Determining factors of vietnam tea export volume in the world market

STATE BANK OF MINISTRY OF EDUCATION VIETNAM AND TRAINING BANKING ACADEMY INTERNATIONAL BUSINESS FALCUTY BACHELOR’S THESIS DETERMINING FACTORS OF VIETNAM TEA EXPORT VOLUME IN THE WORLD MARKET Student Name : Nguyen Hong Trang Class : K21KDQTC Course : 2018 – 2022 Student ID : 21A4050429 Supervisor : Dr Tran Ngoc Mai Ha Noi, May 2022 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014126153081000000 STATE BANK OF MINISTRY OF EDUCATION VIETNAM AND TRAINING BANKING ACADEMY INTERNATIONAL BUSINESS FALCUTY BACHELOR’S THESIS DETERMINING FACTORS OF VIETNAM TEA EXPORT VOLUME IN THE WORLD MARKET Student Name : Nguyen Hong Trang Class : K21KDQTC Course : 2018 – 2022 Student ID : 21A4050429 Supervisor : Dr Tran Ngoc Mai Ha Noi, May 2022 i ACKNOWLEDGEMENT This thesis is the result of my own constant efforts together with the support and encouragement of teachers, friends, colleagues and relatives Through this page, I would like to express my sincerest appreciation to all of you, who have helped me during my study and scientific research First and foremost, I would like to thank Banking Academy of Vietnam and the Faculty of International Business for always creating good conditions for me from my first year of studying here until I complete this thesis Besides, I want to give my appreciation to all the lecturers at Banking Academy, especially the lecturers of International Business Faculty who equipped me with all the useful and practical knowledge about my major and all other aspects of life In addition, I would like to express my sincere gratitude to my advisor, Dr Tran Ngoc Mai for all her continuous support during my research time, for the invaluable motivation, knowledge and encouragement that she gave me Her guidance plays a vital role in the completion and achievement of my thesis Last but not least, I would like to thank my family, friends and colleagues, who always support me spiritually in my life, give me helpful advices and suggestions ii DECLARATION I guarantee that my Bachelor’s thesis with the research topic "Determining factors of Vietnam tea export volume in the world market” is my personal research with the guidance of Dr Tran Ngoc Mai - Lecturer of the Faculty of International Business at Banking Academy Data sources and information used during the study are derived and cited in accordance with regulations These findings have not been published in any other studies before at the time of this thesis’s completion I take all responsibility for my thesis Student’s signature Nguyen Hong Trang iii TABLE OF CONTENTS DECLERATION i ACKNOWLEDGEMENT .ii TABLE OF CONTENTS iii TABLE OF ABBREVIATIONS .v LIST OF FIGURES vi LIST OF TABLES vi INTRODUCTION 1 The urgency of the research topic .1 Literature Overview 2.1 Local research 2.2 Foreign research .3 2.3 The research gaps .6 Research subjects .7 Research Objectives Research methodologies Thesis Structure .8 CHAPTER 1: THEORETICAL UNDERPINNING ABOUT THE FACTORS AFFECTING EXPORT VOLUME OF AGRICULTURAL PRODUCTS 1.1 THEORETICAL BASIS ABOUT EXPORTING AGRICULTURAL PRODUCTS .9 1.1.1 The concepts of agricultural products exporting .9 1.1.2 Features of agricultural export industry 11 1.1.3 The role of agricultural exports in the national economy 14 1.1.4 Criteria evaluating the position of exporting agricultural products……… … .15 1.2 FACTORS AFFECTING THE EXPORT VOLUME OF AGRICULTURAL PRODUCTS 18 1.2.1 Subjective Factors (internal factors of the enterprises) 18 1.2.2 Objective Factors (External factors) 20 iv 1.3 PROPOSED RESEARCH MODEL ABOUT FACTORS AFFECTING EXPORT VOLUME OF AGRICULTURAL PRODUCTS 22 1.3.1 Theoretical basis 22 1.3.2 Hypothesis and research model 25 SUMMARY OF CHAPTER CHAPTER 2: ANALYSIS ON THE SITUATION OF FACTORS AFFECTING THE VOLUME OF VIETNAM'S TEA EXPORTS 32 2.1 THE CURRENT SITUATION OF VIETNAM'S TEA EXPORTS .32 2.1.1 The development of Vietnam tea export industry 32 2.1.2 The position of Vietnam tea export 39 2.2 SITUATION OF FACTORS AFFECTING THE VOLUME OF VIETNAM'S TEA EXPORTS 45 2.2.1 Research model results of factors affecting the volume of vietnam's tea exports 45 2.2.2 Evaluate the relevance of the model .48 2.3 EVALUATION OF VIETNAM'S TEA EXPORT SITUATION .48 2.3.1 Evaluation of Vietnam’s tea export industry 48 2.3.2 Limitations for Vietnam's tea export industry .49 2.3.3 Reasons of limitations 51 SUMMARY OF CHAPTER CHAPTER 3: SOLUTIONS TO PROMOTE TEA EXPORT UNTIL 2025 .53 3.1 VIETNAM'S TEA EXPORT VOLUME ORIENTATION AND FORECAST UNTIL 2025 .53 3.1.1 Orientation .53 3.1.2 Forecast 53 3.2 SOLUTIONS FOR VIETNAM’S TEA EXPORT INDUSTRY 54 3.2.1 Focus on improving the yield and productivity of Vietnamese tea .54 3.2.2 Promoting tea’s material areas to ensure about input quality and equivalence between black and green tea .55 v 3.2.3 Maintaining and promoting the export of tea, especially highly processed tea products to key markets .55 3.2.4 Focusing on tea brand’s promotion and food safety requirements 56 3.2.5 Build a specific orientation for tea production in local scale 56 3.3 RECOMMENDATIONS 57 3.3.1 Recommendations for the state 57 3.3.2 Recommendations for the firms .57 SUMMARY OF CHAPTER CONCLUSION .57 REFERENCES .61 vi TABLE OF ABBREVIATIONS SMEs Small And Medium-sized Enterprises OLS Ordinary Least Squares FE Fixed Effect RW Random Effect GDP Gross Domestic Product WTO World Trade Organization IGG The Inspector General of Government RCA Revealed Comparative Advantage TSR Trade Specialization Ratio UN Comtrade United Nations Commodity Trade Statistic Database Trademap Trade Statistics for International Business Development FAO Food and Agriculture Organization RBT Resource-Based Theory EVFTA EU-Vietnam Free Trade Agreement CPTPP The Comprehensive and Progressive Agreement for Trans-Pacific Partnership RAM Random Effect Model FEM Fixed Effect Model CEM Common Effect Model GLS Generalized Least Square vii LIST OF FIGURES Figure Figure 2.1 Vietnam tea export value to five main importer countries Page 27 between 2016 – 2020 Figure 2.2 Vietnam tea production trend 30 Figure 2.3 Vietnam tea export volume trend 31 LIST OF TABLES Table Page Table 1.1 Independent variables in the study 28 Table 1.2 Hausman test result 30 Table 1.3 Classification of the researched countries 31 Table 2.1 RCA Tea Index (HS 0902) Vietnam and Competing Countries 32 in the International Market Table 2.2 TSR Tea Value (HS 0902) of Vietnam and Competitor 33 Countries in International Market Table 2.3 Data Panel Regression Estimation Result Table 2.4 Data Panel Regression Second Result 35 INTRODUCTION The urgency of the research topic Vietnam is considered to be one of the most important cradles of the world tea tree The cultivation of tea in Vietnam has a long history, up to three thousand years Currently, the tea industry not only produces domestically but also reaches out to the world Over the years, the tea industry has brought significant economic value to society, created many job opportunities, increased incomes, improved people's lives, especially farmers and locals in rural or mountainous areas and contributed to the development of agriculture Moreover, enjoying a cup of tea has been considered a meaningful traditional custom of Vietnamese people since its appearance Tea is an essential contributor of the total agricultural, forestry and fishery exports of Vietnam’s agricultural sector, contributing considerably to the trade balance and curbing the trade deficit of the country’s economy As the tea sector in Vietnam is export-oriented, about 80 percent of its annual total output is supplied to foreign markets Up to now, Vietnam’s tea products have made their presence in more than 100 countries and territories around the world with an annual export value of around 200 million U.S dollars Consequently, Vietnam is proud to be listed in the top largest tea exporters globally, after China, Sri Lanka, Kenya, India, United Arab Emirates, Poland and Germany Despite such significant achievements, the Vietnamese tea sector is still facing numerous challenges due to the impact of the determinants As stated by Oktaviana and Hartono (2016), there is great potential for the market of tea products to grow as tea consumption has never stopped increasing throughout the past many years In particular, in Asian countries, intense competitiveness in the tea exports sector can be seen easily in the last decade Nevertheless, due to the ongoing challenges on quality, Vietnam’s tea exports in 2018 recorded a decrease of about 11 percent in volume (Garcia, 2019), until the present time, China and India are the major competitors of Vietnam’s tea in the international market since these two markets have been listing as the world’s largest producers for tea productions Along with that, Vietnam tea production still has many limitations and