Analyzing and suggesting the situation of the processing export garment at vitexco from 2003 2006

, ACKNOWLEDGEMENT First of all, I would like to express my gratitude to all the respectful professors and teachers at HUFLIT University and those who have given my a firm help , background and practical business experience at the International Business Administratio~ Department Secondly, I would like to give my deeply hearted thanks to my advisor Mr Nguy~n Xuan Minh for his helpful guidance and corrective advice during the time of completing this graduation Without him, maybe I could not finish the research at its best For the ones I especially to express gratefully thanks to Mr Nguy~n Bao Son, Director of VITEXCO and Mr Tam Bi, Vice Deputy of Import-Export and Forwarding Department Mr Tam Bi gave me value opportunities to get reality to practical import-export activities and customs clearance procedures at Cit Lii port, and Tan Cang Port Thank to their helps, recommendations and advice, I could have 'enough documents, figures and statistic to complete fully this graduation p~per Finally yet importantly, I extremely owe many thanks to my family and all of my dear friends because you are always beside, supporting and encouraging me during this Harsh time You are always by my side until the last moment that the research is done July 2007 LE HONG vAN oj.: - '1- - - + r -~ -' -' '~" ~ Ho Chi Minh City University of Foreign Languages and Information Technology : ! : Department of International Business Administration I ASSESSMENT ON STUDENT'S GRADUATION PAPER i ! ~, I ~ : l I I ! f l ~ S tu d ent ' s name: I ' Le Hong ~ t ! ~ I Van l i ~ I Class: ~ , ~ KD0304 • I• ~ I Topic: J i i • ~ Analyzing and Suggesting the Situation of GENERAL ASSESSMENT I ~ 1.1 Necessity of the research and implication ~ I I ~~ , , ~ I The ! I I ~~ ~ Processing Export Garment at VITEXCO from 2003 - 2006 I research is highly appreciated thanks to its valuable contribution I ! ~ to improve the ~ ~ I business pecformance at An Hoi VITEXCO Manufacturing Trading Services Garment ! I, Company td by focusing on the key activity of the company: processing export !~ I I ~ situation It is essential to analyze the situation to confirm the necessity of improving ~ ~ i the t procedures I I and efficiency of the company's activity The research also offers I ~ practical solutions so that the company can be more active in the competition I I ~ field of international l , business in the situation of the joining in the ~ , the World Trade ~ i I Organization.I I ~ ~ 1.2 I ,, I Methodology I I • I The autho, has utilized possible research methods by combining desk I• research Therefore, the paper is so practical and the solutions are feasible I lI and field I Diagrams f f ~ have been used to make it easier to understand the whole paper ! , ~ i ! 1.3 Academic writing skills I ' ' ! t ~ The paper is of good format, coherence, grammar, word choice, which is the result of i , ~ the author' ~~ during effort during her studying at the University, especially her hard working I the preparation ~ I ! , of this paper • ~ CONCLUSION I In conclusion, I I ~ I the paper is well completed and advisor, by this assessment, , appreciates the paper's academic and practical value , ~ Ho Chi Minh City, July, 2007 ' I Advisor t~ ~ I I i , ~ L",(,y,:.:t;"'''':.r;,." I , I 51 I • highly ~ I , •• •• i I I! ~ •• ~_-;~ ",'~ ~: ABSTRACT The WTO Agreement on Textiles and Clothing (ATC) set up a transitional mechanism in 1995, with a view to phasing out quotas for trade in textiles and clothing by the end of 2004 Even though the total global imports of textiles and clothing will expand, competition is also likely to increase among many garmentexporting countries around the world It is expected that textile and garment companies in medium- to high-cost countries will reduce their manufacturing production In contrast, those in low-cost countries with a strong competitive advantage will expand their production and export capacities to become preferred suppliers and to take advantage of liberalization In the setting of joining the WTO, Vietnamese textile and garment compames will be affected at different levels depending on their competitive capacities Therefore, this research is aim to analyzing one real typical small garment company - VITEXCO, and through it, some suggestions might be useful for processing export situation at VITEXCO in c particular or Vietnamese textile and apparel industry in general 111 CONTENT • , Acknowledgement i Advisor's Assessment ii Abstract iii Content iv List of Ta bles viii List of Figures ix Introduction Chapter 1: Overview of Processing Activities 1.1 International Trade Theories Concerning Processing Activities 1.1.1 Theory of Comparative Advantage 1.1.2 Porter's Diamond Theory Concerning National Competitiveness 1.2 Overview ofInternational Processing Activities 13 1.2.1 Definition 13 1.2.2 Export Processing Classification 14 1.2.3 Advantages and Disadvantages of Export Processing 14 1.3 Current Trend of International Outsourcing and Opportunities Vietnamese Garment Companies Exporting by Processing Contracts IV for 15 Chapter 2: VITEXCO's Structure and Business Operations 2.1 VITEXCO History & Structure 19 2.1.1 Company's History and Development 19 2.1.1.1 Company's History 19 2.1.1.2 Development Process 20 2.1.2 Organizational Structure of VITEXCO 22 2.1.2.1 Organizational Structure Diagram 22 2.1.2.2 Departments' Functions and Duties 25 2.2 Business Operation Feature 27 2.2.1 Operation Principal 27 2.2.2 VITEXCO's Business Product 27 2.2.3 VITEXCO's Markets and Trade Partners 28 2.3 The Situation VITEXCO's Operation 29 2.3.1 Business Performance Results 29 2.3.2 Exporting Turnover form 2003 to 2006 31 2.3.3 Business Strategy for the Year 2007 and Future 32 2.3.3.1 The Year 2007 32 2.3.3.2 In the Future 32 v Chapter 3: Analyzing the Company's Situation of Processing Export Garments from 2003 to 2006 3.1 Advantages and Disadvantages ofVITEXCO in Current Situation 34 3.1.1 Advantages 34 3.1.2 Disadvantages 35 3.2 Infrastructure Background 36 3.3 Import - Export Situation ofVITEXCO through 2003 -2006 36 3.3.1 VITEXCO' s Customers 37 3.3.2 Export Situation 40 3.3.2.1 Types of Processed Export Garments 40 3.3.2.2 Markets for Processed Export Garments 42 3.3.3 Import Situation 45 3.3 A Operation Result in 2006 3.3 04.1 General Achievements 47 3.3 04.2 Business Operation Result 47 3.4 Evaluation of Processing Export Garments at VITEXCO 50 Chapter 4: Suggestion to Improve the Situation of Processing Export Garments at VITEXCO for the future 4.1 Direction to Develop Processing Export Garments at VITEXCO vi 53 4.1.1 Opportunities and Challenges for VITEXCO in General Setting of the WTO • 53 4.1.1.1 Opportunities 53 4.1.1.2 Challenges 54 4.1.2 Direction to Develop Processing Export Garment at VITEXCO 55 4.1.2.1 Short - term Target 55 4.1.2.2 Long - term Target 56 4.2 Suggestions to Improve the Situation of Processing Export Garments at VITEXCO for the Future 4.2.1 General Suggestions 57 for Government and Textile Apparel Industry 57 4.2.2 Suggestions to VITEXCO's Processing Export Situation 59 4.2.2.1 Suggestions to Human Resource 59 4.2.2.2 Suggestions to International Marketing 60 4.2.2.3 Suggestions to Infrastructure, Factories and Equipment 61 4.2.2.4 Suggestions to Sub-industries 62 CONCLUSION 64 REFERENCES 65 vii LIST OF TABLES Table Title Pages Table 1.1 Relationship of labor production Table 2.1 Labor Degree Collection in 2006 Table 2.2 Business performance results in 2003 - 2006 32 30 Exporting turnover From 2003 to 2006 at VITEXCO Table 2.3 (FOB value) Table 3.1 Traditional customer structure from 2003 to 2006 Table 3.2 VITEXCO's commodities (as processing value) 31 37 40 , Table 3.3 Main Market Structure ofVITEXCO in 2006 (FOB) 43 Some Huge Exporting Markets of Vietnam Garment Table 3.4 and Textile Industry in 2006 Table 3.5 Import Structure from 2003 to 2006 45 46 Export and Import turnovers through 2005 and 2006 Table 3.6 (FOB value) 49 Vlll LIST OF FIGURES Figure Title Page Figure 1.1 Porter's Diamond Figure 2.1 Organizational structure ofVITEXCO Figure 3.1 Customer Structure ofVITEXCO Figure 3.2 Company's Customer Comparison of Value (FOB) 10 24 in 2006 38 39 Processing Export types of garments (as processing Figure 3.3 Figure 3.4 value) 41 Company's 2006 Exporting Market Structure in Areas Total Exports and Import ofVITEXCO Figure 3.5 Figure 4.1 44 from 2003 to 2006 (FOB value) 48 Sales and net incomes plan from 2008 to 2010 IX 56 MINISTRY OF TRANSPORT VIETNAM SHIPPING AGENCY & FREIGHT FORWARDING JOINT-STOCK CORP VINAFCO SAIGON ADD :6 SONG DA WARD TAN BINH DIST HOCHIMINH VIETNAM TEL: TO: Phong Xuat Nh~p Khfru FM : Ms Nga(0903.778991) GL~Y I BAa NHAN HANG (NOTICE DELIVERY) I I , I Cty chung t6i xin han h'.lnh th6ng baa d~ ' , •• ;' , •• :' , " ~? PHIEU TIEP NHi}N BAN GIAO HO # • S6/Ngay to khai : '2006 BQc Lj.p - Tlf Do - H,!-nh Phuc Chi Clfc Hai Quan : QLHGC Ten den vi : CONG TY Mau 02/PTN.BGH M' HOI VrFEXCO • IXGC ' Ma s6XNK: CO., LTD ,Ngay: thang SO HAl QUAN 030417.1409 nam 200r H6 sd Hai Quan g6m : (phlln gianh cho ngtioi khai hai quan khai, dIng chuc hai quan ki€m Ira) Ten ChUng Tlt STT 1- To Khai Ha.i Quan Huch parI IS properly deSCrtt>ed by name and IS In pruper con(1ltron torcarnage by-air accord'ng 10the In~rnationaLAlr T ransporl Assoclaho(fs Restrrcted Articles Regu1ahons ' _ Jl>RAt JljI~8Ji1\lJQtiAJ_~Q.:.-,-_l-I!2' - - - - S'gnature " / AS- I\RRAHGEO Currency Conversion Rates /" Total collecl MAR 09.2007 at Deslinalial Charaes at Destination / VIETNAM AIRLINES OPA02 _._ - El&uled For carriers Use Only or hIS Agent AS AGENT FOR TH~ CARRIER: cc Charges in CesL Currency / " 01 Shipper / "' on TOlalcolleclCharges P1 " (Dale I ~AIPEI at IPlace) s.goalur~ OtISSUlf'g Carr.e or liS Agent TIC- 694832 l' Copy (for Airport of Destination) , T ~ ,;:;;':~ if-.>toer,.~ ' ,' "'~>.' ~::'Io "'"' ~':-"" :~" ' CONSOLI DATE CARGO:{SHIAMENL,MAN IFEST , TARAY , IrtTE'RNAT"I01jAl#CO., ~TD NO 490, CHI LIN ROAD, TAIPEI, TAIWAN REPUBLIC OF CHINA TEL:(02)25918136-9, 25929901 NO nS-09801ItS4 v H UL'\j _FLIGHT N'O""."' AlB-PORT OF DEPARTURE: LOT NO SGN-H03i28C DATED 1-1/11< iii LUi! (" AIRPORT AT DESTINATI0N '\IA\~ TAIPEI CONSIGNED TO: ( • ' -:::: f: 'S'NO ~""l'-: Tf\RAY lNT'L fl\ ,\t) '(::l., CAPS MATERIAL i, j\ i\ [C-69483J i\ [(-694832 rc -694833 f>\ , [C-~94835 ~ • j I eTN SPARE PARTS, FO~ FABRICS • -r.", "; )/1tdl ' CUTTING MA\'H ItlE & .f ~ s eTN '> V ["T' t! , CO•• ~TD C/O CTN HO('f-lIH [NU r'TY t t VINAFCO SAIGON NO.OFPKGS IC-()94803 ", /'~ '~ -~ , ~'t' j .~.{.C:li TOP (I'llt lki,! • : c , • •• I'{, 'I TD1 ".v., 'X"'" lr- \ KG SIN SIll TRADING CO., LTn I •~~ , NAME OF CONSIGNEE 173.0 KG \ AN IIi) I II fTEXCO MANUFACTURING SRAj) 1NO' SERV TCESGARMEtlT ' : FABRIC & ACCESSORIES 18 CTN CTtI FABRIC ACCESSO~Y C-6U4838 A CTIi PABRIC iC-tH1.4843 - •._ A eTN FABRIC ACCESSORIES 2I")(}'.O KG / ;' - ,- , Til ANH VnUl CO: LTD I '-26.0 .~ KG 126.0 KG ' :.: 40.0 KG . ~ -~ .7;~~~ ~:r ,\i\ \, - - ~ -_._ -54 CTN vvvvvvvvv / \ ''::\ i - -~ \ ., ' \: "( \ \ " :.'" ~"'.-'