e-commerce development in agricultural trade promotion in vietnam

v TABLE OF CONTENTS ACKNOWLEDGEMENTS i ABSTRACT iii TÓM TẮT iv TABLE OF CONTENTS v LIST OF ABBREVIATIONS vii LIST OF TABLES, FIGURES, CHARTS, DRAWINGS viii INTRODUCTION 1 1. The imperative of subject 1 2. Establish the main research subject 3 3. Research’s objectives 3 4. Research scope 3 5. Delimitation of the research’s contents 4 5.1. The basic elements of E-commerce model 4 5.2. Assign content to develop E-commerce model for Agritrade 5 6. Research methods 5 6.1. Data collection methods 5 6.2. Data analysis methods 7 CHAPTER 1: THEORETICAL FRAMEWORK 8 1.1. E-commerce 8 1.1.1. The concept of E-commerce 8 1.1.2. Characteristics of E-commerce 10 1.2. The formation of E-commerce 10 1.2.1. The reasons of E-commerce 10 1.2.2. The formation of E-commerce 11 1.3. The situation of E-commerce development in Vietnam 12 1.4. The operation forms and E-commerce transactions 14 1.4.1. The forms of E-commerce activities 14 1.4.2 Transaction forms of E-commerce 17 1.5. Benefits of E-commerce for businesses 22 1.5.1. E-commerce reduces costs 22 1.5.2. Impact on enterprise architecture 24 1.6. The E-commerce requirements 25 1.6.1. Technological Infrastructure. 25 1.6.2. Human Infrastructure. 26 1.6.3. Security and safety. 26 1.6.4. Automatic Financial payment system. 27 1.6.5. Consumer Protection. 28 1.6.6. Economic and legal infrastructure. 28 1.7. Definition and content of Trade promotion 29 1.7.1. Definition: 29 1.7.2. The purposes of trade promotion 30 1.7.3. Types of Trade Promotions 31 1.8. Trade Promotion in E-commerce 32 vi 1.9. The difference of E-commerce applications in agricultural trade promotion 33 CHAPTER 2: BACKGROUND AND REAL SITUATION OF AGRICULTURAL PRODUCTS PROMOTION OF AGRITRADE 34 2.1. Overall assessment of domestic market for Agricultural product 34 2.2. Overall assessment of agricultural trade promotion activity of Agritrade. 38 2.2.1. Overview of Trade Promotion Center for Agriculture (Agritrade) 38 2.2.2. Agritrade’s main missions: 40 2.2.3. Recent years’ Main Activities: 42 2.2.4. Overview of agricultural trade promotion activities of Agritrade 43 2.3. Assessing the impact of external environmental factors to E-commerce application at Agritrade 46 2.3.1. Impact of economic environment 46 2.3.2. Impact of political legal environment 50 2.3.3. Impact of socio-cultural environment 51 2.3.4. Infrastructure and Internet services for E-commerce 52 2.3.5. Competitors 55 2.3.6. Customers 57 2.3.7. Human resources for E-commerce 59 2.4. Assessing the impact of internal environmental factors to the E-Commerce applications in trade promotion activities of Agritrade 61 2.4.1. Impact of human resources 61 2.4.2. Impact of financial resources 62 2.4.3. Impact of technology infrastructure 63 2.5. Analysis the results of survey and discussions 63 2.5.1. The results of survey 63 2.5.2. Results of expert interviews 75 CHAPTER 3: CONCLUSIONS AND THE PROPOSAL SOLUTION OF E-COMMERCE DEVELOPMENT FOR AGRITRADE. 77 3.1. The conclusions and findings through the research process 77 3.1.1. The achievements and limitations of Agritrade 77 3.1.2. The findings of the research process 79 3.2. Orientation and perspective of development of Agritrade in the future 80 3.2.1. Development orientation of Agritrade 80 3.2.2. Agritrade’s views on the E-commerce application 81 3.3. Proposal solutions of deploying E-commerce application in Agritrade 81 3.3.1. Group of Human Resource solutions 81 3.3.2. Solutions related to infrastructure and technology 82 3.3.3. Solutions related to business processes 85 3.3.4. Solutions related to electronic marketing promotion 87 3.3.5. The other solutions: 89 CONCLUSION 91 LIST OF REFERENCES 94 vii LIST OF ABBREVIATIONS ARPANET Advanced Research Projects Agency Network Agritrade Trade Promotion Center for Agriculture APEC Asia-Pacific Economic Cooperation B2B Business – to – Business B2C Business – to – Consumer C2C Consumer – to – Consumer E – commerce Electronic Commerce ECM Enterprise content management EDI Electronic Data Interchange GSO General Statistics Office Of Vietnam IT Information Technology MARD Ministry of Agriculture and Rural Development MoIT Ministry of Industry and Trade MRO Maintenance, repair and operation. UNCITRAL United Nations Commission on International Trade Law VAN Value Added Network VECITA Vietnam E-Commerce and Information Technology Agency WTO World trade Organization viii LIST OF TABLES, FIGURES, CHARTS, DRAWINGS Tables Table 0.1 The basic elements of E-commerce model for agricultural trade promotion Page 4 Table 2.1 Vietnam Rice production and exporting (2000 – 2009) Page 34 Table 2.2 Domestic consumption of cashew nut (1995-2010) Page 35 Table 2.3 East Asia and the pacific: GDP growth projections Page 47 Table 2.4 The reason for not participating in online purchases of households in Hanoi in 2010 Page 58 Table 2.5 Survey summarizing Page 64 Table 2.6 Summary of survey results (Part 1): Page 64 Table 2.7 Summary of survey results (Part 2) Page 66 Table 2.8 Evaluation of Agritrade’s employees about necessary level of contents of E-commerce application Page 69 Table 2.9 Summary of survey results (Consumers) Page 70 Table 2.10 Summary of survey results (Suppliers) Page 72 Table 2.11 Evaluation of Agritrade’s customers (consumers and suppliers) about necessary level of E-commerce application Page 73 Table 2.12 Evaluation of Agritrade’s customers (consumers and suppliers) about necessary level of contents of E- commerce application Page 74 Charts Chart 2.1 Organization structure of Agritrade Page 40 ix Figures Figure 1.1 Models of E-commerce transactions Page 18 Figure 2.1 GDP quarterly growth from 2008 – 2010 Page 47 Figure 2.2 Monthly CPI development in 2010 Page 48 Figure 2.3 Evaluation of enterprises of obstacles to e-commerce application Page 52 Figure 2.4 Number of computers in enterprises through recent years Page 53 Figure 2.5 Computer usage in enterprises in different localities Page 53 Figure 2.6 Means of Internet access of households in Hanoi in 2010 Page 54 Figure 2.7 Households with computers per 100 households Page 54 Figure 2.8 Methods of Internet access of enterprises in 2009 Page 55 Figure 2.9 Number of E-commerce training schools between 2008 and 2010 Page 59 Figure 2.10 The proportion of E-Commerce schools by level Page 60 Figure 2.11 Enterprises’ IT and e-commerce training methods for employees through recent years Page 60 Figure 2.12 Ability to achieve the target set for trade promotion activities of traditional methods. Page 68 Figure 2.13 Evaluation of Agritrade’s employees on whether to apply E-commerce in agricultural trade promotion. Page 68 Figure 2.14 The E-commerce model to apply Page 69 Figure 2.15 The most important factor when apply E-commerce Page 69 Figure 2.16 Evaluation of Agritrade’s consumers on whether to apply E-commerce in agricultural trade promotion Page 71 Figure 2.17 Evaluation willing level of Agritrade’s consumers to participate in E-commerce website Page 73 1 INTRODUCTION 1. The imperative of subject Internet was born as a turning point in communications history of mankind and plays more important role in all activities of man. Experienced two boom in 1986, 1991 to date, the Internet has brought humanity to overcome many limitations of space and time. Also, dependent on preeminent and universal primacy of Internet, it has quickly applied in many fields, especially economic activities and trade. Since then, the term Electric Commerce (E-commerce) was born. And today, the E- commerce has become a global trend, the rapid development, the motivation to help the world economy forward. In developed countries, E-commerce transactions through other forms of B2B, B2C, or C2C has become very popular, becoming the new consumption habits, the proportion of E-commerce transactions compared to traditional trading constantly increasing. With agricultural and food products manufacturing and trading sectors, the application of E-commerce in the distribution of products to help customers access to product quickly, and gives the company huge revenue such as alibaba.com, japonshop.com In Vietnam, the E-commerce is in the process of formation and has taken huge strides in recent years. According to the E-commerce report 2009 of the Ministry of Industry and Trade (MoIT): “Along with the recent rapid development of Internet and e-commerce, forms of trading via the Internet gradually developed and became popular to a segment of consumers, especially office workers and students in big cities. The most popular form of trading via the Internet was the sale and purchase of goods and services on e-commerce websites. So far, many enterprises have sold their goods and services via e-commerce websites, especially enterprises in sectors of aviation, tourism, general supermarket ” 1 With the situation as on the development, sale and purchase of goods and services online has become a real trend, and certainly there will be strong growth in the 1 Viet Nam E-Commerce Report 2009, Page vi. 2 coming period as electronic payments become more popular and are familiar with both individual consumers and businesses. Trade Promotion Center for Agriculture (Agritrade) is a department under the Ministry of Agriculture and Rural Development (MARD). Agritrade has the functions to act as the implementation of trade promotion activities of Vietnam agriculture and rural development. They also manage “the Exhibition Fair and Commerce Transaction Area” at No. 2 Hoang Quoc Viet Street, Cau Giay District, Hanoi. Every year Agritrade organizes tens of domestic and abroad trade promotion events in the agricultural sector. The typical events are the International Agricultural Trade Fair (Agroviet), workshop and training in the provinces, Trade Fair and market research at foreign markets. Besides trade promotion programs, Agritrade also developed an important promotion activity that is agricultural products displaying. Start this activity, Agritrade deploy a permanent display area at “the Exhibition Fair and Commerce Transaction Area” with the main objectives are displaying, introducing and selling agricultural products and local specialties to markets of Hanoi and neighboring provinces. Through this area, many agricultural products find a foothold in market and gradually built a stable brands such as Gao tam Dien Bien, Seng Cu rice, Da Dui rice, Son La mushrooms On the rise of this area, Agritrade orient to develop it into a great agricultural showroom for agricultural products and local specialties. Thereby, showroom will become a frequent destination for both seller and buyer to come, exchange product information, and deal with each other. The deployment of both display area and organizing trade promotion events, Agritrade will perform well as connections between producers and consumers. However, the effective of the current display area and traditional trade promotion programs are not really high and it also faces some restrictions. Therefore, it is necessary to develop new models to improve the effective of trade promotion to the Agricultural products in particular and Vietnam Agriculture in general. According to the general trend of the times, E-commerce application seems to be the good solution for Agritrade. 3 Due to these factors, along with experience on E-commerce application, using E- commerce model is extremely necessary, feasible in the present time; contribution help to Agritrade to accomplish its functions and duties of promoting and marketing of regional agricultural products; realize the strategic expansion of business toward e-commerce applications. 2. Establish the main research subject Through the learning process, survey and investigation, the authors found that the required objectivity and subjectivity are imposed Agritrade in the short term (1-3 years) and long term are: - AGRITRADE will become a focal point for trade promotion activities in Vietnam Agriculture. - Approach E-commerce development trend and apply IT into operation on promoting agricultural products and local specialties. - Develop E-commerce model to provide a link between producers, traders and consumer of agricultural products. So I would propose the subject of my graduate thesis is “E-Commerce development in agricultural trade promotion in Vietnam”. 3. Research’s objectives - To systematize basic concepts relating to E-commerce model and trade promotion. - Survey and research the activities of trade promotion activities of agricultural products and local specialties at Agritrade. - To propose solutions to develop E-commerce for agricultural trade promotion. 4. Research scope - The scope of research in space: this is graduated subject so the scope of the research only for micro and limited to Agritrade. Specifically, the scope of the research is to study the basic concepts related to a review topic, agribusiness situation and propose solutions to develop E-commerce model for agricultural trade promotion activities of Agritrade. 4 - The scope of research on time: The time for studying the subject and collecting survey data from January to March 2010 at Agritrade. This data combined with secondary outside data in last three years. 5. Delimitation of the research’s contents 5.1. The basic elements of E-commerce model Table 0.1: The basic elements of E-commerce model for agricultural trade promotion Basic elements Basic content Value targets Developing a useful channel for both providers and consumers, ensuring that the process of resource management is done strictly, comprehensively and effectively. Revenue models Products trading are agricultural products and local specialties provided by the providers, producers and other source. Market opportunities Trend of internet shopping in Vietnam created a potential market for trade agricultural products online. Competitive environment Sum of all factors in the business scope of enterprises. It includes numbers, revenue and profits of the competitors. In addition, the increasing number and quality of suppliers is the basis for evaluating market potential. Competitive Advantage That is main task of Agritrade, so it should have the consistency in the direction and creating good conditions of infrastructure, finance and personnel to deploy this model. It also receives support of functional departments and one more important factor that are support and assistance of MARD. Market strategy Researching and developing a convenience and simple E- commerce website for providers and customers. Planning for implementation of activities to promote website. Providing marketing campaign to show about the website and organizing training courses to help sellers know how to sell their products online. 5 Organizational structure The company wanted to sustainable development needs a well organized system to ensure effective implementation of plans and business strategy. Management Team Management Team responsible for making management strategy of enterprises. Good team governance can make decisions to change or restructure business models when needed, contribute to build customers confidence. 5.2. Assign content to develop E-commerce model for Agritrade In this research, to develop E-commerce model for Agritrade, I will develop research methods to conduct surveys on the actual situation of Agritrade’s activities. Overall assessment of the impact factors inside and outside the organization. It also combined with analysis of results compiled from surveys, interviews with staffs and customers of Agritrade and agricultural expert. Since then, I will assess the application ability and plans to develop an E-commerce model for Agritrade. Based on survey results, analysis of primary data and secondary sources, I will develop E-commerce model based on market factors, human resources, finance, and infrastructure for deploying this model. Moreover, I will also improve sales process, handle orders, and deliver the product and other support services. 6. Research methods In the process of collecting data for the study and implementation of the thesis, the author has used the method of data collection as follows: 6.1. Data collection methods 6.1.1. Method of investigation of primary data - Survey: + Candidates of survey: The main Candidates of survey are Agritrade’s staffs and customers (suppliers, producers and buyers). + Contents of survey:  For Agritrade’s staff: promotion situation of agricultural products, needs, capabilities and methods of application E-commerce model. [...]... or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road”1 According to the definition of European Commission, E-commerce refers to conducting business via electronic... cost of data transfer and training are very expensive Currently E-commerce Business to Business development with rapid growth, because it brings many benefits to businesses, for example, businesses can shorten production cycle by combining with other businesses, each specializing in a field, or 1 Business-to-business: www.wikipedia.org 18 business can save time and cost to find and purchase materials... About investment, the survey showed that the density investment of E-commerce application is fairly low in total annual operating expenses Over 80% of businesses said they invested maximum 5% the operational costs for deploying E-commerce, including purchase of E-commerce software, website maintenance and human resource for these activities Only about 14% of businesses invest 5-15% of total operating... market For that characteristic, the main purposes of using trade promotion as following: * Promote the products consumption: Promotion policies have a large role in marketing activities of business With these policies, businesses can impulse product offering and sales, increase revenues, and improve business efficiency Promotion and business support activities will help trade process of the enterprises... focused and it brings back effective to businesses Percentage of enterprises having website reached 45%, increases 7% over 2007 Rate of website that is updated regularly and has online ordering functions are increasing rapidly In 2010, almost 100% of businesses surveyed were implementing E-commerce applications in many sizes and different levels According to survey results, 100% of surveyed businesses were... civil law 1.7 Definition and content of Trade promotion 1.7.1 Definition: Base on the Commercial Law 2005 of Vietnam, Trade Promotion means activities of promoting and seeking opportunities for the purchase or sale of goods and 29 provision of services, including sale promotion, commercial advertisement, display and exhibition of goods and services, and trade fairs and exhibitions.1 Trade Promotion refers... refers to marketing activities that are executed in retail between these two partners Trade Promotion is a marketing technique aimed at increasing demand for products in retail stores based on special pricing, display fixtures, demonstrations, value-added bonuses, no-obligation gifts, and more.2 1.7.2 The purposes of trade promotion The purposes of trade promotion are supporting businesses to sell... software and other services), communications (landline telephone and satellite) and internal information (databases, audio-visual products, entertainment, 11 publishing and providing information ) This combination is creating a new nature and role of the IT industry 1.3 The situation of E-commerce development in Vietnam Although not a measure of the level of E-commerce application, the number and quality... and services 1.7.3.2 Commercial advertising Commercial advertising is the promotion activities of traders to introduce clients to their business goods and services Products of commercial advertising is including image, actions, sounds, voices, words, symbols, colors, lights that containing commercial advertising content Means of commercial advertising is including: the mass media, the means of communication,... current trade promotion activities of Agritrade; the difficulties and advantages of deploying E-commerce model in agricultural promotion at Agritrade (content expert interviewed is attached in Appendix) + Method of Investigation: Organizing Interview at Agritrade’s office + Objects of interview: Director and head of Business Department + Advantages and disadvantages of this method: 6  Advantages: Observed . works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation;. model applying to current trade promotion activities of Agritrade; the difficulties and advantages of deploying E-commerce model in agricultural promotion at Agritrade. (content expert interviewed. Definition and content of Trade promotion 29 1.7.1. Definition: 29 1.7.2. The purposes of trade promotion 30 1.7.3. Types of Trade Promotions 31 1.8. Trade Promotion in E-commerce 32 vi 1.9.