That is why the author chose the topic "Factors affecting the competitiveness of Vietnam's dairy processing industry" to research.. The specific objectives are: Clarifying the concept a
Trang 1NATIONAL ECONOMICS UNIVERSITY
Trang 2THE PROJECT WAS COMPLETED
AT THE NATIONAL ECONOMICS UNIVERSITY
Scientific supervisor: Assoc Prof Dr BUI DUC TUAN
Trang 3PREFACE
1 The urgency of the topic
Competitiveness (NLCT) is an important topic However, the connotation of the term NLCT is understood in many different ways, leading to measurement methods, types of data that can be used, and methods of determining factors affecting NLCT (YTAH) are also very diverse and there is no consistency, especially at the industry level
Vietnam's dairy processing industry plays an important role in economic development and social security However, the scale and development of the industry are still limited, not commensurate with the market potential because the domestic supply of raw milk only meets over 40% of domestic demand, the remaining more than 60% must be imported from abroad
On the other hand, Vietnam's dairy industry is under increasing competitive pressure when tariff preferential agreements take effect Therefore, it is necessary to clarify what is the renewable energy of an industry, how to measure the renewable energy of the industry, what factors affect the environmental protection of the industry, thereby applying it to determine whether the renewable energy of Vietnam's dairy industry is currently strong or weak, which factors play a role in promoting the renewable energy to be promoted, What factors are holding back need to be improved,
and how improvements can be made That is why the author chose the topic "Factors
affecting the competitiveness of Vietnam's dairy processing industry" to research
2 Research objectives:
The general objective of the thesis is to assess the current situation and analyze the environmental protection of Vietnam's dairy industry, thereby proposing solutions
to help improve the environmental protection of Vietnam's dairy industry
The specific objectives are: Clarifying the concept and connotation of industry renewable energy applied to the dairy industry; Analysis and evaluation of renewable energy in Vietnam's dairy industry; Identify and analyze YTAHs to renewable energy
of Vietnam's dairy industry; Proposing solutions and recommendations to improve the quality of Vietnam's dairy industry
Trang 44 Subjects and scope of research
4.1 Subjects of study
Research thesis on NLCT and YTAHs to NLCT of Vietnam's dairy industry In particular, the dairy industry includes enterprises processing dairy products of animal origin operating in Vietnam, including domestic enterprises and enterprises with foreign investment (FDI) The YTAH to NLCT of the dairy industry is approached according to the Diamond model of Porter (1990)
4.2 Scope of study
+ Scope of content: The research thesis is sector-level and limited to aspects such
as concepts, measurement indicators and YTAHs to NLCT
+ Spatial scope: The NLCT of Vietnam's dairy industry will be compared with
86 countries with milk export activities in the world before going into a detailed analysis for Vietnam's dairy industry The analysis of YTAHs to NLCT of the industry
is limited to the context of Vietnam's CNCB industry
+ Time range: The renewable energy of the dairy industry will be calculated and compared in the period of 2000 – 2020, and it is estimated that the YTAH to NLCT will be carried out on the research sample from 1990 to 2020
5 Research contents and methodology
The thesis uses both qualitative and quantitative research methods to analyze
four main contents, including: (i) Overview, research and determination of the theoretical framework for renewable energy in the dairy industry; (ii) Analysis of renewable energy of Vietnam's dairy industry; (iii) Analysis and estimation of YTAHs
to the renewable energy of Vietnam's dairy industry; (iv) Proposing solutions and
recommendations to improve the renewable energy of Vietnam's dairy industry
6 New contributions of the thesis
- New academic and theoretical contributions
Firstly, the thesis has clarified the connotation of the renewable energy of the dairy
industry Accordingly, the performance of the dairy industry is shown and evaluated through the resilience and development of the industry not only in the domestic market but also in the international market However, that ability needs to be based on the achievement of production and business efficiency of enterprises in the industry
Secondly, the thesis has completed a set of criteria, targets and methods of
measuring renewable energy applied to the dairy industry This method converts the indicators through Z transformation and synthesizes them into a single value, allowing comparison and evaluation of the renewable energy of the dairy industry between countries
Thirdly, the thesis has verified and confirmed a number of YTAHs to the NLCT
of Vietnam's dairy industry in the short and long term, contributing to strengthening the analytical model (Michael Porter's Diamond)
Trang 5- New findings and recommendations drawn from the research results
Firstly, the thesis proves that the development potential of Vietnam's dairy
industry is still large However, competitive pressure on both domestic and international markets tends to be increasing
Secondly, the thesis found that the renewable energy of Vietnam's dairy industry is
relatively high compared to other countries in the world, ranking 30th out of 87 countries ranked In particular, economic indicators are performing quite well but are gradually decreasing, while indicators in the trade aspect are still limited but gradually improving
Thirdly, the thesis finds that the size of the herd, exchange rate and policies are
factors that have a positive impact and support the improvement of the industry's renewable energy; the price of raw milk, although it has the opposite impact, has a role
in promoting renewable energy; the scale of demand has a positive impact in the short term but is negative in the long term; while the opening of trade is the opposite again In addition, access to capital, raw milk yield, consumer tastes, climatic conditions, etc are also unfavorable factors for the renewable energy of Vietnam's dairy industry
Fourthly, in order to improve the renewable energy of the dairy industry, the
thesis has raised policy implications on adapting to the situation and fluctuations of the market, directly improving the indicators of renewable energy measurement, and promoting factors affecting renewable energy (YTAH) The thesis has also proposed a number of recommendations to the Government, ministries, departments, sectors and the Vietnam Dairy Association such as completing regulations on product quality assurance, improving management capacity, supporting trade promotion organizations, improving forecasting, strengthening the role of market supervision, etc assistance in resolving commercial disputes, etc
7 Structure of the thesis
In addition to the introduction, conclusion and appendix, the thesis has a chapter structure as follows:
4-Chapter 1: Overview of research on competitiveness and factors affecting level competitiveness
sector-Chapter 2: Theoretical basis of competitiveness and factors affecting sector-level competitiveness
Chapter 3: Results of research on competitiveness and factors affecting the competitiveness of Vietnam's dairy processing industry
Chapter 4: Solutions to improve the competitiveness of Vietnam's dairy processing industry
Trang 6CHAPTER 1 OVERVIEW OF RESEARCH ON COMPETITIVENESS AND
FACTORS AFFECTING INDUSTRY-LEVEL COMPETITIVENESS 1.1 Overview of the history of the development of competition theories
Competitive thinking is rooted in commercial theories, and its meaning changes over time and in the context in which it is applied Since the 16th century until now, there have been many schools and theories proposed The thesis has introduced a sequence of schools of thought related to NLCT from mercantilistic economics, the commercial theory of the Classical, Neoclassical schools, Heckscher Ohlin's (1877 – 1949) factor ratio theory, Leontief's paradox (1953), Linder's theory of the same demand (1961), etc Vernon's product cycle theory (1966), Krugman's (1979) advantage at scale, to the new competition theory with models such as Porter's Diamond model (1990), the double diamond model of (Rugman & D'Cruz, 1993), Cho's nine-factor model (1994), the TOWS model (Weihrich, 1999)
1.2 Overview of studies on sector-level competitiveness
There has been a lot of research around the issue of industry-level renewable energy, in which the common understanding is that the environmental protection of an industry is the degree to which the industry satisfies the needs of customers and achieves success compared to competitors in the international market
Regarding the evaluation criteria, in general, there are 3 views: (1) Measuring renewable energy based on input costs; (2) based on output product consumption results; and (3) based on a combination of both outputs and input costs
Most studies are based on Michael Porter's Diamond model to analyze the YTAH to NLCT of a certain industry through a descriptive and comparative method, while others conduct YTAH to NLCT testing but approach the YTAH to NLCT in terms of exportability or only using a single indicator such as RCA RTA to represent the industry's NLCT
1.3 An overview of research on competitiveness and factors affecting the competitiveness of the dairy processing industry
1.3.1 Foreign Studies
1.3.1.1 Conceptual studies
In the dairy industry, there seems to be no research to give a specific concept of renewable energy of the dairy industry Most studies use or implicitly apply general concepts of industry-level or enterprise-level renewable energy Accordingly, industry-level renewable energy is the ability to achieve solid profits, maintain and expand market share in both domestic and/or international markets However, these studies all lack arguments on the suitability of the concept when applied to a specific industry, especially the dairy industry
Trang 71.3.1.2 Studies on evaluation criteria
The research overview also shows that there are many different perspectives, criteria and criteria for evaluating sector-level environmental protection In particular, there are two prominent approaches One is to evaluate the quality of life through one
or a few individual indicators The second is to synthesize into many indicators into a single indicator The evaluation criteria that are often proposed include: economic efficiency, commercial performance, production and business efficiency, innovation
1.3.1.3 Studies on influencing factors
The profitability of the dairy industry can be determined by many different factors Some studies approach the Structure-Implementation-Performance model of Lipczynski, Wilson, and Goddard (2005), but most of the research has focused on national sources based on Michael Porter's Diamond model The factors analyzed are usually milk quality, supply chain manageability, market size, government support policies, exchange rates, degree of trade liberalization, world milk policy, per capita income, milk unit price, etc
1.3.2 Domestic studies
There is very little research on the renewable energy of Vietnam's dairy industry
In particular, the research of Nguyen Thi Dieu Hien (2016) applying the Diamond model to analyze the factors that help promote or inhibit the renewable energy of Vietnam's dairy industry in the period of 2010 – 2015 Another study is Phung Thi Phuong Hai (2016) implement the assessment of the dairy industry based on three indicators: market share, profit, and relative competitiveness of enterprises in the industry At the same time, the research applies the Diamond model, and the SWOT matrix to analyze the YTAHs to the NLCT of the industry The results show that the renewable energy of Vietnam's dairy industry is still weak compared to other countries
in the region and the world The determinants of the industry's labor performance such
as employers, production and business efficiency, technological level and management capacity, etc are still very limited In particular, the author also affirmed that Vietnam's dairy industry will face a strong wave of competition under Vietnam's tariff reduction policy in trade agreements
1.4 Review of the study overview and research gaps
It can be seen that a number of issues need to be further studied: (i) lack of a
comprehensive theoretical framework on concepts, evaluation criteria and
measurement methods, YTAHs to the dairy industry; (ii) there is no study to measure
the renewable energy of Vietnam's dairy industry into a single index and compare it
with the dairy industry of other countries; (iii) no studies have used quantitative
methods to analyze the YTAHs to the renewable energy of Vietnam's dairy industry From the above gaps, the thesis aims to solve the following problems:
- Regarding the research issue: (i) Completing the theoretical framework on
Trang 8renewable energy of the dairy industry in the following aspects: Concept, content, evaluation criteria, methods of evaluating and identifying YTAHs to renewable energy
in the dairy industry; (ii) measure, analyze and evaluate the renewable energy of
Vietnam's dairy industry compared to the dairy industry in other countries around the
world, thereby, drawing the results and limitations of the industry; (iii) analysis and
estimation of YTAHs to NLCT of Vietnam's dairy industry
- Regarding management issues: Proposing solutions and recommendations to
improve the efficiency of Vietnam's dairy industry
CHAPTER 2 THEORETICAL BASIS OF COMPETITIVENESS AND FACTORS AFFECTING SECTOR-LEVEL COMPETITIVENESS
2.1 Competition, competitiveness and levels of competitiveness
2.1.1 Concept of competition
From different perspectives on competition, competition can be generalized as having at least two entities with the same goal/goal competing for something scarce that they both have a chance of In the field of business, these are the favorable conditions for production & business, thereby reaching more customers, selling more goods, capturing more markets, obtaining more benefits, and developing better than other competitors
2.1.2 Concept of competitiveness
The concept of NLCT can be seen as a multidisciplinary approach of modern economics, and most scholars agree that the concept of NLCT is complex and may not have a general definition applicable to specific economic and business situations The concept of renewable energy can be approached from the perspective of a country, industry, business, or product In general, renewable energy is the ability of the subject
to obtain favorable conditions in production and development, thereby successfully competing in both domestic and international markets on the basis of maintaining profits and development
2.1.3 Levels of competitiveness
Researchers have different classifications in terms of the level or field of NLCT Summarizing the studies, it can be divided into the following levels: Product level, enterprise level, sector level, regional/local level, national level, national block level Although NLCT can be considered at different levels, they are closely related to each other On the one hand, the quality and cost of a product or service determine the survival and development of an enterprise On the other hand, the quality and cost of
an enterprise are connected to the performance of an industry, region or country
Trang 92.1.4 Competitiveness, competitive advantage, comparative advantage and productivity
NLCT refers to the ability of enterprises/sectors/countries compared to competitors thanks to competitive advantages (LTCT) It is as a measure closely related
to LTCT NLCT is not only limited to the fight for customers but also includes the struggle for factors that bring LTCT to enterprises/industries/countries Access to the best resources can bring about LTCT, which in turn creates better value for customers than competitors and achieves NLCT
LTCT is created and maintained through the strategic positioning of localization processes In other words, LTCT relies heavily on the specific factors of the enterprise including those that are created proactively through business strategies or through innovation, while comparative advantage emphasizes natural factors that are passive such as differences in resources, and technology/productivity
Productivity is the output per unit of input Productivity refers to an organization's internal capabilities, while NLCT refers to an organization's relative position relative to its competitors Sometimes an enterprise can improve its natural resources by changing its strategy without increasing productivity
2.2 Characteristics and connotations of competitiveness of the dairy processing industry
2.2.1 Characteristics of the dairy processing industry
2.2.1.1 Concept of the economic sector
Most studies use the concept of industry derived from industrial organization economics, whereby an industry consists of a group of companies that produce alternative products that are close to each other According to Decision No 27/2018/QD/TTg of the Prime Minister, the economic sector is a collection of similar economic activities based on 3 criteria ranked in order of priority, including: (1) Production process and technology; (2) Input materials; (3) Characteristics of the output product
2.2.1.2 Milk processing industry and its products
The dairy industry is understood in a basic sense, it includes milk processing enterprises whose input material is milk derived from animals such as cow's milk, goat's milk, buffalo milk, sheep's milk Raw milk can be developed by enterprises themselves, purchased from dairy farms or from imported raw milk powder
The products of the dairy industry include retail end products such as fresh milk, fermented milk, pasteurized milk, powdered milk, cheese, cream, yogurt, condensed milk, and butter and some intermediate products such as powdered milk, evaporated butter, casein, whey, and lactose In general, milk is a perishable commodity that requires strict storage conditions, while milk products are bulky and difficult to transport, which is a commodity that is of great interest and strict control by governments of various countries in terms of quality and price
Trang 102.2.1.3 Characteristics of the milk processing industry
Due to the nature of the products and supply chain of the dairy industry in general, the dairy industry has some of the following characteristics: The products of the dairy industry are both localized and global; The domestic source of milk raw materials for the dairy industry mainly comes from small dairy farming households and comes from cow's milk; The profit margin of the dairy industry in liquid milk products
is considered quite low; The dairy industry plays an important role in public health; The dairy industry is one of the fast-growing and stable industries; The dairy industry
in general and the dairy industry in particular are highly protected; The output of the dairy industry increased slower than the consumption demand
2.2.2 Connotations of competitiveness of the dairy processing industry
Inheriting the previous studies and combining with the characteristics of the dairy industry, the thesis proposes the concept of industry-level renewable energy
applied to the dairy industry as follows: "The competitiveness of the industry is the
ability to withstand and develop the industry in the domestic and international markets
on the basis of achieving production and business efficiency" This concept has several
implications: (i) It is the resilience and development of the industry in the domestic and international markets, (ii) On the basis of achieving production and business efficiency
2.3 Criteria and criteria for assessing the competitiveness of the sector
From the concept and connotation of the industry's industrial efficiency, high economic performance is expressed through the manifestations of good economic results, good commercial results, on the basis of ensuring high production and business efficiency Thus, the thesis on the industry's approach to renewable energy is a multi-dimensional structure The specific criteria and indicators used by the thesis to evaluate the renewable energy of the dairy industry are as follows:
2.3.1 Economic indicators
Follow (Latruffe, 2010); Wijnands et al (2008); Wijnands et al (2015), NLCT
is reflected in the economic aspect through the following indicators: (1) Real added growth; (2) Growth in the proportion of real added value in the general sector;
value-(3) Labor productivity growth
2.3.2 Trade-related indicators
Indicators reflecting the industry's industrial performance in the commercial
aspect include: (1) Comparative advantage related indicators shown according to the study of Cross B (1965) and Vollrath (1991); (2) Net Export Index Banterle and Carraresi (2007); Ferrarini and Scaramozzino (2011); (Latruffe, 2010); (3) Export
market share, Wijnands et al (2008)
2.3.3 Indicators reflecting production and business efficiency
The most common indicators reflecting the efficiency of production and
Trang 11business include: (1) Gross profit margin; (2) Return on revenue (ROS); (3) Return on assets (ROA); (4) Return on equity (ROE)
2.4 Factors affecting the competitiveness of the industry
2.4.1 Conditions of production factors
Factor conditions are divided into basic and advanced factors Basic factors include natural resources and unskilled labor Enhancement factors include skilled labor, expertise, and capital, among others Economic theories have shown that production costs are a factor that has a negative impact on product costs, enterprise profits, and therefore negatively affects the energy efficiency of enterprises in particular and the industry in general
2.4.2 Bridge conditions
Demand conditions include the composition of domestic demand, the size and growth rate of demand, and the internationalization of domestic demand Demand conditions affect differences in basic factors of production between countries and a country's relative advantageous position, ultimately leading to benefits from trade and the promotion of renewable energy
2.4.3 Supporting and related industries
Related and supporting industries are those that can organize activities in the value chain when competitive Moreover, the presence of these industries often creates LTCT for enterprises in the industry because it increases the barrier to entry into the industry, creating new opportunities for factors such as information exchange, technology and knowledge transfer When local supporting industries are competitive, enterprises will take advantage of more creative and effective inputs, contributing to the creation of renewable energy for the industry
2.4.4 Strategy, structure and competition
This aspect refers to the competitiveness of the domestic market, the objectives, strategies, competition of enterprises in the industry, the way in which enterprises are managed, competitive and innovative, etc These factors greatly affect business efficiency, thereby affecting the environmental efficiency of each enterprise Domestic competition also forces companies to find ways to cut costs, innovate and improve product quality, thereby improving their internal resources
2.4.5 Government factors
Government policies, rules, and regulations at different stages can be beneficial (by reducing bureaucracy, opening up new businesses, encouraging joint ventures) or detrimental (by not opening up the free market) to competition Therefore, the government plays a role by improving the national LTCT, which will affect the NLCT
of specific sectors in that country
Trang 122.4.6 Opportunities
This factor refers to the occurrence of events other than the circumstances of the country outside the power and influence of enterprises and local governments such as wars, political upheavals abroad, exchange rates, etc These events are paramount, as they allow to change the competitive position due to the disruption they create by rebuilding the industry structure, changing direction to new conditions
CHAPTER 3 ANALYSIS OF COMPETITIVENESS AND FACTORS AFFECTING THE COMPETITIVENESS OF VIETNAM'S DAIRY PROCESSING INDUSTRY 3.1 Research Background
3.1.1 Global milk market situation
3.1.1.1 Global milk production situation
According to FAO data, global milk production in 2019 reached 883 million tons,
an increase of 0.4% compared to 2018, mainly due to increased production in India, Pakistan, Brazil, the European Union, the Russian Federation and the United States, while there was a decline in Australia, Turkey, Colombia, Argentina and Ukraine Asia has had the largest growth and has been the leader in milk production since 2005 until now, Europe has had a sharp decline in production since 1990, then maintained relatively stable production until 2019, the Americas with steady growth, while Africa and Oceania account for a very small proportion and are tending to slow down
3.1.1.2 Global milk trade situation
According to the FAO report, in 2019, global milk exports increased to 76.7 million tonnes (equivalent to milk), up 1.0% compared to 2018, representing relatively modest growth compared to 3.2% growth in 2018 The share of global trade remains less than 10% of total global milk production because exports account for a small percentage of milk production in some major milk-producing countries such as India and Pakistan In particular, global avocado exports increased by 4.6% in 2019, largely originating from the European Union, India, New Zealand and Argentina With cheese, global exports in 2019 expanded for the fourth consecutive year, reaching nearly 2.6 million tons, up 4.9% Global SMP exports declined slightly during the year while global WMP exports increased to 2.6 million tonnes in 2019
3.1.1.3 Global milk price fluctuation trend
International milk prices, measured by the FAO-developed Milk Price Index, averaged 3.0% higher in 2019, offsetting a 4.6% decline in the previous year Milk prices rose 24% from January to May 2019 before falling in the second half of the year Among dairy products, the average annual price of skimmed milk powder (SMP) recorded the highest increase (32.7%), followed by cheese (7.8%) and whole milk powder (WMP) (3.8%), while the price of butter decreased (-15.7%)
Trang 133.1.2 Situation of Vietnam's milk market
3.1.2.1 Introduction of Vietnam's dairy processing industry
Vietnam began to raise cows for milk around the 20s of the twentieth century brought in by the French By the 40s, the South had a number of farms specializing in raising cows for milk, while in the North, it was not until the 60s that state-owned dairy farms were formed Until the 80s, Vietnam still only had farms in the form of state-owned with a popular scale of about a few hundred cows By the 1990s, the cow herd
in Vietnam had about 70,000 cows, the annual milk production was about 60,000 tons and began to export dairy products An important time was in 2001, the Prime Minister officially adopted the policy of developing the dairy industry through Decision No 167/2001/QD/TTg, as a result, milk production has increased significantly By 2010, the Ministry of Industry and Trade continued to issue Decision 3399/QD-BCT marking
a remarkable development of the industry The cow herd and milk production have grown rapidly and steadily from 2013 to now
3.1.2.2 Demand for dairy products in Vietnam
According to Euromonitor, spending on dairy products by Vietnamese people usually accounts for more than 10% of total food spending If calculated per capita, the average consumption is about 26-27 kg/person/year, this figure is still low compared to the world average (about 100 kg/person/year) and even in other countries in the same region (Asia averages 38 kg/person/year) In which, the main consumption demand is milk powder and liquid milk (accounting for 75% of the total market value) The yogurt market share is also on a strong upward trend Cheese and butter account for a small proportion of total dairy retail sales, about 3% and less than 1%, respectively Ice cream and condensed milk account for about 9% of the dairy market
3.1.2.3 Supply of dairy products in the Vietnamese market
Total milk production in the country reached 1.67 million tons in 2020, and increased by an average of about 10% in the period 2016 – 2020 In particular, milk production brands in Vietnam account for a large market share in most milk segments Vinamilk alone has accounted for about half of the market due to its dominant position
in the liquid milk, yogurt and condensed milk segments Friesland Campina accounted for 18.5% of the market share and TH Milk with 8.4% of the market share Other brands such as Nestle, IDP and Nutifood account for a negligible market share in many milks due to poorer distribution networks and weaker marketing Bel Vietnam and Yakult are foreign brands that dominate the niche market in the cheese and yogurt product line
3.1.2.4 Import and export of dairy products of Vietnam
Vietnam has been exporting milk since the 1990s and so far there have been about 10 enterprises exporting to more than 50 countries, the export turnover of dairy products has also increased significantly, however, according to FAOSTAT data, this figure has never reached 100 million USD Meanwhile, Vietnam's import turnover of dairy products is much higher than the export turnover and tends to increase gradually