Export of footwear and leather products from ho chi minh to lagos nigeria

CERTIFICATE OF ORIGINALITY I hereby certify my authorship of the thesis submitted today entitled: EXPORT OF FOOTWEAR AND LEATHER PRODUCTS FROM HO CHI MINH CITY TO LAGOS – NIGERIA In terms of the statement of Requirements for Project in Master’s Programs Issued by the Higher Degree Committee Ho Chi Minh City, 2012 ANDREW AZUKA MARAH ii RETENTION AND USE OF THE PROJECT I hereby state that I, Andrew Azuka Marah, being the candidate of the degree of Master in MARKETING, accept the requirements of the University relating to the retention and use of Master Project deposited in the Library In terms of these conditions, I agree that the original work of my Project deposited in the Library should be accessible for the purposes of study and research, in accordance with the normal conditions established by the Library for care, loan and reproduction of Thesis Ho Chi Minh City, 2012 Andrew Azuka Marah iii ACKNOWLEDGEMENTS I wish to express my sincere and deepest gratitude to my supervisor Professor Marianne Claes at the Universite Libre De Bruxelles in Belgium who believed in me right from our first meeting and volunteered to supervise my project As a model of mentors, without her moral support, directions and encouragement, this work would hardly be completed I would like to give my special thanks to Professor Jean-Pierre Baeyens the Dean for Solvay Brussels School, Dr Tran Anh Tuan and Professor Daniel Van Houte for their helpful encouragement throughout my studies at Solvay School in Vietnam My sincere thanks to Nguyen Thi Mong Thuy and Serge Bywalski coordinators in the post graduate school for their kindness and friendliness I owe a lot of thanks to all my lecturers for their helpful instructions during the master course To my classmates, a big thanks for their friendly and brilliant feedbacks Finally, my warmest appreciation and thanks to my family particularly my wife Dr Tran Kim Hang for her understanding, support and encouragement to make this study a success iv ABSTRACT This thesis examines Export of footwear and leather products from Ho Chi Minh City to Lagos – Nigeria 14 Nigerian companies’ representatives in Ho Chi Minh City were interviewed to fill the questionnaire designed with 14 questions, which were divided into 05 parts We try to create a passage of information to Vietnamese footwear industry about the size of Nigeria’s market as far as Africa market potentiality is concern On the other hand, we want to support and encourage Nigerian business communities in general and most especially the representatives in Ho Chi Minh City We would like to enlighten them more about the size of Vietnam’s footwear industry, capabilities and value in the world export market The data obtained are then subjected to descriptive and qualitative analysis The findings indicate parity between theory and practice Many Nigerian firms are able to order directly from Vietnamese companies because of their business representatives and registration in Ho Chi Minh City though they must pay by cash and use different types of methods to source for shoe manufacturers Sports and ladies shoes are given most attention in Lagos market Nigerian companies’ representatives have the advantages in preparing export documentations and availability of carriers and forwarders while they have v disadvantages in delivery and non-adherent to contract agreement There is no market rejection or strong request for special modification for Vietnam’s footwear and leather products regarding quality and style Vietnamese companies should consider the small sizes of Nigerian’s order as they are still in the early stage The findings give rise to the improvement of export of footwear and leather products not only from Ho Chi Minh city to Lagos but probably also from other cities (which have the same circumstances) in Vietnam to different cities in Nigeria The implications relate to Vietnamese businessmen, Vietnamese and Nigerian governments vi companies, Nigerian TABLE OF CONTENTS Certificate of Originality - i Retention and use of the project - ii Acknowledgements iii Abstract - iv Table of contents v List of tables vi Chapter 01: INTRODUCTION 1.1 Background of the study 1.2 Reasons to choose this topic 1.3 Research limitations 1.3.1 Object 1.3.2 Project limitation 1.4 Research methodology 1.4.1 Case study 1.4.2 Data collection method vii Chapter 02: FOOTWEAR AND LEATHER PRODUCTS INDUSTRY IN VIETNAM 2.1 Vietnam footwear and leather products overview 2.2 Vietnam footwear and leather products market problems Chapter 03: INTERNATIONAL TRADE 3.1 How to select a country 3.2 Vietnam and Nigeria bilateral agreement 3.3 Exporting 3.4 Indirect Exporting 3.5 Direct Exporting Chapter 04: SOME ISSUES NEEDED TO KNOW WHEN EXPORTING TO NIGERIA 4.1 Nigeria 4.1.1 Lagos 4.1.2 Nigeria’s business behavior 4.2 Nigeria’s economic structure viii 4.2.1 The economy of Nigeria 4.2.2 Incentives for investors in Nigeria Chapter 05: ANALYSIS AND EVALUATION OF THE SITUATION OF EXPORT OF FOOTWEAR AND LEATHER PRODUCTS INTO LAGOS NIGERIA 5.1 New findings 5.2 Conclusion Chapter 06: SOLUTION TO PROMOTE EXPORT OF FOOTWEAR AND LEATHER PRODUCTS FROM HO CHI MINH CITY TO LAGOS 6.1 To Vietnam companies 6.2 To Nigerian’s companies 6.3 To Vietnam and Nigerian’s government REFERENCE………………………………………………………… APPENDIX 1………………………………………………………… APPENDIX 2…………………………………………………………… ix LIST OF FIGURES Figure 2.1: VN Footwear and Leather Industry and location…………… Figure 2.2: VN export of footwear by 11main export markets… Figure 3.1: Strategy to enter foreign market ………………… x LIST OF TABLES Table 2.1: Export of Vietnam’s Footwear and Leather Industry (2002-2008)…… Table 2.2: VN Footwear and Leather Products by sector……… Table 2.3: VN export of footwear 2006-6/2010…………………… xi Price of Vietnamese products Number of choice Low Moderate 14 High For a firm to be successful in foreign market, marketing managers often monitor price and ponder on what price is appropriate in the new market and might even reset their price to adapt because price is one of the most important elements of the marketing mix It is the only mix, which generates a turnover for the organization We therefore carry out an investigation to know what the representatives think about the prices of Vietnam’s footwear products There are 14 agreements that with regards to standard, quality and style, footwear and leather products in Vietnam has moderate price Question no.7 on the chart refers Question & 9: Having difficulties in preparing export/ import paper Number of choice Yes No 14 From the above table, we try to investigate into the difficulties representatives may have in preparing export documents, and 14 declared that they have no problem with preparing export documents The absence of difficulties in export documentation could be part of the efforts the governments encourage export Question 10: 32 Having difficulties from carrier/ forwarders Number of choice Yes No 14 Irrespective of geographic distance, there are 14 agreements that there is no problem with carriers and transportation from Ho Chi Minh City to Lagos Nigeria This is a good prove that distance is no-longer a strong barrier to trade We hope that the footwear industry in Vietnam will take note and initiate market entry to enjoy the huge export potentiality of African market, particularly Nigeria market Question 11: Having difficulties about time of delivery Number of choice No Slow in production Weighing the effects and danger of late delivery on any business, we try to investigate if there are difficulties experienced by the representatives in their process of ordering and time of delivery by the footwear manufacturers Reasoning from the figures on the table, had no problem with delivery, while complained of late delivery from shoe manufacturing companies Efficient and effective delivery is important in business, we hope the industry will look into this complains carefully to the advantage of both the customers and the producers respectively Question 12: 33 Products gain good market in Nigeria Number of choice Sport shoes Sport & Ladies shoes Ladies shoes It is uncommon to see a firm lunching all its products to the new foreign market Usually, they select, modify or adapt products to match with the needs in the target market Knowing the needs and customers perception of products is very necessary in foreign market, hence we researched to the type of Vietnamese footwear products that have good market in Lagos-Nigeria From the figures on the above table, agreed that ladies shoes have good market share while says Sport and ladies shoes It is interesting to note that also said that sport shoes are very good in Nigerian’s market With reference to these figures on the above table, we can advice Vietnam’s footwear and leather products of the need to pay more attention to ladies and sports shoes when making an entry to Nigeria market Question 13: Footwear and leather products should be customized Number of choice Yes No 12 Vietnam’s footwear and leather products is still very new in Lagos-Nigeria market, however Nigeria market is used to and familiar with western shoe products Fortunately, Vietnam shoe manufacturers also produce not only for local consumption, but for European markets, the US and Japan to mention, hence the appearance, style or quality of their shoe products did not appear strange or require much modification in Lagos-Nigeria market From the above table, of the importers/exporters want some 34 modification while 12 agree to their quality, material and product’s appearance To Vietnam’s footwear industry, when entering Nigerian’s market, they not need to worry much about the newness of their product in the market, but should popularize their brand in the minds of consumers Question 14: Suggestion to improve export of footwear and Number of choice leather products from HCMC to Lagos Nigeria Consideration for small orders 10 Delivery Keep to agreement This question focused on suggestion to improve export of footwear and leather products from Ho Chi Minh City to Lagos This is a new region to businessmen from Nigeria From the above table, 10 agitated for consideration to medium and small size orders This is an indication that they are still testing the market and should be encouraged because most of the Vietnam’s shoe brand names are still new to Nigerian consumers also complained of late delivery The industry should take note because it is said that time is money Many importers transact on bank loan with high interest rate, how could they survive if consignments were delayed? The last group, said that producers in Vietnam don’t keep to contract agreement It proves that some Vietnamese companies are not so serious in doing business with new small customers in a new market 5.2 CONCLUSION 35 5.2.1 New findings Having carefully perused the details of the respondent’s responses to our quest on how to export footwear and leather products directly to Lagos city from Ho Chi Minh City, we discovered that: 5.2.1.1 Many firms can order directly from the companies because of their business representatives and registration in Ho Chi Minh City However, they must pay by cash and use different types of methods to source for shoe manufacturers Sports and ladies shoes are given most attention in Lagos market 2.1.2 Nigerian companies’ representatives have the advantages in preparing export documentations and availability of carriers and forwarders while they have disadvantages in delivery and non-adherent to contract agreement 5.2.1.3 There is no market rejection or strong request for special modification for Vietnam’s footwear and leather products regarding quality and style 5.2.1.4 Vietnamese companies should consider the small sizes of Nigerian’s order as they are still in the early stage 5.2.2 Conclusion To sum up, when we observed the way Nigerians business in Vietnam and the size of the firms, we discovered that many of the firms presently operating are mainly private enterprises, we also noticed that many of them were able to order directly from the companies because they have representatives and registered business in Ho Chi Minh City However, many companies had to pay by cash or by black market money transfer This may be an indication that banking regulations or arrangements are still underway Nigerian companies often use different types of methods to source for shoe manufactures The most popular way is the use office 36 representatives while others use internet, yellow books and catalogues It is clear that sports and ladies shoes are paid more attention in Nigerian market When staying in Ho Chi Minh city to look for more chances in their business, Nigerian companies’ representatives have their own advantages of ease for preparing export documentations and availability of carriers and forwarders while they complain about late delivery and non-adherent to contract agreements There is no market rejection or strong request for special modification for Vietnam’s footwear and leather products regarding quality and style because most of their products were originally designed for western market and Lagos market is dominated by western products The only new thing about these products is Vietnam’s brand names Since Vietnamese companies solely rely on their Nigerian customers to export their products to Lagos market, they should consider the sizes of their orders as they are still in the early stage, they should try to encourage Nigerian businessmen as much as possible by paying prompt attention to both contract and time of delivery 37 CHAPTER 06: SOLUTION TO PROMOTE EXPORT OF FOOTWEAR FROM HO CHI MINH CITY TO LAGOS CITY The data analysis in chapter three supplies several important implications for export not only Vietnamese footwear and leather products but probably also other things which have the same circumstances from Ho Chi Minh City to Lagos City in Nigeria The implications relates to Vietnamese companies, Nigerian businessmen, Vietnamese and Nigerian governments 6.1 TO VIETNAMESE COMPANIES Based on our research, Vietnam’s footwear and leather products are mostly manufactured for export to developed countries, so their quality, styles and models are constantly checked to fit with the needs and regulations of the western countries Nigeria’s market having been used to western standards has no need for special modification rather, they need to familiarize with Vietnam’s brand Looking at the importance of brand, brand image or brand loyalty, Vietnam’s brand should be advertised more to popularize them in Nigeria’s market This is a common way to increase consumer’s awareness and consumption Most importantly, marketing managers from Vietnam firms should visit Nigeria to learn more about the people, market and their buying habits and should try to present their different models and styles in Nigerian’s trade fair s to enable them have good views and business contacts Vietnamese companies should consider small and medium size orders from Nigerian customers to enable them sample Vietnam’s footwear products in Nigerian’s market, give prompt attention to contracts and maintain delivery agreements In38 addition, the industry should try to alleviate them the problems of sourcing with middlemen by creating more awareness in form of conference, invite more Nigeria’s businessmen to trade fairs and other means to make searching for products and brands easier 6.2 TO NIGERIAN COMPANIES There is need for Nigerian company representatives in Ho Chi Minh City to work closely with their embassy in Vietnam They should keep the embassy abreast of their experience, difficulties and findings in course of their business transactions This will unfailingly, to a fair degree, enable the embassy official’s dialogue with Vietnam’s government to find solution to their problems in accordance with bilateral agreement on business and investment enhancement TO VIETNAMESE AND NIGERIAN GOVERNMENTS Vietnam market is still very new to Nigerian businessmen Fortunately, Vietnam and Nigeria governments are presently establishing relationships in governmental levels as we can see in the preceding chapters (there is embassy in each country respectively, with bilateral agreement being signed to encourage trade and investment.) But, for effective business transactions, there are still a lot to be done to protect business and investors in some important areas: such as banking regulations, creating forums for awareness, seminars, etc At governmental level, Vietnam and Nigeria should intensify the exchange of information about trade and investment policies of each country as well as trade and investment activities They should provide the business community of each country list of international exhibitions and 39 fairs that will take place in each country and also list of import and export products respectively They should reconsider the processes and procedures of business invitations and visa 40 REFERENCES Boslaugh, S Secondary Data Sources for Public Health: A Practical Guide, Washington University Cambridge University Press (2007) Bryman, A and Bell Business Research Methods, Second edition, Oxford University Press (2007) EUECC Report on Vietnam 2004, www.embassy-netherlands.org.vn Gauri, P., Granhaug, K and Kristianslund, IResearch Methods in Business Studies: A practical Guide, Prentice Hall, Hemel Hempstead (1995) Gummesson, E Qualitative methods in Management research, Chartwell - Bratt Ltd Bickley, Bomley, United Kingdom (1988) LEFASO Vietnam Leather and Footwear Industry – Directory (2008) LEFASO Overview of footwear and leather of Vietnam in 2008 and prospect in 2009 Marianne Claes International marketing management 2nd edition, (2011) Noor, K.B.M (2008) “Case Study: A Strategic Research Methodology”, American Journal of Applied Sciences 5(11): 1602 -1604, (2008) 10 Pavord and Bogart Quoted in The Export Marketing Decision S.A Hara in S Carter (Ed) (1975) “Export Procedures” Network and Center for Agricultural Marketing Training in East and South Africa (1991) 11 Patton, M.Q Qualitative Evaluation and Research Methods, (2nd ed.) Newbury Park, CA: Sage Publications, Inc (1990) 12 Ricardo, D The principle of political Economy and Taxation (1817) 13 Piercy, N Company Internationalization: Active and Reactive Exporting European Journal of marketing, vol 15, No.3 (1982) 14 Terpstra, V and Sarathy, R International Marketing, 8th ed, Chicago IL, Dryden press (2001) 15 Yin, R Case Study Research, Sage Publication, California (1989) 41 16 www.africaneconomicoutlook.org 17.www.business-in asia.com/Vietnam/manufacture-footwear-vn.html 18 www.business-travel-nigeria.com/lagos-nigeria.html19.www.communicaid.com/access/pdf/library/culture/doing-businessin/Doing%20Business%20in%20Nigeria.pdf 20 www.economywatch.com/world_economy/nigeria/structure-of-economy.html 21.www.economywatch.com/economic-statistics/country/Nigeria 22.www.english.vov.vn/Home/Leather-footwear-industry-to-seize-newopportunities/20113/125030.vov 23 www en.wikipedia.org/w/index.php?title=Nigeria&action=edit 24 www.fao.org/docrep/W5973E/W5973E00.htm 25 www.ice.it/ / A draft sector note on subsidiary materials for 26 www.malaysiaexports.com/inex9.1.exporting.htm 27 www.mobforsenate.com 28.www.referenceforbusiness.com/management/Ex-Gov/Exporting-andimporting.html 29 www.unctad.org/trade_env/test1/meetings/bangkok5/vietnam.pdf 30 www.ven.vn/trade/coping-with-anti-dumping-lawsuits.LE Thi Thuy Van & Sarah Y TONG, EAI Working paper No.146 31 www.vietnamembassy-nigeria.org/nr070521165956/news_object_view?) 32 www.worldbank.org/season6-Nguyen Thi Tong-Footwear33 www.worldbank.org/ /Session6-NguyenThiTong-Footwear_ 42 APPENDIX QUESTIONNAIRE I want to thank you for taking the time to meet with me today My name is Andrew Azuka Marah, I am writing a project for the award of master degree in marketing management at Solvay Brussels School about “Export of footwear and leather products from Ho Chi Minh City to Lagos – Nigeria” This interview will take about one hour We would like to tape this discussion as we not want to miss any of your comments We also want to assure you that all responses will be kept confidential Any information we may include in our report will not identify you as the respondent Remember, you don’t have to talk about anything you don’t want to and you may end this interview at any time Are there any questions about what I have just explained? Are you willing to participate in this interview? - Company name: Position in the company: Address: Telephone: Email: What group does your company belong to? ∆ Private ∆ Shared ∆ Limited ∆ Others How long has your company been registered in Vietnam? ∆ Under one year ∆ One year ∆ Two years ∆ Three years up How you buy footwear and leather products? ∆ Company order ∆ Company stock 43 ∆ From agents ∆ Others Ways of payment by your company? ∆ Bank ∆ Cash ∆ Both ∆ Money transfer What type of leather and footwear products you always buy? ∆ Sport shoes ∆ Ladies shoes ∆ Sport & office shoes ∆ Sport & Sandals ∆ Sandals ∆ Sport & Ladies shoes How does your company know about the leather and footwear products in Vietnam? ∆ Internet ∆ Internet & yellow books ∆ Catalogues ∆ Office representatives ∆ All What you think about the prices of Vietnam footwear and leather products? ∆ Low ∆ moderate ∆ High Does your company have any difficulty in preparing papers for import/ export? ∆ Yes ∆ No What difficulty? ∆ C/O ∆ Bill of lading ∆ Others 10 Does your company have any difficulty from carrier/ forwarders? ∆ Yes ∆ No 11 Does your company have difficulty about time of delivery? ∆ Yes Reason for delay in delivery: ∆ Not enough materials ∆ No ∆ Slow in production ∆ Others 12 What type of footwear and leather products you think has good market in Nigeria? ∆ Sports shoes ∆ Sports shoes & canvas ∆ Sports shoes & Ladies ∆ Ladies 44 13 Do you think these products should be customized? ∆ Yes ∆ No 14 What suggestion would you like to give to improve export of footwear and leather products from HCMC to Lagos Nigeria? - Is there anything more you would like to add? - I will analyze the information you and others gave me and submit a draft report to the school in one month I will be happy to send you a copy to review at that time, if you are interested Again, thanks for your time! 45 APPENDIX LIST OF COMPANY’S REPRESENTATIVES THAT JOINED THE INTERVIEW No Company’s Name Person Interviewed Phone numbers CENENI CO LTD Cliphine E.E Nelson 08023115270 S.T.K Industries LTD Ezeneche Jerome 0972537967 GEORGE &GEOS MARKETING CO LTD Martin Ezediunor 08024198640 MELFINAS DESIGNS Austin M 08033415785 AILIEN CO LTD Chijioke T U 062678158 RISHON PACKAGING E meka Igido 0986315426 ALCONI LTD Hunde Edwin 2348033082164 CHRISPAC INT CO.LTD Patrick O Ibegbu 017925456 ROXYBRONZE IMPORT AND EXPORT CO 10 MULTI-RAY & CO (W.A) Kingsley Ikenna 0976969350 I Emeka 0972046652 11 CHINOBIS &CO Innocent Izundu 08033474900 12 BENICO ENTERPRISES LTD Kingsley Onh 0972088175 13 BUSINESS TRENDSETTERS CO 14 HA ENTERPRISES Iyke Otiteh 0985994553 John Ikemba 0985209521 46 ... Chapter 06: SOLUTION TO PROMOTE EXPORT OF FOOTWEAR AND LEATHER PRODUCTS FROM HO CHI MINH CITY TO LAGOS 6.1 To Vietnam companies 6.2 To Nigerian’s companies 6.3 To Vietnam and Nigerian’s government... suggestions to improve export of footwear and leather products from Ho Chi Minh City to Lagos City in Nigeria (question 14) CHAPTER 02: FOOTWEAR AND LEATHER PRODUCTS INDUSTRY IN VIETNAM 2.1 VIETNAM’S FOOTWEAR. .. Vietnam’s Footwear and leather industry the opportunity of designing an entry to a new market particularly, to export footwear and leather products from Ho Chi Minh city to Lagos city in Nigeria