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MINISTRY OF EDUCATION AND TRAINING THUONG MAI UNIVERSITY NGUYEN NGOC QUYNH ENHANCING EXPORT COMPETITIVENESS OF VIETNAM’S TEA PROCESSING AND EXPORTING ENTERPRISES TO THE EU MARKET Major : Business trade Code: 62.34.01.21 PhD dissertation summar Hanoi, 2019 The research was finished at Thuongmai University - A/Prof.Dr: Phạm Thúy Hồng - A/Prof.Dr: Nguyễn Thị Bích Loan Reviewer 1:……………………………………………………… Reviewer 2:……………………………………………………… Reviewer 3:……………………………………………………… Search for the dissertation available at: - National Library - Thuongmai University’s library INTRODUCTION Rationale Vietnam is known as a country with comparative advantages in agricultural production thanks to its favorable natural conditions such as climate, land and abundant workforce Among various agricultural products with good advantages of Vietnam, tea production and exports have played an ever more important role and become the key export commodity of the country Compared with other varieties, tea plants have high economic values as they help to cover bare hills, reduce poverty and create jobs for more than million laborers In comparison with major competitors in the EU market such as Kenya, India, China, Sri Lanka, Indonesia, etc., it can be seen that Vietnam’s tea processing and exporting enterprises possess big resources and favorable conditions in tea producing and exporting activities However, the gained outcomes are not proportionate to the country’s potential and current comparative advantages Vietnam’s tea products are mostly exported in the form of raw materials which are mainly used for mixture but not have their own brands Besides, as Vietnam’s tea processing enterprises mainly target low market segment, the economic values of exported products are not high, the prices of Vietnam’s tea exported products are always lower than those of competitors Moreover, strict technical barriers set by the EU such as product quality, certificate of food safety and hygiene, environmental friendliness, organic food, etc always remain big challenges to Vietnam’s tea processing and exporting enterprises Motivated by these objective reasons, the author has chosen the subject “Enhancing Export Competitiveness of Vietnam’s Tea Processing and Exporting Enterprises to the EU Market” for her PhD economic dissertation in an attempt to propose feasible recommendations and solutions to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market in the coming time 2 Research objectives and tasks Research objectives: Proposing solutions and recommendations with good scientific and practical grounds to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market on the research framework of theories on export competitiveness of enterprises Research tasks: Firstly, generalizing theories on export competitiveness of enterprises; clarifying views on export competitiveness of enterprises, research framework with criteria to evaluate export competitiveness of enterprises and identifying factors affecting export competitiveness of enterprises Secondly, analyzing, evaluating the export competitiveness of Vietnam’s tea processing and exporting enterprises in the 2010 – 2018 period according to criteria to evaluate the export competitiveness of enterprises and to compare with competing tea processing enterprises from Sri Lanka Thirdly, proposing major views and solutions to raise export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market Research object and scope The research object of the dissertation is the export competitiveness of Vietnam’s tea processing and exporting enterprises with export shares to the EU Scope of research: - In terms of content: The dissertation researches the export competitiveness of Vietnam’s tea processing and exporting enterprises with export shares to the EU by discovering components of the export competitiveness of enterprises; establishing research framework with criteria and indicators to evaluate the export competitiveness of enterprises; factors affecting the improvement of the export competitiveness of Vietnam’s tea processing and exporting enterprises with export shares to the EU - In terms of research participants: Research participants include tea processing enterprises participating in the supply chain of dry tea materials and tea processing enterprises of organic tea and tea products for exports to the EU market - In terms of time: Secondary data used in the dissertation are collected for the 2010-2018 period, primary data were collected in the years of 2017 and 2018 Solutions and recommendations are made valid by 2025 New contributions of the dissertation Theoretical contributions - Establishing research framework for the export competitiveness: The concept of competitiveness, export competitiveness of enterprise and export competitiveness of tea’s processing and exporting enterprises based on previous competition theories - Basing upon consulting tea experts combined, discovering components of the export competitiveness of enterprises and factors affecting the improvement of the export competitiveness of enterprises - Building research model with criterias, 42 indicators to evaluate the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market At the same time, analyzing relationship between these components - Building criteria, 42 indicators to evaluate the export competitiveness of enterprises and indicators to measure business performance Practical contributions - Evaluating the situation of raising export competitiveness of Vietnam’s tea processing and exporting enterprises in recent time according to criteria and to compare with competing tea processing enterprises from Sri Lanka - Using SPSS software to analyzing the mean scores of measurement scales and identify important coefficients as well as the impact levels of measurement scales on the export competitiveness of Vietnam’s tea processing and exporting enterprises - Assessing the successes and causes of successes, limitations and causes of limitations into raise the export competitiveness of Vietnam’s tea processing and exporting enterprises in recent time as the foundations to propose solutions and recommendations - Proposing orientations to improve the quality of components to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market in the coming time - By employing these theoretical and practical grounds, the dissertation has worked out some forecasts, views and development objectives as well as established groups of solutions to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market by 2025 Dissertation organization Chapter Research overview and methodology Chapter Theoretical grounds on export competitiveness of tea’s processing and exporting enterprises Chapter Status-quo of export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market Chapter Solutions and recommendations to raise export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market CHAPTER RESEARCH OVERVIEW AND METHODOLOGY 1.1 Overview of previous studies 1.1.1 Studies on competition and competitiveness Based on competition theories, with closer look into competitiveness, many views have been introduced by researchers worldwide Accordingly, competitiveness is understood via groups of factors: (1) Production and service components; (2) Demand; (3) Supporting and relevant industries; (4) Strategies, structure and competition of the industry Research on competitiveness at various levels have attracted different views Generally, researchers agree that competitiveness should be considered at various levels of national, local, industry, business and products 1.1.2 Research on competitiveness of enterprises However up to now, the concept of competitiveness at business level remains a controversial one Since 1990s, there has been a boom in the theoretical research works on competitiveness These research works are classified into orientations: competitiveness from the approach of traditional competition theories; competitiveness from the approach of value chain; competitiveness from market orientation; competitiveness from the approach of business resources; competitiveness from the approach of resource theories 1.1.3 Research on export competitiveness Foreign and domestic research on the export competitiveness mostly focuses at industry level in a country Researchers believe that the policy mechanism and improvement of infrastructure and logistic system can impact on the export competitiveness of a country or industry To evaluate the export competitiveness of the industry, researchers often use an indicator representing competitive advantages – RCA In a few studies on the export competitiveness at business level in Vietnam, researchers build research models constructed by components affecting the export competitiveness of enterprises such as: selection and implementation of production and business strategies, competence on technology, labor productivity, production costs, management, research and development (R&D) 1.1.4 Research on tea exports There have been various studies on tea exports, focus on the following contents: establishing evaluation criteria for competitiveness of Vietnam’s exported tea; analyzing components affecting added values of exported tea via export supply chains; features and development trends of the world tea market, marketing components in tea exports; regulations on food safety and hygiene standards for tea when exported to the EU; impacts of international economic integration on exports; market entry strategies for Vietnam’s tea products; framework for supply chain of exported agricultural products (rice, tea, flowers, fruits, seafood) of the Northwestern region 1.1.5 Conclusions drawn from the review of previous studies and research gaps 1.1.5.1 Conclusions drawn A review of previous studies related to the dissertation’s subject, the following conclusions are drawn: (1) The evaluation of business competitiveness is classified into subjects (setting up research models with criteria and indicators for evaluation and measurement of competitiveness of specific enterprises); (2) There are differences in research framework and systems of criteria and indicators for evaluating tea competitiveness of enterprises; (3) There are a few theoretical research in Vietnam to evaluate the export competitiveness of the industry in general and businesses in particular; (4) There is a view that internal resources (such as assets, resources, human resources) can raise the competitiveness of enterprises However, these research works are merely done in the conditions of foreign enterprises; in Vietnam, there has been no research which analyses the export competitiveness of enterprises from the competence theory approach and for Vietnam’s tea processing and exporting enterprises; (5) Most research uses either qualitative or quantitative methods; not many combine the two; (6) Some research on competitiveness or entry strategies to international tea market of Vietnam tea enterprises has shown the importance of enterprises’ resources in tea exports as well as Vietnam tea brand development However, there has been no intensive research on the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market Most research has not yet identified priority solutions to improve each component in the export competitiveness of Vietnam’s tea processing and exporting enterprises 1.1.5.2 Research gaps The above conclusions illustrate that there remain some research gaps that need filling in as follows: (1) Identifying components and measuring the export competitiveness of tea processing and exporting enterprises; (2) Establishing research framework with appropriate criteria and indicators to evaluate the export competitiveness of processing enterprises; (3) Analyzing factors affecting the improvement of the export competitiveness of Vietnam’s tea processing and exporting enterprises; (4) Evaluating the export competitiveness of Vietnam’s tea processing and exporting enterprises in comparison with competing tea processing enterprises; (5) Using SEM model to analyzing relationship between these components; (6) Analyzing the export competitiveness of Vietnam’s tea processing and exporting enterprises in comparison with competitor in the EU market; (7) In the 2015-2018 period, there was no research on the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market Motivated by these research gaps, the dissertation’s author aims to answer the following questions: (1) which components of the export competitiveness of tea processing and exporting enterprises are identified as components measuring the export competitiveness of Vietnam’s tea processing and exporting enterprises? (2) Which research framework criteria are proposed to evaluate the export competitiveness of Vietnam’s tea processing and exporting enterprises? (3) Evaluating the export competitiveness of Vietnam’s tea processing and exporting enterprises in following research framework criteria and in comparison with competing tea processing enterprises? (4) Which solutions and recommendations are needed to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises in the coming time? 1.2 Research methods 1.2.1 Qualitative methods Qualitative research in this dissertation aims to identify components of the export competitiveness of enterprises or criteria with indicators to evaluate the export competitiveness of enterprises; on that basis build research model for the export competitiveness of Vietnam’s tea processing and exporting enterprises 1.2.2 Quantitative methods Quantitative research aims to test measurement scales, evaluate mean scores of measurement scales, establish research framework to evaluate the impacts of components of the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market In other words, this is the process to analyze and evaluate the export competitiveness of tea processing enterprises CHAPTER 2: THEORETICAL GROUNDS ON EXPORT COMPETITIVENESS OF ENTERPRISES 2.1 Theories on competition and export competitiveness 2.1.1 Competition and competitiveness There are different views and approaches to competition In the dissertation, the concept of competition is understood as: Competition is the rivalry between economic entities using every resource to gain objectives of market share, profits and reputation from competitors in the same market 2.1.2 Export competitiveness and export competitiveness of enterprises The dissertation covers issues on competitiveness, export competitiveness from different views, then it focuses on research and presents the concept of the export competitiveness of tea’s processing and exporting enterprises for this dissertation as follows: The export competitiveness of tea’s processing and exporting enterprises is the capacity to exploit enterprises resources effectively and catch market opportunities to gain dominance in export shares in comparison with competitors in international market; meet market criteria for 11 Criteria (measurement) Indicators (independent observation variables) (1) Enterprises have strong financial sources to afford Financial export activities to target markets; (2) Enterprises competence for have competence to mobilize and attract capital for export exports flexibly and actively; (3) Competence for activities contract settlement of enterprises; (4) Financial (TC01-TC04) allocations for each stage in production and export activities are appropriate and effective II Group of criteria on coordination market level (1) Enterprises have good competence of market analysis and research; (2) Enterprises have good competence to meet the EU regulations on exported tea products; (3) Policies of exported products are suitable with export marketing strategies of enterprises; (4) Strategies to advertise images and Competence brands for exported products of enterprises are of export effective; (5) Distributing products by delivery time marketing as stipulated in the contracts; (6) Enterprises have (MAR01good integration competence to changes in MAR12) international competitive environment; (7) Competence to establish relationships with partners in target markets; (8) Exported products of enterprises can overcome non-tariff barriers of the EU market (regulations on quality, food safety and hygiene, packing, environment, etc.); (9) Competence of managing supply chains for exported products; (10) Competence of managing warehouses, storage systems to ensure standards as signed with customers in the contracts; (11) Competence to deal with customs procedures and competence of managing customs informations; (12) Competence of managing logistics supplying of enterprise Competence (1) Enterprises have competence to establish good to establish relationships with partners in supply chains; (2) relationships Enterprises usually have customers-care policies and in export maintain relationships with old customers; (3) 12 Criteria (measurement) activities of enterprises (QH01-QH04) Indicators (independent observation variables) Enterprises maintain good relationships with local authorities; (4) Enterprises have competence to approach potential customers of enterprises in the EU market Competence (1) Enterprises’ brands are known to many people; (2) to build up Enterprises’ brands are built up and managed brands professionally; (3) Enterprises’ brands guarantee (TH01-TH03) customer trusts and feelings III Competitive positions of enterprises (1) Revenue of enterprises from exports to the EU Business market; (2) Market share growth; (3) Customers are performance very satisfied with product quality of enterprises; (4) (NLCTXK01- Positions of the enterprises compared with domestic NLCTXK05) enterprises in terms of exported products in the EU market; (5) Ability to expand of business scales in the long term (Source: author’s recommendations) 2.3.3 Factors affecting export competitiveness of enterprises External factors include macro environment and industrial environment Internal factors include: Technology, techniques, variety selection, natural conditions of material planting regions CHAPTER 3: STATUS-QUO OF EXPORT COMPETITIVENESS OF VIETNAM’S TEA PROCESSING AND EXPORTING ENTERPRISES TO THE EU MARKET 3.1 Overview of EU tea import market 3.1.1 Vietnam – EU trade relationships The EU is a strong market and a trading partner of Vietnam for many years Vietnam - EU Free Trade Agreement (EVFTA) is a new step in bilateral trade cooperation The outstanding feature of the export structure between Vietnam and the EU is the huge and less competitive nature of direct confrontation Therefore, this will be a good opportunity for Vietnamese tea processing enterprises to access 13 to the EU market and be exempt from tax for many agricultural products including tea 3.1.2 EU tea distribution channels EU is a market with huge demand for tea consumption but its tea supply mostly relies on imports as EU’s climate is not favorable for tea planting Tea is mostly grown in tropical climate in the midland Tea quality greatly depends on climate, weather and is highly seasonal After buying tea materials, EU producers process and export them under their own brands The distribution channels in the EU tea market include: producers, associations, tea planting cooperatives and purchasers; Intermediaries are middlemen connecting buyers and sellers and earn commissions; importers and distributors 3.1.3 Consumption tastes and habits of EU people EU consumers have a habit of drinking tea daily because this product is both refreshing and good for health In addition, EU consumers are very responsible for society and living environment So they tend to choose environmentally friendly products, packaging of products must be recyclable Besides, is the most developed economies in the world, in modern life, consumers want to use convenient, easy to carry products and easy to prepare 3.1.4 Regulations on standards, quality of imported tea products Regulations on Food safety and hygiene; HACCP regulations; Good Agriculture Practice Procedure and Regulations on packaging and labeling 3.1.5 Overview of exporting countries with tea exported to the EU market The exporting countries with tea exported to the EU market are the competitors of Vietnam’s tea processing and exporting enterprises such as Kenya, India, China, Sri Lanka, Indonesia… 3.2 Overview of Vietnam exported tea supply channels and tea export activities of Vietnam’s tea processing and exporting enterprises to the EU market 3.2.1 Overview of Vietnam exported tea supply channels 3.2.2 Overview of Vietnam’s tea processing and exporting enterprises with export shares to the EU market 14 The 12 Vietnam’s tea processing and exporting enterprises with tea exported to the EU market are classified into groups according to the kinds of exported products: Group of tea processing and exporting enterprises with exported packages of over kg and group of tea processing and exporting enterprises with exported packages of less than kg and tea specialty with distinctive sources 3.2.3 Situation of Vietnam’s tea exports to EU market Compared with competitors, Vietnam’s tea prices are only 60 – 70% the prices of international tea exporters Although both are bought as materials, Vietnam’s tea prices are usually lower because our quality is not up to the EU regulations, food safety and hygiene is not fully guaranteed as plant protection substances are used widely in many tea processing establishments 3.3 Analyzing the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market measured by research model To evaluate the export competitiveness of Vietnam’s tea processing and exporting enterprises in recent time, the dissertation uses business result reports of Vietnam’s tea processing and exporting enterprises according to criteria: Enterprise resource level, coordination market level and competitive positions of enterprises 3.3.1 Evaluation of export competitiveness of Vietnam’s tea processing and exporting enterprises according to group of criteria on enterprise resource level 3.3.1.1 Competence of research and innovation in enterprises According to self-evaluation, 100% of enterprises believe that the technology they are using is better or as good as that of other enterprises in the domestic industry, but compared with international competitors, production technology of Vietnam’s tea processing and exporting enterprises is far lower The reason is the limited financial resources to invest and high-qualified human resources in tea industry to create internationally-recognized technology 3.3.1.2 Human resources and competence of human resource management, training and development 15 Tea processing enterprises with export shares to the EU are mostly the biggest enterprises in the industry and those with high export volume to other markets besides the EU, so their modes of management are quite suitable with international business conditions They constantly update new knowledge of modern business management methods and advanced production lines, the working skills in international environment and foreign language proficiency of these enterprises’ leaders are also continuously improved Investing in land and promoting tea plants totally with organic fertilizers are often very costly and time-consuming (5 – 10 years), but when other enterprises pay higher prices for products, many tea farmers are willing to break commitments and sell products to these enterprises Therefore, investing in tea exports is risky and enterprises cannot fully control The links between partners in the chain only rely on economic relationships but also the trusts, wills and responsibility of the stakeholders 3.3.1.3 Financial competence for export activities It can be seen that although enterprises have made further investments in assets, production expansions, factories and recruited more laborers, they have not yet fully exploited the operational competence of assets, asset utility efficiency remains low In the process of investing in assets, enterprises have not calculated and used their assets effectively The payables of enterprises such as inventory, collectibles from customers, tea export batches subject to returns due to poor standards account for big proportion in the enterprises’ total assets, thus restricting asset efficiency 3.3.2 Evaluation of export competitiveness of Vietnam’s tea processing and exporting enterprises according to group of criteria on coordination market level 3.3.2.1 Competence of export marketing Market research activities of Vietnam’s tea processing enterprises remain limited Besides, the financial resources, qualifications and skills of people in charge of market research are also low, so it is difficult to approach big orders from big important markets like the EU 16 Enterprises are not willing to invest in safe agricultural production, so the volume of output is small, which affects the psychology and decisions of producers and they not fully follow regulations on safe agricultural production 3.3.2.2 Competence to establish relationships in export activities of enterprises Tea processing enterprises should utilize relationships with partners to make their tea products known to EU consumers However, up to now Vietnam’s tea processing enterprises have not yet established contact points to promote new relationships, for example with Vietnamese overseas associations in foreign countries or organizations in charge of distribution channels in the target markets 3.3.2.3 Competence to build up brands Survey findings indicate that both groups of processing enterprises of tea materials and organic tea and tea specialty regard that their brands are little known to consumers in the EU market, so the mean score of this component is very low This is because the quality of Vietnam’s tea is lower than that of international competitor, the proportion of material exports is high and enterprises have not yet built up and managed their brands effectively Besides, enterprises have not been able to exploit stories about Vietnam’s tea such as stories about territorial differences, origins, quality and culture associated with Vietnam’s tea plants for thousands of years, especially not highlighting the techniques of harvesting and drying tea that is unique to Vietnam 3.3.3 Evaluating enterprises’ positions According to many experts, the positions of Vietnam’s tea processing and exporting enterprises in the EU market remain low The values of Vietnam’s exported tea in the EU market are lower than the values of its competitors Although Vietnam ranks 7th in the world in terms of production and 5th in terms of exports, compared with competitors, our tea has the cheapest export prices, only 60 – 70% of the world tea prices 17 3.4 Export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market in comparison with competitors To select competitors for comparison with Vietnam’s tea processing and exporting enterprises, the dissertation used in-depth interviews with tea experts After discussion and analysis, experts suggested using tea processing and exporting enterprises from Sri Lanka The comparison export competitiveness of tea processing enterprises between the two countries according to group of criteria (enterprise resource level, coordination market level and competitive positions of enterprises) Sri Lanka used to be a British colony, leaders of tea enterprises in this country follow the modes of managing plantations and British famous tea brands, so they have lots of experiences in production, processing, brand management and possess good knowledge of target markets The biggest competitive advantage of Vietnam’s tea processing and exporting enterprises is the favorable natural conditions in producing green tea for exports 3.5 Evaluation of export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market From the above analysis, it is possible to evaluate the successes and limitations in raising the export competitiveness of Vietnam’s tea processing and exporting enterprises as follows: 3.5.1 Successes and causes of successes 3.5.1.1 Group of criteria on enterprise resource level  Competence of research and innovation in enterprises - Some big processing enterprises have invested in and used modern processing technology to raise yields as well as quality of tea products - Vietnam’s tea processing and exporting enterprises have proactively integrated and approached to advanced production technology, concentrated on material growing regions, controlled quality and gained organic certificates from reputable organizations for tea products exported to the EU market - To deal with low yield, tea processing enterprises are gradually replacing old tea varieties by new ones with higher yields, 18 higher quality, they have also applied new cultivation methods to maximize the number of plants appropriate with each variety of tea  Human resources and competence of human resource management, training and development: Tea processing enterprises with export shares to the EU are mostly the biggest enterprises in the industry and those with high export volume to other markets besides the EU, so their modes of management are quite suitable with international business conditions  Financial competence for export activities: Some Vietnam’s tea processing and exporting enterprises learned managed capital, saved costs, shorten business cycles by short-term raising methods, and reduced intermediate costs After a period of production activities, many tea’s processing and exporting enterprises have expanded their scale, recruited more workers and formed their own clean raw material areas thanks to effective financial management 3.5.1.2 According to group of criteria on coordination market level  Competence of export marketing: Vietnam’s tea processing and exporting enterprises have proactively integrated and approached to advanced production technology, concentrated on material growing regions, controlled quality and gained organic certificates from reputable organizations for tea products exported to the EU market  Competence to establish relationships in export activities of enterprises: Enterprises have been proactive in learning advanced production modes from foreign enterprises to deal with limitations of low export quality Competence to build up brands: thanks to the supports from Trade Promotion Agency and Tea Association, many tea processing enterprises have affirmed their brands via participating in and winning distinguishable awards in International Tea Contests, bringing honors to Vietnam’s tea industry 3.5.2 Limitations and causes of limitations 3.5.2.1 Group of criteria on enterprise resource level - Competence of research and innovation in enterprises: Processing qualifications are low, many factories not have adequate investments, processing technology is backward with low 19 technical standards, tea is processed in old methods, there is a lack of equipment to test chemical residues in fresh tea before processing - Human resources and competence of human resource management, training and development: Human resources involving in tea production and processing are not professionally trained, the number of skilled workers is small - Financial competence for export activities: Tea processing enterprises have not paid attention to techniques of harvesting and storing material quality, which has affected product quality, raises investments and labor costs and over-exploited tea plants 3.5.2.2 Group of criteria on coordination market level - Competence of export marketing: There is a lack of information due to limited financial resources as well as poor skills and qualifications of market researchers, so enterprises can hardly approach big orders from large import markets from the EU - Competence to establish relationships in export activities of enterprises: There is a paradox that enterprises with investments for farmers have fewer opportunities to buy materials due to heavy competition from other enterprises This discourages enterprises from investing in big tea fields, high-quality material growing regions or providing technical and agricultural supports for farmers Competence to build up brands: Vietnam’s tea processing and exporting enterprises are facing strict technical barriers set by the EU such as product quality, certificate of food safety and hygiene, environmental friendliness, organic food, etc Many Vietnam’s tea batches were rejected and returned due to excessive residue of plant protection substances, bad influence to CheViet brands 3.5.3 According to enterprises’ positions Firstly, as the quality of exported tea products is not high, tea processing enterprises are facing many barriers in markets, especially in meeting requirements for food safety and hygiene and quality Secondly, up to 90% of exported tea is in form of material, so added values remain low Thirdly, compared with competitors, our tea has the cheapest export prices, only 60 – 70% of the world tea prices 20 Fourthly, enterprises have not been willing to invest in safe agricultural production, so output of tea products remains small Besides, the psychology and decisions of producers in following safe production regulations are limited 3.5.4 SWOT analysis for the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS TO RAISE EXPORT COMPETITIVENESS OF VIETNAM’S TEA PROCESSING AND EXPORTING ENTERPRISES TO THE EU MARKET 4.1 Forecasts, views, goals for the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market 4.1.1 Forecasts of major development indicators of the international and EU tea market This part presents some forecasts on the development of international and EU tea market by 2027, vision by 2030 with specific figures on demand, supply and price 4.1.2 Development views and goals General views: Raising to the position of Vietnam’s tea processing and exporting enterprises to the EU market; turn Vietnam’s tea brand into a strong brand which is appreciated and trusted by EU consumers; Development goals: Raising to the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market by promoting comparative advantages Detail goal  For enterprises processing tea materials with packages of over kg: Orientations for joining global value chain vertically and orientations for joining global value chain horizontally For enterprises processing organic tea materials with packages of under kg and tea specialty: (1) Solutions should focus on building geographical identifications for collective brands and investing seriously and consistently in raising tea quality; (2) emphasizing and highlighting distinctive and distinguishable features 21 of organic tea from other kinds of tea; (3) associating origins of tea specialty with cultivation and drinking culture of Vietnamese people via stories and legendary 4.2 Solutions to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market 4.2.1 Groups of solutions to raise competence of research and innovation in enterprises Reviewing and classifying current technology of enterprises as well as considering the needs for renewing technology; establishing funds for technological development; establishing incentive schemes to encourage laborers’ innovations; strengthening links and cooperation with local and international organizations to approach modern technology Besides, there are solutions to innovating production procedures 4.2.2 Groups of solutions to raise human resources and competence of human resource management, training and development Business managers have to update new knowledge and improve necessary skills such as management skill in competition; change management skill; skill to forecast and orient development strategies; international communication skill to manage enterprises effectively in the international business context 4.2.3 Groups of solutions to raise financial competence for export activities - Increasing capital resources via technical economic solutions to cut costs: encouraging initiatives and creative ideas in production, promoting intellectual capacity of individuals and teams in production; reviewing production stages and procedures to save materials, time and labor force; utilizing wastes from production process; maximizing the capacity of equipment and machinery; streaming procedures to make them simple and effective - Renewing internal management system, strengthening financial management 4.3.4 Groups of solutions to raise competence of export marketing Export marketing competence is one of the most important components to create competitive advantages for enterprises in the 22 international competitive environment, therefore enterprises should raise their export marketing competence via the following measures: solutions to market research, trade promotion, distribution channels, product policies in EU market; logistic competence of enterprises 4.2.5 Groups of solutions to raise competence to establish relationships in export activities of enterprises Relationships with partners are decisive components to the success of export activities of tea processing enterprises Therefore, enterprises should establish relationships with strategic partners including relationships between enterprises and tea farmers; relationships between enterprises and enterprises; relationships between enterprises and customers and importers; relationships between of enterprises amid relationships between Vietnam’s Government and EU 4.2.6 Groups of solutions to raise competence to build up brands Tea processing enterprises should build brands for groups of products: tea material and organic tea and tea specialty by participating in trade promotion, trade fairs to advertising Vietnam’s tea products to EU people; doing market research to understand consumers’ tastes; collaborating with tourism to organize tours to famous tea hills with beautiful sceneries to introduce national landscapes and promote tea producing and processing activities at the same time; caring about packaging and history of tea specialty 4.3 Proposals to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market 4.3.1 Proposals to the government Firstly, making development orientations for tea industry Secondly, making policies on land ownership and profit allocation for farmers based on production value chains Thirdly, implementing incentive policies to encourage investments in modern technology and equipment to improve tea quality Fourthly, choosing exported products and producing products with high processing ratio, transferring product structure to meet the demand of local and international markets 23 Fifthly, streaming legal documents, building national technical standards and regulations to create legal framework for the operations of each product line Sixthly, enhancing to inspect of production process follow the technical barriers set by the EU such as product quality, certificate of food safety and hygiene, environmental friendliness, organic food Seventhly, throughout the corridor route to connect between domestic and international Eighthly, promoting public-private partnership model, i.e the Government and enterprises join hands to attract more enterprises to participate in and promote sustainable agricultural development Ninthly, reforming administrative procedures, reducing industrial checks, simplifying customs procedures, adjust transportation shares towards reducing road transport and increasing rail and water transport 4.3.2 Proposals to relevant ministries and agencies Upon analyzing factors affecting the improvement of the export competitiveness of Vietnam’s tea processing and exporting enterprises and identifying objective reasons, in this part, the dissertation makes some proposals to the Government, Ministries and agencies to have policies to instruct and raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market in the coming time 4.3.3 Proposals to Tea Association Raising the roles of product associations; increasing training and farm incentives to direct producers, processing enterprises, exporters, authority and civil servants in localities; building CheViet brands; implementing trade promotion activities effectively; organizing training courses on skills such as contract signing, negotiation in import-export, international practices as well as skills to collect information, research market, analyze and forecast demand for tea products for employees in tea exporting enterprises 24 CONCLUSION Raising the export competitiveness of enterprises in international market represents the goals of any enterprises wishing to succeed and affirm competitive positions in the target markets Accordingly, raising the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market is an orientation in line with the goals of the Government, ministries, agencies and Tea Association Therefore, the research has great significance in both theories and reality to exploit enterprises’ resources sustainably and effectively as well as affirm the footholds of Vietnam’s tea processing enterprises in the EU and international markets Combining various research methods, the dissertation has implemented and fulfilled the following research tasks: (1) Establishing research framework for the export competitiveness of enterprise and export competitiveness of tea’s processing and identifying components of the export competitiveness of enterprises; (2) establishing theoretical research framework with criteria and 42 indicators to evaluate the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market; (3) Analysing factors affecting the improvement of the export competitiveness of enterprises; (4) Evaluating the real export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market via secondary data and in-depth interviews with experts to compare with competing tea processing enterprises from Sri Lanka; (5) Using SWOT matrix to analyzing the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market by; (6) Using SPSS software to analyzing the mean scores of measurement scales and identify important coefficients as well as the impact levels of measurement scales on the export competitiveness of Vietnam’s tea processing and exporting enterprises; (7) Proposing orientations to improve the quality of components to raise the export competitiveness of Vietnam’s tea processing and exporting enterprises to the EU market in the coming time; (8) Proposing to the Government, ministries, agencies and Vietnam Tea Association to complete policies and create mechanism to help Vietnam’s tea processing and exporting enterprises raise their export competitiveness in the coming time LISTS OF PUBLISHED ARTICLES AND RESEARCH WORKS RELATED TO THE DISSERTATION BY PHD LEARNER Nguyen Ngoc Quynh, Nguyen Minh Quang (2011), Solutions to raise the positions Vietnam’s tea export in global value chain International conference proceedings: “Integration: opportunitties and challenges” Nguyen Ngoc Quynh, Nguyen Minh Quang (2012), Identification and evaluation of challenges facing the tea industry of Vietnam in the present context of integration International conference proceedings: “Integration: opportunitties and challenges” Nguyen Ngoc Quynh (2013), The export of Vietnam’s tea into EU market after joining WTO: Benefits and challenges International conference proceedings: “Integration: opportunitties and challenges” Nguyen Ngoc Quynh (2018), Free trade Agreement EVFTA - Opportunitties and challenges for the export of Vietnam’s tea into EU market Ministry of commerce and Industry magazine No7, May 2018 ISSN: 0866 – 7756 Nguyen Ngoc Quynh (2019), Forecasts of major development indicators of EU tea market by 2027 and solutions to raise the export of Vietnam’s tea processing and exporting enterprises to the EU market Ministry of commerce and Industry magazine, No6, Avril 2019 ISSN:0866 – 7756 ... COMPETITIVENESS OF VIETNAM’S TEA PROCESSING AND EXPORTING ENTERPRISES TO THE EU MARKET 3.1 Overview of EU tea import market 3.1.1 Vietnam – EU trade relationships The EU is a strong market and... of Vietnam for many years Vietnam - EU Free Trade Agreement (EVFTA) is a new step in bilateral trade cooperation The outstanding feature of the export structure between Vietnam and the EU is the... opportunity for Vietnamese tea processing enterprises to access 13 to the EU market and be exempt from tax for many agricultural products including tea 3.1.2 EU tea distribution channels EU is a market