UNIVERSITY OF NICE-SOPHIA ANTIPOLIS IAE School of Business Administration THANG LONG UNIVERSITY MASTER OF INTERNATIONAL MANAGEMENT AND BUSINESS INTERNSHIP REPORT ON CHINA ENTRANCE STRATE
COMPANY BACKGROUND
C OMPANY KEY INFORMATION
- Official company name: Ngoc Khanh Electric Wire and Cable Limited company
- Brand name: Goldcup Electric Wire and Cable
- Office center: 37 Nguyen Son street, Ngoc Lam, Long Bien District, Hanoi
- Three factories: Dong Giang cables & wires factory and Ngoc Khanh cables & wires factory are both at Pho Noi A industrial park - Trung Trac – Van Lam – Hung Yen province, beside National Highway 5 (Km19) from Hanoi to Haiphong; Auto electric wire factory at An Lac village
- Trung Trac – Van Lam – Hung Yen province
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- Business scope: Wires and cables
- Experience: 20+ years in manufacturing electric cables & wires
- Currently main Markets: Domestic and Japan market
-Website: http://goldcup.com.vn/
D EVELOPMENT H ISTORY
Ngoc Khanh Electric Wire and Cable Limited Company is a Six-member Limited Liability Company which was established in 1994 Formerly business was cooperative producing light mechanical products and located at 37 Nguyen Son Street, Ngoc Lam Ward, Long Bien, Hanoi. Now a day, with over 20 years of experience, the company has become a professional electric wire and cable manufacturer Ngoc Khanh’s popular brand name Goldcup wires & cables have reached to top 5 best choice of wires and cables for Vietnamese people The company has three specialized factories producing the main series of products: Auto electric wire, low voltage wires & cables, welding cable & rubber cable Products of civil wires, low voltage industrial cables, welding cables and rubber cables have been certified and protected by the National Office of Intellectual Property
Historic milestones of Ngoc Khanh electric wires and cables LLC company and Goldcup brand:
1994 Established company officially, in the name of Ngoc Khanh wires & cables company The first manufactured product was low voltage wires & cables Both office and factory are
3 located on a 1200 meters square land at 37 Nguyen Son Street, Ngoc Lam Ward, Long Bien, Hanoi
1997 For the very first time, A Korean modern line was imported, set up and put into operation
2000 Developed new factory at Pho Noi A industrial park - Trung Trac – Van Lam – Hung Yen province (15000 meters square) to produce low voltage wires & cables
2001 Received Standard conformity certification for electric wires & cables products (TCVN
2002 New factory at Pho Noi A industrial park started to operate
2003 Continued to import and put into operation a series of most advanced production lines
In 2004: Developed new welding cable & rubber cable factory at Pho Noi A industrial park
- Trung Trac – Van Lam – Hung Yen province on 12000 meters square land
2005 Started to operate new welding cable & rubber cable factory (IEC 60254 / GB5013 Standard)
2006 Researched about process and production technology to produce high quality auto electric wires
2007 Signed cooperation contract with YAZAKI Corporation – Japan - Developed High quality
Auto electric wire factory at An Lac village - Trung Trac – Van Lam – Hung Yen province (20000 meters square)
2008 Started to operate new Auto electric wire factory (JASO D611-94/JIS C 3406 Standard)
Received Quality certification issued by YAZAKI Corporation – Japan
2009 Started to build Ngoc Khanh electric wires & cables Office building at the company historic place - 37 Nguyen Son Street, Ngoc Lam Ward, Long Bien, Hanoi
2010 Planned to expand auto electric wire factory to 43.000 meters square
- Implemented expanding plan for low voltage wires & cables factory to 46.000 meters square
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2011 Implemented cooperating project with Japanese to produce car wiring jacks and electrical equipment
2013 More extended construction of factories, expand supply to customers
2015 Increased 30% capacity of the automotive wires factory
2017 Reduce output of the CIVUS 0.35 and CIVUS 0.5 standard and start to applied the JASO standard from Apr 2018
L IST OF PRODUCTS
Fireproof cables are cables which designed to function well even during the fire The smoke emissions in this situation are free from mordant gas, that can help them work towards fire safety in the built environment In case of fire, fire smoke, heat, and toxic fumes are the main obstructions to the evacuation of people in a building or area A major contribution to surpass these disasters is the use of fireproof cables which having fire resistance, flame retardance, long-term circuit integrity in a fire, low smoke emission, and non-halogenated properties
Goldcup fireproof cables are mainly used for: Fire resistant safety circuits, public emergency voice communication systems in the skyscrapers, high buildings, commercial and residential complexes, high-temperature or extreme installation condition, fire alarm systems
Goldcup applied IEC 60502-1, IEC 60331 standard in producing fireproof cables The structure depends to the type of fireproof cables with the main materials such as Copper conductor, Mica tape for fireproof, XLPE insulation, fire resistance filler, PVC Inner sheath, galvanized steel tapes armor, PVC outer sheath
Insulated cables are used both in normal daily life and production activities Insulated cables can be passed through fixed conduits on the walls or ceilings, or be embedded in the walls, ceilings or floors, through hard, heavy-duty, anti-leakage conduits and buried underground
Goldcup applied TCVN 5935 (IEC 60502-1) standard in producing insulated cables The structure depends on the type of fireproof cables, mainly Copper conductor, XLPE insulation, and PVC outer sheath People use insulated, low-voltage wires & cables for indoor electrical appliances c Control cable and signal cable
Control cables are used to transmit electrical signals Generally, with no shielding, applicable to industrial and mining enterprises, energy and transportation sector, circuit protection devices Goldcup applied TCVN 6610-7 (IEC 60227-7) standard in producing control cables
Signal cables are used to transmit data signals Signal cable is protected from outside interferences For information transmission system of wire & cable are mainly cables for TV, local cables, electronic cables, fiber optic cables, data cables, electromagnetic wires, electricity, communications or other composite cables Goldcup applied TCVN 5935 (IEC60502-1), TCVN
6612 (IEC 60228) standard in producing signal cables d Electric wires
This is the most common type of wires in domestic use This product composed of the copper conductor and PVC outer sheath, some multicore types even have PVC insulation Goldcup applied TCVN 6610-3 (IEC 60227-3) standard in producing electric wires e Automotive Cable
Goldcup’s automotive cable is used in low voltage electrical circuits for auto and motorbike These cables can be used for general as well as specialized purposes This product also composed of the superior quality copper conductor and PVC outer sheath Gold cup manufacture automotive cables applied JIC C 3406 standard which enables faster and more secure connections
So that meet any critical demands of the automotive industry
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N OTABLE C USTOMERS
• YAZAKI Corporation – Japan: Automotive wire harness for Toyota, Nissan, Mazda and Mitsubishi
• VINACONEX Corporation: Trung Hoa - Nhan Chinh Urban Complex
• Song Da Group: Ucity Urban Township
• Hoa Phat Group: Mandarin Garden
• LILAMA Corporation: Vung Ang Thermo electricity plant
• Vietnam National Oil & Gas Group: Nghi Sơn Open Economic Zone
• Vinacomin: Mao Khe Thermo Electricity Plant
• Viet Hung Investment & urban development joint stock company (Vihajco): The green city ECOPARK – Van Giang
• Housing & Urban development Corporation (HUD): Viet Hung - Long Bien Urban Township
• EVN Hung Yen Co., LTD: Local Electric project
• EVN Thai Binh Co., LTD: Local Electric project
• EVN Bac Giang Co., LTD: Local Electric project
• EVN Bac Ninh Co., LTD: Local Electric project
• EVN Nam Đinh Co., LTD: Local Electric project
• EVN Hai Phong Co., LTD: Local Electric project
• EVN Thai Nguyen Co., LTD: Local Electric project
• Phuoc Tai Co., LTD: T2 terminal – Noi Bai International Airport
• TSC Co., LTD: TH true milk factory - Nghe An
• Thang Long aviation service Joint Stock Company: Oceanview Apartment Hotel –
• TKH Vietnam Investment & Development Co., LTD: Hongkong Garment factory – Hai Duong
• Hoa Phat Steel Co., LTD: Hoa Phat Steel factory
• Song Da Installation Service Joint Stock Company: EVN Cua Bac Building
• Hue Khanh construction service Co., LTD: SDS Vina factory – Ha Nam
• Truong An One member Investment & Development: Mieu Mon Riffle Rangle Hanoi
• Zodiac Mechanic & Electricity Joint Stock Company: International Kindergarten Hanoi
• PIDI Construction & Installation Joint Stock company: Department of Military’s project
• Dong Son Trading & construction Joint Stock Company: Lai Vu Industrial Zone- Hai Duong
• South East Asia Tech & Trading Joint Stock Company: Viglacera Ha Long brick factory
• Hanoi Investment Construction Joint Stock company: Me Tri Urban area
• Railway signal telecommunication Joint Stock Company: Ha Long – Cai Lan railway renovation project
B ASIC FINANCIAL DATA
Ngoc Khanh LLC Finance statement and Finance comparison 2016-2017 (Unit: VND)
Figure 1: Ngoc Khanh LLC Finance statement 2016-2017
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Figure 2: Ngoc Khanh LLC Finance comparison 2016-2017
The comparison chart between Sales Revenue and Net profit demonstrates a little backward in business performance of Goldcup in 2016-2017 period, Sales revenue in 2017 is 1,765,361,511,728 VND It is 26,894,105,179 VND higher than 2016 sales revenue which recorded revenue of 1,738,467,406,549 VND Despite the increase in sales revenue, the net profit of 2017 was a bit lower than net profit in 2016 It fell from 102,518,055,986 VND in 2016 to 77,231,687,899 VND in 2017 This happened because of several reasons Firstly because of higher material cost which leaded the cost of goods sold became much higher than the previous year The average price of copper was $4800 in 2016 and then went up to $6100 per ton But overall, Goldcup still works effectively and profitably
COMPANY STRUCTURE AND ORGANIZATION
N GOC K HANH L IMITED C OMPANY STRUCTURE
Ngoc Khanh LLC structure is shown in the following organization chart
Figure 3: Ngoc Khanh LLC Organization Structure
M EMBERS ’ C OUNCIL
Member Percentage of total guarantee
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S TRUCTURE ’ S EXPLANATION
The General Director is the legal representative of the Company before the law and other third parties He is also responsible to the state for all aspects of the company The director is the head of the management apparatus of the company, is competent to decide and be responsible for commanding all business activities in the company, assigning tasks to each department and the individuals involved Most importantly, the general director is the one who observes the day-by- day operation of the organization
Has the duty to manage & direct the operation at the factory Advises the general director on strategy and production planning Responsible for the quality and progress of the product to the general manager Collaborate with other directors and relevant departments to plan production activities and achieve the set objectives
Departments under the direction and management of Manufactory Director:
In charge of pulling the copper core for production
In charge of braiding process of copper wire for core production
In charge of insulating outer sheath for production
Carrying out the packing and warehousing of pending products
The technical director is responsible for the technical issues in the factory Technical Director also advises the general director on strategic decisions as well as on production planning along with Manufactory director and Finance director Technical director is responsible for ensuring the best operation of the machinery and timely remedying problems
Departments under the direction and management of Technical director:
Technical department is managed by the Technical Director They are the one who inspects the maintenance and overhaul of machinery in the company, schedule maintenance checks for machinery periodically, control the operation of machines in the factory
The finance director is responsible for making the plan and managing the budget, selling products to the market, coordinating with other managers to advise the production planning for the general director, production planning, consumption plans, report on the periodicaal consumption of goods to the General Director, continuously expanding the market
Departments under the direction and management of Finance director:
The department has the duty to inspect and supervise the goods that the Company imports according to the quality and quantity Employees regularly work at the Company's warehouse in
Ha Dong, in order to fully supervise the materials in stock At the same time, the material department will work together with the accounting department to manage the inflow and outflow of material and to make sure that all materials are not lost
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The duties of the department are assigned by the director of finance to manage all the business activities of the company All activities will be reported to the director on a monthly, quarterly and annual basis Also, the department is responsible for fulfilling its obligations to the state on behalf of the director
Sales Department is responsible for approaching new partners, as well as new sources of supply for the Company, developing sales plans and market expansion at times of the year In addition, the subordinates are responsible for assisting other staff in the Company's affairs
This is the department that the author took the four months’ internship program The import-export department is responsible for importing materials, goods for production The amount of imported material is depended on the forecast of Manufactory Director The import-export department is in charge of exporting finished products aboard to customer The import-export department is really a bridge between the company and foreign partners Another task of this department is to research the foreign market, analyze competition, introduce products to new markets Then advise for General Director through Finance Director to decide whether enter or not enter any overseas market Import and export department has contributed to increasing the efficiency of production and business
THE MISSION: ASSIGNED TASKS & GOALS
T ASKS A SSIGNED TO THE I NTERN
Import-Export Department where I took four months of the intern job has only three full- time members Head of the department is Ms Nguyen Thuy Linh who got a lot of experience in both the import-export field and marketing field Because of the company intended to expand the business to China, Import-Export department took the responsibility to research and to make the strategy for the market expansion to China
That is the time I applied for an internship position in Ngọc Khanh Electric Wire and Cable Limited company Fortunately for me, since the other two members of the Import-Export department are not familiar with market research and marketing in general, Ms Linh recruited me to support her in order to finish the job
In the first ten working days of the internship period, my task is to study about the company, the products, the rules and the general working concepts inside the company I got a chance to visit Dong Giang and Ngoc Khanh factory at Pho Noi A industrial park several times The staff of Import-export department needs to travel from Headquarter to the factory once or twice a month to checking imported raw material if it matches the documentation or not We also need to travel to the factory when preparing shipment aboard The following list describes all the tasks assigned to me during my internship period at Ngoc Khanh wires and cables Limited Company:
• Storing the documents and then bring to the accounting department
• Helping the Accounting department to find the data such as freight forwarding cost, import tax…
• Working with the warehouse to guarantee the cargo delivery and then making arriving cargo notification
• Monthly double-checking remaining material with Manufactory Department
• Despite that Ms Linh gave me a chance to involve in all the tasks mentioned above, the main task she wanted me to focus is to research and make a strategy for market expansion to China
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T HE LINK BETWEEN THE SUBJECT MATTER AND MISSION
It is very fortunate for me because my internship position is directly linked to the subject matter Step one is to have a well understanding of the company and Import-Export department including financial status, all pros and cons of products, unique selling point, competitive advantages and disadvantages, the overview workflow in the company That is just the very first and basic step of the missions Next step considered to be more complicated which included collecting all the needed information of wires and cable in China market, this is the key to getting the right information by refining data for making decision process After gathering all the needed information and then refine data for decision making My task is to continue to assist Ms Linh to analyze the information and build up a suitable marketing strategy for the company to penetrate the China market.
T HE GOALS TO REACH
There are three goals for me to achieve after four months’ internship at Goldcup wires & cables:
• To understand the operating of the company in general
• To understand the activities of the import-export department and the link between it and other departments
• To collect, analyze data and build up a strategy for Goldcup to successfully access into the Chinese market.
W HAT CAN AUTHOR BRING TO THE COMPANY
I always get impressed with the way a business operates No matter if it is a technology company, a retailer, a service provider or a manufacturing company, I still wonder what the secret is inside it? How does it work? What’s the workflow inside it? More than that, I want to be a part of the working system So, the four months of internship at a manufacturing company like Ngọc Khánh Electric Wire and Cable Limited company is precious to me There I can use my abilities, my skills to contribute my part to the big task for the growth of the company Besides a few minor documentation works related to import-export activities of my department, the main contributions that I could provide are collecting data, analyzing it and supporting Head of the department making the strategy With my logical thinking and theoretical knowledge, I’m confident to say that I can
15 choose the most accurate and the most up to date data as possible when collecting data I could also bring the best analyzing methods to analyze data, thanks to a lot of practical subjects that I have learned from the Master AMI course.
AMI THEORETICAL KNOWLEDGE ACQUIRED PUT INTO PRACTICE DURING THE INTERNSHIP
I really appreciate the AMI course I had learned many subjects that cover all sides of international businesses during the course That acquired knowledge came from the diversity of both theoretical lectures and real-life case studies The intern position in Import-Export department at Ngoc Khanh wires and cables Limited Company gave me an opportunity to apply the knowledge from the AMI course into practice Subjects which I can apply to my work during the internship period are:
This subject brought me a deep view of the globalization and how it affects businesses in general It also brought me the awareness of both opportunities and challenges to the business Realizing the changes that globalization can make to enterprises is vital to every business manager now a day
This subject gave me an overall picture of how to manage a business, especially business on the international scale It also helped me to understand hyper-competition when the markets
Thư viện ĐH Thăng Long changing day by day, the countless number of strong competitors So it is very hard to keep competitive advantages for any company these days
This subject helped me understand more about the purpose of accounting in international business With the knowledge gathered from this subject, I can read and analyze financial information in Ngoc Khanh wires and cables Company’s financial reports much more efficiently in order to have planned for the business
This subject provided me the knowledge to be aware of and predict risks may occur, such as operational risks, personal risks, environmental risks, and other risks as well Not just identify those risks, it helped me to find solutions to reduce risks for the market expansion plan to China of Ngoc Khanh company’s Goldcup brand
This subject gave me the understanding of import-export taxation This is vital to any company which has import-export activities like Ngoc Khanh wires & cables company Good understanding of taxation can save a lot of money for the company, reduce the cost of goods production eventually reduce the price of the product delivered to consumers
International Business Plan & International Strategy
These subjects provided me with the most essential tools to do background analysis, strategic diagnosis, select target market, market entry strategy, pricing strategy Because of that, both the International Business Plan & International Strategy subjects contributed a tremendous amount of knowledge and played the essential roles in this report
This subject gave me the understanding about the latest terms and rules of import & export standard to facilitate international trade in INCOTERM INCOTERM is very popular in
17 international trade now a day, so I can integrate easier with the work about import and export activities at the company by having good understand about it
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DEVELOPMENT
E XTERNAL ANALYSIS
In order to find out a solution to successfully go to China market, knowing and understanding about the macro environment, for example, political factor, economic factor, social factor, technological factor, environmental factor, and the legal factor is a must the PESTL analysis method is conducted to make a more unobstructed view of the 2nd largest economy in the world
The People’s Republic of China is indeed a superpower It has a permanent member spot of the Security Council of the UN It is one of the most powerful countries in the world, the second largest economy, the fourth largest country in the world by land
China is a one-party regime The Communist Party of China is the one ruling political scene Although the monopolism and, at least China has a stable political environment which made the country to become a safe place for Foreigner to invest
Considering by purchasing power basis, China is the world’s largest economy By nominal GDP, China is the 2nd largest economy in the world The People's Republic of China has made a shift from a centrally-planned economy to a market-based economy This country did a lot of economic reforms started in the late 1970s which brought China an incredible 10% average GDP growth per year So, the massive demand of the Chinese market, in general, is so promising for foreign companies For example, like Ngoc Khanh LLC
Quick development with cheap labor and improved infrastructure, China becomes an ideal place for foreign direct investment (FDI) In 2016, China attracted a record high US$139 billions of FDI, became the 3rd largest FDI destination in the world On the other hand, China is also a prominent investor China's FDI has reached many countries over the years to the US, the UK, Pakistan, Bangladesh, Indonesia, the UAE, Venezuela, Nepal, Argentina, Angola, Chad, Niger, and so on
Picture 3: China Car Production from 2008 - 2017 (unit: 1000)
Until 2017, China has over 80 major domestic automotive manufacturers, and 18 major joint venture manufacturers These manufacturers produce nearly 29 million automobiles in 2017, which including 25 million passenger vehicles and over 4 million commercial vehicles The Car
Thư viện ĐH Thăng Long production volume gradually goes up And by that, the demand for Auto Parts and other Automotive supporting products like Automotive cables are rising too
China is the world most crowded country The population reached approximately 1.4 billion people in 2018 China is the biggest market for consumer products Over a half of China population is living in the cities Because of the average wage has gone up three times over the years, the consumer spending is also increased Although that China is one of the world’s highest levels of inequality It is also worth mentioning that the people in the upper class and high-end class in China are well known for their open-handed spending These people ready to spend their money on luxury cars, the latest smartphones, and designer clothing to show off their success That is an excellent opportunity for both domestic and foreign companies to sell products and services Especially for high-quality and upper middle-end to high-end products like some of Ngoc Khanh LLC products
China owns numerous of the biggest technology companies in the world which include names like Baidu, Alibaba, and Tencent Not just dominate the domestic market, Chinese technology companies started to make their way to foreign markets As of March 2018, China has the world’s largest online population with 772 million internet users and 699 million smartphone users (BBC, 2018)
China got a vision to be the world leader in science and technology By moving from a labor-intensive economy to an innovation-driven development and entrepreneurship, the Chinese government launched a mass entrepreneurship and innovation initiative across the country The opportunities are not just for domestic companies but also for entrepreneurship from overseas
Chinese Government has invested heavily in the Renewable Energy industry and Automotive industry Moreover, the fact is China became one of the leaders in Solar panel maker, Wind turbine manufacturer China is the world largest Car manufacturing country Also, the sell volume of Electric Vehicle in China is more than the rest of the world combined
There are laws by the government that regulate business and employment practices in the People’s Republic of China For example, The PRC Labour Law 1995, the PRC Labour Contract Law 2007, The law on Chinese-Foreign Equity Joint Ventures, The Law on Chinese-Foreign Contractual Joint Ventures, and The Law on Wholly Foreign-Owned Enterprises, various administrative regulations
Currently, the PRC's government is considering its existing laws and statutes following the model of the WTO It eventually has put an end to specific obsolete laws and regulations, and undoubtedly will gradually retouch the laws and regulations that are still incompatible with the existing rules of the WTO
The average tariff for Auto parts and accessories are from 10% to 13% It is much lower than the tariff for cars which is 25% Because the Chinese Government wants to encourage its domestics automotive manufacturers The standard corporate income tax rate in China is 25% However, some industries encouraged by the People’s Republic of China government can benefit the rate of 15% The individual income tax rates in China is in the range between only 3% and the maximum rate of 45% (PwC, 2018)
In this report, I used Porter's five forces to analyze the electric wires & cables industry in China in order to understand the competitiveness of the industry and to consider whether it attractive or not
Any specific business industry is always under the pressure of 5 different forces They are Threat of new entrants, Threat of substitutes, Bargaining power of customers, Bargaining power of suppliers and Industry rivalry
Table 1: Porter’s five forces analysis
S TAKEHOLDERS ’ MATRIX
In order to make the expansion strategy to China, identifying who make the impact or be influenced by the project, or to the company is vital By clarifying what these influencers expectation and what they can provide, the Stakeholders’ matrix is the perfect tool for the analysis
Company stable growth Global expansion
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Decide who in charge in all level of manage position
Manage staff in operating daily business activities
High salary Promising career path Good working condition
Directly work at the back office or produce at the factories
Good salary Promising career path Good working condition
Money through buying products Network
Higher quality product but cheaper price
Higher power in value chain Stable relationship
Law to protect company and workers
Promote Vietnam Products to international market
Legal framework for doing business
Economic development especially car industry development
SWOT ANALYSIS
I believe that clarifying all the Strengths, Weaknesses, Opportunities and Threats of the company will help me to identify the competitive advantages of the company After understanding the company in depth, Ngoc Khanh wires & cables can strengthen its strengths, avoid its weaknesses or even somehow find a chance to convert its threats or weaknesses into opportunities or strengths SWOT matrix was the suitable choice in this case
• More than 20 years’ experience in producing wires and cables.
• GOLDCUP is a well-known brand in Vietnam
• Has distributors across Vietnam market, and stable customer base that provides stable financial back up for the company
• Has experience working with foreign partner since GOLDCUP Automotive cable has been exported to Japan market for more than 10-year period That once again the confirmation about the quality of the product
• Does not have separate marketing crew
• Cost of products depend on material imported
• Brand awareness still ranked below a few domestic competitors (For example CADISUN, CADIVI)
• Lack of high quality human resource
• Stable political regime in China
• Government of Vietnam indicated the electricity industry is the priority field to invest until 2030 Chinese Government also wants to encourage energy industry (especially Clean/Renewable energy) and other energy related industries
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• Demand in Auto parts & accessories for Automotive Industry and Energy Industry are high
• Vietnam has cheaper labour force than China
Threats (T) • China has plenty of competitors in electric wires & cables
• Corruption in both Vietnam and China
• The high pace of scientific and technological development
S UGGESTED STRATEGIES TO ENTER C HINA MARKET FOR G OLDCUP WIRES & CABLES
After research about the Chinese business environment, the industry and Ngoc Khanh electric wires & cables internal status In this part, I would like to suggest a strategy for Ngoc Khanh company to bring its Goldcup electric wires brand entering the China market
Two products will be selected to bring in the China market:
• Goldcup low-voltage civilian electric wires
With more than 55% of 1.3 billion population are living in the urban, the demand for the high-quality civilian electric wire is huge And since Goldcup low-voltage civilian electric wires brand is a cornerstone product of Ngoc Khanh LLC with high-quality that brought 40% of total revenue for the company, this product is the first one of the two products Ngoc Khanh going to expand to China market
China is the biggest car manufacturer in the world So, the next product Ngoc Khanh LLC decides to bring into China market is none other than the Goldcup main-exported automotive electric cables
Among several entry modes, Ngoc Khanh LLC must choose the entry mode which has high feasibility and low risk taken Open a new subsidiary will be very costly, and with the uncertain of the success possible in China market, this is too risky for the company Joint-venture also be brought to the consideration However, since the production technology is still a competitive advantage over other low-tech domestic competitors, Ngoc Khanh needs to avoid any chance of
27 giving control of technology to partner Joint-venture also consumes a relatively high amount of money to be set up
Due to the demand for low risk and low investment needed, exporting is seemingly the most suitable entry mode for Ngoc Khanh LLC This entry mode helps the company to avoid the cost of establishing manufacturing operations Besides that, China and Vietnam are neighbor countries so the transportation can be more straightforward So, I would like to choose to export as the entry mode for Goldcup low-voltage electric wires and Goldcup automotive cables into China market
Goldcup low-voltage wires and automotive cables are not cutting-edge technology products However, both are still relatively high technology products to Chinese competitors in comparison Therefore, the targeted market will be the upper middle-end market and car manufacturers
The price of Goldcup low-voltage civilian wires is $0.2 per meter, the price of Goldcup automotive cables is $0.22 per meter So, it is quite the same price as the price of equivalent products in the Chinese market I suggest Ngoc Khanh LLC apply Penetration Pricing strategy which lowered 10% of the normal price at first When lower the price, Goldcup product will be relatively cheaper than the equivalent products That will draw the attention to upper middle-end buyers, who are looking for high-quality products at a lower price It might help Goldcup brand gain awareness but will result in an initial loss of income to the company at first However, after the promotion period over, prices will be raised again, and the brand can stand out from the crowd
Because of the lack of China market understanding and networking, the company should work with an Independent Distributor This can help The Company in saving cost, providing the local market knowledge and already having the trade networking of the distributor This is an ideal option
Ngoc Khanh LLC main export partner to Japan is YAZAKI Corporation which is a global automotive parts supplier This company ranked 13th among the largest automotive supply
Thư viện ĐH Thăng Long industry in 2015 by the industry journal Automotive News The company can negotiate with YAZAKI Corporation to be the distributor for Goldcup products in China market Working with YAZAKI to enter China is the smartest and the most convenient option for Ngoc Khanh in term of Distribution Channel
However, with the need of creating its network, in the future, Ngoc Khanh LLC needs to find others distributors as well
In the electric wires & cables industry, the price of products depends heavily on material cost Due to the fluctuation of copper, the price of the wires & cables products is also going up and down The material cost I use to make the estimate the time this report was made, the copper price was approximately $5900 per ton With the assuming material cost, the estimated price of low- voltage electric wires will be $6490 per ton The estimated price of automotive cables will be $6900 per ton
The expected goal for the first year to achieve is to sell 1000 tons of low-voltage civilian wires and 1500 tons of automotive cables Since China market is so huge and potential, the second- year goal is to be double the sales of the first year, and the following years the sales expected to rise 10% each year
CONCLUSION
H OW THE GOALS HAVE BEEN REACHED
During the internship, I have done almost the goals set at the beginning:
Have learned about the company operating, company structure, business activities, significant milestones, and financial situation
Have drawn the Stakeholder matrix, this matrix helps the company to understand who are related and can make the influence on the China market penetrating project By identifying what they can contribute to and what they expect from the project, for example Council's members, Manager, Employee, Customer, Supplier, Vietnam Government, China Government Therefore, the company can make a better decision to manage these stakeholders
Have collected the macro-environment data and made PESTL analysis to help the company to draw a big picture of not just the Chinese Economy but also its Social factor, Politic, Environment, Technical issue and Legal Understanding factors help the company to have the ability to avoid the disadvantages that these factors can cause and at the same time take the advantages from them
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Have conducted Chinese electric wires & cables industry analysis using Porter's Five Forces analysis This analysis method gives the company a more specific picture into the industry, exposing the power of Chinese electric wires & cables Suppliers, Customers, Substitutions, a threat of New Entrances and the Rivalry inside the industry itself Therefore, the company can choose which competitiveness to bring in to confrontation and also can choose the suitable target market segment
Have made a SWOT analysis to clarify the Strengths, Weaknesses of the company SWOT analysis also provides the Opportunities and Threats that the company might face This analysis has its part in deciding the strategy for the company which can maximize the strong points of the company and minimizes the weaker points
Have made a strategy to enter the China market by suggesting the Product to export, suggesting the distributors, choosing the Entry mode, setting the Price strategy, pointing out the target market segment.
L IMITATION
As I mentioned earlier, I still can realize that there are shortcomings in my internship and my report It is tough to cover all the related issue because of my lack of experience and the limitation of time The limitations of my four months of internships are:
Did not conduct a survey on Chinese customers, so I still cannot provide what the exact price Chinese customers want and the quality of the product they expect
Not have primary data to analyze Due to no Chinese survey, has made, only secondary data are used to analyze Moreover, the company still need to research by Chinese if the company wants to have a more realistic view of the China market
Not have the suggestion to adapt the products Products in the market penetration strategy are chosen among the Goldcup brand current existing products Due to lack of technical knowledge and lack of Chinese customer insight, I cannot provide any suggestion to change or adapt the products before entering China market
Not have enough in-depth study about macro environmental factors like Legal factor, Technical factor, and Social factor
Not have enough study about the competitors The report still cannot provide details information about competitors' products, their marketing strategy, their business activities, their technology, their financial situation, and their development strategy
Did not conduct financial analysis with all influenced factors The sales forecast brought in the report are heavily based on the current export status of Ngoc Khanh LLC The forecast is not including other factors from customers or competitors if they fight back.
R ECOMMENDATION FOR N GOC K HANH LLC
Observing Ngoc Khanh LLC and its business during my internship period, I would like to give Ngoc Khanh LLC some recommendations and also some suggestions I hope my recommendations and suggestions can help the company enters China market successful, as well as better, operate its day by day business
The company needs to has its Marketing team as soon as possible All Ngoc Khanh LLC strategies and business development decisions are coming from the network and experience of its Board members including the research stage and analyzing stage However, in order to develop the business more prominent and more professional, that way is not a right way to get the job done fast and efficiently
Market research is fundamental, not just for the China market Penetration but others potential markets and domestic market also Goldcup brand does not occupy good market share in the South of Vietnam, do the market research in the South may help the company figures out how to gain more market share there
The team which takes the research (Should be the Marketing team mentioned) could work with the Accounting department to carry for financial analysis so that the company can analyze and calculate the financial statistic of the project more realistic and reliable That will also help the company have better results in financial investment activities
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Ngoc Khanh LLC has poor branding activities Goldcup brand reputation primary came from word-of-mouth by customers and between building contractors Meanwhile, other competitors like CADIVI and CADISUN have spent the massive budget on advertising and branding Also, as a consequence, they gain robust brand awareness
Import-Export department should search for more source of material Since the cost of production heavily depends on copper price, the company should have more suppliers and long- term contracts with them to have a stable raw material resource
Invest more in R&D, one of a big competitive point of Ngoc Khanh LLC is the high quality and technology compare with the others The company needs to keep this advantages by always goes one step above its competitors Investing in aluminum core electric wires & cables should be a smart move for Ngoc Khanh LLC at this moment Again, research old customers and the market is vital when developing a new product, since the final product must meet the need of the customer and affordable.
C ONCLUSION
I have finished my four-month period internship at Ngoc Khanh LLC, started on March 1st
I once again want to say my thank to my supervisor - Ms Nguyen Thuy Linh, Head of Import- Export department in Ngoc Khanh LLC - who initiate and facilitate me a lot in daily work during my internship period I also want to thank my academic supervisor - Dr Le Thanh Binh - without her advice and instructions, I could not make a final report as success as this report
Much effort has spent, but at the end of the internship, I’m proud of my work at Ngoc Khanh LLC I learned so much here I had a chance to bring my academic knowledge from the course to practice in a real manufacturing organization The hardest part is researching since information about China market is so hard to gather in English or Vietnamese At some point, I feel desperate when I could not find the required data to analyze But fortunately, I found a way to gather the data I needed Despite that there is still shortcoming, I hope my work can help the company with this project
It'd be a pity that I cannot follow this project until the end, I still really appreciate all the experience that I gained from this project And I am looking forward to seeing the project to put on the deployment stage
For Ngoc Khanh LLC, I wish all the best for the company All the staff and workers, they work so hard, willing to share their knowledge and easy to coordinate I believe that it is just a matter of time for Ngoc Khanh LLC to bring Goldcup brand to be a market leader in Vietnam domestic market I also wish they can be more and more successful in the overseas market and become a strong Vietnamese international electric wires & cables brand
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4 https://www.made-in-china.com/
6 https://www.customs.gov.vn/SitePages/Tariff.aspx
Table 1: Porter’s five forces analysis 21 Table 2: Stakeholders' matrix 23 Table 3: SWOT analysis 25
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Figure 1: Ngoc Khanh LLC Finance statement 2016-2017 7 Figure 2: Ngoc Khanh LLC Finance comparison 2016-2017 8 Figure 3: Ngoc Khanh LLC Organization Structure 9