midterm assignment business in multicultural environment a report on developing rice product of vinafood 1 vietnam in china market

VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL MIDTERM ASSIGNMENT Business in Multicultural Environment A REPORT ON DEVELOPING RICE PRODUCT OF VINAFOOD 1 VIETNAM IN CHINA MARK

VIETNAM NATIONAL UNIVERSITY, HANOI

INTERNATIONAL SCHOOL

MIDTERM ASSIGNMENT

Business in Multicultural Environment

A REPORT ON DEVELOPING RICE PRODUCT OF VINAFOOD 1 VIETNAM IN CHINA MARKET

Lecturer: Ms Nguyen Thi Minh Huyen

Subject Code: INS4002 Prepared by : Group 04

Nguyén Thi Thu Nhan 18071185

CHAPTER I: OVERVIEW ABOUT THE BUSINESS

1 Company: VINAFOOD I Vietnam

1.2 Vision, mission, core value

1.3 Product lines

2 Product: RICE SHRIMP ST25

3 New Business environment: CHINA onan

EXECUTIVE SUMMARY The report that we refer to is “Business in a new environment” Specifically, the enterprise, which is a trading and service joint stock company Vinafood 1 Vietnam, chooses Vinafood1 rice - one of the types of rice that is currently highly appreciated internationally, and the country selected to do business in the field This is China For Asian countries such as

Vietnam, Thailand, Japan, Korea, etc, rice is considered an indispensable essential food, used

in daily family meals, and prepared dishes another variable China is a very potential market because it is a densely populated place, leading to a large source of consumption Moreover, China is a country with high standards of food safety If we pass this inspection and cooperate successfully, Vinafood Rice will also benefit from expanding to other markets This report

will evaluate, analyze, study the financial, economic, political factors in the Chinese market

to make strengths, weaknesses, opportunities and threats and can put forward develop appropriate marketing strategies and financial plans to increase sales for rice products in particular and contribute to Vietnam's exports

CHAPTER I: OVERVIEW ABOUT THE BUSINESS

1 Company: VINAFOOD I Vietnam

1.1 Overview about company

Company name abbreviation VINAFOOD1

English name VIETNAM NORTHERN FOOD CORPORATION

LTD

Head Office Address No 6, Ngo Quyen Street, Ly Thai To Ward, Hoan

Kiem District, Hanoi City, Vietnam

Type of business Other foreign organizations and individuals

engaged in production and business activities not under the Law on Foreign Investment

Mission:

Northern Food Corporation has a mission to improve the value and quality of Vietnamese rice grains Creating sustainable values for consumers and the whole society, actively contributing

to stabilizing food and food security in the country and in the world

1 Bac Huong | Bac Huong is a high

Rice quality rice that is very

popular in the North Bac

Huong rice is produced

from the original rice

variety, the rice grains

are small and clear,

giving the rice grains a

fragrant, medium-soft

Tam Dien

Bien Rice

Tam Dien Bien

Vinafood1 rice is

produced from the

original cultivated rice

variety with small,

slender rice grains for

fragrant, flexible and

Muoi

Huong Rice

Produced from a

traditional specialty rice

variety of people in the

lower Mekong, Muoi

Huong rice is considered

to have the best taste on

the market today

VINAFOOD1

Fit bon gee Ui

3.5kg - 135.000VND

RICE

SHRIMP

ST25

ST25 Vinafood1 rice, the

product is planted with

enthusiasm in the rice

fields rotated with

brackish water shrimp

Special rice grains have a

delicious rice taste, soft

and bold

2.9kg - 118.000VND

Seng Cu

Rice

This difference and

strangeness must come

from the large, bright,

yellow rice grain and the

long bearded rice grain

tail Pearl white rice

grain, light aroma Rice

grains with bold, sticky,

soft, flexible and

3.5kg - 146.000VND

6 Tam Soc The seeds are small, 3.5kg -

flexible, hunting, glossy, “Tw soe THANG

rich in flavor, and

fragrant

Nhien Rice | white The rice is soft, 106.000VND

sweet, shiny, and lightly

fragrant

2 Product: RICE SHRIMP ST25

qo S125 chudin, chon gạo tụ

œ8! “foo,

«Gao Lua tom

Northern Food Corporation welcomes the

VINAFOOD1 Yy Lương Thực Air:

new product ST25 Vinafood 1 rice, rice and

shrimp, which is planted with enthusiasm in rice fields in rotation with brackish water

shrimp A special and unique farming form in South Vietnam with "One Shnmp crop - One rice crop" on land with 6 months of freshwater and 6 months of salt water

The special combination of rice-shrimp rotation land and standard ST25 rice variety from engineer Ho Quang Cua, in addition to the HACCP control process (United Kingdom) by Vinafood1 has launched ST25 rice and shrimp Vinafood 1 achieved the following standards the highest standard that rice in the world cannot match To compare and distinguish with other types of rice on the market, customers can recognize the distinctive aroma of pandan leaves and easily recognize the surface of the rice grain through its clear white elongated shape

Sixty years is a number that confirms the number | prestigious brand in Vietnam's rice market, Vinafood1 rice and shrimp rice is a special product of Vinafood1 brand that has been cherished and cultivated with high quality standards introduced to customers the standard of varieties, standards of growing areas, standards of processes and finally the quality standards

of rice that customers want from ST25 Vinafood 1 rice and shrimp

3 New Business environment: CHINA

Agricultural and aquatic products of Vietnamese origin are popular in China, serving the consumption needs of the Vietnamese community living and working in China, which is increasing year by year (with about 500,000 people living and working in China in 2021) Along with the innovation in consumer tastes of China people, who are increasingly interested in quality products imported from abroad, Vietnamese goods are assessed to have great potential to continue penetrating and improving the market share in the China market With the development of economic integration, China has always been a large and easily accessible market so that Vinafood1 can easily export good products, especially “ST25 rice, rice and shrimp” with quality recognized by the world trust use Choosing China as “the

destination” in this business activity, first of all, for the reasons mentioned above, China is

one of the potential markets with a dense population

Second, the China people’s demand for rice is high (Rice is used in daily meals or ground into flour to make noodles) So consuming rice is essential and easy Taste, China dishes can

be said to be similar to Vietnam, broader than bringing the common flavor of Asian countries

When products are successfully imported into China market, our business must maintain product quality, selling prices and upgrade the export process in professional manner; exchange to listen to the market for extensive product feedback including opinions on product quality, weight, packaging or usage instructions, find out recipes, how to use product

in accordance with the tastes and needs of customers have high sensitivity to the change in the selling price of certain product, so China importers always appreciate the stability of prices and supply from their partners Vietnamese businesses in general and Vinafood1 in particular should focus on investing in research to improve quality, diversity, product types and forms to meet the unique tastes of many different customers

CHAPTER IT: MAIN FACTOR ANALYSIS OF BUSINESS ENVIRONMENT PESTEL

1 Economic Factor

In Vietnam market

Vietnam is one of the major exporters of agricultural products in the region and the world In particular, rice is one of the main agricultural exports of Vietnam and one of the agricultural exports with strong export turnover in recent years The export volume of rice in 2021 will reach 6.2 million tons with a value of 3.2 billion USD, the average export price is 526 USD/é/ton Vietnam's rice exports account for about 12.5% of the world rice export market share, behind India and Thailand Vietnam's rice products have been exported to 28 markets (in 2021), of which Asia is still a key market area, accounting for over 60% of total rice exports; followed by Africa at 19%; Europe 2% The export rice market in recent years due to the impact of the Covid pandemic has had many fluctuations, along with unfavorable weather developments, but the export price of rice has increased due to the export of high-quality rice

in recent years and a gradual decrease in the proportion of medium quality rice

In recent years, the scale and turnover of rice

exports have tended to increase Vietnam's rice export volume increased by 5.8 million tons in

2017 to 6.2 million tons in 2021, accounting for

an average of more than 12% of the world's total rice export volume Rice export turnover increased from 2.63 billion USD in 2020 to 2.88 billion USD in 2021; The first 5 months of 2022 reached 1.19 billion USD Rice export

turnover growth in 2021 will increase by 9.75% compared to 2020

Currently, the export price tends to increase, in 2021 the average export price is 526 USD/ton, although still affected by the Covid-19 epidemic, Vietnam's rice exports still achieve positive

results

Moreover, in the present day context of vast monetary integration, Vietnam's participation in bilateral and multilateral loose exchange agreements has unveiled possibilities to penetrate the top-rate rice marketplace Many Vietnamese export products have undergone significant

changes in the EU market In comparison to July 2020, the export price to the EU increased

by 16.6% in August 2020 and by 20.3% in September 2020 According to the EVFTA commitment, the EU offers Vietnam a quota of 80,000 tonnes of rice per year (consisting of

30,000 lots of milled rice, 20,000 lots of unmilled rice, and 30,000 lots of aromatic rice) For

rice, the EU will retain the tax at 0 % after three to five years The EVFTA is a policy

"leverage" for Vietnamese rice to correctly penetrate into excessively pleasant markets

To summarize, Vietnam has a robust monetary base that might at once guide VinaFood company in bringing its VinaFood rice into the China marketplace

In the Chinese market

China is the economy with the second largest total GDP in the world (in 2020 reached 14.72 trillion USD, accounting for 17.4% of the global); has a GDP per capita of 10,435 USD (if PPP is calculated at 17,211 USD); the proportion in GDP of agriculture, forestry and fishery

is only 7.7%; has the largest export turnover in the world (in 2020 reached 2723.3 billion USD and continues to increase), has the 2nd largest export turnover in the world (2357.1 billion USD)

According to the General Statistics Office, for many years, China has always been Vietnam's largest import market Compared to the total import turnover from Vietnam's markets,

imports from China in 2019 accounted for 29.8%, in 2020 accounted for 32%, in 2021 accounted for 33.1%, 8 months of 2022 accounted for 33.1%, forecast for the whole year

2022 accounted for 33.4% This is an increased proportion and much larger than the 2nd largest markets and below (such as Korea, Japan, Taiwan, USA, Thailand )

Besides, China has the largest population in the world and currently has over 400 million people in the middle class, so the demand for consumption is very large and an attractive export market for many countries around the world, including Vietnam The economic environment of China is very convenient and supportive in the field of rice products, so VINAFOOD 1 could use that to penetrate into the Chinese market

2 Political Factor

In Vietnam market

Vietnam has a well-installed political establishment The authorities have some regulations to aid the neighborhood rice enterprise to behave as a commercial enterprise and export to different nations In that case, the Vietnamese authorities are decreasing change limitations to

attract more exporters Thanks to the authorities’ aid, Vietnam remains the world's 2nd

biggest rice exporter in 2020 with 6.15 million tonnes of exports (surpassing Thailand and at the back of India), and the quality of rice has been significantly improved, together with reduced prices

This is a great possibility and circumstance for VINAFOOD 1 to reach out to the Chinese market Moreover, Vietnam is a member of the United Nations (UN), World Trade Organization (WTO), Association of Southeast Asian Nations (ASEAN), Non-Aligned Movement (NAM), and a number of different prestigious establishments that have subsequently become famous worldwide sports commercial enterprises of Vietnamese companies including VINAFOOD 1 In addition, Vietnam pursues the scope of building and retaining accurate family members for anyone in the global sphere irrespective of their political issues on international issues When VINAFOOD1 expands rice sales to the Chinese market, this can support the connection between the two countries becoming closer and closer, in addition to improving the situation of trade between countries

In the Chinese market

Over the years, especially recently, the trend of globalization has been growing and spreading

to every country and region in the world It has had a huge and far-reaching impact on the fields of globalization, especially in the world economy For China, economic globalization not only makes China's foreign economy change a series of old traditional concepts, gradually eliminating the unified centrally planned economic institution, eliminating the policy of developing a closed economy based on the principle of "self-reliance", and limiting links to the world economy Up to now, in the process of implementing the open-door policy and reforming economic institutions, China has gradually entered the international market economy, deeply participating in the process of economic globalization At the same time, in the process, China's foreign economy has absorbed the influence of both beneficial and

adverse factors, making economic activity difficult

Moreover, China is strongly promoting its participation in the regional economy and global trade cooperation Regional economic cooperation and global trade cooperation are prerequisites that bring practical benefits to trade and investment liberalization, reduce tariffs, gradually eliminate non-tariff barriers, improve the investment environment, promote free movement of production factors such as capital, goods, technology, currency and human

resources between countries, and at the same time make the factors of production

standardized, monitored and balanced uniformly through international economic organizations Therefore, China's current policy is to try to quickly join the International Trade Organization (WTO) and global regionalized organizations, establish norms on multilateral trade cooperation, improve trade services, intellectual copyright law, and so on

™ The Law on Investment is related to trade,

the Law on Arbitration in Trade Disputes In the coming years, China also advocates to further increase its participation 1n trade cooperation with developing countries' economic regions in Africa, Latin America, especially Southeast Asia, contributing to promoting the economic development of the regions

It can be seen that China's policies contribute to reducing immigration costs through tax reduction, increasing integration opportunities in 1 potential country.This is a great political environment with very little management opening up creating great possibilities for foreign corporations including VINAFOOD1 to enter and develop in China

3 Social Factor

In Vietnam market

Rice has long played an important role in the meals of Asian people Particularly in Vietnam, rice is deeply ingrained in people's subconscious through family meals In Vietnamese culinary culture, rice dishes are always diverse and hold a key position Rice is known as the pearl of heaven It is the sacred quality that creation has given to mankind Vietnamese humans use rice in nearly each meal There are many rice dishes in Vietnam which include

vermicelli, pho, noodle soup, bread, wine, etc In eating places in Vietnam, rice dishes also

are modified to make rice much less sticky

In addition, the rice sector is important for the development of agriculture and rural areas, especially contributing to ensuring national food security Therefore, the industry continues to strongly restructure in the direction of improving efficiency and sustainable development, fully meeting the demand for domestic rice consumption and export

With the arrival of rice in each social interest of Vietnam, VINAFOOD1 might be supported circuitously withinside the procedure of bringing rice to overseas markets which includes

in common with Vietnamese people: they all use rice in their daily meals Specifically, the South uses rice and rice mainly In the North, people replace rice with flour products such as noodles and dumplings

Attracting investment from foreign enterprises

China is a huge investment market, attracting a large number of foreign-invested companies and corporations with colorful business forms but also a place of fierce competition between domestic enterprises and foreign firms Among the tens of millions of companies operating in China, there are corporations so huge that in 2000 sales reached $ 50 billion, paid a budget of

$ 12 billion, profits reached $ 7 billion like Sinopec oil and gas corporation

High population _—> diverse needs

With the largest population density in the world, the needs of the Chinese market are quite diverse and can be considered an easy market due to different classes of people with different incomes This is a market characterized by the existence of goods of different specifications and quality so far that the prices of goods differ tens or even hundreds of times

Because of the numerous societal values associated with rice, the rice market in China has

developed and opened up clear pathways for VINAFOOD1 to enter the country

4, Technological Factor

In Vietnam market

A thriving startup culture, international investment, low costs, government initiatives, and an

educated workforce have been driving the IT revolution in Vietnam for a long time The country has a number of technology parks such as Da Nang Hi-Tech Park and Saigon Hi- Tech Park, which have offices and factories for more than 700 companies, including 220 foreign companies specializing in IT and software engineering, hardware manufacturing and infrastructure development

Vietnam is currently the eighth largest IT service provider in the world The five IT industries

that are trending today are fintech, artificial intelligence, e-commerce, outsourcing, and

educational technology (Samuel, 2019) In addition, the Ministry of Science and Technology continues to support them to connect with potential foreign partners, improve product quality and safety, and ensure access to foreign markets, especially Vietnamese agricultural products The ministry will also support Vietnamese enterprises to register and protect their intellectual property in foreign markets

VINAFOOD 1 might take use of Vietnam's growing technical environment to expand into

overseas markets such as China

In the Chinese market

Technology and business are closely linked Technical advancements impact manufacturing capacity, increasing business income PESTEL analysis China can highlight the ways in which technology may help China grow:

@ The nation has made advances in technical innovation Both the distribution and the manner of production have altered as a result Globally functioning tech giants like Baidu and Alibaba may help firms increase their sales

@ China is also developing measures to encourage its citizens to focus on discoveries that will advance its development These regulations may help both domestic and foreign businesses produce more effectively

@ A large portion of the population chooses to use e-commerce rather than going to the shop to buy things since the nation has strong technical support

China's highly developed technological environment helps foreign businesses, including VINAFOODI1, expand and grow their operations all throughout the nation

5 Environmental Factor

In the Chinese market

Though ecology does not majorly affect the growth of a country, it may have some indirect impact China has experienced rapid growth in the last few decades, and as a result, there is urbanization Here are some ecological issues which can impact China:

@ The country has set up some guidelines for the business It aims to secure the environmental standards of production It may increase the cost of production and decrease the profit

@ China is also aiming to make electronic vehicles its primary mode of transport If they can successfully incorporate it, the car manufacturing company may get a better market for production and selling

@ As the country has factories on a considerable scale, they need to work on their technologies It can reduce the pollution level and the cost of manufacturing

In recent years, ASEAN countries have been China's second largest agricultural trading partner (after Brazil) In which, Vietnam is in the top 10 imported to China, mainly focusing

on the following industries: vegetables, seafood, rice However, the export proportion of

some export products to China tends to decrease, such as fruits and seafood => China is a

prospective environment for agricultural countries to import rice

In Vietnam market

Vietnam is one of Asia's most beautiful countries It has eight UNESCO World Heritage Sites and had over 18 million foreign tourists in 2019 Tourism has played a significant role in transforming Vietnam's rural economy into a service economy It is worth emphasizing, however, that the dread of the coronavirus (COVID-19) has posed a danger to the tourism sector and public health