SITUATION AND EVALUATION OF EXPORT ACTIVITIES AT BAC GIANG TOBACCO AND FOOD JOINT STOCK COMPANY FROM 2009 TO 2013

FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS MAJOR: EXTERNAL ECONOMICS -*** REPORT OF MID-TERM INTERNSHIP SITUATION AND EVALUATION OF EXPORT ACTIVITIES AT BAC GIANG TOBACCO AND FOOD JOINT STOCK COMPANY FROM 2009 TO 2013 Full name: Nguyễn Thị Mai Dung Student ID: 1117150094 Class: A27 High Quality Programm Intake: 50 Instructor: MSc Phạm Thanh Hà Hanoi, July 2014 List of Tables, Figures and Abbreviations Table 1: Products and Prices Table 2: Export turnover by Goods from 2009-2013 Figure 1: Batfoco’s Organizational Structure Figure 2: Manufacture and Export Procedure Figure 3: Manufacture processing Batfoco : Bắc Giang Tobacco and Food Joint Stock Company Table of Content CHAPTER I: OVERVIEW OF THE COMPANY .2 1.Company’s Information 2.Scope of business 3.Production Capacity and Products 4.Brief History 5.The development in the recent periods 6.Organizational structure of the company CHAPTER II: SITUATION AND EVALUATION OF COMPANY’S EXPORT ACTIVITIES FROM 2009-2013 1.The situation of export activities over the past years (2009-2013) 1.1 Exporting Method 1.2 Products .6 1.3.Markets and Market characteristics 1.4.Labors and Technology & Equipment 1.5.Procedure of manufacture and export 1.6.Export turnovers .11 2.Evaluation of Batfoco’s Export Activities .12 2.1 Advantages and Achievements 12 2.2 Existing problems and reasons 13 CHAPTER III: DEVELOPMENT PLAN AND SOME SUGGESTIONS FOR IMPROVEMENT IN COMPANY’S EXPORT ACTIVITIES 14 1.Development plan of Batfoco in the next three years .14 2.Suggestions for improvement 14 CONCLUSION: 18 REFERENCE .19 INTRODUCTION Currently, in the field of export, agriculture products turnover tends to increase at high speed and improve position in Vietnamese economy Vietnamese Agriculture products are known and preferred in foreign markets Therefore, it create high reputation for Vietnamese agriculture products With many incentives policies of Government, enterprises, firms and companies are encouraged to business in the field of producing, processing and exporting agriculture food products Bac Giang Tobacco and Food Joint Stock Company is a manufacturing enterprise located in Bac Giang province, in addition to producing products for domestic consumer demand, company does export duty aimed at creating jobs for local workers, increasing foreign exchange earner, and bringing considerable profits for the company The company has been growing and gained a foothold in the domestic market as well as the world The canned vegetable products of the company are very popular in international markets According to the schedule of Foreign Trade University, I spent a five-week internship at Bac Giang Tobacco and Food Joint Stock Company, which majors in producing, processing and exporting canned agriculture products Under the instruction of my guidance teacher, Ms Phạm Thanh Hà, as well as the help of the company’s staff, I have been given a great opportunity to apply my academic knowledge to practical problems and compare with the theories I have learned at the university Based on my background knowledge and the experience I gained during my internship, I decide to choose the topic for this report as “Situation and Evaluation of Export activities at Bắc Giang Tobacco and Food Joint Stock Company form 2009-2013” Due to my limitation of knowledge, skills and experience, mistakes and faults are inevitable, I welcome all comments, advices and suggestions that help me improve the quality of the report Finally, I would like to express my gratitude to my instructors and Batfoco staff for helping me complete my mid-course internship Hanoi, July 2014 CHAPTER I: OVERVIEW OF THE COMPANY Company’s Information - Company’s name: BAC GIANG TOBACCO AND FOOD JOINT STOCK COMPANY - Abbreviation: BATFOCO - Head Office: 03 Ly Thai To street - Tran Phu – Bac Giang City - Bac Giang - Vietnam - Phone: 0084 240 3854529/3823646/3823160 Fax: 0084 240 3,853,907 - Email: batfoco4@gmail.com - Website: http://www.batfoco.com Scope of business - Investing in planning materials and producing agriculture products for exporting - Wholesaling and retailing food products - Trading in import and export services Production Capacity and Products - Production capacity: 7000 tons/year - Main products: • Processed vegetables and fruits • Chili sauce and other sauces • Raw tobacco and rolling tobacco Brief History Bac Giang Tobacco and Food Joint Stock Company (Batfoco), formerly known as “Ha Bac Tobacco Company”, established in May 06/1986 with main business: Manufacturing and trading of raw tobacco and cigarettes 1991, Batfoco was merged into Ha Bac Commercial Union the renamed “Ha Bac Tobacco manufacturing and trading factory” 4/1997 Batfoco was renamed into “Ha Bac Tobacco trading factory” 12/2002, Batfoco was converted in to Joint Stock Company with the name as we see nowadays The main business of the company from the beginning is investing in planting and purchasing raw tobacco In 2002, company expanded its business to produce a new range of products: processing agriculture products for exporting such as: pickled baby cucumbers, pickled tomatoes, tomatoes in tomato juice, canned pineapple, syrup litchi, chili paste, sauce, chili garlic sauce, sweet and sour sauce About the scale of operation, at first, the company only produced a little amount and types for exporting into foreign markets Now the company's production capacity reached 7,000 tons of various products per annual As a result, the revenue and export turnover are constantly increasing To recognize the achievements of the company, Government, Party and Organizations, gave many honors to the company: 2003, jarred baby cucumber, jarred cherry tomato and chili sauce were awarded gold medals at the Fair “Food Safety” 2004, Batfoco was chosen as the prestigious exporter by Ministry of Commerce and Vietnam Chamber of Commerce and Industry 2005, Batfoco was certificated “Brand and Product Label”, awarded gold medal for “Reputable brand” 2006, Batfoco was awarded certificates of merit and gold medal for consecutive years (2004-2006) prestigious exporter by Ministry of Commerce and Prime Minister … These are meaningful rewards, which are not only the recognition of the nonstop effort of the whole members of company but also the encouragement for the company to develop stably in future The development in the recent periods Over the past few years, agriculture products and food products of the company always remain the high reputation because of high quality and stability Despite the high competitions from other companies inside and outside the country, company’s products are still favored in the foreign markets such as : Russia, Japan, Taiwan, etc… and gain consumers’ belief With the target that reputation is most important and to meet consumers’ requirements, since 2003 the company has applied the quality management system ISO 9001-2008 Production and export scale has constantly developed and expanded stably and sustainably Organizational structure of the company In general, the organizational structure of the company is suitable for the scale and the business situation of the company General shareholders’ meeting Board of Management Supervisory Committee Technical Vice chairman Representative Office Material Station Administrative office ISO department Sale Vice Chairman General Director Tobacco manufacturing factory Financial and Accounting Department Agriculture products manufacturing factory Business planning office Project Department Sale agency Technology Division Figure 1: Batfoco’s Organizational Structure - General shareholders’ meeting: the highest governing department of the company - Supervisory Committee: the organization that supervise all the company’s business and management activities - General Director: the member who is responsible for general management of the business activities of the company activities Sale vice chairman: responsible for planning and leading business - Technical vice chairman: responsible for technical in production of the branch factories - Other departments: • Administrative office: managing employees, controlling wages, labor safety and insurance • Financial and Accounting Department: Accounting in all company’s business activities Controlling revenues and expenses • Business planning office: making business plans, delivering tasks to departments, business planning for next periods, reviewing the situation in business of the company • Project Department: Studying and building all the company’s projects, implementing projects approved by General shareholders’ meeting, controlling labors, technical, materials, finance,… in implementing projects • Representative office: Transacting, displaying and introducing products, expanding market, solving problems and doing tasks assigned by General Director • Material Station: Collecting, storing materials, then providing enough materials for production • Tobacco manufacturing factory: producing raw tobacco, cigarettes for exporting • Agriculture products manufacturing factory: producing agriculture products such as: canned cucumber, canned tomato, chili sauce, etc… • Sale agency: promoting and introducing new products, guiding customers • ISO department: working with consulting company about building and controlling quality management system 9001-2000, solving problems relating to building, maintaining and improving quality system on behalf of the company • Technology division: keeping secret about technology and formulas, directly guiding, supervising, managing technology process, controlling producing performance and making sure that production complies with quality management system 6 CHAPTER II: SITUATION AND EVALUATION OF COMPANY’S EXPORT ACTIVITIES FROM 2009-2013 The situation of export activities over the past years (2009-2013) Bac Giang Tobacco and Food Joint Stock Company (Batfoco), formerly known as Ha Bac Tobacco Company, has gone through many difficulties At first, the main business of the company was producing raw tobacco and cigarettes for domestic markets and foreign markets The company’s brand is known in foreign markets such as Russia, Czech Republic, Slovakia,… But with the instability of foreign markets, especially the tobacco import restriction policy applied in Europe, the company faced many difficulties, export turnover constantly decreased In that situation, Batfoco found a new way, expanded business into the field of producing canned agriculture products for exporting 1.1 Exporting Method The exporting method of Batfoco is direct exporting As the company works independently, it completes all the process itself from collecting, storing and processing materials to finding markets and signing exporting contract 1.2 Products - Canned agriculture products: canned baby cucumber and canned tomato - Others: chili paste, chili garlic sauce and sweet and sour sauce 7 Products Prices Canned 6$/1 carton baby cucumber Canned tomato 5,5$/1 carton Chili paste 4$/1 carton Chili garlic sauce 4,5$/1 carton Sweet and sour sauce 4,5$/1 carton Table 1: Products and Prices Source: Financial and Accounting Department 1.3 Markets and Market characteristics As we can see, finding and expanding markets is very important in export activities In the case of Batfoco, brand name of the company was known before in some foreign market such as Russia and Slovakia by producing and exporting raw tobacco and cigarettes into these markets In addition, thanks to the development of e-commerce, finding customers and markets is much easier The company has had the trading relationship with many foreign markets The main markets are: EuropeAmerica, Pacific Asia and East Europe with some countries like: Russia, Canada, Czech Republic, Japan, Taiwan, etc… So the question is why the company chooses these markets to business in These countries are also the potential market with other companies, firms or enterprises doing business in export activities There are some common characteristics of these markets which are very suitable and potential for importing agriculture products 8 First, these countries are not in tropical climate which is necessary to grow agriculture plants As a result, they can’t have enough vegetables and other agriculture products to meet the demand inside countries They have to find other sources of agriculture food to import to serve their population’s demand Second, they are also the countries with very cold winter Some kind of plants can’t grow up in such a hazard weather Therefore, they are in lack of vegetables in winter And canned vegetables can be preserved in a long time from summer and then used in winter And last but not least, because of some characteristics like weather, land or seeds, agriculture is not developed in these countries They are almost industrial ones 1.4 Labors and Technology & Equipment First thing we mention here is about labor Out of 200 employees, 35% has graduate and postgraduate degrees The rest are workers All employees are educated to fulfill the requirements to produce food products whose quality is tested strictly Second is Technology & Equipment The most important feature of agriculture products is their seasonal aspect So harvest and preservation after harvest time must be most taken care of Right from the stage of harvest, company uses freezers, dryers and mini refrigerators to deliver materials from fields to the factories Most of equipment are imported from foreign countries such as South Korea, USA or Japan… The most important thing is complying the quality management system As an enterprise specializing in producing, processing and exporting agriculture products, company recognizes that consumers’ health are most important Company applies modern techniques in planting materials, processing, packaging, in order to improve the quality of products to meet the increasingly diverse needs of the market 1.5 Procedure of manufacture and export There are steps that Batfoco needs to complete for their products to be presented in foreign markets They are illustrated as below Figure 2: Manufacture and Export Procedure We will go in detail with each step - Step 1: Planning, Customer transaction, Signing Contracts Before going to sign a contract, company must plan carefully, arrange labors, employees or materials These tasks are implemented by business planning office Then representative office and sale agency are responsible for finding, contacting, negotiating with customers and doing other customer transaction procedure After gaining the agreement by both parties, company and customers go to sign an export contract - Step 2: Investing, Preparing material areas One thing that firms specializing in producing and exporting agriculture products must take into consideration is material Firms must make sure that they have enough material provided But there is a real situation that export companies always meet That is lack of material Common reason is that farmers usually sell to dealers at a higher price So the solution is that Batfoco directly invests for farmers to grow material, make material areas so that company can ensure enough material Some material areas of company are Lạng Giang, Tân Yên, Hà Nam and Hưng Yên These areas all have nice weather and good land which are suitable to grow material that company need like cucumbers, chili and tomatoes - Step 3: Purchasing other materials 10 Beside main material like vegetables and fruits, company need other things to have a complete product such as packaging, labels, bottles and additives These things can be purchased inside country or imported from foreign countries, especially China - Step 4: Harvesting Maturity time of baby cucumbers and tomatoes is about months Farmers harvest directly from the field with the supervisory of representative of the company They will reject material that are not good enough and use modern equipment to preserve vegetables to be fresh - Step 5: Manufacture processing Each kind of material has another way of process But commonly, there are steps to produce canned agriculture products illustrated as below: Figure 3: Manufacture processing This process complies strictly with the quality management system since they are food products directly affecting consumers’ health Technology division and ISO department take main responsibility for this step to ensure that company’s products always keep the high quality - Step 6: Doing export procedures • First, obtaining export license 11 • Second, confirming payment Batfoco usually T/T payment method • Third, preparing products for export • Fourth, checking goods for export Company must invite quality control office to check products and decide that whether products are good enough to export • Fifth, hiring ship and sending notifications to the buyers • Sixth, doing customs procedures It includes Contract, Customer declaration of Goods, Commercial Invoice and Packing list • Seventh, delivering and exporting Goods 1.6 Export turnovers 2009 Canned baby cucumber 391.104 Export turnover(USD) 2010 2011 2012 401.115 452.226 562.221 2013 652.284 Canned cherry tomato 329.923 392.984 401.534 427.915 502.116 Chili paste 89.852 84.227 127.424 205.774 217.139 Chili garlic sauce Sweet and sour sauce 107.221 81.900 178.920 42.754 159.937 158.879 194.296 110.168 201.310 127.151 Sum 1.000.00 1.100.00 1.300.00 1.500.00 1.700.000 Products 0 0 Table 2: Export turnover by Products of Batfoco from 2009-2013 (Source: Financial and Accounting Department) We can see from the table that export turnover of the company constantly increases over the past years with rate 10-20% per year The products with highest turnover are canned baby cucumber and canned cherry tomato Export turnover of these products go up through years Other products’ turnover are fluctuate 12 Evaluation of Batfoco’s Export Activities 2.1 Advantages and Achievements 2.1.1 Advantages Batfoco was formerly company producing and exporting tobacco When facing with the instability of foreign markets, especially the tobacco import restriction policy applied in Europe, Batfoco found a new way, expanded business into the field of producing canned agriculture products for exporting There are many advantages in producing and exporting these kinds of products For Batfoco, there are main advantages First, canned agriculture products are products line that Vietnam has advantages in producing and exporting In the structure of agriculture plants, vegetables account for a large proportion Production cost of agriculture products is lower than other products Moreover our country’s ecological condition are very favorable for planting winter vegetables and in summer, vegetables like baby cucumber are well developed In general, producing and exporting canned agriculture products is a very potential industry with agriculture and developing countries like Vietnam Second, about the market, the company’s main target markets are Russia, Canada, Czech Republic, Japan, Taiwan, etc… Batfoco had the business relationship with these partners since producing and exporting cigarettes When expanding business to exporting agriculture products, the company has had some traditional markets, especially Russia Russia is a big market with high demand for canned agriculture products The Russian market is the market which has traditionally longstanding trade relations with Vietnam This market is relatively easy compared with the EU and the United States, Russian consumers are accustomed to using canned agricultural products imported from Vietnam enterprises Finally, about the company itself, Batfoco has a long-standing staff, with experience in production and export of agricultural products And as an excellent enterprise in Bac Giang province, Batfoco receives many supports and help form organizations and business partners inside and outside province 2.1.2 Achievements Thanks to many advantages and the whole company’s members’ nonstop effort, Batfoco has gained many achievements 13 Export turnover of the company constantly increase through years with the rate of 10-20%/year Going with that, the quality of products are ensured Despite the very tough competition from other enterprises and companies in Thailand, India and Southeast Asia, Batfoco still remain the high reputation in foreign markets With food products, quality is considered most important Batfoco has applied high quality management system to ensure that products are good for consumers’ health Therefore, products of company gain consumers’ belief and loyalty Talking about the factor that makes company successful, Batfoco’s general shares “As an enterprise does business in producing, processing and exporting agriculture products, we know that customers’ health is most important Therefore, company increasingly applies modern technical in planting, harvesting and producing with the target of meeting various demand of markets” With such achievements, Batfoco was given many prizes and awards in the field of producing and exporting canned agriculture products 2.2 Existing problems and reasons Besides achievement, there are still some existing problems that Batfoco should take into consideration The most existing problem that not only Batfoco but also other companies meet is lack of material, which is very important to producing and exporting food products Lack of material can lead to high purchasing material price or even can’t meet the demand of markets There are many reason for this problem First, planting areas are separated Second, agriculture food products heavily depend on factors such as crops, weather, land and insects Some kind of vegetables can only be grown in one season Along with it, it can be destroyed by insects or bad weather like flood, drought or storms In addition, some other difficulties that Batfoco meet are about the quality of food Food products usually have strict requirements about quality because it directly affect consumers’ health And to export into foreign market, products must meet other strict international standards 14 CHAPTER III: DEVELOPMENT PLAN AND SOME SUGGESTIONS FOR IMPROVEMENT IN COMPANY’S EXPORT ACTIVITIES Development plan of Batfoco in the next three years In particular strategy of exporting agricultural canned products, the company has set out a number of key objectives to be achieved - Maintain position in the foreign markets, expand and dominate abroad agriculture products markets with the aim of increasing productivity, expanding production scale, striving to achieve export turnover of $2 million per annual - In the near future, canned products of the company will become the preferred item and have a large market share in total consumption in many countries around the world - Facing with material difficulties, Batfoco actively build material areas To be able to serve the needs of importing large numbers of foreign markets, companies need to coordinate the construction of large-scale materials and specialized production to obtain high yields, thereby can actively provide sufficient material for the manufacturing factories Suggestions for improvement In order to achieve goals set out in strategies, company need focus on improving business efficiency, investing in upgrading infrastructure, expansion of specialized material areas Also, to achieve the level of exports as planned, the management team of company should study to propose specific solutions and appropriate steps to complete the work, gradually boost processed vegetables export activities to other countries This will solve the problems together with any existing problems which contribute to improving the efficiency and value for the company's exports First, the company can apply material planning inputs solutions To implement this, company increasingly invests in in vegetables seeds In the near future, Batfoco needs to prioritize investment in providing modern equipment to be able to create a fundamental change in the vegetable variety, soon keeps the competition advantage with other countries in the area, primarily on seeds Moreover, Batfoco also need to apply modern agriculture science and technical so 15 that farmers can grow some kinds of plants all season of year As a result company can produce and export products through years, help increase export turnover This will solve the problem that some vegetables just can be planted in one season In addition, modern technology can help decrease insects that harm vegetables The company also create material areas for manufacturing factories The total volume of fruits and vegetables needed to produce products is very great That requires Batfoco always be ready to provide enough material In the next time, the company will build manufacturing factory to produce canned agriculture products for export in Song Khê Industrial Zone Second, diversification of products, improvement and enhancement product quality to maintain traditional markets are also very important To meet the increasing demands of the market for canned agricultural products , besides invest in improving product quality, companies must pay attention to the issue of innovation, innovation designs for the new product Due to the characteristics of canned agriculture products that products’ quality depend on natural conditions and environment, company must focus on quality inspection of products prior to shipment In detail Inspection implementation, observation and situation analysis should be taken into consideration to make sure that products quality is in accordance with the terms agreed in the contracts The processing factories must be examined from receipt of material prior to processing, remove rotten fruits, unsatisfactory quality and size fruits During processing, the plant must ensure processing in accordance with specifications, safety and hygiene Next time, the company and technical and product quality control department needs further study to build the quality standards and required specific instructions accompanied details, such as liquid, material, weight, pasteurized process, color, taste…in accordance with the provisions of sale contracts The standardization of specific targets will be the basis for the manufacturing divisions produce high quality products 16 INTERNSHIP DIARY During my internship, I was assigned to the following work: - Translating reports and other documents - Receiving phone and making phone calls - Faxing or sending documents via email - Make photocopies It was very hard for me to the translation job because the documents are relating to important issues However, the interpreters of the company have helped me a lot in finishing my work They give me suggestion on how to translate complicated sentences and some special terms This job helped me a lot in improving my English and broadening my vocabulary Receiving and making phone calls helped me to improve my telephone communication skills Sending documents via email helped me to know how to write a business email, how to start and end it, how to address the receivers appropriately and so on I found out that even speaking fluently in my mother tongue language in this situation is not easy and I have to learn it all, from the easiest tasks to the hardest ones The task seems to be easy but you never know it if you never it And I think my business communication skill is now better Faxing and making photocopies was hard for me for the first time because I had never used a fax or a photocopy machine before After making a lot of photocopies during my internship, I have now known how to it skillfully During internship time, I was given such precious chances to observe and visit manufacturing factory to see how workers produced products and how goods was loaded into the containers These experiences were very new and invaluable for me Finally, the whole internship gave me an exposure to the working environment and condition I know how to get on well with colleagues, how to dress appropriately, how to communicate properly In addition, being at office all 17 day, from 8a.m till 5p.m was really tired and stressful for me I had to learn to better manage my time, balancing among housework, study, and office work In conclusion, the internship was a good experience for me and helped me to be well-prepared for the future 18 CONCLUSION: Vietnam nowadays integrates into the world economy To take the ship out to the sea, boosting export has been a major economic policy of our country With the advantage of an agriculture developing country, Vietnamese companies should promote production and export of agriculture food products Over the past years going to performance, Batfoco has gradually overcome difficulties, challenges and strengthen its position and role in the market economy With rich experience in production and trading of agriculture products, good management team and right strategies, the company keep developing stably and sustainably The topic “Situation and Evaluation of Export activities at Bắc Giang Tobacco and Food Joint Stock Company form 2009-2013” is my conclusion after internship time at the company It’s not only a report but also what I observe, study, work and conclude during the precious time with company I hope that my suggestions for improvement will be taken into consideration of company And I believe the company will more and more develop, become the excellent firm in province and in the whole country 19 REFERENCE Batfoco.com, (2014) Thuốc thực phẩm Bắc Giang [online] Available at: http://batfoco.com/ [Accessed Aug 2014] Batfoco's Anual Report (2014) Bắc Giang: Bắc Giang Tobacco and Food Joint Stock Company Vccinews.vn, (2014) BATFOCO: Hướng tới phát triển bền vững [online] Available at: http://vccinews.vn/prode/678/.html [Accessed Aug 2014] VietNamNet, (2014) Công ty cổ phần Thuốc Thực phẩm Bắc Giang : Xuất lơ hàng trị giá 60 nghìn USD sang Nga - Bacgiang [online] Available at: http://baobacgiang.com.vn/bg/kinh-te/7820/cong-ty-co-phan-thuoc-la-va-thucpham-bac-giang -xuat-khau-lo-hang-tri-gia-60-nghin-usd-sang-nga.html [Accessed Aug 2014] VietNamNet, (2014) Công ty cổ phần Thuốc Thực phẩm Bắc Giang: Kim ngạch xuất vượt kế hoạch năm - Bacgiang [online] Available at: http://baobacgiang.com.vn/bg/kinh-te/11908/cong-ty-co-phan-thuoc-la-va-thucpham-bac-giang kim-ngach-xuat-khau-vuot-ke-hoach-ca-nam.html [Accessed Aug 2014]  ... II: SITUATION AND EVALUATION OF COMPANY S EXPORT ACTIVITIES FROM 2009- 2013 The situation of export activities over the past years (2009- 2013) Bac Giang Tobacco and Food Joint Stock Company (Batfoco),... choose the topic for this report as Situation and Evaluation of Export activities at Bắc Giang Tobacco and Food Joint Stock Company form 2009- 2013 Due to my limitation of knowledge, skills and experience,... rolling tobacco Brief History Bac Giang Tobacco and Food Joint Stock Company (Batfoco), formerly known as “Ha Bac Tobacco Company , established in May 06/1986 with main business: Manufacturing and