THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS The faculty of International Business REPORT TOPIC PLAN FOR SUGAR EXPORT Subject Export – Import Business Lecturer MSc Nguyen Thi Phuong Thao Class[.]
THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS The faculty of International Business ……….……… REPORT TOPIC PLAN FOR SUGAR EXPORT Subject: Export – Import Business Lecturer: MSc Nguyen Thi Phuong Thao Class: 46K01.2 Group: Members: Student Number: Nguyen Phuong Lan 201121601218 Nguyen Doan Khanh Linh 201121601220 Hoang Le Anh Thu 201121601235 Huynh Anh Thu 201121601236 Vo Thi Hong Thuy 201121601237 Da Nang, 2022 TABLE OF CONTENTS TABLE OF CONTENTS TABLE OF FIGURES TABLE OF TABLES ESTABLISH THE COMPANY’S APPROPRIATE GOALS REGARDING I THE NEW BUSINESS Company overview Goals 2.1 Overview of Vietnam's sugar market 2.2 Set export goals of the business II SELECTING A PRODUCT III CHOOSING A TARGET MARKET 11 IV Preliminary screening (basic needs) 11 1.1 Sugar world import situation 11 1.2 Vietnam sugar export situation 11 Secondary screening (financial and economic conditions) 12 2.1 China 12 2.2 The USA 14 Final screening (political and legal condition) 16 3.1 Import Tariff of USA 16 3.2 Import Tariff of China 17 Conclusion the most desirable market 18 PRODUCT ADAPTATION 19 Mandatory 19 1.1 Trademark 19 1.2 Labels 19 1.3 Package 20 Voluntary .20 2.1 Physical product core 20 2.2 Product package 21 2.3 Auxiliary services .23 V CHANNELS OF DISTRIBUTION 24 VI Analyzing Export Channel Options .24 1.1 Direct channel 24 1.2 Indirect channel 25 Model of Indirect channels of MSC 27 PRODUCT PROMOTION 32 Promotion strategy 32 Export promotional tools .32 2.1 Sales Promotion 32 2.2 Advertising 36 VII PRODUCT PRICE 37 Export pricing objectives .37 Pricing and markup policy .37 Approaching export pricing 37 Determinants of export prices 38 4.1 External variables .38 4.2 Internal variables: .40 Cost determination 41 5.1 Freight cost: 40$ / 20’DC 41 5.2 China tariff and tax 41 5.3 Cost of production 42 5.4 Insurance fees 42 Actual product price sheet .42 Conclusion .43 VIII REFERENCES 44 TABLE OF FIGURES Figure Domestically produced sugar and imported Thai sugar into Vietnam Figure Export situation of sugar product line in HS code 17 Figure Export situation of sugar product line in HS code 1702 10 Figure List of markets that import sugar from Vietnam 11 Figure List of supplying markets for sugar imported by China 12 Figure Inflation rate of China 13 Figure Interest rate of China 14 Figure Inflation rate of the USA 15 Figure Interest rate of the USA 15 Figure 10 Import Tariff of USA on Vietnam sugar products 16 Figure 11 Import Tariff of China on Vietnam sugar products 17 Figure 12 Model of Indirect channels of MSC 27 Figure 13 RT-Mart in China 28 Figure 14 Walmart in China 28 Figure 15 Metro in China 28 Figure 16 Jiajiayue in China 29 Figure 17 Carrefour 29 Figure 18 Shanghai New World Daimaru 29 Figure 19 Family Mart 30 Figure 20 Tianfu .30 Figure 21 Easy Joy 31 Figure 22 China Import and Export Fair in Guangzhou 34 Figure 23 SIAL China .34 Figure 24 World Centrifugal Sugar: Production and Consumption 38 Figure 25 List of supplying countries for sugar imported by China .39 Figure 26 China Import Customs Duty, Tax 41 TABLE OF TABLES Table Sugar world import situation .11 Table GDP, GNI per capita 14 Table Container freight rates for some export routes 40 Table Detailed price list 42 Table Actual product price sheet 43 I ESTABLISH THE COMPANY’S APPROPRIATE GOALS REGARDING THE NEW BUSINESS Company overview Myan Sugar Company (MSC) is a sugar manufacturer, located at 71 Ngu Hanh Son Street, Ngu Hanh Son District, Da Nang, Vietnam Our major line of business is manufacturing, processing and selling sugar in the domestic market Regarding the workforce, the company has more than 500 employees After several years of effective operation and successful sale, MSC produces 50,000 tons of product per year with a modern processing plant system Production lines closed on materials to finished products for export MSC produces a lot of kinds of sugar with international standards including Glucose, Fructose, cane sugar, beet sugar and mixed form of products Goals 2.1 Overview of Vietnam's sugar market a Reality Sugar cane output in the year 2019-2020 is about 7.4 million tons (-39% YoY) and produces nearly 770 thousand tons of sugar (-35% YoY) In addition, the area of raw sugar cane is estimated to decrease by 18%YoY to 156 One-third of sugar mills in the Association had to close due to a shortage of raw materials The volume of sugar imported from Thailand into Vietnam skyrocketed after the quota was removed and the import tax for ASEAN countries was only 5% The average price of Thai sugar exported to Vietnam (including raw and refined) has increased, but is still only at 327.7 USD/ton, lower than the cost of cane to make domestic sugar (currently about 410 USD/ton) leading to serious damage to the competitiveness of the domestic market Figure Domestically produced sugar and imported Thai sugar into Vietnam Source: VSSA, Ministry of Commerce of Thailand, PHFM In the context of a slow economic recovery and serious impacts from smuggled sugar, dumped imported sugar, and unfair competition, the output of sugar produced from sugarcane faces many difficulties "In that situation, the mills, despite their efforts to reduce the selling price of sugar in order to have money to pay sugarcane to farmers and invest in the next sugarcane crop, could not push sales," VSSA emphasized In the last years, Vietnam has 9/38 sugar factories that have to close because they cannot compete at home Many experts predict that the sugar industry is at risk of being completely dependent on imports These things have led many Vietnamese enterprises to plan to promote the export of products to foreign countries in order to expand consumption markets b Positive export prospects of Vietnam's sugar market Export to China: Under the impact of the Covid-19 epidemic and the flood situation that occurred in the third quarter of 2020, China has increased sugar imports to reserve essential food, including Vietnam Export to EU: The effective EVFTA has opened up opportunities to export highquality sugar to the EU Tariff quotas on 10,000 tons of white sugar and 10,000 tons of products containing more than 80% sugar, and tax rates of 339 EUR/ton for raw sugar and 419 EUR/ton for refined sugar will be gradually reduced over time According to USDA forecast, EU sugar import volume in the 2020/2021 crop year is estimated at million tons (up 43% YoY) 2.2 Set export goals of the business Myan Sugar Company is a sugar producer in Vietnam, which has many years of experience in successful production and consumption in the domestic market and has never exported to foreign countries Therefore, the initial goal of the company is entering foreign markets by selling in large volumes, at competitive prices while still achieving profits for the company to attract international demand Currently, although the Government has imposed anti-dumping tax on a number of sugar products originating from Thailand for a period of years, from June 16, 2021, the amount of sugar imported from other ASEAN countries spiked again, there were signs that Thailand evaded anti-dumping and anti-subsidy taxes, reducing the effectiveness of antidumping and anti-subsidy measures This can lead to a threat to Vietnamese sugar producers, so they need to find new markets abroad to prevent, protect and compensate for their domestic market share Furthermore, MSC also builds up a strategy of sustainably developing the Vietnamese sugar industry and increasing competitiveness in the long term II SELECTING A PRODUCT HS code: 170290 HS Chapter 17 - Sugars and sugar confectionery 1702 - Other sugars, incl chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavouring or colouring matter; artificial honey, whether or not mixed with natural honey; caramel 170290 - Sugars in solid form, incl invert sugar and chemically pure maltose, and sugar and sugar syrup blends containing in the dry state 50% by weight of fructose, not flavoured or coloured, artificial honey, whether or not mixed with natural honey and caramel (excluding cane or beet sugar, chemically pure sucrose, lactose, maple sugar, glucose, fructose, and syrups thereof) The decision to select the above product to develop an export plan is based on the following factors: Figure Export situation of sugar product line in HS code 17 Source: Trade map According to data from Trade map presented by the above picture, it can be seen that the sugar product line with HS code 1702 has lower value exported than the 1704 product line, but the remaining indexes of this product line show a superior advantage Specifically, annual growth in both value and quantity tend to increase very quickly compared to the rest of the product lines Therefore, products with HS code 1702 should be selected for export to foreign countries 10 Figure Export situation of sugar product line in HS code 1702 Source: Trade map When it comes to the specific product lines of HS code 1702, it is easy to see that products with HS code 170290 recorded a top number in all indicators Most notably, only this product has a positive trade balance, showing that this item is tending to increase in export demand when the import-export balance is at $8,732 thousand In conclusion, based on the actual data and the above analysis, the product with HS code 170290 is a reasonable selection for MSC to export first to the world ... based on sugarcane, especially the properties and composition of sugarcane juice Therefore, sugarcane must be harvested at the time when the plant is ripe, then the sugarcane will have a high sugar. .. ESTABLISH THE COMPANY’S APPROPRIATE GOALS REGARDING I THE NEW BUSINESS Company overview Goals 2.1 Overview of Vietnam''s sugar market 2.2 Set export. .. rates for some export routes 40 Table Detailed price list 42 Table Actual product price sheet 43 I ESTABLISH THE COMPANY’S APPROPRIATE GOALS REGARDING THE NEW BUSINESS