ANALYSIS OF BUSINESS ENVIRONMENT 4
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2.1.1 Overview of the EU’s market
European Union, also known as the European Union, (abbreviated as EU), is a political and economic union consisting of 27 member states in Europe The European Union has developed a single market through a standard legal system that applies to all member states to make sure the free movement of people, goods, services and capital The EU maintains common policies on trade, agriculture, fisheries and local development
The EU 27 market size is now 500 million people, GDP will reach 15.193 trillion USD in 2020 (according to Worldbank.org) The EU is now one of Vietnam's leading trading partners, with two- way trade increasing by 15-20% per year on average
Figure 2: Proportion of Products Exported to EU (2018) textile (98%)
+ leather (for shoes) (11,1%) bag, suitcase, umbrella (2,2%) ô phones and components (31,4%) 3.20% 2.20% — clectranics and components (11,3%) 3,40% | ằ machinery, mechanical equipment (4,9%)
(Source: Ministry of Industry and Trade, General Department of Customs)
With a coastline of 3,200 kilometer, an exclusive economic zone of 1 square kilometer million and a large inland water surface of 1.4 million hectares, especially the waters of the Mekong Delta have created favorable conditions for Vietnam to develop the industry aquaculture and fisheries processing In which, Tien Giang, An Giang and Dong Thap are key areas for raising basa fish in the country, which has fully met the demand for raw materials for export fisheries processing companies The characteristics of freshwater fish such as basa fish are easy to raise, less diseased, and more fertile, especially suitable for environmental conditions in the waters of the Mekong Delta.
Like other regions of the world, under the impact of the COVID-19 pandemic, the European Union in the past year saw many unprecedented changes and challenges in history For the EU area, in the first quarter of 2020 recorded a decrease of 2.7% and the strongest decline in the second quarter of 2020 with a decrease of 13.8%
The COVID-19 crisis has sent shock waves through the EU food supply chain in
2020 Furthermore, EU agriculture is heavily dependent on cross-border seasonal workers and these factors are increasingly exposed by the crisis, which could push millions of EU citizens into poverty, especially those in poverty vulnerable objects Among the negative factors caused by COVID-19, this is a positive signal for Vietnam's food export industry to Europe, especially fisheries exports
The European market is considered the most rigorous market in terms of import control, the company needs to understand the regulations to be able to deploy the most effective sales strategies in this market
Required Furthermore, it is not allowed to treat the company's basa with carbon dioxide for the European market and control the chlorate content of the product
Food safety | Products found to be non-compliant will be reported in the Rapid Alert System for Food and standards Feed If the company is on that list, its containers will be thoroughly inspected at the port of must be met | entry In addition, constant temperature control is recommended To import into the EU, a hygiene certificate is required with the product Health and hygiene are important to customers Make sure that there are no contaminants in the finished product
Chlorate The European Union has not yet established a specific maximum residue level for chlorate in control food, and a default MRL of 0.01 milligrams/kg applies The European Union is working to strengthen regulation of residue levels in food and water Even at the default MRL, the product is often violated because of its higher chlorate content At the end of October 2019, a few shipments of frozen basa fillets with added water from Vietnam were found to have higher chlorate levels and were put on the RASFF quick alert
Do not treat | Carbon dioxide treatment is used to improve the appearance of basa products and keep the blood basa fish of the basa red and the flesh white The European Union believes that carbon monoxide with carbon | treatment can mask product deterioration and is not allowed oxide
Tariff In which, shrimp, tuna basa fish are the main export products of Vietnam to the European barriers market so fisheries enterprises have many advantages in terms of tax rates as well as legal rules when exporting
Non-tariff In an EU member state, Romania, recently, on online newspapers such as Realitate.net, barriers Ziuanews.ro, Bzi.ro, Adevarul.ro, Puppe.ro, Secretulsanatatii.net inaccurate information about
Vietnam's basa fish industry, which is harmful to export activities to this country Some other websites recommend that the people of this country boycott basa fish and restaurants with this fish menu Because the situation of exporting basa fish to the European market decreased due to smear media in some countries in Europe, VASEP signed a contract with Globally Cool Company to catry out a campaign to promote Basa fish at this market from March to December
2.2.1.1 Direct competitors a Inside Vietnam: Organizations that give the same product or service and use in the same market as a business such as:
Table 2: Vinh Hoan’s Competitor inside Vietnam
No Company Name Year of export
1 | Nam Viet Joint Stock Company 2020 76.3 511%
2 Bien Dong Fisheries Co., Ltd Fish Lt 2020 100.4 : 6.73% :
4 | Go Dang Joint Stock Company 2020 66.5 4.46%
(Source: VASEP) b At Europe: Currently, there is no significant competitor for Vietnam in the EU market Most basa fish products exported to the European Union originate from Vietnam
Table 3: Vinh Hoan’s Competitor at EU
Bangladesh Due to supply chain issues, Bangladeshi exporters are often unable to sell to demanding high-end markets such as the retail sector, where certification for traceability, quality and durability is often required Instead, Bangladeshi basa is often in the lower end of the foodservice market
China China is another country that exports small quantities of basa to the European Union Every year, no more than 50-100 tons to Europe
Potential competitors are businesses that are not present in the fisheries industry or are new to the industry but have not provided services and it may affect the industry in the future The entry of new enterprises will increase the level of competition among enterprises in the same industry, however, this level of competition will depend on factors and conditions for entering the industry as follows:
With many signed agreements such as EVFTA, UKFTA, along with a lot of government attention to develop the national fisheries industry, the industry's attractiveness becomes great: Technology; Capital requirements; Commercial factors: Distribution system, brand, customer system; Specific resources: Inputs (controlled), patents Human resources, government protection; Distribution channel
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2.4.1 Main markets of Vinh Hoan Company
In terms of revenue by market, most markets have decreased compared to 2019 and 2020 due to the impact of the pandemic, mainly due to food service chains, which are one of the two main consumption channels In 2020, Vinh Hoan sold to 47 markets, an increase of 9 markets compared to 2019 In which, the 3 largest markets are the US , Europe (including the UK) and China 2.4.2 Europe market
The bright spot of the market in 2020 is the growth of the Europe market Europe so that a block pass China the 2™ largest market after the United States of Vinh Hoan, accounting for 18% of total revenue
Demographic | According to VASEP, the biggest markets for basa in Europe are in Northern Europe, where Segmentation | consumers are most concerned with sustainability, price and convenience The majority of basa is brought to Europe as frozen fillets and Vietnamese exporters account for most of the market
Behavioral Most consumers in Germany are interested in preserved and processed fisheries products A notable segmentation | trend is the development of new fisheries products for special occasions or for special enjoyment such as Spanish savory dishes, fish appetizers, sushi and breaded products If fisheries is more conveniently ready and consumers are taught how to cook it, sales of fisheries could increase
The population of EU countries is about 500 million people, GDP is 15,193 trillion USD in 2020, the consumption rate for food and non-alcoholic beverages is 13%, restaurants and hotels are 8.7%, estimated EU people spend 10.85% of GDP on food and drink activities, that is, spending 1,648 trillion USD This is a huge market for Vinh Hoan to exploit
According to data in 2020, Vinh Hoan's pangasius and basa exports to Europe reached 54 million USD, a very small number compared to the total market and showed an opportunity to expand the market further
Figure 3: Household Expenditure by EU’s consumption purpose
Source: Eurostat (online deta code:.nema.10.ca3 g0) eurostatm
(Source: eurostat) 2.4.2.3 Competitive advantage of Vinh Hoan Company
It is thanks to Ms Le Khanh assertiveness in leadership that she has made the right and timely strategic decisions Since then, Vinh Hoan is not passive when the price of raw materials increases in the market, improves productivity, reduces costs and costs when realizing that the market demand is growing or pioneering in research and processing Basa products, basa fish into high value-added products such as breaded basa, artichoke rolls Ms Le Khanh showed excellent talent and bravery when helping Vinh Hoan gain a huge competitive advantage over rivals
INTRODUCTION STRATEGY 12 Em) 004015/9)8.,/0 205909
INTERNATIONAL MARKETING STRATEGY OF VINH HOAN
INTERNATIONAL MARKETING STRATEGY OF VINH HOAN COMPANY
Over the past several decades, international marketing has experienced rapid development Participating in an extremely fierce competitive environment, especially when the trend of internationalization of the economy is very strong, Vinh Hoan company has constantly improved its international marketing activities These activities are aimed at penetrating new markets, improving sales and reputation of Vinh Hoan brand in the international market However, completing marketing activities is an important first step to help Vinh Hoan gain a firm foothold in the fisheries market, specifically the Company's pangastius fillet As mentioned above, the Company mainly exports products from basa, therefore, this part of the 4Ps strategy also focuses on understanding and analyzing the Company's activities for basa products
In international marketing, international product decisions are important because they will affect international pricing, distribution and promotion strategies as well as the success or failure of the company in the international market Therefore, with decision products in the domestic market, international decision marketers will be more coordinated to do things differently from schools, differences in needs, preferences for attributes product special qualities, packaging materials, packaging formats, standards
Thus, the importance of product strategy is great and the product is also the image of the company in the market So, a company's international product policy must always keep up with ever-changing needs, tastes, regulations, and standards that are ever higher and more stringent To do this, product research and development is essential for companies Research and development activities have been interested and invested by Vinh Hoan Company for many years Every year, the company fully participates in fairs and exhibitions at home and abroad, through which to learn, research and create new products Over the past 20 years, the Company has launched many value- added products (VAT) in accordance with market requirements and consumer tastes, apply new technologies to make products of higher value, more diverse
Rolling on the world market, Vinh Hoan soon saw that product quality is a vital factor and determines the development of business products and activities of the enterprise Due to the characteristics of the business line, it is always required to meet strict requirements in terms of
19 measure, type and technical standards in fastidious markets such as the US, China and the European Union (EU) Therefore, the company has trained quality managers and workers directly in production, about the components of quality, quality levels, The company is the first fish processing unit that has achieved quality standards in accordance with strict regulations on food safety and hygiene (Vinh Hoan is the first unit to be granted HACCP and ISO certificates 9001, BRC, IFS ) according to the best standards to give guaranteed high quality products to consumers
The Company's products are divided into several categories based on different sizes and packaging:
+ By size: depending on orders and different requirements of customers, products are packed in different sizes and weights
+ By way of packaging: the two main forms of packaging currently of the Company are block and loose (IQF) The block usually has a large weight (5kg, 10kg), the price is lower; bulk freezers (IQFs) are more expensive, small in volume, and individually packaged
The product's packaging uses carton paper, printed with trademarks in accordance with Vietnam's standards (TCVN) on regulations on trademarks of exported goods Currently, the Company has a workshop that produces PE packaging and prints goods labels All kinds of cartons and boxes are purchased by the Company from external suppliers In general, the company's packaging and packaging all meet the requirements of VIEW (Visibility, Information, Emotional impact, Workability)
Vinh Hoan also has an expansion policy to promote goods to Eastern Europe, the Middle East and Mexico.
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Pricing for a product can be the key to success or failure Even if international marketers produce the right product, promote it properly, and start the right distribution channels, they will fail if the product is priced incorrectly In the current market mechanism, there are many other factors that influence the choice of buyers, but fish price is still one of the most important factors determining the market share and profitability of the company Pricing is affected by many factors such as production costs, transportation costs, market demand, competitive situation, the influence of laws, tariffs, etc Therefore, pricing can be determined Consider it one of the most difficult jobs
Compared to 2015, the ratio of COGS/revenue in 2006 has decreased from 91.83% to 90.19% due to the Company strictly controlling input material costs The company has taken many measures at the same time to reduce production costs, make use of raw materials to avoid waste and maximize the productivity of equipment, build a reasonable inventory of raw materials and finished products Continuing the positive factors in cost management in terms of COGS, in the first 9 months of 2007, although raw material prices in the market kept increasing, the Company still maintained the COGS ratio reaching 88.46% (a decrease of more than 1.73% compared to 2016) This stability is achieved because the Company has a policy to adjust the selling price of products according to the market price of raw materials and is agreed with partners to import Vinh Hoan's products In the opposite case, the price of raw materials decreases, the Company also actively lowers the selling price of its products to ensure mutual benefits in business activities with major partners, having long-term business relationships
In recent years, due to the impact of the COVID-19 epidemic, the demand for this product has decreased sharply, especially in Vietnam's three top import markets, China, the US and Europe - the The "hot spot" of the COVID-19 epidemic, there were successive waves of large-scale social distancing The quantity demanded falls, leading to a drop in prices According to observers’ estimates, for the US market alone, if the export price of basa in January 2019 was nearly 5 USD/kg, by September 2020 it would only be 2.6 USD/kg, equivalent to about 5 USD/kg, equivalent to a decrease of 46%
Distributing products in the country is already complicated, distributing products to foreign markets is even more complicated because it is bound by many objective factors of the host country such as differences in culture - society, conditions Politics, laws, customs, consumption habits, etc Therefore, it is required that companies carefully study these factors to be able to decide on a flexible distribution suitable for each market
The market for products of Vinh Hoan Company is spread all over the world, focusing on markets such as the US, EU countries (Spain, Germany, the Netherlands ), Australia, Hong Kong and some other markets other country In particular, the US and EU markets are considered the main markets for consuming the Company's products (reaching 80% of export turnover) With the constantly growing consumer demand of the US market (In the first 2 months of 2017, the US
21 imported 5,104 tons of frozen basa fillets with a value of nearly 17.5 million USD, an increase of 217% in volume and 302 USD in volume In the coming time, Vinh Hoan is expected to constantly increase the export value to the US market, the market where the Company has a competitive advantage compared to other businesses
In addition to maintaining current markets, the company focuses on expanding distribution channels distribute directly and explore new markets At the end of 2016, this strategy has recorded certain successes when Vinh Hoan has added 5 new markets: Pakistan, Thailand, India, Greece and Reunion, increase customer network about 300 customers in more than 40 countries Markets with growth outstanding are Japan, China and Mexico with corresponding increases are 60%, 135% and 80% The highlight is that the Company has successfully introduced products with Vinh Foods brand into the largest Mercadona supermarket chain in Spain
The company need to sign a memorandum of understanding of 20 fresh food suppliers with Amazon Shaking hands with Amazon, Vinh Hoan is gradually switching from B2B to B2C to be able to provide products to customers The company is also preparing to open a representative office in EU to continue expanding the market
Currently, Vinh Hoan is setting up a branch in the US market (it has been granted an offshore investment certificate No 09/BKH-DTRNN dated December 1, 2006 by the Ministry of Planning and Investment) investment in Vietnam and approved the establishment of a branch in the California) to distribute Vinh Hoan's products in the US market
Marketing activities are not only intended to promote production and distribution of products or services, but also need to give information to guide customer needs to purchase decisions To achieve success, international marketers must understand the business environment abroad, must overcome many barriers in local countries to conduct promotional activities
The method that Vinh Hoan Company applies is to cooperate with the Vietnam Association of Fisheries Exporters and Producers (VASEP) to attend annual international fisheries fairs (Vietfish - Viet Nam, Boston, San Francisco - USA) to introduce products and find trading opportunities In addition, the company also searches for customers through newspapers, the Internet and the introduction of businesses in the industry and from customers Develop business strategies for basa products in markets, promote the brand in association with quality standards and food safety and
22 hygiene The company considers this to be a big, long-term goal that needs to be implemented professionally and on a larger scale
In addition, the tendency to choose and pay a higher price for natural, organic, clearly labeled products with recognizable ingredients with minimal impact on the environment is also gaining popularity Therefore, Vinh Hoan constantly creates delicious and nutritious fisheries products with fast and convenient processing time, helping consumers have a better experience A memorable, safe culinary experience while still having time to enjoy yourself and moments with family and friends During this year Vinh Hoan has to continuously research and successfully develop 9 new products of breaded and seasoned lines, with export orders to Europe and the Middle East Asian
Europe has always been a strategic market of the Company due to the same vision of quality and high requirements related to sustainable development This helps the Company continue to grow its sales and place in Europe Europe is currently the Company's third largest export market with a proportion of 14% on sales of basa products
Vinh Hoan has made good use of this opportunity to increase sales in Europe The EVFTA trade agreement helps to reduce the basa tax rate to Europe, increasing competitive advantage The UK market recorded an impressive growth, up 63% thanks to the main consumption channel of basa in the UK, which is retail In other European countries such as Belgium, the Netherlands, Italy, Spain and Vinh Hoan, sales growth has been increased compared to 2019 As a result, the overall growth of Vinh Hoan's European market in 2020, is 35% Europe (including the UK) thus surpassed China to become Vinh Hoan's second largest market after the US, accounting for 18% of total revenue
The expenses are clearly and fully accounted for, which is the basis for the Company to see whether the use of its capital is effective or not, so that appropriate adjustments can be made Through the planning, the work in the export promotion is also arranged in a scientific way by the Company in a certain order, which makes the work carried out quickly and conveniently
Through analysis, it can be seen that Vietnam's fisheries industry has had many great developments, is a competitive industry, due to its advantages in natural resources and cheap labor 5.2 RECOMMENDATIONS