03 strategy to bring cashew nuts into the US market

BANKING ACADEMY INTERNATIONAL TRADE AND FINANCE LECTURER: NGUYEN THU HUONG STRATEGY TO BRING CASHEW NUTS INTO THE US MARKET GROUP HA NOI, MAY 2022 MEMBER OF GROUP Duong Phuong Nhung 22A4050404 Trinh Trung Kien 22A4050108 Cao Thanh Giang 22A4050202 Luong Thuy Dung 22A4050073 Le Thi Hong Ngoc Cao Minh Trang 22A4050352 22A4050307 Nguyen Thi Thu Mai 22A4050043 Vu Ha Trang 22A4050406 GROUP - CONTENT CONTENT Company Introduction Why Eubiz finding a new market? About US market PESTLE analysis of US market Method of entry 12 Conclusion PREFACE Occupying nearly 50% of the cashew area and more than 54% of the country's cashew production, Binh Phuoc is considered the "capital" of Vietnam's cashew trees Farmers' income in Binh Phuoc comes mainly from collecting cashews and selling them to processors at low prices; the output is unstable due to crop failures and falling prices Seeing the hardships of the cashew farmers here, EUBIZ and their associates grew worried and wondered: How can farmers be helped? How can brand value be increased? How can we bring high-quality cashew nut products to the world? Stemming from that spirit and will, EUBIZ and their associates left Hanoi and met Binh Phuoc farmers, organized them, built factories, assisted in purchasing, enhanced processing, and began exporting cashew nuts However, exporting to a difficult market like the US is not easy Therefore, group chose the topic: "Strategy to bring cashew nuts into the US market" with the desire to be able to advise on the advantages and disadvantages through the PESTLE model and which method of accession is appropriate through the knowledge has been approached in the subject of International Trade to help the company achieve the goal of maximizing profits and improving the export output of Vietnam's cashew nuts Company Introduction It was established in 2019 and is a pioneer in cashew processing and cashew nuts exporting located in Binh Phuoc, Viet Nam EUBIZ Group has been manufacturing and exporting cashew nuts & dried fruits Manufacture Address 1: 192, Village 3, Thong Nhat Ward, Bu Dang District, Binh Phuoc province, Viet Nam Address 2: DT.741 Street, Tan Luc VillageVillage, Bu Nho commune, Phu Rieng District, Binh Phuoc Province, Viet Nam Page - MISSION OF EUBIZ HEALTH: The highest demand for organic, nonGMO, and vegan products comes from the US and Europe EUBIZ aims to bring a healthy and nutritious product and help treatment of Obesity, diabetes, and heart disease COMMUNITY: EUBIZ wants to promote and expand the scale and create jobs for farmers in Binh Phuoc, Vietnam, to have stable incomes SUSTAINABILITY: From securing economic and social sustainability for families and farmers in rural areas in Binh Phuoc, Vietnam, ensuring our products are packaged sustainably and reducing our carbon footprint WHY EUBIZ FINDING THE NEW MARKET ? Organizational factors International attractiveness Enterprise Size EUBIZ is a small and medium-sized company Currently, the government has issued many policies to help this group develop, such as improving the business environment, enhancing competitiveness, and creating favorable conditions for international integration Besides, in Binh Phuoc, EUBIZ has had a manufacturing plant labeled international fair trade for seven years It acts as a special passport for cashew nuts, which gives EUBIZ a competitive advantage over other domestic and foreign enterprises Due to the significant demand for cashew nuts, Vietnam has the advantage of being a country with many exports High quality and low price give this product a competitive advantage and quickly expand its market share in the world market Specifically, according to the Import and Export Department (Ministry of Industry and Trade), 2021 will be a successful year for Vietnam's cashew exports, with an export volume of 579,800, worth 3.64 billion USD, up 12.6% in book and 13.3% in value compared to 2020 Environmental factors Page - The voluntary proposal Eubiz's supply chain is connected with Amazon, Alibaba, and several ECommerces Platforms across Asia, with headquarters from Vietnam This is one of the first supply chains to be included in Walmart - the sourcing package is the most comprehensive tracking and sustainability response in the wholesale market , Facilitating meetings and getting recommendations from distributors and retailers → The "pull" effect Competitors in the domestic market often tend to capture each other's strategies When one business expands to the international market and can bring a competitive advantage, the remaining companies not want to be left behind, gradually internationalizing Therefore, the internationalization of businesses sometimes creates the effect of enticing a series of other companies, and EUBIZ in particular and cashew nut trading companies, in general, are no exception The attractiveness of the host country The United States and Europe have a habit of consuming fast food, which increases the rates of diabetes, obesity, and high blood pressure in your countries As a result, the demand for non-GMO and vegan products is increasing EUBIZ creates energy-rich, cholesterol-free, low-sodium, low-fat products with a high percentage of fiber and vitamins, helping to improve the health of people in different countries without changing their eating habits Besides, high income makes stable product consumption and large purchasing power is also a motivation to enter new markets US IS A POTENTIAL MARKET Consumption rate: The US market is currently the leading import market for Vietnam's cashew nuts, with a total import volume of over 163 thousand tons in 2021, worth about $1,080 million, an increase of 10% in value compared to 2020 (According to data from Trademap - List of importing markets for the product exported by Vietnam in 2021) Next, according to the Vietnam Import-Export Department, cashew nut exports to the US are increasingly favorable In January 2022, the average price of cashew nuts imported to the US reached 6,709 USD/ton, up 9.4% compared to January 2021 The volume of US cashew nuts imported from Vietnam reached 11,780 tons, worth about 78.24 million USD, up 8.9% in book and 19.1% in value over the same period in 2021 Page - The United States is the second-largest consumer of cashew in terms of volume, with a share of 34% of the total global consumption, as of 2019 Cashews are also being increasingly used as a constituent in muesli, energy bars, cookies, chocolates, and ice creams Therefore, high demand from direct consumers and cashew milk processing industries in the United States are the critical stimulants for cashew consumption in the country Vegetarians are prioritizing a plantbased diet, including plant-based sources of protein Cashew nuts are a good source of plant protein This has increased the per capita consumption of cashew nuts in the country According to the International Nut and Dried Fruits Council, the per capita consumption of cashews in the country increased from 0.46 kilograms in 2018 to 0.48 kilograms in 2019 Import rate: List of importing market for the cashew nuts exported by Viet Nam in 2021 - ITC PESTLE POLITICAL America is a multi-party country (Democracy, Republican, ) Since then, the political mechanism and economic structure can change more or less through each presidential term The US has applied many quotas and difficulties on each item of Vietnam Although the US has not yet imposed sanctions, quotas or tariffs on Vietnamese cashews, businesses need to prepare well to be able to penetrate the US market in the near future Corruption Perception Index (CPI) According to a report by Transparency International, the US in 2021 ranks 27th in this ranking with 67/100 points This is a good indicator level for a country and lays the foundation for the penetration of foreign companies to invest in this market ECONOMIC The average household income in the US in 2020 is about $67,500, down 2.9% from 2019 and considered a significant decrease over the past decade However, this is still considered a high level compared to other countries in the world Page - On December 30, 2021, the US Department of Labor released data showing that the country's unemployment rate is now at 4.2%, the lowest level in 52 years when the number of new jobless claims continued to decline in the week ending December 25 TECHNOLOGY The US is rated as the world's number one power in AI development capacity in all fields, from basic research to applications In 2015, the US Government's investment in research and development of AI-related technologies (not classified as confidential) reached approximately $1.1 billion SOCIAL Cultural environment Since the 1960s in North America, the Hippy style spread - Eat clean was born and continues to develop until now Cashews are one of the most widely used nuts in this diet Americans love breakfast with cereals containing nutritious nuts People here often use cashews to make snacks and combine them with milk, so the US is one of the leading cashew consuming countries in the world; from 2010 to now, the demand for cashew nuts has grown by 53% LEGAL Formulation and enforcement of American legislation in environmental protection law In some states, environmental control and management of projects and works are based on environmental impact assessment (EIA) tools and permits Trade compensation law (including anti-dumping law) and anti-subsidy tax law are two laws that any business entering the US market must pay attention to because these are two US tools applied Frequently on imports that affect domestic US production Page - FDA BRC SGS TESTING ISO Certificate EUBIZ obtain for respond US required The US technical standard fence includes many regulations: Regulations on labels and trademarks; Regulations on codes and symbols; Regulations on intellectual property rights; Regulations on product liability, and sanitary and phytosanitary standards ENVIROMENT The United States is located between the two oceans and belongs to the AsiaPacific economic region, which is convenient for Vietnamese businesses to exchange goods by sea There are many climates, so it is challenging to grow cashews nuts METHOD OF ENTRY Choosing a way to enter foreign markets is a big issue that EUBIZ needs to consider It is a combination of two main factors: ownership and level of investment; the form of entry is export, which includes direct and indirect exports Page - DIRECT EXPORT EUBIZ should use direct exporting as a method of entry because of its advantages that can control all of our manufacturing processes, thus avoiding the risks associated with production overseas (e.g., poor production standards, use of child labor) and the risks related to political instability in a foreign market The most significant advantage of direct exporting and why EUBIZ should use it is that it can obtain in-depth information about trade in the target market and be closer to customers, enabling it to make future decisions about whether to invest in facilities in the market However, there are disadvantages that EUBIZ might need to consider, such as greater financial risk or limited market coverage, or insufficient knowledge of the market and culture But I think these are the risks that EUBIZ is willing to face to get to know about the market and have the information about their customers so that it operates in the company's best interests Although U.S customs regulations are complex and often different from those used by other countries, shipping goods across the border can be relatively uncomplicated if we are well prepared Get in touch: MADE IN VIET NAM www.Eubizfood.com Direct exporting could be challenging, but it also presents an opportunity for high profits when markets are chosen carefully It can be a suitable entry method for longterm growth in an international market Recommend Export partner - https://www.amazon.com/ - http://www.costco.com/ - https://www.walmart.com/ - https://www.target.com/ PREMIUM CASHEW NUTS FROM THE LEGENDARY LAND INDIRECT EXPORT Besides direct exporting, EUBIZ could use indirect export as well Indirect exporting means selling to an intermediary who sells EUBIZ products either directly to customers or to importing wholesalers The easiest method of indirect exporting is to sell to an intermediary in their own country - Vietnam When selling by this method, EUBIZ is typically not responsible for collecting payment from the overseas customer or coordinating the shipping logistics Management Companies An export management company (EMC) is one such intermediary A good one will act as a global extension of EUBIZ's sales-and-service presence EMCs offer a wide range of services, but most specialize in exporting a specific range of products to a well-defined customer base in a particular country or region For example, an EMC might specialize in exporting cashew nuts to nursing home customers in the US Page 10 - Other common compensation structures used by EMCs include commission and buy-and-resell, start-up or project fee-only, fee plus commission, or fee plus carry out commission and buy-and-resell An EMC will all aspects of the export transaction: Identifying international markets for cashew nuts products Locating customers overseas Arranging agent/distributorship relationships Preparing, negotiating, and handling all communication, documentation, and shipping logistics Exhibiting at international trade shows Traveling overseas to meet with potential customers Setting up appropriate distribution channels Helpful tips: Several ways to find EMC Rely on your local chamber of commerce or small business assistance center They generally know who has been in the export trading business for a while At the very least, they can point you to an excellent online exporting directory Freight forwarders and logistics experts also might provide you with the names of EMCs that use their service Search the internet for listings under "Export Trading Companies" or "Export Management Companies." Trading Companies EUBIZ might also use the services of an export trading company (ETC) ETCs are virtually identical to EMCs, but they tend to function on a more demand-driven basis, by which the demand of the market compels them to buy specific commodities They usually have longstanding customers for whom they source products regularly For example, they might get a request from a customer to find a supplier of cashew nuts who can provide twenty container loads a month for a given number of months The ETC will then seek out a reputable manufacturer who can handle the demand at an economical price and then arrange to transport the goods to the customer You can track down a good ETC via the same channels recommended above for finding an EMC Helpful tips: Intermediaries Indirect exporting can also involve selling to an intermediary country where EUBIZ transact business, which in the wishes to sells its Page 11 - products directly to customers or other importing distributors (wholesalers) Under these circumstances, they will not know who their ultimate consumers are When selling by this method, they are generally responsible for collecting payment from the overseas customer and coordinating the shipping logistics TRANG In some instances, the overseas agent might request that they are allowed to handle the shipping, usually because they receive special transportation rates from carriers with whom they've done volume business for years In this case, EUBIZ will need to arrange for the cargo to be ready by shipment They must still collect payment from the customer, but their actual involvement in the transaction is minimal It is nearly as easy as a domestic sale SỐNG XANH Advantage It's an almost risk-free Depending on the intermediary way to begin with which you are dealing, you don't have to concern yourself with It allows you to continue to concentrate on your domestic business shipment and other logistics Disadvantage PROFIT Your profits are lower You lose control over your foreign sales You rarely know who your customers are and thus lose the opportunity to ucts sim Prod ila r control se Lo needs When you visit, you are a step removed from the actual transaction You feel out of the loop The intermediary might also be offering products similar to yours, including se in er directly competitive products, to the Lo Page 12 - tailor your offerings to their evolving for s m a tio n c u Conclusion t om same customers instead of providing exclusive representation Only you can determine which export strategy suits your needs Your choice will depend on your goals, available resources, and the type of business you run Bạn muốn hành tinh tươi đẹp hơn? CONCLUSION In the development of the country, Vietnam has accelerated the process of globalization and is deeply integrated with the region and the world In particular, the Party and State have always paid attention to the development of agricultural products because this is the strength of our country Seizing that opportunity, EUBIZ Vietnam Joint Stock Company, with the mission of bringing the image of cashew nuts to the West America, has many positive development signals Through the analysis process of group 3, when EUBIZ joint-stock company in particular and cashew export companies, in general, chose to penetrate the US market We can see that besides the great benefits that internationalization brings, there are also many difficulties However, when the team analyzed the factors through the Pestle model - a useful analytical tool that helps businesses understand the "big picture" of the business environment in which they are operating, identifying potential opportunities and threats In addition, the team has also come up with many suitable entry methods based on the size of the business and the current capacity to optimize costs and grow revenue in the US market REFERENCES https://eubizfood.com/ https://www.ceintelligence.com/content_manager/contentPages/vi ew/us-market-entry-strategies https://www.transparency.org/en/countries/united-states https://en.vietnamplus.vn/vietnamese-cashew-nuts-occupynearly-90-percent-of-us-market-share/209643.vnp https://www.medicalnewstoday.com/articles/309369#_noHeaderP refixedContent https://www.danielmachine.com/tin-tuc/tin-tuc-chung/us-stillsurpassed-china-to-become-the-number-1-market-to-importcashew-nut-product-of-vietnam-12417.html https://ustr.gov/sites/default/files/2022%20National%20Trade%20 Estimate%20Report%20on%20Foreign%20Trade%20Barriers.pdf https://www.pewresearch.org/social-trends/2022/04/20/covid-19pandemic-pinches-finances-of-americas-lower-and-middleincome-families/ ... exporting cashew nuts However, exporting to a difficult market like the US is not easy Therefore, group chose the topic: "Strategy to bring cashew nuts into the US market" with the desire to be able to. .. exports to the US are increasingly favorable In January 2022, the average price of cashew nuts imported to the US reached 6,709 USD/ton, up 9.4% compared to January 2021 The volume of US cashew nuts. .. nutritious nuts People here often use cashews to make snacks and combine them with milk, so the US is one of the leading cashew consuming countries in the world; from 2010 to now, the demand for cashew