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INTRODUCTIONIn the integration tendency with the world economy, the ever competitive environment and for assurance, our Lotus Rice company always make sustainable development, not only f

CONTENT

I INTRODUCTION

II SELECTION OF INTERNATIONAL TRADE MODE AND PRODUCT 1.Selection of trade pattern

2 Selection of products

III SELECTION OF COUNTRY

1 Reason for selection

2 Introduction of China country

3 Evaluation of Chinese rice demand

IV PEST ANALYSIS

V SWOT ANALYSIS

VI GENERAL AND DETAILED TARGET

VII STRATEGY FOR TARGET COMPLETION

VIII IDENTIFICATION OF RISK AND SOLUTION

IX CONCLUSION

I INTRODUCTION

In the integration tendency with the world economy, the ever competitive environment and for assurance, our Lotus Rice company always make sustainable development, not only focusing on the growth of the local trade market, but also expanding the foreign investment for the market development As an investor, a managerof Lotus Rice company specializing in trading agricultural products, I decide to widen the trade of the fields, branches as the strength of Lotus Rice company in particular and Vietnam in general in the current global economy

II SELECTION OF TRADE AND PRODUCTS

1 Selection of trading pattern

At present, in the international trade field, there are many patterns to integrate into the foreign market including:

- Export

- Turn-key projects

- Licensing

- Business franchise

- Joint venture

- Possession of the whole subsidiaries

The Lotus rice company has the quite good local trading process, but its experience for the foreign development is still limited However, in order

to meet the business strategy and long run, sustainable growth target and develop the strength of the company in the field of rice trade, we

decide to select the pattern of the foreign integration by exporting the

items as the strength of the company in general and Vietnam in general

2 Selection of the products

With the suitable topography, land and climate, the right policy of the agricultural development, the hard-working workforce together with the support of the field irrigation system, applying for the technology, Vietnam has strongly reached the field of the agricultural production, especially the rice Vietnam has been the 2nd rice exporter in the world

only after India The export turnover of the year 2011, 2012 averagely gets 3,5 billion USD The new export capacity is only equal to 1/3 the local production output Therefore, the goods source for the export is abundant and available The acceleration of the export contributes to accelerating the agricultural branch of the rice planting, the developing technology of the rice processing and then increasing further the income for the farmers under the direct production

(Unit: Million tons)

Year 2009

Year 2010

Year 2011

Year 2012

Year 2013

(estimate )

Paddy output 38,9 39.9 42.2 43,6 43,8 Export rice

(Source: Ministry of Industry and Trade)

The rice/paddy is one of the most advantageous agricultural products of Vietnam with the nearly absolute advantage compared to the regional

and world countries OurLotus Ricecompany decides to select Rice for

export to integrate into the foreign market, expanding the market and increasing the efficiency of the business production for Lotus Rice company in particular and in Vietnam in general

III SELECTION OF COUNTRY FOR BUSINESS:

1 Reason for selection:

After investigation, study of the market, we decide to select the Chinese market for exporting the rice with the following reasons:

- The biggest scale of the people in the world; the country using the rice as the main foodstuff in the daily meals Therefore, it will be the extremely big consumption market

- Vietnam has the common border gate in land and on sea with China The Vietnam road and railway system is linked to the border gate of Lao Cai, Lang Son, Tanthanh Thus, the goods transportation is very convenient with the low cost to enter Yunnam, GuiZhui, Sichuan, Quangxi provinces etc of China In addition, the Vietnamese rice can be transported with the big quantities by the sea from Vietnam South, the big rice granary

of the whole country passing the China Eastern provinces (QuangDong, Fujian, Zheijiang, Anhui, etc.) easily with the low cost

- The two countries have the closely ties of economics, commerce and politics and both nation are also the members of WTO

- Being in the same oriental culture with many homogeneous cultures

- China has implemented the door-opened policy attracting the foreign investment from since 1978

- There is a stable political system leaded by Chinese Communist Party with the economy policy is developed strongly according

to the market economy under to Chinese characters

According to the data of Bloomberg Business Week evaluated in the year 2012, China is the first ranking country in 25 top countries which is the most suitable for the foreign direct investment (FDI)

No Country No Country

10 Unites Kingdom of

England

23 Turkey

11 IEU (united Arap) 24 Singapore

13 France

2 Introduction of China country:

China is an Asia-East country, the most crowded country in the world of over 1,3 billions of people; The administrative unit of China People’s Republic includes 22 provinces, five self-ruled zones, four centrally ruled cities (Beijing, Tainjin, Shanghai, Chongqing) and two administrative special zone (Hong Kong and

Ma Cao)

People’s Republic of China

With the area of 9,6 millions of km², China is the fourth biggest country of the world At present, China has the border gate bordering 14 other countries in Asia North borders Mongolia, Russia; West borders Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan; South borders Nepal, Bhutan, Myanma, India, Lao, Vietnam; East borders North Korea and China sea

From the economic renovation in the year 1978, China has become the most rapid developing economy in the world with the rapid development speed of averagely 10% within three consecutive decades and become the biggest exporting country as well as the second import country in the world

At present, China is the 2nd economy of the world (behind the United State) and is also the permanent member of the security Council of united states as well as the member of the international organizations like WTO, APEC, G-20 and Shanghai Cooperation

Organization According to the world monetary fund, the nominal GDP of China in the year 2011 gets 7,298 thousand of billions of United State Dollars; GDP per capita averagely gets 5,417 USD equal to about 1/9 GDP per capita of America (48,328 USD) and is

4 times higher GDP per capital of Vietnam (1,374 USD) Calculating the equivalent purchase capacity, China’s GDP gets 11,299 thousands of billion USD; GDP per capita is equivalent to 8,382 USD

(Source: Wikipedia)

China is the 29th rank of global competitiveness index (Source:The

Global competitiveness report 2012- World Economic Forum), and

as the top the BRICS country groups, but only takes 136th ranks of

Economic Freedom of the year 2012 (Source: Heritage Foudation,

retrieved 17/4/2011).

According to the data of world bank in the year 2012, as for the Ease to do business, China is ranked 91/185 countries/territories proving the foundation of the legal system and trading culture of China to be completed etc

According to the statistics of World Transparency Organization (TI)

of the corruption index of the world countries by the years , in the year 2012, China ranks 80 /176 countries, territories going down 5 steps compared to the year 2011 (in the year 2011, it ranks 75) China is in the groups of the average corruption level

3 Evaluation of China rice demand:

From a country which is nearly self-supporting of the rice in some previous years and from the year 2011 onward, the China’s rice import demand has strongly grown up due to the high production cost, the insufficient local capacity and also the philosophy of the Chinese the local rice is contaminated with the toxic chemicals (Cadmium)

According to the prediction of China’s rice export in the year

2012-2013, it is expected about 3 millions of tons increasing approximately 28% compared to about 2,34 millions of export tons

in the previous years The China’s rice import demand in the year 2013-2014 will be predicted to get still the high level, approximately

3 millions of tons China is one of the countries importing the rice a lot in the world

(Source: Ministry of American Agriculture -USDA)

Currently, Vietnam has been the main rice exporter of China In the year 2011-2012, Vietnam supplied approximately 1.54 million

of rice tons, equivalently about 66% out of total 2,34 million of import rice tons of China

(Source :China’s

Custom)

IV PEST ANALYSIS:

1 Political environment:

The political environment in China is of the very stable status under the Chinese Communist Party to continue the policy to develop the market economy according to the Chinese color; China has issued the clear policies, regulations to lure the foreign investment for the import activities in which its priority gets the essential items for the people’s life, especially the rice export The change of the policies of this regulation, if any, creates more facilitation for the investment of import activities In addition, due to the incomplete legal system, the management policy is still limited Thus, the corruption of China is still at the high level According to the world transparency organization, in the

year 2012, China ranked 80/176 countries and territories, backward 5 ranks compared to the year 2011

2 Economic environment:

Although it is the country of the 2nd economy in the world (only after USA), with the territory area as the 4th big rank of the world, it is regarded as the workshop for the whole world; It possess the natural resource with the developing finance, information technology and energy and concurrently the quite modern infrastructure distributing the goods efficiently After the long term of the hot development, China’s economic speed has slowly developed at the moment and the status of the public debt has been in the alarm level; The cost of the cheap manpower is not still the China’s advantage As for the foodstuff production branch, the rice planting area cannot be developed by the fact that the cultivating land, the capacity has not be improved and the production price is high while the people’s demand increases Thus, the rice import demand of China is very big In the year 2013-2014, it will be

to import approximately 3 millions of tons of rice

3 Social environment:

With the population of over 1,3billion of people ranking the top of the world, since the door open policy in the year 1978, China has become the country with the very fast growth level However, the dark side of the growth is to ruin the whole environment, increasing the rich and the poor, the developing discrepancy among the eastern areas bordering the sea with the Western area and Northern area Thus, the potential of the social instability can happen if Chinese Government has

no proper adjustment of the economic, social policy

4 Technical environment:

- With the development of the technology, the cooperation of the international organizations (International rice institute IRRI), the rice planting study branch of Vietnam has strongly been invested Vietnam has got the research institutes of the rice planting at the key plains of the rice like Red river plain with the high capacity, anti-disease and

putting to the mass planting creating the products of Cuu Long river These institutes have created the short rive races meeting fully the local consumption demand and export to the world

- With the definition of the rice production as the commodities, the rice planting industrial branch in Vietnam has been mechanized at the high level in the irrigation, sowing, harvesting and processing

- In the information technology age, the offering, marketing of the products, transactions with the customers/importers have been efficiently and rapidly

V SWOT ANALYSIS:

Strength

- The rice/paddy is prevailed by Vietnam

due to the strong production capacity

The world has reached Vietnam as the

world topping rice exporter

- Lotus company has got the experiences

in manufacturing and supplying the rice

for the local market

- The company has the headwork as the

rice trading agency distributing properly

at Mekong Delta rive, the biggest

granary of Vietnam

- The goods delivery is convenient, quick

The company has the manufacturer

meeting punctually the demand of the

local and foreign customers

- The company focuses on exploiting the

parting of the white rice of 15 – 25% for

export Thus, the price will be more

competitive

- The company has the strategy of the

proper market integration, the first step

from the provinces bordering Vietnam:

Vân Nam, Quíchâu, Quảngtây,

Quảngđộng

Weakness

-Limiting the capital, understanding the Chinese market little

- The Vietnamese rice export market has the tendency to the mass export when the purchasing price of the importer is low and the export suspends when the price is high

- The company has just joined the export market Thus, the integration into the Chinese market has not been strong; the rice brand of the company has not been known at the Chinese market

Opportunity

- The demand of the Chinese market is

very big

Threats

- Vietnam has some competitors at this

by Vietnamese Government with 0%.

- Việt nam-China has signed many

commercial conventions served for the

priority of the most-favored nation; 2

countries are the member of WTO

- Vietnam together with ASEAN sign and

develop 03 conventions of FTAs

including ASEAN (AFTA), ACFTA

- The distancne of the transportation is

short; the transportation cost is low It

always ensures the delivery time and is

ready for competing kinds of rice from

Thailand, India etc

- Vietnamese Government has the policy

to encourgage the Vietnamese

enterprises to make connection for

exporting rice to the world market

Pakistan, India

- The Chinae import headworks impose the price

- The long term reliable

headkwork in the business is low

- Risky in the payment if the payment condition is not closely and does not comply with the international business practice

VI GENERAL AND DETAIL TARGET:

1.Mission: “The rice product of Lotus Rice company brings the

delicious, quality meals, the reasonable price for every family”

2 Vision

“It becomes one of the top rice exporters of Vietnam and Asia

South-East countries.”

3 Target:

To the year 2020, Lotus rice is available at 50% provinces, cities of China and occupies 45-50 % of the import market share of China

by ceaselessly diversifying the categories of the products, together with the partners expanding many distributors

4 Short term target:

+ The first year: The rice producer in Vietnam firstly widens the export to the foreign country; We choose the three provinces including Yunnam, Guizhui and Quangxi, and two provinces next to Vietnam with the traffic system of the inland, railway connected to Vietnam The population of the three provinces is about 140 million