(Tiểu luận) project soymilk export strategy of vinasoy corporation to japanese market subject international business

UNIVERSITY OF ECONOMICS AND LAW FACULTY OF INTERNATIONAL ECONOMICS RELATIONS PROJECT : SOYMILK EXPORT STRATEGY OF VINASOY CORPORATION TO JAPANESE MARKET SUBJECT: INTERNATIONAL BUSINESS Instructor : Phạm Tố Mai Group – K13402C : Nguyễn Thành Chiến K135011172 Nguyễn Thị Ngọc Như K134020177 Đặng Mạnh Khương K134070800 Lê Quang Thanh K134020223 Nguyễn Hữu Tiến K134040494 TEACHER COMMENTS CONTENT CONTENT TABLE OF FIGURES INTRODUTION I VINASOY COMPANY 1.1 GENERAL INTRODUCTION 1.2 COMPETITIVE ADVANTAGES 1.2.1 Vinasoy: Leading Position 1.2.2 Product – Soymilk 1.3 OPERATING STATUS 1.4 AWARD – MERIT II JAPAN 2.1 OVERVIEW OF JAPAN’S ECONOMY 2.1.1 Economy – Society Potential 2.1.2 Economic Indicators 2.2 SOCIETY & CULTURE 2.2.1 Politic & Society 2.2.2 Culture 2.3 THE PARTNERSHIP AGREEMENT BETWEEN VIETNAM AND JAPAN 2.3.1 Agreement on Comprehensive Economic Partnership ASEAN - Japan (AJCEP) 2.3.2 Agreement on Comprehensive Economic Partnership Vietnam - Japan (EPA) 2.4 COMPETITORS III SWOT 11 3.1 STRENGTH 11 3.2 WEAKNESS 11 3.3 OPPORTUNITIES 11 3.4 THREAT 12 STRATEGIES 13 IV 4.1 CONSUMER BEHAVIOR IN JAPAN 13 4.2 PRODUCT STRATEGY .13 4.3 PRICING STRAGEGY 15 (1USD = 22.000 VND) 16 4.4 DISTRIBUTION STRATEGY 17 4.5 PROMOTION STRATEGY 18 4.5.1 Promotion goal .18 4.5.2 Promotion Strategies .18 CONCLUSION .20 REFFERENCE 21 TABLE OF FIGURES Table 2.1.2 Table 2.2.1.1 Table 2.2.1.2 Table 4.3 16 INTRODUTION In modern society, the health is the most important concern today In the processing industry of food, consumers tend to increasingly use natural products Soy milk is currently one of the natural drinks which is more and more consumers trust In Japan, consumers like drinks made from natural and especially soy milk Thus expand business of Soymilk in Japan is very attractive and potential Domestically, Vinasoy corporation is leading the domestic soymilk manufacturing and processing industries, with the slogan: "Only soy milk, just for you" Based on the current situation and the development direction of the company, our group propose “SOYMILK EXPORT STRATEGY OF VINASOY CORPORATION TO JAPANESE MARKET” During the implementation of this essay, our group is hard to avoid the shortcomings We are looking forward to comments and supports to revise this essay better I VINASOY COMPANY 1.1 GENERAL INTRODUCTION Vinasoy company is one member of the Quang Ngai Sugar Joint Stock Company, the predecessor is Truong Xuan milk company JSC Quang Ngai Sugar is one of the biggest companies in Viet Nam, with the main products are sugar, food and beverages In 2012, the company's revenue reached over 5.000 billion VND, an increase 25% compared to 2011 The company began construction in 1996 and went into operation in 1997 At that time, the factory has a design capacity of million liters milk/year With the motto "Just as soybeans and soy only focus on" The strategy focus on core products has made growth and impressive sales for these years day According to the financial report of the first months 2015, revenue and profit after tax of Vinasoy was the highest in JSC Quang Ngai Sugar‘s members 1.2 COMPETITIVE ADVANTAGES 1.2.1 Vinasoy: Leading Position Leading the domestic soymilk manufacturing and processing industries, with the launch the most modern world soymilk factory in Bac Ninh, is a first Viet Nam soymilk factory among top largest soymilk factories in the world This is the most modern soymilk factory in Southeast Asia with an area of 61.000m 2, the capacity of 180 million liters / year Complete production lines at the factory in Bac Ninh are equipped with the most modern world technology of Tetra Pak (Sweden).The other is in Quang Ngai which has the capability of 125 million liters / year and the entire system of equipment has been upgraded and invests new modern technology today In addition, Vinasoy has established VSAC center which is the first and only center in Vietnam, was established by the strategic cooperation of two leading research soy centers in the world (NCSB & NSRL), with the goal of bringing advanced science in the world in breeding, planting, cultivation, production and processing of soybeans in Vietnam In 10 years recently, the consumption of Vinasoy has grown more than 40% / year on average According to Nielsen’s market research market on 2013, Vinasoy are leading in soymilk carton product in Vietnam, achieving over 78% market share 1.2.2 Product – Soymilk Quality of Fami and Vinasoy keep full flavor and natural nutrition is due to differences in application of Tetra Alwin Soy (*) - modern extraction technology which leading soy manufacturers are using this app VinaSoy has gradually expressed position through product quality standards and consumers completely trust (*)The system comprises three major sections – grinding, fibre separation and enzyme deactivation – which are integrated to produce a soya base with a high protein content and a high nutritional value 1.3 OPERATING STATUS Although revenue growth has declined slightly but business of Vinasoy is still a major contributor to the Quang Ngai company (QNS)’s gross profit In the months of 2011, VinaSoy contribute less than 1/3 advantage Gross profit for QNS and now this figure reached 681 billion, raised to 63.8% share of profits first months of 2015 In the latest financial statements of QNS showed Earning Before Tax of VinaSoy achieve 401.1 billions (totally company was 659.3 billion ) This means VinaSoy particularly have contributed to the 60% Earning Before Tax of QNS [1] 1.4 AWARD – MERIT Top 10 The famous trademark – brand Top 20 Awarded with the “Asean famous Trademark” Award, 2013 Top 20 The golden products in integration period Top Viet Nam service product 2011 Top Viet Nam product II JAPAN 2.1 OVERVIEW OF JAPAN’S ECONOMY 2.1.1 Economy – Society Potential - Natural Features: Area is approximately 378,000 km [2] ; is an archipelago which locate in Northeast Asia Japan easily communicate with countries in the region by the sea and develop maritime economics However, the natural resources in Japan are very poor - Society Features: Politics: Constitutional Democracy Population: 127.1 million (2014) [2] The population growth rate is more and more low, proportion of adults is increasing Workforce is skilled, highly-qualified, hard work and discipline that has contributed to develop economy - Economy Features: Japan’s economy ranks third in terms of nominal GDP while it slips to fourth spot when comparing the GDP by purchasing-power-parity The economy has been facing hard times since the 2008, when it was first showed recessionary symptoms Though the government’s stimulus packages have helped the economy recover a bit, the massive earthquake in 2011 gave the fragile economy another jolt Economic growth has hovered between 0.5–2 percent in recent times The nominal GDP of Japan is $4.77 trillion, its GDP (PPP) is $4.78 trillion, and its GDP (PPP) per capita is $37,683.[3] Interest rate is 0.1% only; current exchange rate is JPY = 182.93 VND (2015) JPY still lose value; public debt increases highly However, Japan is still the world's largest creditor, this position has been maintained for 24 years so far 2.1.2 Economic Indicators Table 1.2 Year 2010 2011 2012 2013 2014 GDP (PPP-billion) $4,478 $4,444 $5,900 $5,960 $4,770 GDP (%) 4.5 -0.8 -0.9 1.3 GDP per capita $35,000 $34,700 $34,278 $37,100 $37,800 GDP by area: (%) -Agriculture 1.21 -Industry 25.7 -Services 73.1 Workforce (million 65,9 65,91 73,1 63,1 65,93 person) Unemployment rate (%) 4.6 4.1 4.1 3.6 Inflation (%) -0.7 -0.3 -0.2 0.3 2.8 Export (billion ) $730.1 $787 $750.3 $714.9 $710.5 Import (billion) $639.1 $807.6 $760.2 $832.6 $811.9 From World Bank 2.2 SOCIETY & CULTURE 2.2.1 Politic & Society The Japanese government is democratic and modern, with a long history of stability There has been significant dissatisfaction with the state economy But the government has the necessary reforms are made to solve problems such as the national pension system, unemployment, health care systems and mounting government debt Recently the Japanese government has been postponed and will cut corporate income taxes to boost the economy Furthermore, the legal system is reliable and the infrastructure business effectively The threat of a preemptive attack Japan's North Korea is a direct risk businesses in Japan must consider, however, the United States' unequivocal backing of Japan's security renders it highly unlikely In addition, the intellectual property laws in Japan very well, "Intellectual Property High Court" in April 2005 2.2.2 Culture 2.2.2.1 Consumer tastes High requirement: Japanese consumers have the most rigorous requirements Consumers Japan set specific standards for quality, durability, reliability and usability of the product Japanese consumers not only high quality requirements, packaging guaranteed, sales service and good after-sales service, but also want to purchase with a reasonable price However, they can still pay for innovative products, good quality Consumer trends change with the seasons When planning sales, businesses must consider the difference in the weather Favored the variety of products: goods have diversified models attracting Japanese consumers However, the Japanese often buy products in small quantities for their accommodation space is relatively small, and also to change accordingly equipped new models So the current scale of import tends to smaller and more abundant species 2.2.2.2 Drinking milk culture Recently, environmental protection consciousness of Japanese consumers are increasing The stores and businesses are removing the packing too much The packing of products were recovered and recycling After taking out a box of milk, the Japanese don’t throw into the garbage bin Instead, they will peel upper-under ("ear" of the box) and squeeze the milk carton down flat, then drop it For big milk box, oversized (from liter or more), the Japanese did the same as above, but in addition to the milk box cut out, washed and dried The milk box will be used for recycling, both an economical and environmentally friendly Therefore our boxes of product need to ensure quality, environmentally friendly, recyclable or biodegradable 2.3 THE PARTNERSHIP AGREEMENT BETWEEN VIETNAM AND JAPAN 2.3.1 Agreement on Comprehensive Economic Partnership ASEAN - Japan (AJCEP) Date signed: 4/2008 effective from 01.12.2008 Benefits: Provide a roadmap for tariff reductions in agreements between countries and established the Center for the Promotion of Trade, Investment and Tourism ASEAN-Japan (AJC) in May 1981 based on the agreement established the Center for the Promotion of Trade, Investment and Tourism ASEAN was signed by ASEAN governments AJC center headquartered in Tokyo plays a key role in promoting the growth of exports, investment and tourism in economic development between Japan and ASEAN member countries 2.3.2 Agreement on Comprehensive Economic Partnership Vietnam - Japan (EPA) Date signed: (EPA) began negotiations since 2007 After rounds of formal negotiations, the two countries signed the EPA to date 25/12/2008 As AJCEP, this is a comprehensive economic agreement in terms of trade in goods, services, investment and economic cooperation Benefits: In terms of general commitments, within 10 years from the implementation of the agreement, Vietnam has committed to liberalize approximately 87.66% for trade and Japan pledged to liberalize 94, 53% of trade turnover In the last year of tax reduction roadmaps is after 16 years of implementation of the agreement, Vietnam has committed to liberalizing trade turnover 92.95% Nowadays, Japanese tax imposed on soya milk products imported from Vietnam of 1.2% (2015) There's also a number of agreements on avoiding double taxation and customs help make the import and export between Japan and Vietnam are safe and easy 2.4 COMPETITORS Kibun Food Chemifa Co.,Ltd It is a subsidiary of Kikkoman Corporation, a Japanese firm involved in the manufacture and sale of soy sauce and soy sauce-related seasonings, the leader in the Japanese soy milk market, now known as Kikkoman Soyfoods Company (SF) The company is headquartered in Tokyo, Janpan In addition, it has sales offices in Kamogawa, Osaka and Nagoya Kibun Food Chemifa Co.,Ltd Products: Kikkoman Coffee Flavoured Soy Milk; Kikkoman Soy Presso Coffee Flavoured Soy Milk; PEARL® Organic Soymilk Family (Original; Creamy Vanilla; Green tea; Chocolate; Unsweetened; Coffee); PEARL® Organic Smart Soymilk Family (Original; Creamy Vanilla; Chocolate) [4] MARUSAN-AI Co., Ltd Together with its subsidiaries, produces and sells food provisions in Japan The company’s product portfolio includes Miso, a seasoning made from soy beans for soup, dip, etc.; and soy milk It also offers soft drinks and other foods The company is headquartered in Okazaki, Japan Products: (Soy milk) Unsweetened (organic – certificate); Sweetened; Sweetened Light (45% Calorie – off); Malt flavor; Malt flavor Light (50% Calorie – off); Matcha flavor (green tea); Mame Piyo (for children): Cocoa flavor, Strawberry flavor [5] Alpro company Alpro is the European market leader in plant-based alternatives to dairy and meat with its brands Alpro and Provamel The Wevelgem plant in Belgium is the largest plant-based food & beverages factory in Europe Alpro is a subsidiary of The WhiteWave Foods 10 Company, which makes and sells branded plant-based foods and beverages, coffee creamers and beverages, premium dairy products, and organic produce throughout North America and Europe Products: Provamel Almond Natural Unsweetened (£2.49 per litre); Provamel Almond Sweetened (£2.49 per litre); Provamel Cashew Sweetened (£3.58 per litre); Provamel Rice Unsweetened (£2.49 per litre); Provamel Rice – Coconut Unsweetened (£2.49 per litre); Provamel Soya Unsweetened (£1.79 per litre) [6] In addition, there are many products of other companies such as Meiraku 100% Certified Organic Soy Milk, Kagome Karada (Health) NEXT, Top Valu (Max Valu supermarket brand) Coffee Flavoured Soy Milk 11 III SWOT 3.1 STRENGTH - Have experience in establishing and building a strong brand In the years 1997 - 2002 Vinasoy had to compete with a lot of big guns in Vietnam (Vinamilk, Dutch Lady, ) Vinasoy proved a big firm in domestic market That is foundation and a - steppingstone to enter international markets Technology: Modern technology, with a first Viet Nam soymilk factory among - top largest soymilk factories in the world and a Research & Application soybeans Vinasoy Center which is the first and only center in Vietnam Brand Vinasoy have occupied Vietnamese’s affection We can begin to - channel its products through Vietnamese living in China Vinasoy has an enthusiastic human resources as well as the courage to learn and - change 3.2 WEAKNESS Vinasoy hasn’t diversified to taste yet (only taste) But, Chinese like to use - flavored milk and the competitors produce soymilk which combined with a lot of taste - Raw material mainly purchase from Dak Nong, lead to be difficult in buy in bulk 3.3 OPPORTUNITIES - Japan is a developed country - The legal system is reliable and the infrastructure effectively, political risk in Japan is very low - Japan is a country with an aging population, a high proportion of elderly people Soya milk is the drink suitable for older people - Japanese like products from natural have high nutritional value - Customs of soymilk from Vietnam to Japan is only 1.2% Customs system develop and safe Route, transporting goods from Vietnam to Japan easily 12 3.4 THREAT - Japan's economy is restoring but not really stable GDP fell 19.97% in 2014 compared with 2013 - The Japanese have very strict requirements on the product (quality, durability, reliability and pricing) In order to persuade the Japanese to use and accept our product, we need to be well prepared, to ensure quality, diverse categories, environmentally friendly and the packing must be recyclable or biodegradable - The competition is highly potential because of many big competitors, such as Kibun Food Chemifa, MARUSAN-AI… 13 IV STRATEGIES 4.1 CONSUMER BEHAVIOR IN JAPAN 2014 is the third consecutive year Japan held the record for the average life expectancy of people (according to data from the Ministry of Health, Labour and Welfare of Japan) In Japan, health consciousness is the top concern, they have a schedule to balance work and exercise to ensure the health They also have to pay higher costs for quality products They claim that the price is not important, but quality must ensure Thus, safety issues are top concerns in Japan Influenced by Western life, Japanese people tend to consume canned food, milk and meat noodle 4.2 PRODUCT STRATEGY Product strategy plays decisive role of the success of the enterprise In the competitive environment in Japan, the product plays fundamental roles of other strategies The properties of Vinasoy soymilk: - Helpful to blood pressure - Good for preventing prostate cancer - No preservative - Preventing obesity Competitive advantages: - Summers in Japan are extremely hot and Japanese are under a high pressure of working, soymilk is a refresher good for the health, helpful to clear the pressure Thus, it is better than other refreshers - The design is changed continuously in accordance with customers’ inclinations - The products are composed from clear resources (especially, with no preservative, their expiry dates are within months) Vinasoy company set up VSAC center – soymilk research center with the aims of applying the latest science to process the soymilk Because of the center, Vinasoy is confident that the quality of the product ensures health and environment standards Vinasoy’s product quality is always good 14 because of applying HACCP – Food safety system (TCVN 5603:2008) and ISO 9001: 2008 – Quality management system - Prices are reasonable Vinasoy has more than 15 years’ experience of specializing research and develop soymilk and thus, the prices will be competitive with its opponents The products of the Company Fami: Pure, Calcium, Kid Vinasoy’s traditional products have been confirmed qualities as well as suitableness for taste of all ages, Fami calcium is for adults and Fami kid is better for supporting of growth Vinasoy: Pure, Black sesame Pure, protein-rich, 100% pure soybean, Japanese like the freshest, pure and come from natural products Soymen: Soymen is matcha-flavored Match is one of the most favorite flavors in Japan – the country has high opinion of Chanoyu and is considered that Matcha brings about good health and comfortable spirit There are three points of view in the strategy Firstly, Vinasoy’s product quality is always secure and stable Vinasoy combines production line provided by Tetrapak Swedish corporation with modern technology to produce moreish nature-flavored soymilk and see to nutrition facts of soybeans Nevertheless, due to the competitors inside and outside the country, Vinasoy always renovates technology and secures quality of the products Secondly, maintaining their competitive advantage by Vinasoy’s guideline through the difference: Only Soybean and natural soybean Although, it looks more monotonous than the ones of other competitors, that is the factor secure about customers’ memorizing Vinasoy’s brand rapidly and effectively Finally, maintaining and developing the motto: “Soymilk in a paper box is not only convenient but also advantageous”, it tally with strictness of the market of sanitary and 15 aesthetic requirements in Japan Nowadays, Fami’s packing is always clear owing to aseptic packing, no-preservative methods (4 PE layers, paper layer and 1aluminium layer) On the other hand, Japanese are aesthetic and “enjoy-by-eyes” The packing must be designed carefully and eye-catchingly Green and Violet are taboo for Japanese and thus, the colors of Soymen soymilk’s packing have to be changed Japanese like light colors, icons concerning sun, moon … 4.3 PRICING STRAGEGY Japan is a new market, the average price for a box 200-250ml soy milk in Japan 80-90 16000-17000 JPY in VND Price of Fami soya milk in Vietnam is about 4,500VND / box This is a major advantage of company on price so we decided to use penetration pricing strategy This strategy with competitive qualities and low price make company will easily be accepted by Japanese consumers The selling price is expected to be 12,000VND / box about 63 JPY / box It’s cheaper than competitors (about 80-90 JPY/ can) [7] Cost of production and import duty: The average selling price is 4,500VND / box (in Vietnam) Original price around 3000VND / box or 0.14USD / products or $ 5.04 / barrel (1 barrel have 36 boxes) The final sale price is 12,000VND / box = 0.55USD / box or 19.8USD / barrel, import tax on the selling price of 1.2%, tax on barrel is $ 0.24 Transportation costs barrel weighing an average of 7.2 kg of 36 boxes, each box 200ml Total shipments around 15,000 barrels, weighing about 110 tons Shipped by container to Japan (Yokohama port) Charges for container 40 feet / 25 tons: $ 2,000