The world economy is currently going through a period of strong fluctuations with outstanding features such as high inflation in major economies, supply chains disrupted by the COVID-19 pandemic and the Russian conflict - Ukraine, at the same time geopolitical tensions and trade protectionism are also increasing. These fluctuations directly affect the Vietnamese economy, especially the export industry, which plays an important role in economic growth. The export industry is facing many challenges such as declining demand from major export markets, increased competition from other countries and rising production and transportation costs. The microplastic production industry is an important industry in the Vietnamese economy with great development potential. Microplastics are widely used in many industries such as electronics, healthcare, automobiles and construction. The demand for microplastics is increasing, opening up development opportunities for this manufacturing industry. Challenges of Vietnamese masterbatch production enterprises in the context of economic fluctuations: The rapidly fluctuating world economy poses many challenges for Vietnamese masterbatch production businesses. Firstly, there are limitations in accessing advanced technology and knowledge, Vietnamese businesses often encounter difficulty in accessing advanced technology and knowledge due to lack of financial resources and professional qualifications. This prevents them from applying advanced technologies to production, resulting in products that cannot compete with products from other countries. The second challenge is high production costs, the cost of producing masterbatch in Vietnam is higher than in other countries due to high input material prices, labor costs and high transportation costs. This makes product prices high, affecting the competitiveness of businesses in the international market. In addition, there is a shortage of highly qualified labor, the masterbatch manufacturing industry requires highly qualified labor, however the skilled labor source in Vietnam is still limited. This affects the production capacity and product quality of the enterprise. Besides, fierce competition from foreign enterprises: Vietnamese enterprises must compete fiercely with foreign enterprises that have advantages in technology, finance and market. This makes it difficult for Vietnamese businesses to penetrate international markets. Significance of the topic is Improving export business efficiency of Vietnamese masterbatch production enterprises is an urgent task in a fluctuating economic context. Improving export business efficiency will help businesses enhance competitiveness, expand export markets and contribute to the development of Vietnam's masterbatch production industry. The objective of this study is to propose recommendations to improve export business efficiency of Vietnamese masterbatch manufacturing enterprises in the context of economic fluctuations. In conclusion, Vietnam's masterbatch production industry has great development potential. However, for sustainable development, Vietnamese masterbatch production enterprises need to improve export business efficiency. Overcoming the above challenges is a prerequisite for Vietnamese businesses to compete in the international market.
Rationale of the thesis
The global economy is experiencing significant fluctuations characterized by high inflation in major economies, disrupted supply chains due to the COVID-19 pandemic and the Russia-Ukraine conflict, alongside rising geopolitical tensions and trade protectionism These factors are directly impacting the Vietnamese economy, particularly the vital export sector, which is encountering numerous challenges, including decreased demand from key markets, heightened competition from other nations, and escalating production and transportation costs.
The microplastic production industry plays a crucial role in the Vietnamese economy, showcasing significant growth potential With applications spanning various sectors, including electronics, healthcare, automotive, and construction, the demand for microplastics continues to rise, creating ample opportunities for development within this manufacturing sector.
Vietnamese masterbatch production enterprises face significant challenges amid fluctuating economic conditions Limited access to advanced technology and knowledge, primarily due to financial constraints and insufficient professional qualifications, hampers their ability to innovate and compete globally Additionally, high production costs driven by elevated input material prices, labor expenses, and transportation fees further diminish competitiveness in the international market The industry also grapples with a shortage of skilled labor, which adversely affects production capacity and product quality Compounding these issues is the fierce competition from foreign firms that possess superior technology, financial resources, and market presence, making it increasingly difficult for Vietnamese businesses to establish a foothold in global markets.
Enhancing the export business efficiency of Vietnamese masterbatch production enterprises is crucial in today's volatile economic environment By improving these efficiencies, businesses can boost their competitiveness, broaden their export markets, and significantly contribute to the growth of Vietnam's masterbatch production sector.
The objective of this study is to propose recommendations to improve export business efficiency of Vietnamese masterbatch manufacturing enterprises in the context of economic fluctuations.
In summary, the masterbatch production sector in Vietnam holds significant growth potential To achieve sustainable development, it is crucial for Vietnamese masterbatch manufacturers to enhance their export business efficiency Addressing these challenges is essential for local companies to effectively compete in the global market.
Purpose of the thesis
This thesis aims to analyze the theoretical foundations of export business efficiency while examining the export performance of US MASTERBATCH It seeks to identify limitations and shortcomings within the company and provide targeted recommendations for both the company and state agencies The ultimate goal is to enhance the export business efficiency of US MASTERBATCH, contributing to its overall success in the international market.
Objectives and scope of the thesis
The objects of the thesis: The Improvement of Export business efficiency of US MASTERBATCH Company
The scope of the thesis:
+ Suggestions and Recommendations to improve the export business efficiency of US Masterbatch
Structure of thesis
Apart from the table of contents, list of abbreviations, tables and figures, introduction, conclusion, and references, the thesis consists of 3 chapters with the following main contents:
Chapter 1: Theoretical basis for improving the export business efficiency Chapter 2: Analysis and evaluation of the current export business effi at
US Masterbatch Company from 2020 to 2023
Chapter 3: Recommendations to improve the export business efficiency of
THEORETICAL BASIS FOR IMPROVING THE
Concept of export business
Exporting goods involves engaging in international trade by purchasing and selling products across borders This process is not merely a one-time transaction but a structured system of trade relationships that operates both domestically and globally The primary objectives of exporting include generating foreign currency, fostering production growth, stabilizing economic restructuring, and ultimately enhancing the living standards of the population.
In a simpler sense, exporting is understood as the act of selling goods and services to another country, using currency as a means of payment.
The concept of export according to the Commercial Law 2005 is specifically stated in Article 28, Clause 1 as follows:
The export of goods refers to the process of transporting goods out of Vietnam's territory or into designated special areas within Vietnam that are recognized as separate customs zones under legal regulations.
Direct export involves a transaction between a buyer and a seller who engage directly in signing a foreign trade contract This contract must adhere to the legal regulations of both countries involved and comply with the standards set forth by the International Sale of Goods Convention.
Direct export offers significant advantages, allowing enterprises to independently seek customers, set prices, and select payment methods in accordance with state export management policies As a result, this method is typically utilized by reputable import-export companies that employ highly skilled professionals.
This business model is not ideal for new companies lacking experience in the export sector, as they often have limited production capital and a shallow understanding of the international market, resulting in their products being relatively unknown.
Indirect export involves exporting goods internationally through an intermediary In this process, the owner of the goods delegates the export rights to a third party, known as the consignee, who acts on behalf of the seller to facilitate the export.
To formalize the arrangement, both parties must sign an export entrustment contract, which outlines the rights and obligations of the entrusting party and the entrusted party as mutually agreed upon in the agreement.
Export processing is a production method where a domestic company obtains production materials, such as machinery and raw materials, from a foreign company This process allows the domestic firm to manufacture goods tailored to the specifications of the foreign client, which are then sold internationally as directed by the ordering company.
On-site export refers to the direct delivery of goods at the buyer's location, rather than the traditional method of shipping products abroad This approach is utilized when international buyers prefer their purchases to be delivered to their partners within the same country.
This form will help businesses save a lot of costs because they do not have to do customs procedures, buy insurance, hire freight forwarders, etc.
1.1.2.5 Temporary Export Re-import, Temporary Import Re-export
Temporary import re-export involves bringing goods into a country for a limited time before exporting them to a third country This process also includes temporarily exporting domestic goods abroad, which are then re-imported back into the original country after a specified period.
Countertrade is a unique exchange system where the buyer simultaneously acts as the seller, ensuring that the values of exports and imports are equivalent This method, often referred to as linked import-export or barter, facilitates trade by allowing goods to be exchanged directly without the need for cash transactions.
Concept of export business
An export business involves selling domestically produced goods or services to international buyers, playing a vital role in global trade These companies significantly contribute to economic growth, create jobs, and enhance international relationships.
Export businesses operate in a unique environment compared to domestic businesses Here are some key characteristics:
● Dealing with foreign markets: Export businesses navigate cultural differences, varying legal and regulatory frameworks, and international logistics.
● Focus on international marketing: Effective communication and marketing strategies are crucial to reach foreign buyers and understand their needs.
● Currency fluctuations: Export businesses need to manage the risks associated with fluctuating exchange rates between currencies.
● Complex documentation: Exports involve various documents like customs declarations, certificates of origin, and invoices, requiring attention to detail and compliance.
Export businesses are essential for several reasons:
● Economic growth: Exports generate foreign currency that can be used to invest in domestic industries and infrastructure, leading to overall economic expansion.
● Job creation: Export businesses often require a larger workforce due to increased production and international operations, creating employment opportunities.
● Increased competition: Competing in the global market encourages businesses to innovate, improve product quality, and become more efficient.
● Improved resource allocation: Exports allow countries to specialize in producing goods they excel at, leading to a more efficient allocation of resources across the globe.
Concept of export business efficiency improvement
1.3.1 Definition of export business efficiency
Efficiency, as defined by economic principles, relates to the balance between limited input resources and the production of goods and services This relationship can be evaluated through technical efficiency, which considers physical output, or economic efficiency, which focuses on value Additionally, efficiency serves as a key metric for evaluating how well resources are allocated within the market (Nguyen Van Ngoc, 2006).
Efficiency is fundamentally defined as the elimination of waste In economics, it is analyzed both from a broad viewpoint and specifically in relation to businesses.
From a macroeconomic perspective, the economic efficiency of a phenomenon or process indicates how effectively resources—such as human, financial, physical, and capital—are utilized to achieve specific goals.
Export business activities play a crucial role in the operations of enterprises, and the concept of export business efficiency is a subset of overall business efficiency This efficiency specifically measures the effectiveness and cost savings related to export activities, highlighting its importance in optimizing business performance.
Export business efficiency measures the ability to optimize outcomes while reducing costs by leveraging both external factors and internal resources It is defined as the ratio of output results—such as net revenue, gross profit, and total production—to input costs, which include capital investment, labor, and infrastructure This calculation highlights how many output units can be produced from a specific input unit However, to accurately assess export efficiency, it is essential to consider that the output is primarily in foreign currency, while input costs encompass all expenses related to export activities, including procurement, production, transportation, warehousing, insurance, and other fees associated with international trade agreements.
1.3.2 Importance of export business efficiency improvement
In today's interconnected world, businesses are increasingly focusing on exporting goods and services to tap into expanding markets, which offers significant advantages However, entering new markets also brings inherent risks As a result, improving the efficiency of export operations is crucial for seizing opportunities while mitigating potential challenges.
The improvement of export business efficiency is highly necessary as it brings numerous benefits to both businesses and the entire nation, including:
Increased sales and profits: Enhancing the efficiency of export business enables enterprises to access new markets, expand partnerships, and increase sales volume, thereby resulting in higher profits.
Export business activities play a crucial role in job creation and income growth, particularly in sectors such as manufacturing, transportation, and related services By improving the efficiency of these businesses, production productivity is enhanced, leading to lower production costs This, in turn, allows companies to increase wages and boost employee income, fostering economic development and stability.
Improving the efficiency of export businesses significantly boosts product and service quality, leading to enhanced brand reliability and reputation This process establishes a credible and trustworthy brand image among customers and partners, as well as in the global market.
Boosting a country's economic development relies heavily on the export business, which significantly contributes to the Gross Domestic Product (GDP) and fosters economic growth By improving the efficiency of export operations, countries can enhance the value of their exported goods, thereby positively impacting overall economic progress.
Enhancing export business efficiency allows companies to boost their competitiveness in the global market, enabling them to connect with potential customers around the world through their products and services.
1.3.3 Key indicators for export business efficiency
1.3.3.1 Aggregated indicators of export business efficiency
- Export profits o Export profits = Export revenue - Export costs
Profit is a crucial indicator of business performance, calculated as the difference between total revenue and production costs It represents the ultimate financial outcome of a company's operations and serves as a foundation for assessing economic efficiency For businesses, profit is of paramount importance, as it determines their survival; without it, a business cannot sustain itself Conversely, higher profits provide greater opportunities for investment and growth.
- Export profit margin o Rate of return on equity = Net profit / Total Equity
Return on Equity (ROE) is a key metric that evaluates how effectively a business utilizes its equity to generate profits It indicates the amount of profit earned for every unit of equity invested, with a consistently high ROE suggesting efficient capital use The formula for calculating ROE is the rate of return on sales, which is derived from dividing net profit by total equity.
Return On Sales (ROS), or profit margin on sales, measures the profit generated from each dollar of revenue, highlighting a company's profitability A higher ROS signifies greater profit margins, essential for sustainable growth To achieve this, a company should aim to maintain or increase its ROS ratio over time, ensuring efficient management of its sales and expenses.
This indicator measures the profitability of a company by calculating the profit earned for every dollar spent on export costs, achieved by dividing net profit by export costs A higher profit margin on these costs signifies greater operational efficiency and potential for growth Additionally, the rate of return on total assets is determined by dividing net profit by total equity, providing further insight into the company’s financial performance.
Return on Assets (ROA) measures a company's profitability in relation to its total assets, illustrating how effectively it utilizes its resources This financial ratio reveals the profit generated for each dollar of assets, highlighting the efficiency of asset management within the company A higher ROA indicates better performance in converting assets into profit, making it a crucial metric for assessing overall financial health.
A higher ROA indicates that the company is earning more profit from its current assets.
1.3.3.2 Component indicators of Export Business efficiency
- Efficiency in using working capital o Rate of return on working capital = Export return/ Export
Factors affecting export business efficiency
The legal environment encompasses two primary aspects: the creation of laws and the organization of their enforcement It includes a wide range of regulations that both facilitate and regulate business activities Legal factors significantly influence the outcomes and operational efficiency of enterprises.
A robust and transparent legal environment is crucial for fostering smooth business operations and ensuring fair competition among companies By safeguarding the rights of all participants, a well-structured legal system contributes to socio-economic development Conversely, a legal framework riddled with loopholes can lead to exploitation, resulting in unfair competitive practices.
The Government must establish a robust legal framework that safeguards the rights of businesses, both locally and globally In turn, businesses are required to adhere to state regulations and policies while also familiarizing themselves with international legal standards to mitigate potential risks.
The economic environment is one of the factors that have the greatest influence on business performance of enterprises It includes some of the following elements:
Economic growth, defined as the rise in gross domestic product (GDP) or gross national product (GNP) over time, plays a crucial role in enhancing output and income This increase allows individuals to spend more freely, thereby improving their quality of life Additionally, robust economic growth encourages businesses to expand production and operations to meet market demand, ultimately leading to more efficient business practices.
The exchange rate represents the value comparison between two currencies, serving as a crucial tool for assessing the domestic currency against foreign currencies and the pricing of goods internationally An increase in the exchange rate leads to higher prices for imported goods, while a decrease results in lower import costs Export businesses can strategically leverage these fluctuations to inform their decision-making processes.
High bank lending interest rates significantly raise the operational costs for businesses, potentially hindering their production and overall business activities This situation can diminish their competitiveness, particularly against firms with robust capital resources.
Inflation refers to the ongoing rise in the overall price level of goods and services, which results in a decrease in currency value over time As inflation escalates, businesses become hesitant to invest in production and operations due to concerns about recovering their capital and safeguarding their assets.
● State economic policies: A country's economic policies will either create opportunities for businesses to promote business activities, or will limit the ability of businesses to develop.
When engaging in international business, companies must recognize the unique cultural and social traits of different countries and regions Exposure to new customs, languages, communication styles, and management approaches necessitates tailored product, marketing, and distribution strategies that align with the preferences and needs of target customers Notably, understanding the influence of lifestyle and religion is crucial, as these factors significantly impact consumer behavior and purchasing decisions.
Understanding the socio-cultural environment of a target country is crucial for exporting enterprises; without this knowledge, they may struggle to capture market share and risk facing boycotts.
The ongoing advancement of science and technology has made technology a crucial element in enhancing business performance As technology evolves, it offers businesses the chance to implement innovative production models, leading to the creation of diverse new products that meet various social demands This not only boosts competitiveness but also enhances customer outreach Furthermore, the integration of advanced technology enables companies to improve product quality and increase productivity.
Technological advancements present significant challenges for businesses, compelling them to continuously innovate and stay current with trends to prevent obsolescence This is particularly challenging for small or emerging companies, as they often lack the financial resources to adopt every new technology.
The impact of environmental factors on a business's operations varies based on the type of products sold Key influences include epidemics, natural disasters, and regional weather conditions Therefore, when selecting a market, companies must thoughtfully evaluate these factors to ensure they can provide appropriate products.
Industrialization and modernization in numerous countries have led to significant environmental issues, including global warming, soil, and ocean pollution These challenges result in natural disasters and increased disease outbreaks, which severely impact business operations Consequently, it is essential for companies to prioritize environmental protection alongside their production and business activities.
As the number of countries adopting market mechanisms rises, competition is becoming increasingly complex and intense Understanding the competitive landscape allows businesses to navigate market regulations concerning competition, competitors, and competitive pressures This knowledge is essential for developing appropriate and effective competitive strategies.
For exporting businesses in a country, competitors include exporters and domestic producers in that country.
Capital is a crucial input for production and business operations, serving as an essential resource for companies to initiate their activities It forms the foundation for businesses to assess and develop strategic plans that align with their capabilities Without sufficient capital, it is impossible for any business to operate effectively.
Some methods to improving export business efficiency
1.5.1 Importance of improving export business efficiency
Business efficiency is crucial for generating revenue, as it measures the amount of profit a company can achieve with specific input resources Efficient businesses are able to produce goods, deliver services, and meet objectives while minimizing costs and maximizing output.
In a landscape of limited and costly resources, business owners strive to create efficient operations that maximize revenue The law of scarcity mandates the optimal use of resources, while the law of competition compels businesses to innovate and maintain competitive advantages for survival and growth To enhance efficiency, companies must invest in research and adopt new advancements, focusing on optimizing costs, capital, and labor This commitment not only drives profit maximization but also elevates the quality of operations and expands market share.
To enhance operational efficiency, businesses frequently focus on increasing revenue, which can lead to higher profitability and improved effectiveness There are various strategies that companies can implement to boost their revenue.
To enhance profitability and efficiency, businesses must develop a strategy that aligns with current market trends By implementing a well-defined plan, companies can optimize their resources for production and operations, leading to improved overall performance.
To achieve substantial revenue growth, businesses must conduct thorough market research and develop effective marketing plans This involves integrating essential marketing policies, including product, pricing, and distribution strategies, to effectively meet customer needs.
Effectively managing business processes is crucial for enterprises, as it involves every stage from input to output, including storage, consumption of goods, and customer service By executing these tasks efficiently, businesses can quickly meet customer demands, build market credibility, and foster loyalty among customers and partners.
In the course of production and business operations, enterprises face numerous expenses, including raw materials, labor, depreciation, transportation, inventory, and marketing costs, all of which significantly affect profitability To enhance financial performance, businesses should focus on cost reduction strategies aimed at managing these expenses, minimizing waste, and eliminating unnecessary costs Implementing effective measures can lead to improved efficiency and increased profitability.
To enhance cost management, businesses should meticulously plan and forecast their expenses while consistently monitoring documents and invoices Implementing strict oversight and disciplinary actions for any misappropriation or fraudulent expense claims is also essential.
Human resources are essential for improving labor quality within an enterprise, significantly boosting productivity and overall business efficiency By cultivating talent and strategically assigning tasks, organizations can optimize their resources, minimizing waste in both labor and machinery.
Effective organization of business production and operations is crucial for enterprises, as it promotes a seamless and efficient workflow This strategic approach not only enhances productivity but also aids in cost savings by reducing unnecessary expenses.
1.5.4 Methods of increasing profit margin
To improve the efficiency of an import business, it is crucial to ensure that revenue growth outpaces cost growth, which requires a well-structured strategy.
To enhance revenue generation, the company must focus on expanding its market reach, diversifying its product offerings, and refining its marketing strategies Cultivating strong customer relationships will also be essential for driving sales growth By successfully entering new markets and appealing to a wider customer base, the company can significantly boost its revenue streams.
To achieve cost control and boost operational efficiency, it is essential to streamline processes, optimize supply chain management, and adopt technology and automation solutions By eliminating unnecessary expenses and reducing waste, the company can enhance productivity and minimize costs related to import operations.
Strategic pricing strategies and value propositions should be employed to maintain healthy profit margins while remaining competitive in the market.
Through careful analysis of market conditions, customer preferences, and competitor pricing, the company can establish optimal pricing structures that balance profitability and market demand.
To sustain revenue growth and manage costs effectively, continuous monitoring and analysis of market dynamics are crucial By remaining attentive to market trends, consumer behavior, and industry changes, the company can proactively adapt its import business strategies, seizing emerging opportunities while minimizing potential risks.
To enhance the efficiency of their import business and achieve sustainable growth in a competitive global market, companies should prioritize revenue generation, implement cost control measures, optimize operational efficiency, adopt strategic pricing, and remain adaptable to market changes.
ANALYZING AND EVALUATING THE CURRENT
General information about the company
Company name: US Masterbatch Joint Stock Company
Headquarter: 02th Fl, CT1-VP2-01, My Dinh Plaza 2 Building, 02 Nguyen Hoang Street, My Dinh 2, Nam Tu Liem District, Hanoi, Vietnam
Business line: Manufacturer and exporter
Our extensive range of products includes Filler Masterbatch, Color Masterbatch, White Masterbatch, Black Masterbatch, and Additives Masterbatch, catering to diverse plastic manufacturing needs We also offer high-quality Engineering Plastic Compounds, Desiccants, and a variety of Plastic Color Powders Additionally, our selection features premium Plastic Virgin Resins, Paraffin Oil, Stone Powder, Talc, Zinc Stearate, and Calcium Stearate, ensuring optimal performance and versatility in your applications.
Figure 2.1: Logo US MASTERBATCH JSC
Founded in 2010, US Masterbatch is a leading manufacturer in Vietnam, specializing in Filler Masterbatch, Color Masterbatch, Additives Masterbatch, and Engineering Plastic Compounds With a dedicated team of over 300 employees and two factories boasting an annual production capacity of 250,000 tons, the company leverages advanced technology and modern equipment to ensure high-quality products Primarily focused on international trade, which constitutes over 90% of its sales, US Masterbatch is committed to expanding its global presence and seizing opportunities in the worldwide marketplace.
2.1.1.2 Mission and vision of the company
Mission: Become a global leader of Masterbatch in Plastics Industry by building the product-market fit to MassCustomization to create great cost- effective products.
Vision: Offering to customers the best of masterbatch in terms of quality, efficacy and safety in their growth journey deploying Trust and Integrity as prime factor.
Become a pioneering actor in the application of science and technology to materials, transforming Vietnam's natural resources into high-quality commodities with a reputation in both domestic and global markets.
Maintain its position as one of the top five masterbatch manufacturers in Vietnam, with the goal of becoming Southeast Asia's largest.
Increase product export turnover to $60 million per year.
Successfully controlling the supply chain through the use of the 5S management model, lean and economical production, and applying.
Figure 2.2: Organizational structure of US Masterbatch JSC
The General Meeting of Shareholders serves as the highest authority within a company, essential for overseeing and electing the Management Board responsible for managing production activities This governance structure is vital for ensuring sustainable, long-term development while safeguarding stakeholder interests Key responsibilities of the General Meeting include the approval and amendment of company bylaws, the election and dismissal of the CEO, the endorsement of management reports, decisions on profit distribution, authorization of new share issuance, and the sanctioning of special activities.
The management board, or board of directors, is a group elected by shareholders to oversee company operations and make key decisions This board is tasked with establishing the company's strategic direction, ensuring compliance with legal regulations, and representing shareholder interests.
The General Director, often referred to as the CEO or Managing Director, holds the top executive position within a company, overseeing its overall management and performance Appointed by the management board, the General Director is accountable for reporting the company's operations and performance to the board.
The Vice General Director is a senior executive who supports the General Director in their responsibilities and may handle specific tasks assigned by them This role is crucial for assisting in the management of the company and contributing to its overall success.
The Controlling Board, often referred to as the Supervisory Board or Board of Supervisors, is composed of individuals elected by shareholders to oversee the management board This board plays a crucial role in ensuring that the company operates in the best interests of its shareholders It holds the authority to appoint and dismiss management board members, approve significant decisions, and monitor overall company performance.
Headquarter: is located in Ha Noi, serving as the company’s central command center for leadership and decision-making as well as supervising various crucial functions for the entire company.
US Masterbatch Vietnam operates two factories in Hung Yen and Ha Noi, covering areas of 10,000 m² and 16,000 m², respectively These facilities are dedicated to the production, storage, packaging, delivery, and research and development of masterbatch activities, specializing in CaCO3 masterbatch.
These factories are furnished with modern equipment and devices and numerous production lines with a total capacity of 250.000 tons of masterbatch per year.
Business is essential for crafting effective business plans, building connections, and nurturing relationships with current and potential customers It also plays a crucial role in fostering long-term partnerships with collaborators Furthermore, it provides guidance and support to managers in executing business operations efficiently.
Financial accounting plays a crucial role in managing production by assessing both quantity and value It entails analyzing and synthesizing business and production outcomes to propose strategies for the Management Board aimed at improving efficiency and identifying the best growth trajectory Furthermore, financial accountants are responsible for calculating state liabilities and employee salaries, while also overseeing debts owed by suppliers and customers.
Research and Development (R&D) focuses on allocating resources for research and testing to create new products and enhance operational methods The main goal of the R&D department is to generate innovative ideas and solutions that boost the company's competitive advantage in the marketplace.
The Import & Export Logistics department is responsible for managing transactions, agreements, and the completion of import and export procedures, including customer payments and product processes while ensuring compliance with State Customs regulations Additionally, the department oversees the movement of materials and goods from suppliers to customers, aiming to reduce lead times, minimize costs, and enhance customer satisfaction through effective supply chain optimization.
Purchasing: involves predicting material needs, aligning procurement strategies, executing contracts, and overseeing contract fulfillment.
The Human Resource Training Center is responsible for managing insurance coverage, working hours, and employee records, while also recruiting staff based on departmental needs This department provides essential training and mentoring, ensuring all employees are informed about HR policies For new hires, it delivers targeted job-specific training to equip them for their roles Furthermore, the center develops training initiatives, evaluates the effectiveness of employee apprenticeships, and assesses the overall success of training programs.
Marketing involves essential tasks such as conducting market research to understand customer needs, forecasting revenue from target markets, and implementing strategies for market segmentation, targeting, and brand positioning It also includes leveraging diverse media channels to promote products and services effectively and developing and executing comprehensive strategic marketing plans.
At US Masterbatch JSC, each department's responsibilities and tasks are well-defined, emphasizing collaboration and communication to meet the company's goals Regular monthly meetings are held to enhance relationship-building and ensure efficient information sharing, promoting effective teamwork and mutual understanding among departments.
2.1.4 Main products of US MASTERBATCH
US Masterbatch JSC main products are masterbatch for customers and partners around the world, namely:
Actual situation of export business activities at US MASTERBATCH
2.2.1 Current situation of export business at US MASTERBATCH period
From 2020 to 2023, the company achieved consistent export revenue growth of 7-10% annually, culminating in a total increase of approximately 30%, rising from $38,037 thousand USD to $49,129 thousand USD Notably, 2023 marked the peak growth rate of 10.2%, driven by economic recovery and the resurgence of global trade, which significantly boosted US Masterbatch's product exports.
Table 2.3: Export business results of US Masterbatch in the period of 2020-2023
Export revenue 38.037.159,45 41.726.598,98 44.574.891,36 49.129.393,43 Earning before tax 7.351.661,39 7.154.863,61 4.013.261,32 10.513.732,18 Earning after tax 6.028.362,34 5.866.988,16 3.290.874,28 8.621.260,39
Source: Financial statement report of US Masterbatch JSC
Between 2020 and 2022, the company encountered significant challenges due to the COVID-19 pandemic and stagnant exports to various countries, leading to a disparity between revenue growth and rising costs associated with pandemic mitigation, economic fluctuations, and geopolitical conflicts The maritime and aviation sectors were particularly hard-hit during this timeframe, resulting in a drastic decline in the company's pre-tax profit, which fell by 45.4% from $7,352 thousand USD in 2020 to $4,013 thousand USD in 2022.
In 2023, the company experienced remarkable growth in pre-tax profit, achieving a 162% increase compared to 2022, fueled by economic recovery and rising revenues, while also overcoming the cost impacts previously associated with COVID-19, thus exceeding the pre-tax profit levels of 2020.
2.2.2 Export business results of company
2.2.2.1 Business export situation of the company by product type revenue structure
Below is the business structure according to the company's main product and service types in the period of 2020-2023.
Table 2.4: Revenue structure by business field of US Masterbatch in the period of 2020-2021
1.3 White masterbatch 6.553.701 18,0% 8.319.725 20,2% 1.4 Black masterbatch 9.830.551 27,0% 11.700.256 28,5% 1.5 Additives masterbatch 2.436.726 6,7% 1.686.153 4,1% 1.6 Engineer Plastic Compound 327.321 0,9% 583.985 1,4%
Source: Export Department of US Masterbatch Vietnam 2020-2023
The company's revenue structure reveals that approximately 95% of its total revenue is derived from the sale of finished products, making it the primary source of income Additionally, sales of goods contribute around 4% to the overall revenue, while the remaining revenue is generated through service provision.
In 2020, approximately 95.4% of the company's revenue was generated from finished product sales, with filler masterbatch contributing 40%, and black and white masterbatch each accounting for 35% The trend continued in 2021 and 2022, where finished product sales comprised 98.3% and 97% of revenue, respectively Filler masterbatch remained the primary product, contributing 38% and 37% of total revenue in those years, while black and white masterbatch together accounted for 49% and 48%.
Table 2.5: Revenue structure by business field of US Masterbatch in the period of 2022-2023
1.1 Filler masterbatch 16.417.826 37,9% 16.255.688 35,5% 1.2 Color masterbatch 2.746.412 6,3% 3.357.252 7,3% 1.3 White masterbatch 8.923.673 20,6% 9.911.670 21,7% 1.4 Black masterbatch 12.046.959 27,8% 13.305.514 29,1% 1.5 Additives masterbatch 2.451.844 5,7% 1.555.131 3,4% 1.6 Engineer Plastic Compound 732.088 1,7% 1.353.878 3,0%
Source: Financial statement report of US Masterbatch JSC
In 2023, the economy's normalization led to a robust recovery in sales activities, achieving a growth rate twice that of 2022 and contributing 7% to the company's total revenue Notably, the revenue share from filler masterbatch declined to 35.5%, while the combined revenue from black and white masterbatch surged, now accounting for 50% of the total revenue from finished product sales.
Between 2020 and 2022, the revenue growth of filler masterbatch experienced a slowdown, resulting in a declining market share In contrast, white masterbatch saw remarkable revenue growth of 151%, rising from $6,554 thousand in 2020 to $9,912 thousand in 2023, while black masterbatch also demonstrated significant growth of 135.4%, increasing from $9,831 thousand to $13,306 thousand during the same period.
During this period, the company prioritized the investment in Engineer Plastic compounds, which demonstrated significant growth despite its small share of total revenue The revenue from Engineer Plastic Compounds surged by 4.13 times, rising from $327,000 in 2020 to $1,354,000 in 2023, highlighting its potential for future investment and development.
2.2.2.2 Business export situation of the company by product type cost structure
The cost structure of the company's exported masterbatch products reveals important insights, particularly regarding the expenses linked to the production and sale of finished goods.
On the other hand, the cost of trading goods sold refers to the costs incurred in trading or distributing the masterbatch products.
Table 2.6: Cost structure by business field of US Masterbatch in the period of 2020-2023
Cost of finished good sold 24.367.952 25.685.335 26.218.006 30.154.067
Cost of trading good sold 1.494.787 575.692 990.861 2.343.798
Total cost of good sold 25.862.739 26.261.027 27.208.867 32.497.865
Source: Financial statement report of US Masterbatch JSC
Over the years, data analysis reveals a steady rise in the cost of finished goods sold, suggesting potential growth in both production and sales Specifically, this cost escalated from $24,367,952 in 2020, highlighting an upward trend in business activity.
$30,154,067 in 2023 This suggests that the company may have experienced an expansion in its production capacity or an increase in the cost of raw materials and manufacturing processes.
The cost of trading goods sold rose significantly from $1,494,787 in 2020 to $2,343,798 in 2023, indicating potential growth in the company's distribution activities This increase suggests an expansion of the distribution network or heightened costs associated with transportation, logistics, or marketing.
The total cost of goods sold, encompassing both finished goods and trading goods, has consistently increased over the years, reflecting the growth of the company's export business and the rising expenses related to production and distribution.
Evaluating the export landscape of a masterbatch production company through the lens of product type cost structure reveals crucial insights into its financial health and operational effectiveness By effectively monitoring and managing these costs, the company can enhance its export strategies and sustain profitability in the competitive masterbatch industry.
2.2.2.2 Business export situation of the company by export markets
There are a table below to observe several trends and patterns across different regions which US Masterbatch export its products.
Table 2.7: Export revenue structure by market of US Masterbatch in the period of 2020-2023
Revenue Ratio Revenue Ratio Revenue Ratio Revenue Ratio
Source: Export department of US Masterbatch Vietnam
In 2020, the total export revenue was $38.1 million, with Southeast & East
Asia contributing 10% ($3.6 million) of the revenue China accounted for 15%
($5.5 million), Europe for 27% ($9.8 million), Africa for 5% ($1.8 million),
Middle East & South Asia for 35% ($12.7 million), and the Americas for 8%
In 2021, total export revenue reached $41.8 million, with Southeast and East Asia contributing 11% ($4.5 million) and China's share rising to 16% ($6.6 million) Europe significantly increased its revenue ratio to 30% ($12.3 million), while Africa also saw growth, accounting for 10% ($4.1 million) of the total revenue.
However, Middle East & South Asia witnessed a decline in their share to 26%
($10.7 million), and the Americas remained relatively stable at 7% ($2.9 million).
In 2022, total export revenue rose to $44.6 million, with Southeast and East Asia maintaining a 12% share at $5.2 million China's revenue ratio significantly increased to 21%, amounting to $9.1 million, while Europe saw a decline to 22% with $9.5 million Africa's contribution remained steady at 10% ($4.3 million), and the Middle East and South Asia experienced a slight increase to 27% ($11.7 million) The Americas also showed slight growth, contributing 8% ($3.5 million) to the overall revenue.
Factors affecting the improvement of export business efficiency at
Export activities provide substantial advantages to countries, prompting Vietnam and others globally to implement supportive export policies According to Article 16 of the Vietnamese Commercial Law, the government encourages economic entities to produce and export goods in compliance with legal provisions This includes preferential policies aimed at boosting exports, fostering competitive domestic products, and regulating imports to satisfy local demand Notably, Masterbatch exports benefit from a 0% export tax rate as outlined in Decree No 122/2016/ND-CP, and exporting companies also receive favorable corporate income tax benefits under the Corporate Income Tax Law.
Masterbatch products play a vital role in driving economic growth, and US Masterbatch benefits from government incentives when exporting these products globally, such as a 0% export tax and preferential corporate income tax These advantageous conditions significantly lower export costs, enhancing profitability and boosting the effectiveness of the company's export operations.
Vietnam's plastic export activities, along with other export sectors, are increasingly regulated due to the country's deep integration into the global market Vietnam is a member of various trade organizations and has implemented free trade agreements, including AFTA, AJFTA, AKFTA, ACFTA, and newer agreements like EVFTA and CPTPP.
The Vietnam-European Union Free Trade Agreement (EVFTA), effective from December 30, 2020, significantly lowers import duties on a majority of Vietnamese exports to the EU This includes masterbatch products, which now enjoy a 0% tax rate for black masterbatch, white masterbatch, and other related products, enhancing trade opportunities between Vietnam and the European Union.
The "other colorants" group, which includes fillers and compounds, benefits from trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Vietnam-Korea Free Trade Agreement (VKFTA) Effective January 14, 2019, the CPTPP reduces import duties for masterbatch products under HS code 3206.19.00, allowing exports to member countries like Japan, Canada, and Australia to enjoy a 0% tax rate when shipped to Japan Similarly, the VKFTA, effective December 20, 2015, lowers import duties for masterbatch products exported to South Korea, with specific tax rates varying by HS code; for instance, HS code 3206.41.00 (liquid colorants) also benefits from a 0% tax rate in South Korea.
In addition, Vietnam has other FTAs with countries such as Vietnam- Chile Free Trade Agreement (VCFTA), Vietnam-European Free Trade Association Free Trade Agreement (VEFTA).
Vietnam has established multiple agreements with various countries, regional groups, and economic unions globally These agreements have led to reduced import duties for US masterbatch exports, significantly lowering costs for businesses As a result, this has enhanced the efficiency of exporting masterbatch products to international markets.
Currently, the regulations related to the export of masterbatch products in Vietnam are stipulated in various legal documents, including: 1) Customs Law
The law No 54/2014/QH13 governs customs procedures, supervision, and control for import and export goods, making it crucial for exporters of masterbatch to comprehend the relevant provisions regarding HS codes, customs procedures, and clearance processes Additionally, Decree No 08/2015/ND-CP outlines detailed regulations for implementing the Customs Law, while Circular No 14/2015/TT-BTC offers guidance on goods classification, analysis, quality assessment, food safety inspections, and related documentation.
Moreover, when exporting products to international markets, US Masterbatch needs to comply with the legal policies of those countries regarding quality, labor laws, safety regulations, and environmental requirements.
In the European market, manufacturers must adhere to the European Chemicals Agency (ECHA) standards, which mandate comprehensive risk assessments and documentation to ensure their products are free from harmful substances In the United States, companies are required to comply with labor laws that safeguard workers' rights, covering wages, working conditions, and benefits Similarly, the Chinese market enforces stringent health, safety, and environmental regulations for masterbatch products, necessitating full compliance for successful export.
Many countries are implementing restrictions on plastic products and thin nylon bags due to their environmental impact, prompting businesses to innovate and create more eco-friendly alternatives This may require altering product compositions to align with regulations aimed at reducing plastics' detrimental effects on the environment and public health Companies must invest in research to develop sustainable products that meet these emerging standards Additionally, the plastic industry is urged to transition towards longer-lasting product categories, as highlighted in Vietnam's Plastic Industry Development Plan This shift has led to an increase in the production of engineering and building materials while decreasing the output of packaging and household plastics, which may affect companies that produce masterbatch in bulk at lower costs.
Stringent global standards and restrictive policies on plastic products pose challenges for US Masterbatch, leading to increased investment in research and development, which raises costs These restrictions in key markets could diminish future revenue from the company's primary products, directly affecting profitability and export effectiveness However, by adapting to international market regulations, the company can preserve its market share and boost revenue through products aligned with consumer preferences, ultimately optimizing costs and enhancing long-term profitability.
In 2023, the global economy confronted significant challenges even after the Covid-19 pandemic subsided, marked by unpredictable risks and fluctuations While inflation showed signs of easing towards the end of 2023 and the start of 2024, many economies persisted with tight monetary policies and elevated interest rates, resulting in decreased global trade and consumption Additionally, the rise in protectionist and trade defense measures further affected international trade and commerce.
In 2023, the intensified political conflict between Russia and Ukraine sparked new tensions in the Middle East and the Red Sea, leading to a dramatic rise in transportation costs This disruption caused delays in goods reaching European markets, resulting in significant financial losses for many businesses The global merchandise trade for the year totaled around $30.7 trillion, reflecting a 5% decline from 2022, with commodity trade experiencing an 8% drop.
The economic landscape and international trade conditions have created significant challenges for masterbatch manufacturers and exporters, leading to increased operational costs necessary for sustaining production From 2020 to 2023, US masterbatch companies experienced a notable rise in expenses, which adversely affected profitability and hindered the effectiveness of their export operations.
The global trade outlook for 2024 is uncertain, influenced by geopolitical tensions, elevated public debt in numerous developing nations, and widespread economic instability, all of which are expected to negatively impact trade dynamics in the coming year.
Recent fluctuations in foreign exchange rates have significantly impacted the market, with the USD reaching a peak of 25,700 VND on the free market, reflecting a 4.5% increase However, the State Bank of Vietnam's timely interventions have stabilized the exchange rate to a 1.9% rise, maintaining levels around 24,820-24,850 VND/USD, which offers some relief to businesses Export-oriented companies, particularly those less reliant on imported raw materials, stand to benefit as their revenues increase when converted to VND Conversely, businesses with substantial foreign debt or those importing machinery and raw materials may experience adverse effects from the USD's appreciation, negatively influencing their production and operations.
Some methods applied by US MASTERBATCH to improve the
2.4.1 Solutions applied to increase revenue of US MASTERBATCH
- US Masterbatch invested in promoting market research activities
In 2020, US Masterbatch Vietnam successfully entered three markets, followed by a remarkable expansion into five new markets in 2021, marking its most successful year However, the company faced challenges in 2022, losing two existing markets and only managing to enter two new ones Despite these setbacks, US Masterbatch Vietnam made a strategic move by entering the South American market, anticipating a surge in demand for masterbatch products By 2023, the company had successfully entered four additional markets and achieved steady stabilization.
Table 2.13: New markets which US Masterbatch invested in promoting in the period of 2020-2023
Source: Capacity profile of US Masterbatch Vietnam
By 2023, US Masterbatch Vietnam successfully expanded its reach to 54 countries, marking a notable increase of 14 markets since 2020 The company established a strong presence in emerging markets such as Egypt, Nigeria, Brazil, and Argentina, thanks to dedicated efforts in enhancing export market growth and effective operational strategies Despite limited human resources for market research, US Masterbatch Vietnam strategically invested in YCP Solidiance to identify potential export opportunities This proactive approach led to consistent year-over-year market penetration, a growing client base, and an upward trend in total export turnover, contributing to the expansion of industrial producers in the region.
US Masterbatch Vietnam has strengthened its Business and Marketing departments by hiring top talent to enhance market research and support export market development The Business Department saw an increase of nine employees since 2020, while the Marketing Department added three The company is also focused on improving employee qualifications through coaching and training programs in international negotiations and export activities Notably, there were 18 more employees with overseas master's or bachelor's degrees in 2023 compared to 2020.
The company focused on enhancing its brand image by developing a professional and modern website It welcomed foreign partners and experts to its office and factory while participating in major global fairs and exhibitions These efforts aimed to attract potential customers, expand knowledge, access valuable information, and stay updated on current trends.
- Improving the quality of human resources
The company's leadership prioritizes the training and development of its workforce, particularly the sales team, recognizing their crucial role in driving business growth and enhancing revenue and profit margins To achieve this, the company has intensified training programs aimed at improving both technical expertise and industry knowledge, while also focusing on developing soft skills and interpersonal abilities for effective client interactions These training initiatives have produced positive outcomes from 2020 to 2023, as US Masterbatch experienced consistent revenue growth despite challenging global and domestic economic conditions Notably, 2023 marked significant growth, coinciding with signs of recovery and stabilization in the global market following the Covid-19 pandemic.
Table 2.14: Training session of US Masterbatch in the period of 2021-2023
Source: Human resource department of US Masterbatch
In 2021, the company hosted 22 training sessions, featuring 10 led by external industry experts and 12 by internal managers This increased to 26 sessions in 2022, with 15 conducted by outside specialists and the rest by company leadership By 2023, following additional funding, the company ramped up its training efforts to 37 sessions, including 20 led by industry experts.
Technical skill training Knowledge training
Total 3 4 5 7 8 13 12 14 19 were conducted by industry experts, while 17 sessions were led by the company's management and leadership team.
2.4.2 Methods to optimizing cost of US MASTERBATCH
- Improving the logistics capicity of company
When choosing logistics partners, businesses evaluate the total service cost of shipments to enhance cost efficiency and profit optimization, while also considering potential quality and risk factors in international exports An all-inclusive service cost alleviates concerns about unexpected expenses or liabilities Besides transportation, companies often select freight forwarding services and additional support such as documentation handling, inventory management, and supply chain activities, allowing them to concentrate on product research and core operations.
Table 2.15: The results of the enhanced logistics capability solution implemented by US Masterbatch JSC in the period of 2020-2023
Source: Export logistics function of US Masterbatch
An analysis of the US Masterbatch data table for Vietnam from 2020 to 2023 reveals the company's commitment to enhancing its logistics capabilities Despite substantial investments, the outcomes fell short of expectations, suggesting that the strategies employed were not effective.
Transportation Efficiency (%): The transportation efficiency showed an overall increase over the years, ranging from 2% in 2020 to 4.4% in 2023.
Despite some improvements, the increase in transportation efficiency was modest, indicating that the initiatives aimed at enhancing this efficiency were either poorly executed or failed to achieve their intended results.
Cost Reduction in Transportation (%): The company aimed to reduce transportation costs, but the percentage reductions were relatively small, ranging from 0.3% in 2023 to 1.6% in 2020.
The limited cost reduction indicates that the implemented cost-saving measures might not have been efficient or comprehensive enough to achieve significant savings.
Warehouse Management Improvement (%): US Masterbatch made efforts to improve warehouse management, leading to a gradual increase in the improvement rate, ranging from 3.7% in 2020 to 6.3% in 2022.
Despite the improvements, the achieved rates were not substantial enough, suggesting that the strategies implemented may have been insufficient in optimizing warehouse operations and maximizing efficiency.
The company focused on improving partner collaboration, achieving an increase from 1.6% in 2020 to 2.6% in 2023 However, the modest rates of improvement suggest that the company encountered difficulties in forming effective partnerships and maximizing the benefits of collaboration.
Customer Experience (%): US Masterbatch focused on improving the customer experience, with varying rates of improvement, ranging from 1.7% in
2020 to 4.1% in 2023 While there was progress, the achieved rates were not substantial, suggesting that the implemented measures might not have fully met customer expectations or addressed their specific needs.
In summary, US Masterbatch's efforts to improve logistics in Vietnam have faced challenges, with high costs and limited results suggesting the need for a strategic reassessment The company should identify shortcomings in its current measures and explore alternative strategies to enhance transportation efficiency, reduce costs, improve warehouse management, foster partner collaboration, and elevate customer experience A thorough evaluation of existing processes and potential adjustments is essential for optimizing logistics operations and achieving the desired outcomes.
2.4.3 Methods to increase the profit margin of US MASTERBATCH
- Optimizing inventory management system and warehouse cost
The company has invested in advanced technologies and management software that enable warehouse managers to efficiently monitor inventory levels, storage history, and barcode recognition Furthermore, it offers comprehensive training to warehouse managers, empowering them to utilize the software effectively, optimize warehouse operations, reduce inventory costs, and minimize storage time.
The company performs monthly and quarterly inventory audits to verify that system records match actual stock levels Additionally, it has implemented comprehensive auditing procedures to maintain accuracy during the inventory auditing process.
- Strengthening capital mobilization, prudent capital utilization to Invest in technical technologies, market research, and human resource development
Capital is vital for enhancing business effectiveness, as its efficient utilization directly influences a company's performance This capital encompasses both fixed and liquid assets, which are essential for production and business activities aimed at generating profits In a market economy, companies frequently seek additional financing sources, including credit capital, prepayments, and payment deferments, alongside their own capital to optimize operations.
The company has raised $15 million in capital, significantly boosting its equity from 2022 to 2023 By implementing effective capital mobilization strategies, it has successfully directed idle societal capital towards productive business activities, enhancing the efficient use of existing resources Following this capital influx, the company has increased its investments in technological equipment and machinery, resulting in an additional $11 million growth in fixed assets in 2022.
- Promote investment in technology and equipment to improve production efficiency
Table 2.16: New buying machines for production line of US Masterbatch
JSC in the period of 2020-2023
Source: Financial department of US Masterbatch Vietnam
Analyzing situation of export business at US MASTERBATCH
The general indicators of export business results of US Masterbatch Company are clearly shown in the table below:
Table 2.17: Export result and several aggregate indicators for export business efficiency of US Masterbatch JSC in the period of 2020-2023
Cost of gold sold (Export product) (25.862.739) (26.261.027) (27.208.867) (32.497.865) Selling expense (4.861.463) (10.198.325) (10.022.992) (7.651.255)
Earning before tax 7.351.661 7.154.864 4.013.261 10.513.732 Earning after tax 6.028.362 5.866.988 3.290.874 8.621.260
Rate of Net profit on revenue 15,82% 14,02% 7,37% 17,52%
Rate of Net profit on expense 19,24% 15,81% 8,70% 21,02%
Rate of Net profit on
Rate of Net profit on Total asset 11,94% 10,67% 4,98% 11,53%
Source: Financial statement of US Masterbatch Vietnam
Figure 2.3: Earning after tax of US Masterbatch JSC in the period of 2020-
Source: Financial statement of US Masterbatch Vietnam
Profitability is a primary concern for businesses as it affects their financial health and ability to operate effectively A stable profit margin is crucial for maintaining market position and assessing managerial effectiveness From 2020 to 2022, profitability declined significantly, with after-tax profits dropping by 45.4% from $6,028 million in 2020 to $3,291 million in 2022, primarily due to global economic challenges and international trade issues stemming from political conflicts However, in 2023, after-tax profits rebounded dramatically, increasing by 161.9% compared to 2022, and exceeding the 2020 figures, reaching $8,621 million.
- Rate of return on sales
Figure 2.4: Rate of return on sales of US Masterbatch JSC in the period of
Source: Financial statement of US Masterbatch Vietnam
The profit margin on revenue showcases a business's ability to generate profit for each dollar earned A higher profit margin signifies efficient operations, where the company effectively reduces costs and enhances profitability per revenue unit.
From 2020 to 2023, US Masterbatch's revenue showed positive growth, but after-tax profits fell significantly from 2020 to 2022, causing the profit margin to drop from 15.8% to 7.4% in 2022 In 2023, a robust recovery in economic conditions and international trade led to a substantial rebound in after-tax profits, resulting in a profit margin on revenue of 17.5%, which not only exceeded the 2020 figure but also marked the highest profit margin during this four-year period.
- Rate of return on total cost
Figure 2.5: Rate of return on total cost of US Masterbatch JSC in the period of 2020-2023
Source: Financial statement of US Masterbatch Vietnam
The profit margin on revenue is a key indicator of a business's efficiency in generating profit from its revenue A higher profit margin reflects effective cost management and maximization of profits for each revenue unit.
Between 2020 and 2023, US Masterbatch achieved notable revenue growth; however, the company faced a significant drop in after-tax profits from 2020 to 2022 This downturn resulted in a reduction of the profit margin on revenue, falling from 15.8% to 7.4%.
In 2023, the company experienced a robust recovery in economic conditions and international trade, which enhanced export activities between nations This positive environment led to a remarkable increase in after-tax profits, with the profit margin on revenue reaching 17.5% This figure not only exceeded the index recorded in 2020 but also marked the highest profit margin observed from 2020 to 2023.
- Rate of Return on Equity
Figure 2.6: Rate of return on Equity of US Masterbatch JSC in the period of
Source: Financial statement of US Masterbatch Vietnam
The return on equity (ROE) index follows a similar trend to the aforementioned indicators, experiencing a decline during the period from 2020 to
In 2023, the company's return on equity (ROE) rebounded to 14.71%, following a decline from 19.94% to 6.14% in 2022, indicating a profit of 14.7 Vietnamese dong for every 100 dong of equity From 2020 to 2023, the company consistently recorded profits, leading to an annual increase in equity However, despite 2023's after-tax profits exceeding those of 2020, the ROE has not fully recovered to the 2020 level of 19.43% This highlights that while profitability has improved, the company's operational efficiency and effectiveness in generating profits from equity have yet to return to their previous heights.
- Rate of Return on Asset
Figure 2.7: Rate of return on Total asset of US Masterbatch JSC in the period of 2020-2023
Source: Financial statement of US Masterbatch Vietnam
The majority of the company's capital was derived from equity 61,4% in
2020 and 78,4% in 2023, corresponding to 38,6% of the capital from debt in
Between 2020 and 2023, the company's debt financing decreased from 38.6% to 21.6% of total capital, reflecting a strategic capital restructuring in response to the pandemic's severe impact and economic fluctuations This reduction, from 19.47 million USD in 2020 to 16.19 million USD in 2023, aimed to alleviate the pressure of interest payments and debt repayment Consequently, while the net profit on total assets showed a declining trend initially, it experienced a robust recovery in 2023 as the company resumed larger-scale production, outperforming the recovery of the return on equity (ROE) index.
In 2023, following an economic recovery, the company reinitiated its production activities, leading to an increase in the debt-to-total capital ratio, which rose from 12.55 million in 2022 to 12.19 million This strategic move aims to enhance production scale and support the company's long-term business operations.
Working capital is a key financial metric that indicates a company's short-term solvency and financial flexibility, calculated as Current Assets minus Current Liabilities A positive working capital signifies that the business has adequate resources to fulfill its short-term debt obligations and sustain operations by purchasing raw materials and covering production costs Conversely, negative working capital suggests challenges in meeting short-term debts, potentially leading to financial risks and disruptions in business activities.
Table 2.18: Indicators reflecting the efficiency of working capital utilization of US Masterbatch in the period of 2020-2023
Rate of Net profit on
Source: Financial statement of US Masterbatch Vietnam
From 2020 to 2023, enterprises experienced a notable increase in their working capital index Initially, in 2020, the working capital was remarkably low at 118.4 thousand USD due to a reliance on short-term debt and the adverse effects of COVID-19, which hindered business operations However, in 2021, companies restructured their debt, reducing the short-term debt ratio and benefiting from share transfer deposits, resulting in a significant rise in working capital to 9,179 thousand USD By 2022, additional capital mobilization from shareholders further enhanced short-term assets and facilitated debt repayment, leading to a 44% increase in working capital to 13,220 thousand USD This upward trend continued into 2023, with working capital reaching 13,191 thousand USD.
- Rate of return on working capital
Figure 2.8: Rate of return on Working capital of US Masterbatch JSC in the period of 2020-2023
Source: Financial statement of US Masterbatch Vietnam
In 2020, the return on working capital reached a historic high of 5091% due to exceptionally low working capital levels However, this figure normalized to the industry average of 63.92% in 2021 The following year, 2022, saw a significant increase in working capital alongside a notable decrease in profit after tax, leading to a reduced profit margin on working capital of 24.9% in 2023 By the end of the 2020-2023 period, the return on working capital rebounded to 65.4%, indicating that every 100 VND invested in working capital generated a profit of 65.4 VND.
Figure 2.9: Working capital turnover of US Masterbatch JSC in the period of 2020-2023
Source: Financial statement of US Masterbatch Vietnam
The working capital turnover was significantly impacted in 2020 and 2022, reflecting the working capital index during these years In 2020, the company achieved a capital turnover index of 322 rounds, which declined to 4.56 rounds in 2021 and further decreased to 3.37 rounds in 2022 However, there was a slight increase to 3.73 rounds in the final year of the 2020-2023 cycle, indicating that the business is operating effectively and utilizing its capital and financial resources efficiently.
From 2020 to 2023, the company implemented various personnel policies in response to challenges faced during the pandemic The workforce decreased from 297 employees in 2020 to 286 in 2021, and further to 278 in 2022 due to reduced production levels However, as the economic situation improved and production activities rebounded to pre-pandemic levels in 2023, the company actively recruited new talent, adding 42 employees—a 15% increase compared to the previous year.
Table 2.19: Labor efficiency indicators of US Masterbatch JSC in the period of 2020-2023
Source: Financial statement of US Masterbatch Vietnam
Figure 2.10: Average revenue per employee of US Masterbatch JSC in the period of of2020-2023
Source: Financial statement of US Masterbatch Vietnam
The average revenue per labor reflects the annual productivity of employees within a company In 2020, this figure stood at $128,302 per employee From 2020 to 2022, the average revenue per labor index consistently exhibited positive growth, indicating an upward trend in employee productivity.
$153,812 per labor in 2023 Although it experienced a 4.2% decline compared to
2022, it still achieved a growth rate of 19.9% during the entire period of 2020- 2023.
- Earning after tax per employee
Figure 2.11: Earning after tax per employee of US Masterbatch JSC in the period of 2020-2023
Source: Financial statement of US Masterbatch Vietnam
SOLUTIONS TO IMPROVE THE EXPORT
Objectives and orientation of improving the export business
3.1.1 Objectives of improving the export business efficiency
Through forecasting, market research, and a thorough understanding of the industry's overall objectives, the company has established its export goals for
US Masterbatch's key products for the next five years as follows.
The company is targeting an annual revenue growth rate of 18.5% from manufacturing products over the next three years, followed by a 21% increase in the subsequent two years Additionally, it anticipates a steady 5.5% growth rate in revenue from commodity trading over the next five years and a 6% growth rate from service activities Overall, the company projects an export revenue growth rate of around 17.2% per year from 2024 to 2026, increasing to 20.2% from 2027 to 2028, with total export revenue expected to reach $114.58 million by 2028.
3.1.2 Orientation of improving the export business efficiency
The global masterbatch industry is witnessing steady growth, fueled by rising demand across sectors like plastics, composite plastics, and packaging This expansion plays a vital role in the overall development of the sector Notably, Asia, with China and India at the forefront, is becoming a key market for masterbatch production The rapid industrial growth in this region, coupled with substantial demand, presents significant opportunities for manufacturers.
Quality and standards are crucial in the masterbatch manufacturing industry, as rising consumer awareness about product quality and environmental impact drives the need for adherence to high standards and regulations With intense competition from multinational companies that can invest significantly in research and development and global distribution, smaller manufacturers must identify unique competitive advantages and target specific markets to succeed Additionally, technological innovation is a vital factor, compelling companies to continually invest in R&D to improve production techniques and provide a diverse range of efficient masterbatch products.
The global masterbatch manufacturing market is poised for growth, but intense competition and the demand for high quality standards require manufacturers to adopt a clear strategic direction To maintain and enhance their market presence in a rapidly globalizing environment, it is essential for companies to invest in research, technological innovation, and product development.
In the next five years, Vietnam's masterbatch manufacturing industry is poised for substantial growth, driven by the robust demand from its plastics, packaging, and textiles sectors Local manufacturers are expected to enhance production capabilities, invest in research and development, and adopt advanced technologies to elevate product quality and meet international standards Furthermore, a strong focus on sustainable practices and environmentally friendly solutions will align the industry with global trends and address increasing environmental concerns.
The global masterbatch manufacturing industry is set for continued growth over the next five years, driven by demand from key sectors like automotive, construction, and consumer goods Asia, particularly China and India, will lead the market due to rising manufacturing activities and consumption rates Manufacturers are expected to prioritize innovation through research and development, aiming to create specialized masterbatch solutions that meet changing customer requirements Additionally, there will be a strong focus on sustainability, promoting the development of bio-based masterbatch products.
Some solutions for improving the efficiency of export business activities
3.2.1 Some solutions for US Masterbatch to improve the export business efficiency of company
3.2.1.1 Solutions to improve human resources quality
The success of business operations heavily relies on the human factor, making it crucial for US Masterbatch JSC to enhance its recruitment strategy By prioritizing the selection and hiring of candidates with high knowledge, experience, and expertise, the company can better align its workforce with future production and expansion goals Implementing a strategy to rejuvenate the workforce and increase the proportion of employees holding a university degree or higher, especially in departments demanding specialized knowledge, will be essential for driving growth and success.
To effectively attract, retain, and develop top talent, companies must not only place personnel in appropriate roles but also identify and evaluate talent promptly Establishing appealing talent acquisition and retention policies is essential for retaining experienced employees with advanced expertise.
To enhance operational efficiency, a company must prioritize strong leadership and management skills in strategic planning and organizational structure Effective leaders inspire and unite employees, enabling them to monitor operations and respond swiftly to challenges This proactive approach fosters clear guidance and effective problem-solving, ultimately boosting overall management efficiency and individual productivity within the organization.
To improve overall business effectiveness, the company must enhance the skills and expertise of its management and workforce Currently, there is a noticeable gap in the qualifications of personnel, particularly in the import-export department, where strong language skills and professional qualifications are essential for successful negotiations with foreign partners To address this issue, the company should implement assessments to evaluate employee qualifications and performance, allowing for the development of targeted training plans that align with job requirements.
To excel in exporting masterbatch to significant markets and clients, export sales personnel must hold a university degree or higher and have a deep understanding of foreign trade practices They should be well-versed in the company’s products and possess advanced foreign language communication skills to effectively negotiate with international partners This expertise is essential for maximizing the efficiency of export operations and driving revenue growth for the company.
3.2.1.2 Solutions for Marketing and Market Development a Solutions for developing and exploring potential markets for Masterbatch products
The effectiveness of US Masterbatch Company's export business in Masterbatch products is significantly influenced by market conditions and demand To expand and develop potential markets, the company can engage in various strategic activities.
Strengthening market research efforts in foreign markets:
To enhance growth beyond its primary markets like China, the company should actively seek new opportunities in regions with a rising demand for high-quality Masterbatch products Emphasizing the production and sales of high-margin product lines, particularly color masterbatch, black masterbatch, and white masterbatch, will be essential for maximizing profitability and expanding market presence.
Conducting separate research for each market and market segment:
To effectively navigate diverse markets, the company must conduct targeted research tailored to specific segments, particularly in high-demand regions like China and Europe It is essential to explore opportunities in rigorous markets such as the United States, South Korea, and Japan While China stands out as a significant importer of US Masterbatch, its unpredictable policies necessitate a thorough understanding of market trends and customer needs to maintain a strong presence in this competitive landscape.
Market research is essential for identifying long-term customers and assessing the demand for high-quality Masterbatch products, ultimately helping to minimize business risks To achieve this, the company must invest in gathering comprehensive domestic and global market data Establishing a dedicated department for research and information processing on Masterbatch markets in key regions is crucial Furthermore, organizing training programs will enhance employees' knowledge and skills, providing them with practical insights into the international market This approach will improve critical thinking and enable more accurate evaluations of market potential, leading to the development of effective long-term strategies for the company.
To enhance sales efficiency, businesses should proactively acquire verified data from various service providers and government agencies that specialize in data search and retrieval These resources offer insights into potential buyers, including lists of customers based on HS codes related to import and export activities By obtaining accurate contact information derived from actual transactions or expressed interest in Masterbatch exports, sales teams can save considerable time This allows them to concentrate on conducting thorough customer research, pinpointing effective selling points, and ultimately boosting order conversion rates.
To enhance email communication, consider leveraging third-party email services, as they provide valuable insights into email performance These services enable senders to track key metrics, such as the volume of emails that land in spam, successful inbox deliveries, open rates, complete reads, and attachment engagement By implementing proper monitoring tools, senders can formulate effective strategies for future email campaigns, ultimately improving communication effectiveness.
An effective tool for measuring marketing campaign success is crucial, and several third-party providers, including Mailchimp, Getresponse, and Bitrix24, offer valuable services Mailchimp, for instance, specializes in collecting and managing email addresses and allows users to create and send bulk emails Additionally, it provides comprehensive statistical reports that help customers analyze the effectiveness of their email marketing efforts, enabling them to make informed improvements for future campaigns.
Investing in third-party marketing services can cost as little as a few tens of dollars per month, yet the impact on effectiveness is substantial Enhancing the appeal of email content is vital and requires strategic content marketing efforts Many customer emails still depend heavily on the sender's personal touch, leading to a tone that is professional but often lacks engagement As a result, the content tends to be uninteresting, missing valuable tips to capture attention, featuring unappealing designs, and employing a language style that feels disjointed.
To effectively tackle this issue, the sales and marketing team must embrace a customer-centric approach This involves using concise and precise language in emails to enhance professionalism and deliver the core message efficiently, thereby respecting the customer's time Additionally, incorporating important keywords is essential to emphasize the company's competitive advantages and clearly communicate the email's purpose to customers.
Most countries worldwide start working in their offices around 8 am. Therefore, aligning with the potential market's time frame enhances the company's ability to reach customers.
To enhance customer engagement, it's essential to include the company's product catalog in every email, showcasing all available manufactured items Currently, the catalog features only basic product images, which do not capture viewer interest Therefore, revamping the catalog is vital to create a more visually appealing presentation that highlights the production process and emphasizes the unique qualities of the products, ultimately attracting more customers.
- Marketing on international e-commerce platforms: