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CONTENT I INTRODUCTION II SELECTION OF INTERNATIONAL TRADE MODE AND PRODUCT 1.Selection of trade pattern Selection of products III SELECTION OF COUNTRY Reason for selection Introduction of China country 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 Page of 16 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 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 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 Page of 16 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 Year Year Year Year 2009 2010 2011 2012 2013 (estimate ) Paddy output Export rice output 38,9 39.9 42.2 43,6 43,8 6,05 7.1 7,72 7,5 (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 Page of 16 III SELECTION OF COUNTRY FOR BUSINESS: 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 - There is a very convenient investment environment 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) Page of 16 No Country No Country China 14 Hong Kong USA 15 Qatar India 16 Romania Brazil 17 Republic of Czech Germany 18 Russia Poland 19 Saudia Arabia Australia 20 Indonesia Mexico 21 Malaysia Canada 22 Chile 10 Unites Kingdom of 23 Turkey 11 England IEU (united Arap) 24 Singapore 12 Vietnam 25 Egypt 13 France 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) Page of 16 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 Page of 16 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 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 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 steps compared to the year 2011 (in the year 2011, it ranks 75) China is in the groups of the average corruption level 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) Page of 16 According to the prediction of China’s rice export in the year 20122013, it is expected about 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 millions of tons China is one of the countries importing the rice a lot in the world (Source: Ministry of American Agriculture -USDA) Page of 16 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: 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 Page of 16 year 2012, China ranked 80/176 countries and territories, backward ranks compared to the year 2011 Economic environment: Although it is the country of the nd economy in the world (only after USA), with the territory area as the th 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 millions of tons of rice 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 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 Page 10 of 16 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 Opportunity - The demand of the Chinese market is very big - Rice import and export tax is preferred Page 11 of 16 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 Threats - Vietnam has some competitors at this market like Thailand, - - - by Vietnamese Government with 0% Pakistan, India Việt nam-China has signed many - The Chinae import headworks impose the commercial conventions served for the priority of the most-favored nation; price - The long term reliable countries are the member of WTO Chinese import Vietnam together with ASEAN sign and headkwork in the develop 03 conventions of FTAs business is low including ASEAN (AFTA), ACFTA The distancne of the transportation is - Risky in the payment if short; the transportation cost is low It the payment condition is not closely and does not always ensures the delivery time and is comply with the ready for competing kinds of rice from international business Thailand, India etc practice Vietnamese Government has the policy to encourgage the Vietnamese enterprises to make connection for exporting rice to the world market VI GENERAL AND DETAIL TARGET: Mission: “The rice product of Lotus Rice company brings the delicious, quality meals, the reasonable price for every family” Vision “It becomes one of the top rice exporters of Vietnam and Asia South-East countries.” 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 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 Page 12 of 16 of people The identification of the brand of Lotus Rice at the three provinces is 35-40 % and occupies the market shares of 30% of the import output + The target of the nd year: The identification of the brand of Lotus Rice at the three provinces is 65-70% and makes up the share market of 60% + The target of the 3rd year: The identification of the brand of Lotus Rice at three provinces is 100% and accounts form the market shares of 90-95%, concurrently develops continuously three adjacent provinces at West-South of China like Sichuan, Quinghai and Eastern province of China bordering Vietnam including QuangĐong, Fujian, Zheijiang, Anhui with the identification of 25% - 30% Long term target : After 8- 10 years, Lotus Rice is present with at least 50% of the Chinese provinces, cities of China and occupies 45-50% of the rice market share of import of China VII STRATEGIES FOR TARGET COMPLETION : Strategy of the price : Due to the active advantage of the supply goods source, especially the purchasing system, the price processing and especially the transportation capacity, the quick delivery, the low cost for the partners, agencies, Lotus Rice is not afraid of any competitor And we have the policy to sell the price which 5-8% is lower than the same categories of the products of Thailand, India or Pakistan Strategy of the product: After studying the market, products, we select the category of the white rice with the high quality to the average one (from 5% - 25% plate) with the nature of the thin, long, pure rice grain Its core will get the light, pliable, soft fragrance With such the quality together Page 13 of 16 with the suitable price, we believe that it will be accepted by the Chinese provinces, cities’ majority of the consumers Strategy of the location: We choose the provinces bordering the Vietnamese borders, especially the Chinese South, East areas as the key areas to integrate and develop the market These areas are convenient for transporting the goods by land, railway, and sea quickly with the low cost They are regarded as the developing, dynamic areas of China, with the crowded people of about 500 million of people Strategy of the goods sale: + Strategy of advertisement: Because this is the new market, for the customer to be familiar and knowledge, we together with the Chinese import head-works support the agencies including: - Supporting to train the agency staff of the partners, heading them to identify the nature of each kind of rice and market the rice to the Chinese consumers luring them to use the rice products of Vietnam known with the competitive price, the good and safe quality of the food sanitation In addition to the traditional marketing measures like leaflets, newspapers, TV, offerings of samples etc every month, it is to hold the incidents to apply viral marketing to focus on the house wives because they are very good at the oral transmittance Thus, we will organize the contest of the good meal cooking for the family and ask the family to join the cooking, process the local meals together with the rice cooking (the rice of the company) for the family meal The prize is the Vietnam tour for the whole family as an example In order to advertise the contest, we will organize to distribute the leaflets at the markets, Page 14 of 16 supermarkets etc and take camera, pictures in the contents uploaded on the internet - We can support the agencies to sometimes organize the charitable meals in the cities, far areas, helping the difficult cases and then highlight the importance when using the Vietnamese rise to head for the community - In addition, we have the policy to support the importer by making flexible payment but getting the assurance of the local and international trade bank - By the intermediate channel as the local importers, in 03 first years, we will together build up from two to five main agencies for distribution and will support 50% of the amount for the yard rental of these master agencies + Logo for the brand identification: Strategy of the investment: In the phase of 2013 – 2017, Lotus Rice will invest, widen the production scale of the existing rice processing plants to meet the development speed of the local market and build newly the paddy Page 15 of 16 storages and 02 export rice processing plants at Mekong Delta River, the biggest production area of Vietnam These will be the key projects in the long term development strategy and expanding the market share of the company VIII IDENTIFICATION OF RISK AND SOLUTIONS: Risk identification * Risk branches of Proposing measures to control/limit risks goods The branch of agricultural products always the fluctuation of the price, disaster and state policy Thus, Lotus Rice needs to get the device to observe and predict the market for the suitable orientation * Risk of management, Management board of Lotus Rice has got execution many years of experience in producing, trading the agricultural goods, especially l2 items of the rice; understanding the market Thus, it will work out the business strategies as well as the competitiveness of the other trade companies in the same field * Risk of the supply Lotus Rice company has got experience in source many years in the branch There is purchasing agency and synchronous rice processing plants at the biggest rice production area of Vietnam Thus, it will be stable for the quality and quantity * Risk of the export Lotus Rice company has surveyed the market Chinese market, set up the import partners distributing the rice at the target market of China with the full function as specified by Chinese law with the wholesome financial potential and experienced in the trade of Chinese local agricultural goods * Risk of payment The head work importing partners in China is the reliable ones hired by Lotus rice for the consultant to verify and got the long term negotiation before signature Thus, the risk of the payment is almost very low Page 16 of 16 The payment term is closed, complies with the international practices IX INCLUSION: In the global economy, the countries have ever integration of the world economy, with the orientation of the market enlargement, the right international trade strategy of Lotus rice company, I believe that the decision of expanding the business at the market with the most crowded population and also the 2nd world economy will bring the success and strong, sustainable development for Lotus rice company in the future./ References: - International business Management by Dr Larry; - Global Business Mike W Peng – second edition; - Marketing Management of Philip Kotlerand Keller.K (Pearson International Edition, 12th edition); - Transparency international reports; - World Economic Forum reports; - Wikipedia dictionary; - Web site of the foreign information of Ministry of Industry and Trade; Page 17 of 16