report topic trung nguyen enters the korean coffee market

He is a successful businessman and is known as the "coffee king"of Vietnam.Trung Nguyen Coffee quickly became one of Vietnam''''s leading coffee brands, specializing in theproduction and su

MINISTRY OF EDUCATION AND TRAINING

FPT UNIVERSITY

-REPORT

TOPIC: TRUNG NGUYEN ENTERS THE KOREAN COFFEE MARKET

Lecturers: Tran Nguyen Nam Anh Students: Huynh Thi Yen Nhi

Dang Tieu Chau Linh Dang Thuy Trang Nguyen Yen Nhi Pham Nguyen Quynh Nhu

Quy Nhon, March 12, 2023

I Trung Nguyen company overview 3

1 Company Background 3

2 Product 3

3 Service offered 3-4

II Korean Analysis 4

1 Introduction 4

2 Political system 4-6

3 Economic system 6-8

4 Cultural 8-9

5 Technology 9

6 Regional economic integration 9-10 III Korean Market analysis 10

1 Market prospect analysis/Potential demand 10-11

2 Customer’s preferences and tastes 11-12

3 Competition 12-13

IV Recommendations 13-14

V Reference 15-16

1 Company Background

Trung Nguyen Coffee is a coffee brand established in 1996 in Buon Ma Thuot city, Dak Lak province, Vietnam by Mr Dang Le Nguyen Vu He is a successful businessman and is known as the "coffee king"

of Vietnam

Trung Nguyen Coffee quickly became one of Vietnam's leading coffee brands, specializing in the production and supply of high-quality coffee products, including coffee beans and filter coffee Trung Nguyen's products are produced from the best Arabica and Robusta coffees and are carefully cared for during cultivation and processing

Over the years, Trung Nguyen Coffee has expanded its production and business scale to other countries around the world, including Asian, European, and American markets They have also opened many coffee shops in Vietnam and around the world, offering not only coffee but also other food and beverage products

2 Product

Trung Nguyen Coffee offers high-quality coffee products, including coffee beans and filter coffee Trung Nguyen's coffees are produced from the best Arabica and Robusta coffees and are carefully cared for during cultivation and processing Here are some typical products of Trung Nguyen Coffee:

Coffee beans: Trung Nguyen offers a wide range of coffee beans, including Arabica and Robusta beans.

Arabica coffee beans have a mild, delicious taste, which is often preferred by consumers Robusta coffee beans have a stronger and richer flavor

Filtered coffee: Filtered coffee is a traditional method of making coffee in Vietnam Trung Nguyen offers

filter coffee products, including Trung Nguyen Legend filter coffee, one of the brand's most popular filter coffee products

Roasted and ground coffee: Trung Nguyen offers roasted and ground coffee, which can be used to make

coffee using a coffee machine or traditional coffee brewing methods

Packaged coffee products: Trung Nguyen offers packaged coffee products, including instant coffee and

instant coffee These products are often used for quick coffee making or for traveling

In addition, Trung Nguyen Coffee also offers other food and beverage products, including tea, chocolate, and confectionery products

3 Service offered

Trung Nguyen Coffee offers a wide range of different coffee-related services, including:

Online coffee service: Trung Nguyen provides a website where customers can order their coffee products

online and have them delivered to their door

Consulting services: Trung Nguyen provides consulting services to customers about their coffee

products, including how to choose and brew the right coffee

to learn how to make professional coffee.

Store management services: Trung Nguyen provides store management services to their business

partners, including store design, merchandise management, and staff training

Event services: Trung Nguyen provides coffee delivery services for events, including conferences,

seminars, and weddings

With these services, Trung Nguyen Coffee is trying to satisfy customers' demand for high-quality coffee products and coffee-related services

II Korean Analysis

1 Introduction

South Korea located in Eastern Asia, takes up the southern half of the Korean Peninsula Together with North Korea, it shares boundaries with the Yellow Sea and the Sea of Japan The majority of South Korea's landscape is mountainous The president serves as the head of state, and the prime minister is in charge of the government A blend of private freedoms, centralized economic planning, and government control make up South Korea's economic system South Korea is a member of the Asia-Pacific Economic Cooperation (APEC) and the Asia-Pacific Trade Agreement (APTA)

2 Political system

The politics of Korea takes place within the framework of a presidential-parliamentary democratic republic

Current Political LeadersPresident: Yoon Suk-yeol (since 10 May 2022)

Prime Minister: (since 14 May 2021) President Yoon has nominated HAN Duck-soo to the role of prime minister)

Current Political Context: South Korea is adjusting to a quickly shifting geopolitical environment under

the leadership of the recently elected Yoon Suk-yeol by working to raise its international profile and strengthen ties with important allies But, in order to sustain this significant strategic shift, both domestically and in the US and Japan, it will need to be institutionalized at a deeper level In a broader sense, South Korea will also need to increase its involvement in international organizations and networks

so that it can collaborate with other nations to deliver global public goods, solve issues with supply chains, and deal with other international concerns

Advantages:

South Korea has a high Index of Economic Freedom The Index of Economic Freedom compares different jurisdictions' levels of trade freedom, tax burden, judicial efficiency, etc Rankings may be determined nationally or by larger geographic areas The Heritage Foundation assigns a grade to each nation based on ten freedoms, with 100 denoting the maximum degree of economic independence from government intervention According to Heritage Foundation (2023), Korea with a score of 73.7 ranked 15th in the world for economic freedom Why does Korea have such a free economy? Part of this is probably because Korea follows a democracy

Source: Country Rankings: World & Global Economy Rankings on Economic Freedom (n.d.) Indexdotnet.azurewebsites.net https://indexdotnet.azurewebsites.net/index/ranking

The high index of economic freedom means that Trung Nguyen has easier access to the Korean market than countries with low economic freedom In addition, A study of 102 countries over a 20-year period provided evidence of a strong relationship between economic freedom (as provided by a market economy) and economic growth (Gwartney, 2006) A country with a free market economy is usually a country with a high level of economic development Korea is a country with such a high index of economic freedom that its economy is also very developed A market that is both easier to penetrate and has a high level of economic development like Korea is a possible place for Trung Nguyen Coffee to enter

Moreover, South Korea also has a low Country Risk Rating A country risk assessment is an evaluation that assesses a country's political situation and policies to determine how much risk exists of a change in that country's government Country risk assessment is a measure of the threat of nationalization According to Coface (2022), South Korea Country Risk Rating is at the A2 level of the country risk assessment

Countries risk assessment

South Korea / Economic Studies - Coface (n.d.) Www.coface.com Retrieved March 11, 2023, from https://www.coface.com/Economic-Studies-and-Country-Risks/South-Korea?

fbclid=IwAR3nAsAXqOrXEDCSt_fCz67GDDSAy6VE_1jRYQtK9qsQK03M2wTeSfct0Fk

A2 level of country risk assessment shows that the level of risk in South Korea is low Political situations and policies are relatively stable That is a decisive factor for Trung Nguyen's desire to enter the Korean market

Disadvantage:

Regulatory Environment: Both foreign and native businesses may encounter difficulties in the Korean regulatory environment Government employees frequently interpret laws and regulations differently because they are written in vague words Foreign investors like Trung Nguyen that seek certainty in the Korean market are frustrated by this

Political Violence: The Democratic People's Republic of Korea, usually known as North Korea or the DPRK, and the Republic of Korea (ROK) are technically at war An almost 60-year-old armistice agreement has kept the Korean Peninsula generally peaceful and stable Tensions between the nations have occasionally risen as a result of military and political provocations The risk of war is a important alarm for Trung Nguyen's decision to enter the Korean market

=> In terms of politics, Korea has some attractions for Trung Nguyen to enter as a highly liberal economy and a stable political background However, Korea also has some less attractive points for Trung Nguyen

to enter such as Regulatory Environment is not clear and it contradicts with North Korea

The Korean economy is a highly developed mixed economy characterized by conglomerates owned by wealthy families known as Chaebol On March 15, 2021, the Organization for Economic Cooperation and Development (OECD) stated that Korea's nominal GDP in 2020 is anticipated to be 1.624 billion USD, ranking 10th in the world This is a famous country known for its miraculous economic growth from one

of the poorest countries in the world to a high-income developed country in just a few generations The politically stable developed and developing countries with free market economies and no significant increase in either inflation rates or private sector debt tend to have the most alluring international markets (Hill, 2022)

Free market system and political stability have been covered in the above two sections So let's learn about the Free market system and political stability that have been covered in the above two sections So let's learn about either inflation rates or private-sector debt in the next part

In Seoul, the capital of South Korea, the rate of consumer price inflation in 2022 was about 4.5 percent This percentage increased from the 2.1 percent of the previous year and was the highest since 2012 Nonetheless, Korea's inflation rate in 2022 is 4.25% lower than the 8.75% global inflation average 4.25%

is a significant percentage

Global inflation rate from 2000 to 2021, with forecasts until 2027

Source Global inflation rate from 2000 to 2027 (n.d.) Statista Retrieved March 11, 2023, from https://www.statista.com/statistics/256598/global-inflation-rate-compared-to-previous-year/?

fbclid=IwAR1dgyVcDN_szW5jF4Pq6XjXQ0Lj7Wesvlt7J4reAtId8wIVbOr8hgD_WNE

According to Statistics Korea, South Korea's consumer price index increased 4.8% in February 2023 compared to a year earlier, slowing from January's 5.2% increase and reaching its lowest rate in ten months The market's forecast for a 5.05% for the inflation rate in February was similarly lower than reality, which reduced pressure on the central bank to keep hiking interest rates In order to battle inflation, the Bank of Korea increased its policy rate by a total of 3 percentage points starting in August

2021, pushing borrowing costs to a record-high 3.5% Inflation, according to BOK Governor Rhee Chang-yong, may drop below 5% in March before steadily easing to a low-3% range by year's end But,

the BOK may tighten policy further if it anticipates that the US Federal Reserve will continue rising interest rates as it tries to reduce inflation

South Korea Inflation Rate

Source: Mario (2019, October) South Korea Posts Deflation for the First Time on Record Tradingeconomics.com; TRADING ECONOMICS https://tradingeconomics.com/south-korea/inflation-cpi

In general, the inflation rate of Korea compared to the world is quite small Usually, when a country has low inflation, that country's economic situation is stable When Trung Nguyen enters a market with such a low inflation rate, it will make its operations more stable, and they do not have to worry about reducing the value of assets pegged to the domestic currency compared to foreign currencies

Private-sector debt: Private-sector debt is the total of all loans held by both individuals and businesses,

excluding debts owed to financial institutions like banks

According to Cho Kye-wan, a senior staff writer, As of December 2022, the ratio of financial institutions' borrowings from households and businesses to nominal GDP reached 220.8 percent, the highest level recorded since data collection began in 1975 and an increase of 0.3 percentage points from three months earlier, according to the BOK

In comparison to the GDP from 2021, household credit increased by 2.7 percentage points to 106.1 percent, while corporate credit increased by 4.4 percentage points to 114.7 percent

By the end of the year, household debt had increased by 7.8% year over year to $1.862.1 trillion won ($1.5 trillion), although this was a slight slowdown from quarterly increases of 10.3% year over year in the second quarter and 9.6% year over year in the third quarter due to tighter loan regulations and higher interest rates

According to the bank, the debt-to-disposable-assets ratio increased by 4.3 percentage points to 173.4 percent, increasing concerns about a higher financial strain on households

The financial stress index (FSI) was close to the "warning" level of 8 to 22 at 7.4 in February, 2022

Korea, with such a high private-sector debt ratio, has lost ground in the eyes of an FDI investor Even Trung Nguyen is the same High private-sector debt in Korea will make Trung Nguyen's operation a big risk when operating in this market

=> In terms of the economy, the low inflation rate compared to the world in Korea is a bright spot for Trung Nguyen if they wants to enter here On the other hand, the high Private-sector debt index here is a point to note because it will be detrimental to Trung Nguyen when entering the Korean market

4 Cultural

Koreans can drink coffee all day Young people in the land of kimchi have a habit of drinking coffee regularly, some people drink 3-5 cups of coffee a day, starting in the morning, on the road, after meals, after shifts, evening coffee Koreans mostly like milk coffee Korean coffee taste has a neutral color when compared to the coffee of some countries, the coffee is not too rich, and strong in the style of pure coffee but also not bland, and fewer tastes like instant coffee The combination of sweet, greasy milk and

a strong bitter taste make Korean coffees Meanwhile, Trung Nguyen coffee is very suitable for the taste

of Vietnamese people, it has a dark brown color, a strong aroma, and a characteristic-rich taste So if Trung Nguyen wants to enter in Korea coffee market, it is very important to adjust the taste of coffee to suit the taste of customers here If it can be adjusted to better suit the taste of Koreans, in a market with high demand for Coffee like Korea, Trung Nguyen will be able to reach many customers

In Korea to reduce the use of disposable products, and to protect the environment, in the coffee industry,

it is not allowed to use disposable products When entering Korea, Trung Nguyen should use glass or reusable cups when customers drink at the shop When customers buy to take away, Trung Nguyen should also provide biodegradable cups to meet the environmental protection needs of Koreans

In Korean culture, Koreans will usually do things very quickly, so they will not like to sit around waiting for a drip of coffee like VN When Trung Nguyen comes to Korea, they should pay attention to reducing investment in filter coffee, but instead, Trung Nguyen should focus on other types of coffee with fast service

5 Technological

Korea is a country that came up from the agricultural sector Korea has introduced many research technologies on coffee, especially in the field of mixing and combining with other beverages

Some of the Korean coffee research technologies include:

Air-conditioned roasting method: This method allows the coffee to be roasted without the use of high heat, which preserves the flavor and nutrient content of the coffee

Mix coffee with other drinks: Korea has many popular drinks, such as tea, condensed milk, and toast They have developed many recipes to blend coffee with these beverages, creating unique and appealing drinks

Using automatic coffee machines: Korea is one of the most advanced countries in technology, so they have developed many types of smart automatic coffee machines, saving time and increasing coffee efficiency preparation process

Use green coffee: Green coffee is unprocessed, which helps to preserve the nutrient content and create a special flavor Korea has researched and used green coffee in the process of roasting and preparing coffee

Development of a taste analysis system: Korea has also developed a coffee taste analysis system, which helps to recognize the quality and freshness of the coffee This technology makes the coffee production and distribution process more automated and optimized

In short, Korea has introduced many diverse and unique coffee research technologies, helping to improve the quality and value of coffee products like Vietnam

6 Regional economic integration

South Korea is a developed economy, with one of the highest levels of economic integration in the world Here are some analyzes of Korea's economic integration:

Participating in free trade agreements: Korea has signed a number of free trade agreements (FTAs) with other countries and regions, including the United States, the European Union, ASEAN and Chile Participating in these FTAs has helped Korea improve its export opportunities for products and services, and strengthen trade and investment relations with international partners

On May 5, 2015, Vietnam and Korea officially signed a Free Trade Agreement (FTA)

The Agreement brings Vietnam many benefits as well as development opportunities such as:

With commitments to open tariffs, Vietnam will have many opportunities to expand export markets to Korea in the fields of agriculture, fisheries, textiles, furniture, and electronics, increasing the competitive advantage for Korea Vietnam's exports compared to other countries in the region This commitment will be a catalyst for Trung Nguyen coffee in the Korean market to have an opportunity for business and development

The Vietnam - Korea FTA opens up opportunities to attract large investment flows from Korea to Vietnam, especially capital flows that can be expected to flow into key sectors such as supporting industries and industry This is also one of the basic benefits, a premise for the Government of Vietnam to decide to sign this agreement One of the great benefits that Vietnam has received from the FTA with Korea is to expand the export market to Korea; Vietnam's exports will have many opportunities thanks to Korea's strong commitment to opening the market

Increased trade: VKFTA has significantly boosted trade between Vietnam and Korea According

to South Korea's Ministry of Trade, Industry and Energy, two-way trade between the two countries will reach $69.2 billion in 2020, up from $58.9 billion in 2019

Tariff elimination: VKFTA has eliminated tariffs on most goods traded between the two countries

As a result, Vietnamese goods such as seafood, textiles and agricultural products have become more competitive in the Korean market, while Korean goods such as electronics, automobiles, and steel products have become more competitive more reasonable in Vietnam

Investment promotion: VKFTA has encouraged Korean companies to invest in Vietnam, especially in industries such as electronics, textiles and footwear This has led to the establishment of many joint ventures and expansion of existing Korean businesses in Vietnam, creating jobs and contributing to the country's economic growth

Technology transfer: VKFTA has also facilitated the transfer of technology and expertise from Korea to Vietnam, especially in the fields of information technology, electronics and manufacturing This has contributed to improving the quality and productivity of Vietnamese enterprises and enhancing the competitiveness of the country's economy

Cultural exchange: VKFTA has also promoted cultural exchanges between Vietnam and Korea, helping to strengthen the friendship and cooperation between the two countries This has led to an increase in tourism, educational and cultural exchanges, and person-to-person contact