Subject Vegetexco Vietnam''''s fruit and vegetables export Situation & Recommendation PREAMBLE On January 2007, Vietnam gets a firm member of WTO, the largest economic commercial playing field on planet[.]
PREAMBLE On January 2007, Vietnam gets a firm member of WTO, the largest economiccommercial playing field on planet Taking part in WTO marked a new step on Vietnam's international integration WTO creates big opportunities for Vietnam's enterprises, besides challenges difficult to overcome Vietnam agriculture industry is affected strongly of this event Vegetexco Vietnam is a state company specializing in manufacturing, processing and trading fruit and vegetables, agricultural products export with up to 30% of total annual export value of Vietnam Like other enterprises, Vietnam has taken part in WTO affect significantly to the corporation’s producing and trading activities in general and its fruit and vegetable export activities in particular The corporation has a lot of opportunities to promote manufacturing and export because markets are expands, tariff barriers are cut down, demand on fruits and vegetables is increasing However, besides, it also has to face enormous challenges when integrating, those are fluctuation and tough competition of market economy, simultaneously, it has to accept strict international regulars, technical barriers, and open the market, face difficulties in raw materials, climate, weather, material and labor prices After practicing at Vegetexco Vietnam, I have opportunity to learn about its producing and trading operation With a desire to have deeper knowledge on the corporation’s fruit and vegetable export field, as well as a desire to contribute to find out resolutions in order to intensify this activity in the next time, I chose the subject “Vegetexco Vietnam's fruit and vegetables export: Situation & Recommendation” The report is divided into parts: Chapter1 Basic issues on Vietnam's fruit and vegetables export Chapter Real situation on Vegetexco Vietnam's fruit and vegetables export activities Chapter Solutions to promote Vegetexco Vietnam's fruit and vegetables export activities My report was fulfilled in a short time so it does not avoid shortcomings, I hope to receive supports and suggestion CHAPTER BASIC ISSUES ON VIETNAM’S FRUITS AND VEGETABLE EXPORT 1.1 Fruit and vegetables export, and role of fruit and vegetables export for Vietnam 1.1.1 An overview of fruit and vegetables export 1.1.1.1 Characteristics of fruit and vegetables commodity Fruit and vegetables connect closely with life of people They are plentiful of type and taste; fruit and vegetables products include fresh, processed ones and juice Characteristics of trading fruit and vegetables: seasonal, dispersive, areal, fresh, unstable Therefore, doing business in fruit and vegetables needs grasping basic issues: Grasping main production, dispersion and concentration areas, as well as entrepôt in order to work out business directions for sellers and customers Grasping traditional purchasing trends and areas for fruits and vegetables, it is necessary for sellers to find out buyers Grasping characteristics, qualities and seasonal nature of same types of fruit and vegetables at different areas in order to find out reliable and timely sources 1.1.1.2 Overview of export activities Export is commercial activities which relate to sell goods and services to foreign markets, including re-export In import- export transaction, buyers are just importers, sellers are exporters, and sales process and procedure basically include steps of domestic transaction, however in import- export transaction, they have to obey tougher conditions in accordance with agreements or international practices Exporting fruit and vegetables is action that concern selling fruit and vegetable products into foreign markets 1.1.2 Types of fruit and vegetables export 1.1.2.1 Direct exports Direct exports are transactions where exporters enter into direct relationships with importers overseas and negotiate a contract for the sale of goods and services Alternatively, exporters may use a commission agent in the overseas market to solicit orders and generally represent the exporter's interests The agent is paid by means of a commission on the value of orders obtained 1.1.2.2 Export through intermediary Exporters and importers not directly negotiate conditions of a contract, and they deal through the third party At present, popular kinds are intermediary and agency 1.1.2.3 Counter transaction This is a mode in which export is connect closely to import, an exporter is simultaneous an importer, and it has a characteristic that export commodity quantity is correlative to import one 1.1.2.4 Re-export This is a mode in which a re-export enterprise exports fruit and vegetable goods imported to the third country, and these goods are not processed in a re-export country 1.1.2.5 International auction It is a mode which is hold at certain place, there exporters by themselves or an auction organization implement selling goods publicly in order to choose a buyer who pay the highest price Commodities give to auction are always difficult to standardize There are famous auction centers of fruits and vegetables are Amsterdam and Autuerp 1.1.3 Role of fruit and vegetables export for Vietnam Export is considered strategic issue to develop economy and implement industrialization and modernization Of Vietnam's main force export commodities, agricultural products in general, fruits and vegetables in particular, are major goods In 2007, our whole country's total export value was 48.38 billion USD, agricultural product export value gained 6.2 billion USD, including 300 million USD of fruit and vegetable export value, accounted for a quite big density Therefore, exporting fruit and vegetable play an important role shown on following aspects: 1.1.3.1 Creating major capital sources for importing and building up infrastructures to contribute to develop the economy Now our country is in industrialization and modernization process, so it is necessary to set up infrastructure system to serve the economy Accordingly, we must have capital source in foreign currency That capital can be mobilized by a lot of ways, such as borrowing, receiving from aid, joint venture, association, or export However, the safest and solidest capital source is foreign currency from exporting 1.1.3.2 Facilitating to develop related industries Development in exporting fruits and vegetables will create sufficient opportunity for development of industries which produce inputs for fruit and vegetables such as seeds, or concerned services forms such as preservation, transport, process, selling products Especially in tough competitive environment, enterprises have to attempt to reduce cost price, improve quality 1.1.3.3 Raising export enterprises' business capacity Dealing with foreign partners require that Vietnamese companies has to be dynamic, creative, and have management ability, prestige, in order to exist and develop on international markets First and foremost fruit and vegetable goods, they are sensible and sharply competitive commodities on world market because more and more fruit and vegetable export enterprises appear, higher and higher the companies' talent and experience Thus, companies must usually investigate, renovate and improve themselves in manufacture and trading as well 1.1.3.4 Contributing to solve employment and ameliorating living conditions Fruit, vegetable manufacture and process field requires a lot of labor Intensifying exporting fruits and vegetable not only creates jobs in this industry, but also leads to develop other industries, create works there It is considered our strategic export industry due to we have advantages to develop, including advantage in workforce And when employees have stable jobs and salaries, their living conditions are improved, that contributes to fulfill strategy on the nation's security and society 1.1.3.5 Being basis to speed up international economic integration process In fruit and vegetable export process, Vietnamese businesses deal with foreign partners; learn about law, politics, and culture of export markets Therefore, they widen experiences and business relations At the same time, Government, concerned Ministry and Department support companies as supplying information, creating favorable legal corridor for exporting It requires that countries' leaders enlarge external economic relations, promotion activities, and market researches 1.2 The tenor of Vietnam's fruit and vegetables export Fruit and vegetable export activities have manner and execution process is different, they depend on specific commodity, enterprise, but in general, this activity always is implemented according to following order: 1.2.1 Researching, approaching markets In this period, companies have to collect information on fruit and vegetable markets, and then analyze them Companies need collecting information on fruit and vegetable import, manufacture situation on world market, and target markets, researching consuming trend and fluctuation in price Especially, enterprises must learn carefully about target markets and competitors At the same time, they have to find out factors that effect to export activities such as politics, culture, law, and related conditions, for example, transportation of import countries Businesses always collect information through documents available from means of mass information, Vietnam's counselors abroad or surveying directly of markets, or through workshops and taking part in exhibitions, fairs 1.2.2 Selecting business partners Selecting business partners is one of elements, which creates success in export activities To choose exporting partners, we have to evaluate partners' capacity on aspects such as finance, work force, administration ability, and marketing activities Especially for foreign partners, companies study their legal entity and prestige Besides, it is necessary to study partners' viewpoint for establishing long business relation In addition, selecting business partners has to notice compatibility in condition of sales, transport, and payment 1.2.3 Planning export project Firstly, enterprises must raising objective of exporting fruit and vegetables, selecting business partners Next, companies need estimating criteria in evaluating effect of export activities such as norm in effect of direct export, breakeven (minimum export price), losses and profits, and other norms Finally, planners have to recommend and evaluate implement ability of the project in economic and social aspects 1.2.4 Dealing, negotiating and signing contracts Companies choose types of fruit and vegetables export according to above-mentioned ones Direct export type always includes steps: inquiry, offer, accept and confirm After dealing, parties reach to sign an export contract In export contracts, parties have to negotiate terms on name of commodity, quality, quantity, price, transport, payment, and solving dispute 1.2.5 Purchasing and creating commodity source Inputs of export fruit and vegetables can be mobilized from different sources as importing, joint venture, associating, or purchasing in domestic… Enterprises must calculate so that resources are stable, prestigious, and have good quality, reasonable price in order to meet flexibly for production and export, simultaneously, reduce cost price, increase competitiveness on markets Major seed source for production of Vietnamese fruit and vegetables to export has to be imported a lot; this is disadvantage in reducing cost price and improving competitiveness of Vietnamese export fruit and vegetable 1.2.6 Implementing export contracts Sequence of implementing export contracts is similar to general export contracts, usually includes steps: applying for a permit for exporting, checking L/C, preparing goods, chartering (if allowed), taking out insurance (if allowed), doing export customs procedure, checking goods before exporting, delivering, doing payment procedure, solving dispute (if any) Vietnamese companies always export in accordance with FOB so they not take out insurance and charter 1.2.7 Evaluating results of export activities In this period, enterprises calculate real datum, real criteria of export activity, and analyze losses and profits, and simultaneously, compare real criteria with estimated ones Thenceforth, businesses can evaluate a result and effect of export activities for each commodity, market, partner, and find out strengths, weaknesses, in order to have specific methods to adjust business operations timely 1.3 Factors affect Vietnam's fruit and vegetables export 1.3.1 Common situation of economy, politic, law of world and Vietnam Together with development of world economy, specialization processes increasingly deeply Countries produced commodities, which they have comparative advantage on these goods, export, then export them and import other commodities in order to meet domestic demand, and improve effect in manufacturing, trading Economy develop more and more, needs for fruit and vegetables increase in types, quality , facilitate to impulse to produce fruit and vegetables In recent years, USD has devalued, thus, that makes advantage of fruit and vegetables export businesses reduce, especially for Vietnam, because United States is one of the Vietnam's biggest import markets Besides, prices continue to show an upward tendency, makes input price increase Meanwhile, inputs of producing Vietnam's export fruits and vegetables have to import a large quantity, effects to competitiveness on world market In addition, countries are watchful over terrorist security, so countries' customs control strictly, it makes transit time last long That influences exporting Vietnam's fruit and vegetable In company with developing world economy, Vietnamese economy gained obvious advance Economy has many changes; industry structure is more reasonable, international trade increases Moreover, fruits and vegetables export companies appear increasingly, and they accumulated experiences in international business, administration capacity and business skill improved much Politics and laws can affect positive or negative to businesses in general and fruit and vegetables export enterprises in particular Although politic institution of each country is different, in order to integrate into global economy, our party and state have policy to diversify economic relations, Vietnam want to be friend with all countries in the world As a result, our diplomatic relations and external economic relations were expanded, facilitating export Due to the effect of politic, legal element to business activities, enterprises that export any market has to learn carefully about that market's politic institution in order to behave suitably Export is a commercial issue having international characteristic, thus, not only national laws of two countries that business, but also international laws and rules affect it In fact, laws of countries are quite complete and close; meanwhile, our country is lack, asynchronous, unstable, and prolix in administrative formalities This is a big disadvantage for fruit and vegetables export industry Therefore, Vietnamese legal system needs to perfect to accord international laws and practices 1.3.2 Economic-commercial relations between Vietnam and other countries in the world After innovating and opening markets, Vietnam's external economic relations attained enormous achievements Vietnam is a member of ASEAN that is potential area and have strong economic development; besides, our country is also a member of APEC In addition, we intensify multilateral and bilateral cooperation with United States (such as Vietnam- United State commercial agreement), and Canada Moreover, in early 2007, Vietnam is a firm member of WTO These external economic relations create conditions for Vietnam's fruit and vegetables export activities However, Vietnamese fruit and vegetables industry has to face a lot of challenge in integration ground For example, entering WTO, world's fruit and vegetables importexport markets are held closely, multinational supermarkets systems dominate almost all, so Vietnam's fruit and vegetables export inherently have many difficulties, face new challenges at present Besides, we cannot but mention commercial relation with China; this is a country that is evaluated to have potentiality for Vietnam's fruit and vegetable export in the future With ACFTA (ASEAN- China free trade area), China reserve MFN status similar to WTO's members for Vietnam This advantage together with geographic conditions is ... VIETNAM’S FRUITS AND VEGETABLE EXPORT 1.1 Fruit and vegetables export, and role of fruit and vegetables export for Vietnam 1.1.1 An overview of fruit and vegetables export 1.1.1.1 Characteristics of fruit. .. manufacturing and exporting fruits and vegetables With many advantages in manufacturing fruit, vegetables and diversified commodities, Vietnam exported many types of fresh fruit and vegetables, and processed... practices Exporting fruit and vegetables is action that concern selling fruit and vegetable products into foreign markets 1.1.2 Types of fruit and vegetables export 1.1.2.1 Direct exports Direct exports