering the South African market Geographical location South Africa occupies the most southern tip of Africa with its long coastline stretching more than 000 km from the desert border with Namibia on the Atlantic coast southwards around the tip of Africa and then north to the border of subtropical Mozambique on the Indian Ocean Weather Most of the country has warm, sunny days and cool nights Temperature and rainfall patterns vary in response to the movement of a high-pressure belt that circles the globe between 25º and 30º south latitude during the winter and low-pressure systems that occur during summer In addition, South African textiles are classified by season and by region The climate of South Africa is divided into two seasons: winter and summer The weather is semi-temperate, hot during the day but cold at night This makes the lower class (mostly black) want to buy a warm shirt to be able to wear during the day and warm enough to wear at night Weather factors greatly affect the type of garment LEGAL Currently, South Africa does not apply quotas for exported textiles and garments and South Africa also follows the Free Trade Agreements with the EU, SADC, Zimbabwe to impose taxes on textiles and apparel as well as other items other Depending on each Agreement that South Africa signs, will apply different tax rates, however, the general tax rate is from 20% to 60% Several factors make investing in the textile and footwear industry in South Africa more attractive South Africa has trade agreements with the EU and the US under which South Africa enjoys a preferential import tax rate of 17.5% In the US market, South Africa's textile and garment exports have increased by 62% since receiving preferential treatment under the AGOA act South Africa also enjoys the tax incentives that SADC countries grant under the SADC Free Trade Agreement, which was fully implemented in 2008 V METHOD OF ENTRY After analyzing the South African environment, with the above advantages, it can be seen that the South African market is very complex, the penetration needs to be well planned, considering the following factors Price sensitivity of consumer demand Exchange rates tend to be very predictable in the medium term, but may surge in the short term Distribution issues need to be studied carefully, as large retail centers are concentrated in five urban areas Consumer protection rules implemented and better enforced in recent times Prudent market biases tend to stick with known suppliers and therefore require sustainable market development South Africa's position as a stepping stone for developing market opportunities in Sub-Saharan Africa (the marketing mix should envisage this medium-term option) Localization measures such as imposing quotas or increasing taxes on imports and local content requirements to prioritize local supply chains Difficulties in geography, reliability in payment transactions, payment methods, verification of customer capacity Currently, the demand for goods, including fashion consumer goods in South Africa is increasing, the domestic textile and garment industry has not yet developed despite abundant raw materials With a growing population and people's income, the country will become a promising consumer market for textiles due to improved people's incomes, taste and diverse fashion preferences However, with a completely new market, there is a need for deep understanding and great geographical difficulties, risks and inadequacies in trading, the economy gradually recovers from the Covid pandemic, the remaining uncertainties in politics, economics The reasonable choice for Dong Tien Company when entering the market of South Africa is indirect export advantages and disadvantages advantages It provides a route to entering an overseas market without the risks (smaller financial risks) and complexities of direct exporting, as the intermediary will basically provide all of the export services This approach also does not require employing more staff with specialist experience because the agent knows and has access to the market and distribution channels in South Africa They can help Dong Tien company remove cultural, legal, language and even minimize fraud situations in commercial transactions disadvantages The main disadvantage is that control is lost over how your goods are sold and marketed as well as the potential cost incurred When working with an intermediary, the company must accept a lower profit margin and not expand the market quickly Indirect exporting does not have direct contact with customers and makes it difficult to build a closer relationship with customers in South Africa, which reduces future marketing efforts During this period, in order to bring the company's textile and clothing products into the South African market, it is most appropriate to choose the form of indirect export because: Firstly, South Africa is a very new market with the company, with great geographical differences, language barriers, culture, law It’s necessary to have experience, research and learn carefully when entering the market When choosing to work with intermediaries, the company can overcome those difficulties to minimize the risk Secondly, the Vietnamese economy is suffering from the huge impacts of the Covid-19 pandemic and Dong Tien company is no exception, the business is on the way of recovery and development, the choice of safe market penetration, risk reduction is a way for the company to grow and gradually Thirdly, dealing with African countries in general and South Africa in particular is always subject to the risk of fraud The common form of scam is usually the object of accepting any price of imported goods from Vietnamese enterprises at low prices, then requesting the payment of a deposit fee and then occupying Therefore, choosing a reputable intermediary helps the company to learn about partners, avoid undue risks In particular, when dealing with South Africa, the company also needs to be aware that if using the form of delivery, it will deliver the documents (D/P), which must be accompanied by the deposit terms Depending on each item, the business needs to offer a deposit percentage (preferably 30%) to ensure the safety of orders In addition, it is recommended that the partner use irrevocable letters of credit (L/C) opened at reputable banks, and at the same time limit for deferred customers In addition, in the long term, after successfully exporting textile and garment products to this market, the company can also study investment in the production of goods in South Africa to take advantage of the abundant labor and raw materials, serving local consumption and exporting to countries in the African region, including exporting to the EU and the United States where goods originating in South Africa enjoy preferential tariffs VI CONCLUSION After analyzing many issues revolving around the penetrating new markets, it shows us that to be able to sell his goods in a different country needs to study particular and detailed activities of that country South Africa is a country that has developed with many shortages of material living conditions Besides, there are many markets being left lane as agricultural products, aquatic products, pharmaceuticals, and apparel And of this, we can see that South Africa is a market full of potential that we can tap into here, especially the apparel market is very promising With more than 40 million people, the need to dress has not been fully met, which is attached to customs policy relative advantages, the development of international business is too right To be favorable of facilitating, we need to have more cooperation policies accordingly The Vietnamese government needs to have economic policies that create conditions for the garment industry in general and Vietnam in particular The most important thing is that Vietnamese enterprises should also have their own endeavors in the production process, given the strategy match with the situation of your country and heavy power With such conditions, then Vietnam can succeed in the development of international business TÀI LIỆU THAM KHẢO Book: International Trade and Finance http://dovitec.com.vn/gioi-thieu.html https://www.vietnamplus.vn/tao-buoc-dot-pha-mo-rong-thi-truong-xuat-khaumoi-tiem-nang/682479.vnp https://bnews.vn/viet-nam-nam-phi-day-manh-hop-tac-songphuong/240461.html http://asemconnectvietnam.gov.vn/WebLocalfiles/Huong/136201491229ttnn_ vn_20580_151_quy_dinh_xnk_namphi_vu_cp_Tna.pdf https://thuvienphapluat.vn/van-ban/Thuong-mai/Hiep-dinh-Thuong-maigiua-Viet-Nam-Nam-Phi-2000-13440 https://moit.gov.vn/tin-tuc/thi-truong-nuoc-ngoai/tang-cuong-day-manhquan-he-thuong-mai-viet-nam-va-nam-phi.html https://www.vietnamplus.vn/thuc-day-quan-he-song-phuong-viet-namnamphi-sau-dai-dich/773333.vnp https://www.vietnamplus.vn/imf-khuyen-nghi-nam-phi-tang-toc-cai-cach-devuc-day-nen-kinh-te/620629.vnp 10 https://moit.gov.vn/tin-tuc/thi-truong-nuoc-ngoai/co-hoi-cho-doanh-nghiepday-manh-xuat-khau-hang-thoi-trang-sang-chau-phi.html 11 https://dangcongsan.vn/kinh-te/xuat-nhap-khau-cua-viet-nam-sang-khu-vucchau-a-chau-phi-con-nhieu-thach-thuc-603854.html 12 https://tradingeconomics.com/south-africa/gdp-growth-annual 13 https://www.trade.gov/country-commercial-guides/south-africa-market-entrystrategy 14 https://vov.vn/kinh-te/thi-truong/thi-truong-chau-phi-giau-tiem-nang-choxuat-khau-det-may-viet-nam-post938406.vov ... of Dong Tien Joint Stock Company exporting garments to South Africa II COMPANY BACKGROUND Genaral introduction Dong Tien Joint Stock Company (DOVITEC) was formed from a garment factory under Dong. .. 9 002 Thereby, it proves its competitiveness and prestige in the market Type of business: Joint- stock company Dong Tien Joint Stock Company was formerly known as Dong Tien Garment Limited Company, ... the company was officially converted into Dong Tien Joint Stock Company Joint stock company is a type of business organization that is owned by its investors In a joint stock company, the company