Exporting SVR 3l rubber of vietnam to india

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS GRADUATION THESIS Major: International Business Management EXPORTING SVR 3L RUBBER OF VIETNAM TO INDIA Author: Duong Tan Vu Student ID: 0952015093 Class: K48CLC Supervisor: Dr. Nguyen Xuan Minh Ho Chi Minh City, May 2013 TABLE OF CONTENT LIST OF ABBREVIATIONS LIST OF TABLES, CHARTS AND DIAGRAM INTRODUCTION 1 CHAPTER 1: OVERVIEW OF RUBBER EXPORT OF VIETNAM TO INDIA 3 1.1 Overview of rubber export of Vietnam 3 1.1.1 General introduction 3 1.1.2 Features and Competitive advantages of Vietnam’s natural rubber 6 1.1.3 Grades and Specifications 10 1.1.4 Factors affecting Exporting activities of Vietnam’s rubber 12 1.2 Overview of India’s rubber market 14 1.2.1 Key indicators 14 1.2.2 Production 15 1.2.3 Consumption 16 1.3 The necessity of improving the export of SVR 3L Rubber of Vietnam to India 19 1.3.1 Contribution of SVR 3L rubber to general rubber export of Vietnam 19 1.3.2 Contribution of Vietnam’s SVR 3L rubber to Indian Market 20 1.3.3 Contribution of Indian Market to Vietnam’s SVR 3L rubber exporting 20 1.3.4 Social – economics benefits of exporting SVR 3L rubber 21 Summary of chapter 1 23 CHAPTER 2: CURRENT SITUATION SVR 3L RUBBER EXPORT OF VIETNAM TO INDIA PERIOD 2007-2012 24 2.1 Current situation of rubber export of Vietnam to India and the contribution of SVR 3L grade period 2007-2012 24 2.1.1. Rubber export turnover 24 2.1.2 Structure of natural rubber export 29 2.1.3 Rubber export price 33 2.1.4 Distribution channels 35 2.1.5 Shipment method 37 2.1.6 Trade promoting activities 38 2.2. Assessments of the current situation of SVR 3L rubber export of Vietnam to India 51 2.2.1. Achievements and reasons 51 2.2.2. Limitations and reasons 53 Summary of chapter 2 54 CHAPTER 3: THE OUTLOOK, ORIENTED DEVELOPMENT AND RECOMMENDATIONS FOR PROMOTION OF SVR 3L RUBBER EXPORT OF VIETNAM TO INDIA 55 3.1 The outlook of SVR 3L rubber export of Vietnam to India period 2013 – 2018 55 3.1.1 Opportunities 55 3.1.2 Threats 56 3.2 Oriented development and objectives of solutions 57 3.2.1 Oriented development 57 3.2.2 Objectives of solutions 57 3.3 Solutions for promotion of SVR 3L rubber export of Vietnam to India period 2013 – 2018 58 3.3.1 Solutions for improving competitive advantages of SVR 3L rubber 58 3.3.2 Solutions for guaranteeing stable and sustainable sources of supply 69 3.3.3 Solutions for improving human resources 73 3.3.4 Solutions for development and innovation of production technology 75 Summary of chapter 3 77 CONCLUSION 78 LIST OF ABBREVIATIONS Abbreviation Full word ADS Air-Dried Sheets AIRIA All India Rubber Industries Association ANRPC The Association of Natural Rubber Producing Countries ASEAN The Association of Southeast Asian Nations DRC Dry Rubber Content NR Natural rubber PLC Pale Latex Crepe RSS Ribbed Smoked Sheets SR Synthetic rubber TCVN Vietnamese Standards TSR Technically Specified Rubber VRA Vietnam Rubber Association VRG Vietnam Rubber Group DEPB Duty Entitlement Passbook Scheme DEEC Duty Exemption Entitlement Certificate SION Standard Input Output Norms DFIAS Duty Free Import Authorization Scheme DFRC Duty Free Replenishment Certificate EOU Export Oriented Units EPZ Export Processing Zones LIST OF TABLES, CHARTS AND DIAGRAM No. Type Name Page 1 Chart 1.1 World’s rubber production 4 2 Table 1.1 Natural rubber production of major rubber producing countries 5 3 Chart 1.2 World natural rubber consumption 6 4 Chart 1.3 Consumption of NR in main consuming countries in 2012 6 5 Table 1.2 Area, output and productivity of Vietnam’s natural rubber period 2008 - 2012 7 6 Table 1.3 Region-wise output and productivity of Vietnam’s natural rubber in 2011 7 7 Table 1.4 Production type – wise output and productivity in 2011 8 8 Table 1.5 Vietnam’s natural rubber output, import and consumption in 2011 9 9 Table 1.6 End uses of NR 11 10 Table 1.7 Key Indicators of Indian natural rubber industry (2010-2011) 14 11 Table 1.8 India’s rubber production 15 12 Table 1.9 India’s rubber small holdings and estates 16 13 Table 1.10 India’s rubber consumption 16 14 Table 1.11 Import as percentage to consumption of NR of India 17 15 Table 1.12 NR consumption per capita of major NR consuming countries in 2012 17 16 Table 1.13 India’s rubber consumption - sector wise 18 17 Table 1.14 India’s rubber consumption according to end products 19 18 Table 1.15 Major Export market of Vietnam’s SVR 3L in 2012 20 19 Chart 1.4 Bilateral trade between Vietnam – India 22 20 Chart 2.1 Rubber Export volume and value of Vietnam 24 21 Table 2.1 Origin-wise Vietnam’s natural export volume in 2012 25 22 Table 2.2 Top export market of Vietnam’s NR in 2012 26 23 Table 2.3 NR export turnover of Vietnam to India 28 24 Table 2.4 Import Value of major NR import market of India in 2011 28 25 Table 2.5 Export Rubber grades produced in Vietnam in 2012 29 26 Table 2.6 Export Turnover of SVR 3L Rubber 30 27 Table 2.7 Main Rubber Grades of Vietnam exported to major market in 2012 31 28 Table 2.8 Export structure of Vietnam’s NR to India 32 29 Chart 2.2 Export value and export price of Vietnam’s NR 33 30 Table 2.9 Average export price of major grades in Vietnam’s NR export to India 34 31 Table 2.10 Export Price of Vietnam’s SVR 3L to major export markets 35 32 Diagram 2.1 Supply chain of rubber from field to producers/exporters 35 33 Table 2.11 Shipping term - wise export volume to different markets in 2012 37 34 Table 2.12 Import Duty Structure for the year 2012-2013 44 35 Table 2.13 Import Duty Calculation 45 1 INTRODUCTION I. The necessity of the topic In the industrialization and modernization of the country, rubber industry has played an increasingly important part. Rubber is an economic crop with social, economy and political benefits. Over years, Rubber is considered to be a major export product of Vietnam with export value of over 1 billion USD a year. Vietnam is now the 4 th largest rubber exporter with presence in over 78 countries. However, a majority of Vietnam rubber is exported to China market, which contains many risks, especially in payment and price fluctuation. This places a need to diversify the export market of Vietnam in recent years. Since 2010, India appears to be a very important strategic partner of Vietnam. Rubber export to India market has improved amazingly, especially SVR 3L grade. Aware of the importance and necessity of the diversification of Vietnam’s natural rubber and competitive advantage of SVR 3L grade, the writer has chosen the graduation thesis with topic: “Exporting SVR 3L Rubber of Vietnam to India”. II. Research subject Research subject of this thesis is the export Vietnam’s SVR 3L rubber to Indian market. III. Research scope For content: The current situation about exporting activities of Vietnam’s SVR 3L rubber in India market in the period of 2008 – 2012. For time: research about export of Vietnam’s SVR 3L rubber to India market in the period from 2008 to 2012. IV. Research objective The objective of this thesis is to evaluate export competitiveness of Vietnam’s natural rubber to India market in the period from 2008 to 2012, and give some suggestion about solution to improve export competitiveness of Vietnam’s natural rubber in the period of 2012-2020. 2 V. Research method The research methods are collecting, analyzing, comparing between theory and reality based on information sources of experts, researchers, associations, government agencies, enterprises and newspapers. Structure of the thesis includes 3 chapters: CHAPTER 1: OVERVIEW OF RUBBER EXPORT OF VIETNAM TO INDIA CHAPTER 2: CURRENT SITUATION SVR 3L RUBBER EXPORT OF VIETNAM TO INDIA PERIOD 2007-2012 CHAPTER 3: THE OUTLOOK, ORIENTED DEVELOPMENT AND RECOMMENDATIONS FOR PROMOTION OF SVR 3L RUBBER EXPORT OF VIETNAM TO INDIA Although a lot of effort has been invested in research and evaluating process, there are limitations in time and research resources therefore, the thesis might contain mistakes. As a writer, I welcome all comments from professors and my colleague for further development on my findings. The writer would like to express my deep gratefulness to Vietnam Rubber Association, Dr. Tran Thi Thuy Hoa, Chief Secretary of Vietnam Rubber Association for sincere support. The writer would also like to say thank to lecturers of Foreign Trade University for knowledge and experiences, which is the key factor helping the writer complete this thesis, especially Associate Professor, PhD. Nguyen Xuan Minh for his devoted instructions. Ho Chi Minh City, April, 2013 Writer Duong Tan Vu 3 CHAPTER 1: OVERVIEW OF RUBBER EXPORT OF VIETNAM TO INDIA 1.1. Overview of rubber export of Vietnam 1.1.1. General introduction The term "rubber" encompasses not only the natural product that yields from the tree Hevea Brasiliensis and other vegetative sources but also the variety of synthetic polymers or lesser degree to natural rubber. Generally, "rubber" is used in its wider meaning to encompass both the natural product and synthetic materials commonly known as "synthetic rubber". However, in the scope of this thesis, “rubber” without any further explanation is referred as natural rubber. 1.1.1.1. Natural rubber and synthetic rubber Physically, the properties of natural rubber (NR) are plasticity, resistance to electricity, adhesiveness and elasticity. Chemically, NR is a high-molecular weight terpene hydrocarbon polymer. NR is found in the lattices of over 2000 species of plants belonging to 311 genera of 79 families. However, Hevea Brasiliensis now accounts for over 99% of NR produced and used because of high yield and low impurities. Contrary to NR, synthetic rubber (SR) has no specific chemical or technical connotation; it usually refers to a group of high-molecular weight polymers, having physical properties similar to NR. 1.1.1.2. Collection of natural rubber Natural rubber is collected in form of latex, which is a neutral milky fluid flowing out of a cut on the bark of the tree. This fluid flows down to a collection container, which can be half shells of coconut or plastic cups… Latex should be collected as soon as possible after the flow has ceased, which may be 3 to 4 hours after tapping. Latex is then transferred into galvanized iron buckets. Some trees will continue to drip after the collection and this leads to a small amount of "cup lump" which is collected at the next tapping. In some countries, farmers may intentionally collect rubber in form of cup lump instead of latex because it takes less labor. In terms of latex, tappers have to wait on field to collect latex from containers before coagulating. For cup lump, they can come back after several days to collect cup lump in containers without having to wait on field. The 4 latex that coagulates on the cut is also collected as "tree lace". Tree lace and cup lump together account for 10–20% of the dry rubber produced. Latex that drips onto the ground is called "earth scrap", which is also collected for processing of low grade product. 1.1.1.3. Production trend Chart 1.1: World’s rubber production Unit: 1000 metric tons (Source: Natural rubber statistics 2012, Malaysian Rubber Board) The world rubber production increases very fast over years in general. In 2012, total rubber production reached over 26.4 million metric tons, increased by 1.31% over the previous year. The period 2008-2009 marked the crisis of global economy, so the world’s total production of rubber declined in this period and recover faster in 2010 with an increase of 11.03%. The synthetic rubber production is more sensitive to the global economy than natural rubber production. This is because natural rubber production is strongly affected by climate and rubber’s tree yield. 0 10,000 20,000 30,000 40,000 50,000 60,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Rubber Synthetic Rubber Natural Rubber [...]... 63.28% in 2010-2011 1.3 The necessity of improving the export of SVR 3L Rubber of Vietnam to India 1.3.1 Contribution of SVR 3L rubber to general rubber export of Vietnam SVR 3L is the most popular export natural rubber grade of Vietnam In 2012 export volume of SVR 3L rubber is 401,174 tons, equals to 39.2% of total rubber export produced in Vietnam SVR 3L is of relatively high quality, usually used... categories of domestic one and international one These insights provide a base for the writer to conduct analysis the situation of SVR 3L rubber export of Vietnam to India, period 2007-2012 24 CHAPTER 2: CURRENT SITUATION SVR 3L RUBBER EXPORT OF VIETNAM TO INDIA PERIOD 2007-2012 2.1 Current situation of rubber export of Vietnam to India and the contribution of SVR 3L grade period 2007-2012 2.1.1 Rubber. .. single market 1.3.2 Contribution of Vietnam s SVR 3L rubber to Indian Market In 2012, export volume of Vietnam s rubber to India is 71,676 tons Among this, SVR 3L grade takes up to a major part of 40,490 tons, equals to 56.5% India is the second largest consumption country in the world due to high demand of its auto industry Therefore, the major consumption of rubber in India as well as other major consumption... 12.39 Total 401,589 100 (Source: Vietnam Rubber Association) 21 SVR 3L is the grade has the most diversified market with over 60 countries, compared to the second, which is SVR 10 is 52 countries India is the second largest export market of SVR 3L, next to China In 2012 Vietnam exported 40,490 tons to India, equivalent to 10.08% of total SVR 3L export 1.3.4 Social – economics benefits of exporting SVR 3L. .. contributed by tire sector, which needs lower-quality rubber grades than SVR- 3L such as RSS rubber of Thailand, SMR 10, 20 of Malaysia, SIR 20, 50 of Indonesia or SVR1 0, 20 of Vietnam 1.3.3 Contribution of Indian Market to Vietnam s SVR 3L rubber exporting Table 1.15: Major Export market of Vietnam s SVR 3L in 2012 Market Amount (metric tons) Proportion (%) China 237,611 59.17 India 40,490 10.08 Taiwan... from data of Vietnam Customs) Year Before 2010, India is a minor export market of Vietnam with share of less than 1% of total Vietnam s natural rubber export Period 2010-2012 sees a fast development of export turnover of Vietnam s rubber to India In 2010, Vietnam exported 20,038 tons natural rubber to India, equal to 2.56% of total Vietnam s natural rubber export This shows an increase by 245% over... stability of Vietnam s economy Natural rubber is one of the main exporting products of Vietnam with 2.5% of total export value of Vietnam in 2012, ranking 13th in top exporting product and 3rd in top agricultural exporting products An improvement in export competitiveness of Vietnam s natural rubber will help gain export value, government budget and balance of payment Increase employment rate Rubber industry... Summary of Vietnam Rubber Association from data of Vietnam Customs) 30 Besides the temporary import and re-export source of natural rubber, domestically produced rubber accounts over 87.27% total rubber export volume of Vietnam Among these, the most popular grade is SVR 3L with 401,174 tons, equal to 39.21% total rubber export This shows an increase by 13.3% over 2011 The grade standing in 2nd rank is SVR. .. natural rubber exporter of India with about 2.6% market share Since 2010, the value of natural rubber export of Vietnam to India has improved extensively and become the 3rd largest natural rubber import market of India with 11.49% market share in 2011 2.1.2 Structure of natural rubber export 2.1.2.1 Major export grades of Vietnam s natural rubber Table 2.5: Export Rubber grades produced in Vietnam. .. Summary of Vietnam Rubber Association over statistics of General Statistics Office of Vietnam and Ministry of Agriculture and Rural Development) Domestic consumption of natural rubber of Vietnam increases gradually year to year regardless of world economy crisis However, domestic consumption of natural rubber takes a very limited part (about 17.37% in 2012) of overall national output The reason is that Vietnam s . to general rubber export of Vietnam 19 1.3.2 Contribution of Vietnam s SVR 3L rubber to Indian Market 20 1.3.3 Contribution of Indian Market to Vietnam s SVR 3L rubber exporting 20 1.3.4 Social. of exporting SVR 3L rubber 21 Summary of chapter 1 23 CHAPTER 2: CURRENT SITUATION SVR 3L RUBBER EXPORT OF VIETNAM TO INDIA PERIOD 2007-2012 24 2.1 Current situation of rubber export of Vietnam. indicators 14 1.2.2 Production 15 1.2.3 Consumption 16 1.3 The necessity of improving the export of SVR 3L Rubber of Vietnam to India 19 1.3.1 Contribution of SVR 3L rubber to general rubber