Nâng cao năng lực cạnh tranh hàng nông sản xuất khẩu việt nam sang thị trường trung đông tt tiếng anh

1 INTRODUCTION Rationale of the thesis The Middle East is of great importance and considered to be the potential market for Vietnam since the early 2000s This importance is not shown through diplomatic policy but also through “Vietnam- Middle East cooperative relationship promotion program in 2008- 2015 period” of the Government of Vietnam The Middle East market has high demand and purchasing level so Vietnam’s agricultural product has to compete fiercely with many competitors from countries like India, China, Pakistan, Thailand, Sri Lanka…Vietnam still have disadvantages such as: Vietnam’s agricultural product joined after other countries’ products, inconvenient geographical distance, difficult payment condition, export through intermediary, packaging, labels mainly are in English but not in Arabic, trade promotion and customer service has limitations Objective of the research To build scientific basis and propose solutions to enhance the competitive capacity of Vietnam’s agricultural product exported to the Middle East market from now till 2025 and orientation towards 2030 Object and scope of the research 3.1 Objective of the research Objective of the research is scientific basis and solutions to enhance the competitive capacity of Vietnam’s agricultural product exported to the Middle East market 3.2 Scope of the research As for spatial dimension: Study on enhance the competitive capacity of Vietnam’s agricultural product exported to 15 countries in the Middle East (except for Cyprus) As for time dimension: Analyzing, evaluating the real situation of enhancing the competitive capacity of Vietnam’s agricultural product exported to the Middle East market from 2010 to 2017; proposing solutions for enhancing the competitive capacity of Vietnam’s agricultural product exported to the Middle East market till 2025 and orientation towards 2030 As for content: Focus on analyzing the competitive competence of rice, coffee, tea and pepper of Vietnam on the Middle East market As for subject: Enhancing the competitive capacity of Vietnam’s agricultural product exported to the Middle East market is studied both at the micro and macro levels It is a combination of the subjects that are the exporters and the manager that are government agencies Research method 4.1 Data collection method 4.1.1 Secondary data collection method Secondary data of the research includes of information, opinions, theory system and data related to enhancing the competitive capacity of Vietnam’s agricultural product exported to the Middle East market 4.1.2 Primary data collection method Survey method, investigation method: PhD Student investigated 90 managers of 50 Vietnamese companies exporting to the Middle East market based on the investigation paper about approaching method to the Middle East market in recent years Interview method: is the primary collection method which the author uses with officers of Asia- Africa market Department, researchers in the Institute, universities and Agriculture association 4.2 Data analysis method 4.2.1 Meta- analysis method This is popular method used in analyzing socio- economic subjects On the base of theory analysis combined with practical observation of internal and external factors and then evaluation 4.2.2 Comparative analysis method Comparative analysis method is used to evaluate results as well as identify the location to recognize current trends of Vietnam’s agricultural product in Middle East market In the thesis, comparative analysis method is used to evaluate the fluctuation in the quantity and turnover of Vietnam’s agricultural product in the Middle East market 4.2.3 Inductive method and interpretation method Interpretation method is also used in analyzing the real situation of enhancing the competitive capacity of Vietnam’s agricultural product exported to the Middle East market on the basis of systemized theoretical basis and lessons for Vietnam as well as suitable solutions for export activities in Vietnam Chapter THEORETICAL AND PRACTICAL BASIS OF COMPETITIVE CAPACITY OF AGRICULTURAL EXPORT PRODUCT 1.1 Theoretical basis of competitive capacity and competitive capacity of agricultural export product 1.1.1 Definitions of competition and competitive capacity 1.1.1.1 Definition of competition Competition is the contest between two or more competitors in order to gain favorable conditions in a particular spatial and time dimension Specifically, competition in economy is the contest between two or more economic subjectsin a particular context to get the market by different methods or consumers’ choice of its products 3 1.1.1.2 Definition of competitive advantage and competitive strategy - Definition of competitive advantage: According to M.Porter, competitive advantage is from values which can be created by companies for consumers, those values must be greater than what companies costed There are two basic competitive advantages that companies possesses, which are low cost and differentiation To make a profit above average and achieve different goals, companies need to create and maintain sustainable competitive advantage - Definition of competitive strategy Competitive strategy is a process seeking an advantageous position to attract consumers for companies The essence of strategy localization is to choose activites which are different from enemies to bring higher values for consumers 1.1.1.3 Definition of competitive capacity Competitive capacity is the ability of companies or nations to transfer potentials into competitive advantages In other words, competitive capacity is the ability of companies or nations to enhance strengths to make use of chances, minimize weaknesses for efficiently dealing with challenges, to create and maintain sustainable competitive advantage 1.1.2 Technical and economic characteristics of Vietnamese agricultural products for export Currently Vietnam exports agricultural products mainly to traditional markets and new markets such as Middle East mainly: Rice, coffee, cashew, pepper, tea, including many nutrient-rich products Vietnamese agricultural products are very diverse in terms of economic value and can process many kinds of foods with high nutritional value However, agricultural products grow and develop depending much on natural conditions, some agricultural products are difficult to preserve fresh and perishable 1.1.3 Competitive capacity of agricultural export product 1.1.3.1 Definitions of exporting, export product and types of export - Export: is a lucrative business by selling products and services in foreign markets to earn foreign currency Export facilitates the country's participation in international labor allocation and economic development - Types of export: Nowadays, export companies apply some types of export which are: direct export, entrusted export, countertrade, temporary import and reexport, on-spot export and outward processing 1.1.3.2 Definition, classification and charateristics of agricultural export product a) Definition and classification of agricultural export product Agricultural product is the product of agriculture, which includes: crop production, husbandry and agricultural service However, in a broad meaning, agriculture includes forestry and aquaculture According to new ideology, forestry and aquaculture values are not counted in agriculture results Nowadays, agricultural product has been understood more specifically, been mainly products from land, which are made from land- means of production b) Characteristics of agricultural product Agricultural product includes essential goods for life and production in every country This is the product of agriculture, which is the result of growth and development of plants, livestock Therefore, agricultural product has characteristics of agricultural production activities: seasonality; agricultural product depends on natural conditions; qualities of agricultural product affects actively to consumers’ healths; freshness of agricultural product; diversity of agricultural product; Agricultural product is the sensitive type of commodities in international trade 1.1.3.3 Definitions of competitive capacity of agricultural export product Competitive capacity of agricultural export product is all of features, constituents and potential characteristics that these agricultural commodities can sustain and develop their position in the competitive export market in a long term In other words, the competitive capacity of agricultural export product of a country is a dominant force in the consumption and development of its agricultural commodities in the international market 1.1.4 Opinion on the constitution of competitive capacity of agricultural export product Nowwadays, there are different opinions on the constitution of competitive capacity of product, so there are opinions on the constitution of competitive capacity of agricultural export product, such as: 1.1.4.1 Approaching method on the base of M.E Porter’s strategy According to M.E.Porter, to evaluate the constitution of competitive capacity of export product, we must base on criteria: (1) Improvement in productivity; (2) Quality of product; (3) Reasonable price; (4) The decrease in price; (5) Stability and holding market share; (6) revealed comparative advantage; (7) Coefficient of local resource costs; (8) The individual cost factor for the production of a particular product 1.1.4.2 Approaching method on the base of value chain analysis The key feature of the value chain is to create a working synergy between subjects involved in the value chain including producers, processors, retailers and exporters This requires good management to coordinate well in the process of making exchange and production decision 1.1.4.3 Approaching method of Ministry of Foreign Industry and Trade The approaching method of the project “Enhancing competitive capacity of Vietnam’s agricultural export product in 2014 – 2020 period and orientation towards 2030” of Ministry of Foreign Industry and Trade in 2014 showed that competitive capacity of product in general is composed by factors: domestic goods and international goods 5 1.1.5 Criteria to evaluate competitive capacity of agricultural export product 1.1.5.1 Criteria to evaluate the export scope of agricultural product + Agricultural export turnover: the amount of money from agricultural exports of a country in a particular period of time, which is a year + Agricultural export quantity: reflects the scope of agricultural export product of a country in a particular time, which is a year 1.1.5.2 Criteria reflecting market share and growth rate of agricultural exports in market share Market share criteria reflects a country's position on a particular item in the market The larger the market share of a commodity in a country is, the stronger the competitive capacity of that commodity is, the higher the competitiveness of this commodity 1.1.5.3 Criteria to evaluate level of agricultural export product - Quality of agricultural products for export The quality of exported agricultural products is the whole characteristic of the goods that gives it the ability to satisfy certain needs A good quality agricultural product when it is able to better satisfy customer needs compared to similar products - Prices of agricultural products for export Competitive price is one of the important factors to assess the competitive competence of agricultural products for export because it is the cost that customers have to spend to buy those items However, agricultural products originated from different countries, so they often have different prices, this is due to differences in production conditions, farming, price, - Cost of producing agricultural products for export Cost competitiveness of products will depend on the effectiveness of all stages, including production, procurement, transportation, processing, warehousing, jetty, international shipping to create and bring that product to the international market Inadequacies, inefficiencies in any stage will increase costs and reduce the competitiveness of products - RCA- Revealed Competitive Advantage When the same commodity from two countries are compared, the one with higher index of RCA- Revealed Competitive Advantage is more advantageous while exporting Up till now, RCA is used as an index to measure comparative advantage - Domestic Resource Cost-DRC DRC is the index to measure competitive capacity of product in case of there is no errors in price due to interfere of policy The meaning of DRC is the actual refeflection of cost that society must pay in order to produce a commodity DRC is the total cost of domestic sources used, which is equivalent with dollar got from products that are sold 6 1.2 Factors affecting to competitive capacity of agricutural export product 1.2.1 Internal factors 1.2.1.1 Diversfication of agricultural export product Diversification of product categories, product improvement, production cost reduction compared to competitors create the competitive capacity of agricultural products on the international market The more categories of the export product has, the more likely it is to cover and exploit segments, gain more market share The more diverse the structure of agricultural export product is, the more suitable it is for customs and tastes of customers 1.2.1.2 Design, packaging, model and label of agricultural export product The packaging design is not only paid attention to images packaging, design, product instruction, content on the package but also paid attention to the appropriateness of the picture on the package, the appropriateness of models with consumers and policies of import markets Package and model of agricultural export product must ensure both the form and content Besides the form, packaging and model must provide sufficient information in accordance with the habits and culture of consumption of each country, each ethnic group, each religion, each age 1.2.1.3 Distribution channel Distribution channel can be understood as a systematic collection of elements involved in the process of transferring goods from the producer to the consumer Nowadays, agricultural products are distributed through direct and indirect channels Direct channels are export companies that sell directly through supermarkets, retail stores, traditional markets, etc on foreign markets Indirect channels are exporters selling to intermediaries, brokers, importers, dealers, distribution agents 1.2.1.4 Trade promotion Trade promotion is used to influence the target market, a powerful tool in dominating the international market The basic objective of trade promotion is to create and develop the brand image of the product on the market, to distinguish the product from other competitors’ ones, to increase the prestige and reputation , to establish trust and loyalty of customers 1.2.1.5 Customer service Along with competitiveness factors, providing customers with services that outperform competitors’ ones, providing more and better value is also a factor helping Vietnam’s agricultural product to have higher competitive capacity Listening to feedback from the Middle East consumers will help Vietnamese companies to adjust in order to meet their expectations, thereby establishing their trusts 1.2.1.6 Brand of agricultural export product Brand of agricultural export product is all of characteristics of the product such as quality, profit, model and service of the product Brand is not only the sign to recognize and distinguish this company’s product to the other’s ones but it is also a valuable posession of the company, the prestige and it is shown the trust of customers for the product 1.2.1.7 The capacity of agricultural export product to join in the global agricultural product value chain Creating value and competitive capacity of agricultural export product have stages, which are: producing stage (in agricultural production area), processing stage (in industrial production area) and export stage ( in trade area), which means that to create value and competitive capacity of agricultural export product, the most important is to connect these three stages efficiently by affliation, cooperating on the base of both sides gain benefits 1.2.2 External factors 1.2.2.1 Condition of producing factors Natural condition: including of factors such as: temperature, climate, humidity Infrastructure: the road system, transportation, biotechnology, manufacturing plants improvement, processing, irrigation works, irrigation systems Technique and producing teachnology: As we know, the productivity of crops increasing or not depends on two main factors: the quality of the soil and the breed Processing and preservation technology: In the integration context, processing process is considered to be a huge area consuming agricultural product Agricultural product plays a role as material for production and processing 1.2.2.2 Condition of domestic demand for agricultural product The domestic demand for agricultural product determines what companies produce and how, and also affect the competitive capacity of exports Because domestic demand develops, it will put pressure on companies to continually improve their products, improve quality, and decrease price Domestic demand also helps forecasting demand trends of buyers in foreign markets to create new products before competitors 1.2.2.3 Supporting and relating industry of agricultural export product According to the flying geese paradigm (FGP), it can be seen that a thriving key industry will inevitably lead to the consistent development of many supporting and related industries Besides, development of supporting and related industries helps key industry gain competitive advantage, reduce input costs, improve service quality, and support production 1.2.2.4 Competitiveness environment and institution of the industry The competitiveness level of agricultural industry in the domestic market affects the success of domestic companies on the international market The success of a domestic company attracts new entrants into the industry and make the current competitors seek out ways to improve production efficiency and increase the strength of companies Increasing competitiveness in the domestic market puts pressure on innovation, creativity, quality improvement, cost reduction and investment in upgrading advanced elements to help companies more competitive in both domestic and international markets 1.2.2.5 Role of the State and chances For markets with high potential but risky as the Middle East market, it is important to analyze and evaluate the opportunities of this market for Vietnamese agricultural exporters 1.3 Experience of countries on enhancing the competitive capacity of agricultural product exported to the Middle East market and lessons for Vietnam 1.3.1 Experiences of Thailand Improving the quality of agricultural export product: Thailand has restructured agricultural products of the Ministry of Agriculture of Thailand to improve the quality of 12 agricultural commodities through the planning of key agricultural areas Moreover, Thailand also implements the policy of "one village one product" to promote local comparative advantage For rice, Thailand has technological lines, milling, modern rice polishing equipments, ensuring the rate of broken rice from to 10% for export Development of packaging, designs and brand of agricultural export product Thailand has invested heavily in equipment, advanced technology lines, transportation conditions, modern packaging technology to meet the market requirements Thai comapnies focus on building, registering and promoting the brand For example, Thai export rice are packed in bags from to 10 kg, with trademarks of the origin, name in English, Thai, and Arabic 1.3.2 Experiences of China Improving the quality of agricultural export product: China has had clear plans, enacted policies for supporting farmers and export companies Before joining in WTO, China had already enacted policies on planning agricultural farming in provinces such as Guangxi, Guangdong Besides, China has had policy to encourage companies to ask for international certificate such as ISO 9001, S1400 on environment Trade promotion: China has promulgated policies on establishment of trade promotion program for agricultural product in Middle East countries by establishing fairs, advertisements in this market 1.3.3 Learned lessons for Vietnam - Improve the competitive capacity of agricultural product exported to the Middle East by improving the quality of agricultural product, supporting market information and trade promotion programs in the Middle East market - Trade promotion: Vietnam should place more trade offices in the Middle East countries which are in charge of market research, searching partners and promotional activities for each agricultural sectors Chapter REAL SITUATION OF THE COMPETITIVE CAPAPCITY OF VIETNAM’S AGRICULTURAL PRODUCT EXPORTED TO THE MIDDLE EAST MARKET 2.1 Socio- economic characteristics of the Middle East and real situation of Vietnam’s agricultural roduct exported to the Middle East market 2.1.1 Socio- economic characteristics of the Middle East 2.1.1.1 Social characteristics of the Middle East The Middle East is a large area, a bridge between Asia, Europe and Africa Due to the complex and diverse geography, politics, culture and religion, there are still many political and unstable changes 2.1.1.2 Cultural characterictics of the Middle East The economic, political and cultural environment in the Middle East is heavily influenced by the religious system In the Middle East, there are three main religions: Islam, Christianity and Judaism 2.1.2 Agricultural export product in the Middle East market 2.1.2.1 Demand for importing agricultural product of the Middle East market According to ITC, besides importing raw materials, industrial products, the demand for agricultural import products from the world such as: Rice, pepper, cereals, tea, cashew nuts, coffee, vegetables, fruits, and other spices is in large quantities Among them, rice, pepper, tea and coffee are the most frequently imported agricultural products 11% 10% 36% 9% 9% 3% 4% 4% Rice Sea product Computer, electronic device, spare parts Milk and dairy product Plastic material Other products 6% 4% 4% Textile Iron and steel Footwear Steel billet Pepper Table 2.1: Structure of products impoted to the Middle East in 2017 Source: Ministry of Foreign Industry and Trade The Middle East imports agricultural products mainly from Europe, America 10 and some countries such as China, India, Thailand, etc For example, rice accounts for 11% of the total import products from the Middle East, pepper accounts for 3% A prominent feature is that Turkey, Iran, Israel are big agricultural producers with many agricultural products such as vegetables, fruits, nuts that not only export to the world but also export to other countries within the Middle East 2.1.2.2 Competitors of Vietnam’s gricultural product in the Middle East market Vietnam’s key cooperators in the Middle East of agricultural product is Thailand, India, countries in North Africa, the USA These are all countries with strengths in food supply, consumer goods.They are also strong competitors with Vietnam in the field ò agricultural export product on the world Besides, there are agricultural companies of countries within the Middle East like: Turkey, Irael, Iran 2.1.2.3 Macroeconomic policy and regulations for import product of the Middle East In general, the Middle East countries not adopt restrictive policies on agricultural import products However, there are some remarks in the trade policy for agricultural import product of some Middle Eastern countries: For import procedures and documents, agricultural product imported to the UAE should have the following documents: Customs declaration attached with original bill of lading, notarized commercial invoice, packing slip, proof certificate of origin certified by the UAE Consulate, the certificate of hygiene and epidemiology required The UAE applies the GCC Common Tariff to the Common Tariff range of 0-5% 2.1.3 Generalising the real situation of Vietnam’s agricultural product exported to the Middle East market Agricultural commodities takes high proportion of total export turnover to the Middle East market, with main products: rice, pepper, cashew nuts, coffee, fruit, tea Table 2.2: Vietnam’s highest value agricultural product exported to the Middle East market in 2016 Unit: million USD Name of Turnover Main market Numb commodit er y Rice 44 Iraq, Iran, Yemen, UAE Arap Saudia, Pepper 151 UAE, Yemen, Arap Saudia, Israel, Tea 16.5 UAE, Arap Saudia, Israel, Turkey, Iran Coffee 26 UAE, Arap Saudia, Israel, Turkey, Iran Fruit and 31.9 Mainly to GCC countries, Cyprus vegetable Nguồn: Africa, West Asia, South Asia Department, Ministry of Foreign Industry and Trade 11 In recent years, Vietnam's main agricultural export product to the Middle East market have fluctuated not only in export product but also in the market Vietnam's highest value export products include rice, pepper, cashew nuts, vegetables, coffee and tea The largest and most stable import markets in the Middle East are mainly the six GCC countries and other countries: Turkey, Lebanon 2.1.4 Characteritics of Vietnamese agricultural companies exported to the Middle East market Vietnamese agricultural exporters exporting to the Middle East market are mainly small and medium-sized enterprises, while this market is still quite remote for Vietnam, so the time for agricultural product circulation will be longer , contains many risks related to the quality of some agricultural products going down This may reduce the competitiveness of Vietnamese agricultural exports, and create a fear for businesses when they intend to penetrate this market Companies followed agreement to pay through irrevocable letter of credit at banks of partners However, Vietnamese agricultural export companies to the Middle East market have had difficulties in payment, especially late payment 2.2 Real situation of the competitive capacity of Vietnam’s agricultural commodities exported to the Middle East market 2.2.1 Analyzing the current situation of competitiveness of some agricultural products for export to the Middle East market 2.2.1.1 The reality of competitiveness of Vietnamese rice exports to the Middle East market - Turnover and the quantity of Vietnamese rice exported to the Middle East market: In recent years, Vietnam's rice export volume has increased sharply So far Vietnam has become the second largest rice exporter in the world, after Thailand In the Middle East region, in addition to Thailand, there are other countries that are able to compete with Vietnam: India, Pakistan and China - Market share of export rice: The increase in export rice production makes Vietnam's rice market share in the Middle East market also increase Compared to some highly competitive countries such as Thailand, Pakistan and India, the speed of expanding Vietnam's rice market share in the Middle East market increased faster By 2017, Pakistan's rice export market share accounts for 39%, India accounts for 32% and Thailand accounts for about 20% - Compared with competitors in the Middle East market such as India, Pakistan, Thailand, China about the competitiveness and position of exported rice products of countries in the Middle East market is possible appear in the following table: 12 Table 2.7: RCA coefficient of some countries exporting rice to the Middle East market in the period of 2012 - 2017 Year 2012 2013 2014 2015 2016 2017 India 11,18 11,25 11,33 12.56 12,95 12,40 Pakistan 35,14 35,26 35,91 36,54 38,79 37,39 Thailand 4,05 4,16 4,40 4,45 4,25 7,44 Vietnam 0,62 0,78 0,99 0,924 1,22 3,12 China 0,0016 0,002 0,0025 0,003 0,007 0,05 Campuchia 0 0,0015 0,0021 0,004 0,022 Source: PhD Student analyzes and generalizes from Trademap, General Statistics Office of Vietnam Followed by India's RCA from 11.18 in 2012 to 12.40 2017 RCA Thai export rice to the Middle East is also very high, from 4.05 in 2012 to 7.44 in 2017 Although there is no competition for rice with Pakistan, India or Thailand in the Central market East but Vietnam has a much higher RCA index than other competitors such as China, Cambodia, 2.2.1.2 Current situation of competitiveness of Vietnamese coffee exports to the Middle East market The market share of Vietnamese coffee in the world market is increasingly affirmed In the past, Vietnam's coffee did not have a significant position in the Middle East market, but now Vietnam has become a country with a large market share of exported coffee in this market Comparing RCA coefficient of Vietnamese coffee products with some other competitors in the Middle East in the period of 2012 - 2017, we see that Vietnam's export coffee has a relatively high competitiveness compared to competitors in the this market Table 2.9: RCA coefficient of some coffee exporting countries to the Middle East market in the period of 2012 - 2017 Year 2012 2013 2014 2015 2016 2017 Brazil 18,74 19,92 21,9 21,68 19,14 20,05 Colombia 17,97 18,4 18,25 31,28 22,66 19,65 Indonesia 6,64 6,58 6,51 7,19 7,62 8,22 Vietnam 16,61 6,69 7,61 4,62 7,73 3,98 Honduras 3,17 1,41 1,54 1,65 1,32 2,40 Source: PhD Student analyzes and generalizes from Trademap, General Statistics Office of Vietnam 13 South American countries are often the main competitors of Vietnam in the Middle East market such as Brazil, Colombia, RCA index of coffee products of these countries in the Middle East market is higher than with other countries like Vietnam or Indonesia The RCA levels of these South American countries are all on average 20, much higher than Vietnam 2.2.1.3 Actual competitiveness of tea exports of Vietnam to the Middle East market Among Vietnam's tea exports to the Middle East market, mainly green tea However, tea exports tend to fall sharply in the period of 2012-2017 Specifically in 2012, the export turnover of tea to the Middle East market reached more than 20.45 million USD and only reached 7.7 million USD in 2016 According to the author's calculations based on Trademap data, RCA of Vietnam in the period 2012 - 2017 has an average of 2.1 This is lower than 2.5 This proves that the competitive advantage of Vietnamese export tea in the Middle East market is quite low Compared with the biggest competitors like Srilanka, Keynia, Paskistan, UAE, India, RCA tea products of Vietnam are much lower As for the direct competitors of Vietnam such as China, Indonesia, Vietnam has a higher competitive advantage in the Middle East market 2.2.1.4 Actual competitiveness of pepper exports to Vietnam to the Middle East market Vietnam pepper has been exported to 97 countries and territories and has always led the world in exports in recent years For the Middle East market in the period of 2012 - 2017, Vietnam exported pepper to this market, increasing from USD 138.609 million in 2012 to USD 154,732 million in 2017 According to the author's calculations based on Trademap data and the General Statistics Office of Vietnam, the RCA export pepper of Vietnam reached the highest in the period 2012 - 2017 is 2016 with 87.2 RCA index of Vietnam is much higher than the RCA index of main competitors in the Middle East market such as India, China, Indonesia, UAE Although the Middle East market evaluates pepper Vietnam is very fragrant and quite tasty, but Vietnamese pepper still mainly exports black pepper, so the added value is not high 2.2.2 The reality of the quality of Vietnamese agricultural products exported to the Middle East market Although Vietnamese agricultural quality standards meet the basic requirements of Middle Eastern countries such as cashew nuts, pepper, peanuts, coffee, tea, honey, processed spices , rice and rice products, crispy flour, cereal flour, brown rice flour, lotus seed, fresh-dried fruit, but now the proportion of deep processing of Vietnamese agricultural products in general is only reached 2530% of total agricultural export output Many agricultural products are exported only in the form of preliminary processing or raw processing, so the selling price is not high and cannot compete with the products of competitors 14 On assessing the quality of Vietnamese agricultural products in conformity with Halal standards, it is assessed that many Vietnamese agricultural products conform to Halal standards and Muslim tastes "are evaluated at a low level ( 2.34 / 5.0) points There are 60/90 opinions disagree with the above statement 2.2.3 Current situation of prices of agricultural products exported to the Middle East market of Vietnam In general, the product price of each Vietnamese agricultural product is generally quite competitive in the Middle East market Each agricultural product is often divided into different types For example, rice, Middle East mainly imports rice types such as Basmati rice, long grain white rice, dried coconut rice, etc Meanwhile, Vietnam mainly exports only long grain white rice, rice Dried coconut into this market Basmati rice is mainly supplied by India and Pakistan The types of rice exported to the Middle East must compete quite fiercely with the rice varieties of Thailand, China, India 2.2.4 Current situation of production costs of agricultural products for export In countries exporting agricultural products to the Middle East market, Vietnam is still a country with relatively cheap labor costs compared to its competitors Because of the low labor advantage, the price of Vietnamese agricultural products has moderate competition, although the price of some agricultural products is quite high in the Middle East market but still accepted by customers As for the judgment "Prices of agricultural products are generally lower than those of competitors such as Thailand, India, Pakistan and China in the Middle East market" with an average score of 3.21 This is the average score This shows that the price of Vietnamese agricultural products is lower than its competitors such as Thailand, India, Pakistan and China in the Middle East market in recent years 2.3 Real situation of factors affecting to the competitive capacity of Vietnam’s agricultural product exported to the Middle East market 2.3.1 Real situation of internal factors 2.3.1.1 Real situation of diversification of agricultural export product Vietnam’s agricultural product has been more and more favored in the Middle East agricultural product market because of improving quality, diversifying categories, models and ensuring the stable supply Additionally, diversification exprt and import policy is not only about commodities categories but also promoting for deep processing products such as: rice Nowadays, Vietnam has not only exported broken rice but also exported long grain white rice, dried coconut to the Middle East market 2.3.1.2 Real situation of design, packaging, model and trademark of agricultural 15 export product The brands of rice, coconut milk, tea, Trung Nguyen coffee have continuously offered in the Middle East market with many different brands However, designs and models of Vietnam’s agricultural products are still monotonous, not diverse, so competitive capacity has been at medium level In many Middle Eastern markets such as the GCC, competition of agricultural products among countries is largely based on model, design because the price and quality of agricultural products are relatively similar 2.3.1.3 Real situation of distribution channel The Middle East's current agricultural importers are mainly China, some South Asian countries, the United States, India, etc While Vietnam has only exported agricultural product to the Middle East over 15 years and still have had many difficulties in terms of geographical distance, culture, religion, customs, habits, language so most of Vietnam's agricultural products still have to export through intermediaries such as India, Malaysia, Pakistan, Turkey These countries have established a distribution system of agricultural product in the Middle East since early 2.3.1.4 Real situation of trade promotion Vietnam has opened six trade offices in the Middle East: Iran, Kuwait, Israel, Turkey, United Arab Emirates (UAE), Saudi Arabia, and Iraq (temporarily closed) Basically, the national trade promotion program has had positive impacts on the export promotion in general and the export of agricultural products promotion in particular, contributed to raising the production capacity and competitiveness of companies 2.3.1.5 Real situation of customer service Due to geographic distance and the fact that there are not enough conditions to directly distribute all of Vietnam's agricultural products in the Middle East, customer service activities of Vietnamese companies is still limited New commercial service activities are mainly carried out with intermediary partners but not many direct customer service activities with Middle East consumers so there is not a favorable condition to understand more about habits, customs, business practices, consumption habits of the Middle East people 2.3.1.6 Real situation of agricultural export product Major agricultural products exported to Middle East in the past years include: Long grain white rice, dried coconut, Trung Nguyen coffee, Tan Cuong tea, O Long tea, Phu Quoc pepper , Binh Phuoc Cashew, Dong Giao Pineapple, Ninh Binh sweet corn, Lao Cai Banana, Java Rambutan, Hoa Loc Mango, Tien Lang Cucumber These products have entered more deeply into the Middle East market, especially in the GCC countries and Turkey 2.3.1.7 The capacity of Vietnam’s agricultural export product to join in global 16 agricultural product value chain In recent years, the State has always paid attention, guidance and support to the agriculture industry with the guideline of determination to change the mind, open the market and accept the competition, to enhance the management skill, production and business management Besides, there is support from different levels of government to urge farmers to cooperate with companies to build concentrated and large-scale raw material areas in association with processing and consumption of agricultural products to be able to compete in the global value chain 2.3.2 Real situation of external factors 2.3.2.1 Real situation of production factors Seed: Localities have actively innovated the structure of rice seeds in the direction of increasing the proportion of high quality rice seeds in order to meet the export demand better Provinces in the Mekong Delta have focused on increasing the area of high-quality rice for export such as An Giang, Tien Giang, etc Red River Delta provinces have initially formed special rice production areas such as Tam Thom, Nam Dinh, Hung Yen However, the application and dissemination of high quality rice is not really widespread Mechanization in agriculture: It can be seen that from the stage of tillage to seeding, harvesting, preserving and processing have the participation of modern machines repecing for physical labor However, mechanization is mainly applied in land preparation and harvesting, while the rest people still 2.3.2.2 Real situation of domestic demand for agricultural product In recent years, the demand for agricultural product in general has increased Total retail sales of agricultural commodities increase annually However, companies mainly focus on agricultural exports, accounting for 62%, while domestic consumption accounts for only 38% 2.3.2.3 Real situation of supporting and relating sector To enhance the competitive capacity of agricultural exports, the role of suppoting sector is truly important to enhance added value of agricultural exports These sectors are: producing technology, harvest technology and processing technology These supporting industrial sectors helps to diminish the damage after harvest agricultural products 2.3.2.4 The real situation of the competitive environment and the institution of the sector Currently, Vietnam's agricultural products have to compete fairly with ones of countries such as Thailand, India, China, Pakistan, Sri Lanka, Brazil in the Middle East market Moreover, competitors are also coming from some countries in the Middle East such as Isael, Turkey Thus, the Government of Vietnam has identified the importance of the research of the Middle East market by the establishment of trade offices in many countries in the region 2.3.2.5 The real situation of the State’s role and chances 17 The role of the Goverment of Vietnam: In the recent time, in order to support for enhancing competitive capacity of Vietnam’s agricultural product exported to international market in general and the Middle East market in particular, the Government has developed policies to positively affect the production and export of agricultural goods Opportunities: Most of the Middle East countries are now members of the World Trade Organization and in 2007, Vietnam joined this organization Thus, Vietnam may be more favorable in exporting agricultural products to these countries because of MFN (Most Favor Nation) and National Treatment 2.4 Evaluation of the real situation of the competitive capacity of Vietnam’s agricultural product exported to the Middle East market 2.4.1 Evaluation of the competitive capacity of agricultural export product based on SWOT Table 2.17: Evaluation of the competitive capacity of Vietnam’s agricultural product exported to the Middle East by SWOT Strengths - RCA index of many relatively high agricultural products such as coffee and pepper on the Middle East market While the DRC of many agricultural products is still smaller than - Vietnam's agricultural products are increasingly expanded and penetrated deeper into the Middle East market Weaknesses - Export turnover and output are still low and not really stable - Prices of some agricultural products are not really competitive in the Middle East market - RCA of rice and tea in the Middle East market is still low - Mainly exported through third countries - Packaging, labels are still mainly English, not many brands use Arabic Challenges - The political and social situation of some countries in the Middle East is still unstable - Great influence of religions such as Islam, Judaism, Christianity on the demand for agricultural products Chances - Middle East market demand is increasing on imported agricultural products -Agricultural products are commodities with poor comparative advantages of the Middle East - Middle East agricultural products import policy is not too strict Source: PhD Student generalizes 2.4.2 Achievements Firstly, the turnover and export volume of Vietnamese agricultural products to 18 the Middle East market generally have a certain increase Secondly, the quality of Vietnam's export agricultural products has been increasingly enhanced and met the consumption demand of the Middle East market Third, a number of Vietnam's agricultural exports have gradually established and affirmed a certain position in the Middle East market 2.4.3 Some limitations and causes 2.4.3.1 Some limitations The turnover and export volume of agricultural products to the Middle East market in recent years has not been really stable and commensurate with the potential of each party The ability to meet the standards, import regulations of the Middle East market of Vietnamese agricultural products is still limited 2.4.3.2 The cause of the limitations a) Subjective causes - Causes from the state agencies: The role of the State in orientation and creating a favorable environment to improve the competitiveness of agricultural products exported to Vietnam in the Middle East market is still limited; The quality of Vietnamese agricultural products despite meeting many world standards but with the Middle East market - The reason is from the enterprise exporting agricultural products to Trung Do Enterprises have not invested much in technologies, especially agricultural product processing technology; Export enterprises still mainly export to traditional markets of Vietnam such as the US, EU, Japan, China, but have not really paid much attention to the Middle East market - Causes of agricultural product associations: not much support for agricultural export enterprises in providing Middle East market information, import standards, Halal standards, and Islamic culture for businesses, farmer households to produce and trade in agricultural products b) Objective causes The Middle East region still has many uncertainties in politics, war, nuclear issues, religious conflicts and geographical distance quite far from Vietnam The difference in culture and information on the Middle East market has made it less difficult for Vietnamese agricultural products exporters to enter the Middle East market in determining market demand The custom of purchasing goods, payment habits, criteria for selecting importers of Middle East countries is different from other markets Chapter SOLUTIONS FOR ENHANCING THE COMPETITIVENESS CAPACITY OF 19 VIETNAM’S AGRICULTURAL PRODUCT EXPORTED TO THE MIDDLE EAST FROM NOW TILL 2025 AND ORIENTATION TOWARDS 2030 3.1 Domestic and international context affect to the competitive capacity of Vietnam’s agricultural product exported to the Middle East market 3.1.1 International context Nowadays, the Middle East is the region on the world which is particularly concerned because this area has a geopolitical and economic position which is very important This is a very sensitive area, the largest oil supplier in the world International contexts have important influence to exports and trade policy development to boost Vietnam's agricultural exports to this market 3.1.2 Domestic context Industrial Revolution 4.0 is a precious opportunity for Vietnam to embrace new technologies to accelerate the process of industrialization and modernization in order to narrow the development gap with other developed economies in the world generally and promote the development of Vietnamese agriculture particularly The application of 4.0 technology in agricultural production has become a trend and been effective in terms of product quality, cost and risk of damage reduction 3.2 Opinions and orientation to enhance the competitive capacity of Vietnam’s agricultural product exported to the Middle East market 3.2.1 Opinions on enhancing the competitive capacity of Vietnam’s agricultural product exported to the Middle East market - Improving the competitiveness of agricultural products exported to the Middle East market must ensure consistency, with a suitable roadmap according to the domestic and international context on the basis of competitiveness of core agricultural products - The high competitiveness for agricultural products exported to the Middle East market must gradually contribute to the export of Vietnamese agricultural products to the global value chain of agricultural products 3.2.2 Orientations to enhance the competitive capacity of Vietnam’s agricultural product exported to the Middle East market 3.2.2.1 General orientaiton Based on the Resolution No 2471/QD-TTg of the Prime Minister on 2011/28/12 on Strategy on exports and imports in 2011-2020 period, orientation towards 2030 as well as general goal of the agriculture in 2016- 2020 period, the average growth rate in 2016- 2020 period reaches 2.5- 3%; average production value in years reaches 3.5-4% Exports of forestry and aquaculture will be about 39- 40 billion USD in 2020 3.2.2.2 Specific orientation a) Regarding the production and processing targets of some agricultural 20 products Rice processing: Investing in processing capacity to reach the aim as 25 million ton each year, therefore 60% of total quantity of grain can be processed Coffee processing: By economic cooperation between companies and farmers, the amount of processed coffee in industrial scale increases from 40% in 2015 to 70% in 2025 Pepper processing: By investing in capacity expansion and new industries for processing white pepper, the quantity of pepper products increases from 22% in 2025 to 30% in 2030 Tea processing: Transfering product structure in the direction of 55% of black tea and 45% of green tea; by 2025, price of Vietnam’s export tea is similar to the average global price b) Export target of agricultural products Vietnam’s orientation is the growth rate of agricultural exports reaches 22% to 25% each year, increasing the institution propotion of deep producing products in agricultural exports, which reaches 40 to 60% of the total agricultural exports turnover c) Export target of Vietnamese agricultural products to the Middle East market To the UAE market: By 2025, Vietnam’s agricultural export turnover to the UAE will have average growth rate which is 25% per year Main agricultural export commodities are: pepper, seafood, furniture, tea, rice, fruit This is the most essential market of Vietnam in the Middle East To Turkey: By 2025, Vietnam’s agricultural export turnover to Turkey will reach 1.505 million USD with the average growth rate as 22% each year Main agricultural export commodities are: pepper, tea, rubber, coffee To Arab Saudia: By 2025, Vietnam’s agricultural export turnover to Arab Saudia will be above 800 million USD with the average groth rate as 22% each year Main agricultural export commodities are: seafood, cashew, pepper, tea d) Objectives to improve the competitiveness of agricultural products exported to Vietnam to the Middle East market Eenhancing competitive capacity of agricultural product exported to the Middle East market is the important, continuous and long – term mission Vietnam needs to emphasize the importance through detailed strategy, plan, program carried out by the State management agencies, agricultural exports companies, associations and households Vietnam both enhances competitive capacity of agricultural export product that Vietnam has advantages and prepares conditions to enter rising value stages inglobal value chain of agricultural product Besides focusing on enhancing competitive capacity of Vietnam’s agricultural 21 products that has already been sold in the Middle East market, it is needed to orientation for creating competitive capcity of new agricultural products in this market 3.3 Some solutions and recommendations to improve competitiveness of agricultural products for export to Vietnam Middle East market until 2025 and orientation to 2030 3.3.1 Solutions for the State 3.3.1.1 Creating a competitive environment for the competitive capacity of Vietnam's agricultural product exported to the Middle East market Negotiating and concluding trade agreements between Vietnam and the Middle East Providing sufficient information to assist comapnies in developing export markets for agricultural products exported to the Middle East 3.3.1.2 Improving the quality of Vietnam’s agricultural product exported to the Middle East market Making use of policy that WTO does not allow to support strongly research, transfer, apply science and technology in processing, producing to increase productivity, value of agricultural product, improving the competitive capacity of Vietnam’s agricultural productoôn the world It is necessary to have a synchronous system, from producing, gathering, processing and consuming to improve the quality of Vietnam’s agricultural product exported to the Middle East market 3.3.1.3 Completing programs on trade promotion for agricultural product exported to the Middle East market Besides proactively entering traditional markets such as The USA, EU and China, Vietnam also needs to have other new export markets Specifically, with the Middle East market, it is needed for policy to promote exports to this country 3.3.1.4 Solutions for brand development of agricultural export product Vietnam needs to have a general program on buiding and developing brand of key agricultural product exported to the Middle East, which is also the orientation for localities, companies to identify commodities, markets to focus on building brand Vietnam needs to have a synchronous legal system in this term, especially intellectual property guidance, trade-mark, geographical guidance on agricultural export product of Vietnam 3.3.1.5 Enhancing the role of the State in the joint of agricultural product value chain To join in the agricultural product value chain, the State needs to have policies to unite farrmers and companies for sustainability, and breaking contract preventation To decrease risks, it is necessary to information transparency in two ways which are through contract for specific products and customers diversity 22 3.3.1.6 Completing policy on key markets in the Middle East The Dubai market in particular and UAE in general have great demand of many kinds of goods that Vietnam can supply and have strengths such as: agricultural products, electronics, furniture, textiles, footwear, seafood, milk, fruit and vegetables The market are not too strict in terms of quality, orders are not huge which is suitable for the capacity of Vietnamese comapnies Urging Trade Office to find more suitable customers to introduce to companies of both countries, specifically to find more Turkish customers who have the need of importing commodities that Vietnam have strengths such as: pepper, copra, coffee, native rubber to introduce to Vietnamese companies Enhancing delegation exchanges as well as urging companies to join in fairs to gather market information for export promotion with commodities that Vietnam have strengthssuch as: pepper, rice, tea, cashew, fruit and vegetables, coffee, native rubber 3.3.1.7 Other solutions Simplifying the legal documents, standards, national technological standards built for efficient legal corridor of each commodity Policies on human resources development for processing industry includes policies for attraction, preference for labor sources in agricultural product’s term such as: training establishment, connection between training agencies and training companies, re-training establishment, training attached to on – spot labor use 3.3.2 Some petitions for Vietnamese agricultural product exporters 3.3.2.1 Improving the quality of agricultural export product To compete in the international market, increasing productivity and improving product quality should be focused Besides processing stage completion and improving product quality, companies must focus on preservation stage Due to the long distance between Vietnam and Middle East, it is necessary for companies to improve preservation stage 3.3.2.2 Market development and trade promotion Arabs respect individual relationships, they prefer long – term business relationship with a specific agreement, so companies want to business in this market, they must spend time and have relationships to gain trust If companies onlys care profits, it will not be possible in Middle East market 3.3.2.3 Enhance the brand of agricultural products for export Companies needs to cooperate actively with each other to build national agricultural brand Vietnamese agricultural export product needs to actively join in global value chain of agricultural product Companies needs strategies and specific plans to join in and become a member of global agricultural supply chain which was founded by leading agricultural production corporations 3.3.2.4 Improve the quality of human resources ... Vietnam’s agricultural product exported to the Middle East market on the basis of systemized theoretical basis and lessons for Vietnam as well as suitable solutions for export activities in Vietnam... more and better value is also a factor helping Vietnam’s agricultural product to have higher competitive capacity Listening to feedback from the Middle East consumers will help Vietnamese companies... competitiveness of Vietnamese rice exports to the Middle East market - Turnover and the quantity of Vietnamese rice exported to the Middle East market: In recent years, Vietnam's rice export volume