LV Thạc sỹ_Vegetexco Vietnams fruit and vegetables export_Situation and Recommendation

Subject: Vegetexco Vietnam's fruit and vegetables export: Situation &
Recommendation

PREAMBLE

On January 2007, Vietnam gets a firm member of WTO, the largest economiccommercial playing field on planet. Taking part in WTO marked a new step on
Vietnam's international integration. WTO creates big opportunities for Vietnam's
enterprises, besides challenges difficult to overcome. Vietnam agriculture industry is
affected strongly of this event.
Vegetexco Vietnam is a state company specializing in manufacturing, processing and
trading fruit and vegetables, agricultural products export with up to 30% of total annual
export value of Vietnam. Like other enterprises, Vietnam has taken part in WTO affect
significantly to the corporation’s producing and trading activities in general and its fruit
and vegetable export activities in particular. The corporation has a lot of opportunities
to promote manufacturing and export because markets are expands, tariff barriers are
cut down, demand on fruits and vegetables is increasing. However, besides, it also has
to face enormous challenges when integrating, those are fluctuation and tough
competition of market economy, simultaneously, it has to accept strict international
regulars, technical barriers, and open the market, face difficulties in raw materials,
climate, weather, material and labor prices.
After practicing at Vegetexco Vietnam, I have opportunity to learn about its producing
and trading operation. With a desire to have deeper knowledge on the corporation’s
fruit and vegetable export field, as well as a desire to contribute to find out resolutions
in order to intensify this activity in the next time, I chose the subject “Vegetexco


Vietnam's fruit and vegetables export: Situation & Recommendation”. The report
is divided into 3 parts:
Chapter1. Basic issues on Vietnam's fruit and vegetables export
Chapter 2. Real situation on Vegetexco Vietnam's fruit and vegetables export activities
Chapter 3. Solutions to promote Vegetexco Vietnam's fruit and vegetables export

activities
My report was fulfilled in a short time so it does not avoid shortcomings, I hope to
receive supports and suggestion.

CONTENTS
SUBJECT: VEGETEXCO VIETNAM'S FRUIT AND VEGETABLES EXPORT: SITUATION &
RECOMMENDATION.................................................................................................................................................1
PREAMBLE....................................................................................................................................................................1
CHAPTER 1. BASIC ISSUES ON VIETNAM’S FRUITS AND VEGETABLE EXPORT...............................4
CHAPTER 2. REAL SITUATION ON VEGETEXCO VIETNAM’S FRUITS AND VEGETABLES
EXPORT ACTIVITIES...............................................................................................................................................17
CHAPTER 3. SOLUTIONS TO PROMOTE VEGETEXCO VIETNAM’S FRUIT AND VEGETABLES
EXPORT ACTIVITIES...............................................................................................................................................32
CONCLUSION.............................................................................................................................................................46



CHAPTER 1. BASIC ISSUES ON VIETNAM’S FRUITS AND VEGETABLE
EXPORT
1.1. Fruit and vegetables export, and role of fruit and vegetables export for
Vietnam
1.1.1. An overview of fruit and vegetables export
1.1.1.1. Characteristics of fruit and vegetables commodity
Fruit and vegetables connect closely with life of people. They are plentiful of type and
taste; fruit and vegetables products include fresh, processed ones and juice.
Characteristics of trading fruit and vegetables: seasonal, dispersive, areal, fresh,
unstable
Therefore, doing business in fruit and vegetables needs grasping basic issues:


Grasping main production, dispersion and concentration areas, as well as

entrepôt in order to work out business directions for sellers and customers


Grasping traditional purchasing trends and areas for fruits and vegetables, it is

necessary for sellers to find out buyers


Grasping characteristics, qualities and seasonal nature of same types of fruit and

vegetables at different areas in order to find out reliable and timely sources
1.1.1.2. Overview of export activities
Export is commercial activities which relate to sell goods and services to foreign
markets, including re-export
In import- export transaction, buyers are just importers, sellers are exporters, and sales
process and procedure basically include steps of domestic transaction, however in
import- export transaction, they have to obey tougher conditions in accordance with
agreements or international practices.
Exporting fruit and vegetables is action that concern selling fruit and vegetable
products into foreign markets.


1.1.2. Types of fruit and vegetables export
1.1.2.1. Direct exports
Direct exports are transactions where exporters enter into direct relationships with
importers overseas and negotiate a contract for the sale of goods and services.
Alternatively, exporters may use a commission agent in the overseas market to solicit
orders and generally represent the exporter's interests. The agent is paid by means of a

commission on the value of orders obtained.
1.1.2.2. Export through intermediary
Exporters and importers do not directly negotiate conditions of a contract, and they
deal through the third party.
At present, popular kinds are intermediary and agency
1.1.2.3. Counter transaction
This is a mode in which export is connect closely to import, an exporter is
simultaneous an importer, and it has a characteristic that export commodity quantity is
correlative to import one.
1.1.2.4. Re-export
This is a mode in which a re-export enterprise exports fruit and vegetable goods
imported to the third country, and these goods are not processed in a re-export country.
1.1.2.5. International auction
It is a mode which is hold at certain place, there exporters by themselves or an auction
organization implement selling goods publicly in order to choose a buyer who pay the
highest price.
Commodities give to auction are always difficult to standardize. There are 2 famous
auction centers of fruits and vegetables are Amsterdam and Autuerp.
1.1.3. Role of fruit and vegetables export for Vietnam
Export is considered strategic issue to develop economy and implement
industrialization and modernization. Of Vietnam's main force export commodities,


agricultural products in general, fruits and vegetables in particular, are major goods. In
2007, our whole country's total export value was 48.38 billion USD, agricultural
product export value gained 6.2 billion USD, including 300 million USD of fruit and
vegetable export value, accounted for a quite big density. Therefore, exporting fruit and
vegetable play an important role shown on following aspects:
1.1.3.1. Creating major capital sources for importing and building up infrastructures to
contribute to develop the economy

Now our country is in industrialization and modernization process, so it is necessary to
set up infrastructure system to serve the economy. Accordingly, we must have capital
source in foreign currency. That capital can be mobilized by a lot of ways, such as
borrowing, receiving from aid, joint venture, association, or export. However, the
safest and solidest capital source is foreign currency from exporting.
1.1.3.2. Facilitating to develop related industries
Development in exporting fruits and vegetables will create sufficient opportunity for
development of industries which produce inputs for fruit and vegetables such as
seeds,... or concerned services forms such as preservation, transport, process, selling
products... Especially in tough competitive environment, enterprises have to attempt to
reduce cost price, improve quality.
1.1.3.3. Raising export enterprises' business capacity
Dealing with foreign partners require that Vietnamese companies has to be dynamic,
creative, and have management ability, prestige, in order to exist and develop on
international markets. First and foremost fruit and vegetable goods, they are sensible
and sharply competitive commodities on world market because more and more fruit
and vegetable export enterprises appear, higher and higher the companies' talent and
experience. Thus, companies must usually investigate, renovate and improve
themselves in manufacture and trading as well.


1.1.3.4. Contributing to solve employment and ameliorating living conditions
Fruit, vegetable manufacture and process field requires a lot of labor. Intensifying
exporting fruits and vegetable not only creates jobs in this industry, but also leads to
develop other industries, create works there. It is considered our strategic export
industry due to we have advantages to develop, including advantage in workforce. And
when employees have stable jobs and salaries, their living conditions are improved,
that contributes to fulfill strategy on the nation's security and society.
1.1.3.5. Being basis to speed up international economic integration process
In fruit and vegetable export process, Vietnamese businesses deal with foreign

partners; learn about law, politics, and culture... of export markets. Therefore, they
widen experiences and business relations. At the same time, Government, concerned
Ministry and Department support companies as supplying information, creating
favorable legal corridor for exporting... It requires that countries' leaders enlarge
external economic relations, promotion activities, and market researches...

1.2. The tenor of Vietnam's fruit and vegetables export
Fruit and vegetable export activities have manner and execution process is different,
they depend on specific commodity, enterprise, but in general, this activity always is
implemented according to following order:
1.2.1. Researching, approaching markets
In this period, companies have to collect information on fruit and vegetable markets,
and then analyze them.
Companies need collecting information on fruit and vegetable import, manufacture
situation on world market, and target markets, researching consuming trend and
fluctuation in price. Especially, enterprises must learn carefully about target markets
and competitors. At the same time, they have to find out factors that effect to export
activities such as politics, culture, law, and related conditions, for example,


transportation of import countries.
Businesses always collect information through documents available from means of
mass information, Vietnam's counselors abroad or surveying directly of markets, or
through workshops and taking part in exhibitions, fairs.
1.2.2. Selecting business partners
Selecting business partners is one of elements, which creates success in export
activities. To choose exporting partners, we have to evaluate partners' capacity on
aspects such as finance, work force, administration ability, and marketing activities.
Especially for foreign partners, companies study their legal entity and prestige.
Besides, it is necessary to study partners' viewpoint for establishing long business

relation. In addition, selecting business partners has to notice compatibility in condition
of sales, transport, and payment.
1.2.3. Planning export project
Firstly, enterprises must raising objective of exporting fruit and vegetables, selecting
business partners. Next, companies need estimating criteria in evaluating effect of
export activities such as norm in effect of direct export, breakeven (minimum export
price), losses and profits, and other norms. Finally, planners have to recommend and
evaluate implement ability of the project in economic and social aspects.
1.2.4. Dealing, negotiating and signing contracts
Companies choose types of fruit and vegetables export according to above-mentioned
ones. Direct export type always includes steps: inquiry, offer, accept and confirm. After
dealing, parties reach to sign an export contract. In export contracts, parties have to
negotiate terms on name of commodity, quality, quantity, price, transport, payment, and
solving dispute


1.2.5. Purchasing and creating commodity source
Inputs of export fruit and vegetables can be mobilized from different sources as
importing, joint venture, associating, or purchasing in domestic… Enterprises must
calculate so that resources are stable, prestigious, and have good quality, reasonable
price in order to meet flexibly for production and export, simultaneously, reduce cost
price, increase competitiveness on markets. Major seed source for production of
Vietnamese fruit and vegetables to export has to be imported a lot; this is disadvantage
in reducing cost price and improving competitiveness of Vietnamese export fruit and
vegetable.
1.2.6. Implementing export contracts
Sequence of implementing export contracts is similar to general export contracts,
usually includes steps: applying for a permit for exporting, checking L/C, preparing
goods, chartering (if allowed), taking out insurance (if allowed), doing export customs
procedure, checking goods before exporting, delivering, doing payment procedure,

solving dispute (if any). Vietnamese companies always export in accordance with FOB
so they do not take out insurance and charter.
1.2.7. Evaluating results of export activities
In this period, enterprises calculate real datum, real criteria of export activity, and
analyze losses and profits, and simultaneously, compare real criteria with estimated
ones. Thenceforth, businesses can evaluate a result and effect of export activities for
each commodity, market, partner, and find out strengths, weaknesses, in order to have
specific methods to adjust business operations timely.


1.3. Factors affect Vietnam's fruit and vegetables export
1.3.1. Common situation of economy, politic, law of world and Vietnam
Together with development of world economy, specialization processes increasingly
deeply. Countries produced commodities, which they have comparative advantage on
these goods, export, then export them and import other commodities in order to meet
domestic demand, and improve effect in manufacturing, trading. Economy develop
more and more, needs for fruit and vegetables increase in types, quality..., facilitate to
impulse to produce fruit and vegetables.
In recent years, USD has devalued, thus, that makes advantage of fruit and vegetables
export businesses reduce, especially for Vietnam, because United States is one of the
Vietnam's biggest import markets.
Besides, prices continue to show an upward tendency, makes input price increase.
Meanwhile, inputs of producing Vietnam's export fruits and vegetables have to import
a large quantity, effects to competitiveness on world market.
In addition, countries are watchful over terrorist security, so countries' customs control
strictly, it makes transit time last long. That influences exporting Vietnam's fruit and
vegetable.
In company with developing world economy, Vietnamese economy gained obvious
advance. Economy has many changes; industry structure is more reasonable,
international trade increases. Moreover, fruits and vegetables export companies appear

increasingly,

and

they

accumulated

experiences

in

international

business,

administration capacity and business skill improved much.
Politics and laws can affect positive or negative to businesses in general and fruit and
vegetables export enterprises in particular. Although politic institution of each country
is different, in order to integrate into global economy, our party and state have policy to
diversify economic relations, Vietnam want to be friend with all countries in the world.
As a result, our diplomatic relations and external economic relations were expanded,


facilitating export. Due to the effect of politic, legal element to business activities,
enterprises that export any market has to learn carefully about that market's politic
institution in order to behave suitably.
Export is a commercial issue having international characteristic, thus, not only national
laws of two countries that do business, but also international laws and rules affect it. In
fact, laws of countries are quite complete and close; meanwhile, our country is lack,

asynchronous, unstable, and prolix in administrative formalities. This is a big
disadvantage for fruit and vegetables export industry. Therefore, Vietnamese legal
system needs to perfect to accord international laws and practices.
1.3.2. Economic-commercial relations between Vietnam and other countries in the
world
After innovating and opening markets, Vietnam's external economic relations attained
enormous achievements. Vietnam is a member of ASEAN that is potential area and
have strong economic development; besides, our country is also a member of APEC. In
addition, we intensify multilateral and bilateral cooperation with United States (such as
Vietnam- United State commercial agreement), and Canada... Moreover, in early 2007,
Vietnam is a firm member of WTO. These external economic relations create
conditions for Vietnam's fruit and vegetables export activities.
However, Vietnamese fruit and vegetables industry has to face a lot of challenge in
integration ground. For example, entering WTO, world's fruit and vegetables importexport markets are held closely, multinational supermarkets systems dominate almost
all, so Vietnam's fruit and vegetables export inherently have many difficulties, face new
challenges at present.
Besides, we cannot but mention commercial relation with China; this is a country that
is evaluated to have potentiality for Vietnam's fruit and vegetable export in the future.
With ACFTA (ASEAN- China free trade area), China reserve MFN status similar to
WTO's members for Vietnam. This advantage together with geographic conditions is


basis to strengthen fruit and vegetables export into China, especially, provinces at
Southwest of China. Furthermore, many researches showed Vietnam would enjoy
many benefits from early harvest program, and with ACFTA, Vietnam have a lot of
advantages in manufacturing cost, thanks to natural conditions such as land, climate,
and cheap labor price.
1.3.3. Situation of countries’ fruits and vegetables export in the world
Nowadays, fruits, vegetables manufacturing, and processing enterprises are
increasingly in area and world, especially China, United States. Therefore, Vietnamese

fruit and vegetable products have to compete toughly with these markets' ones.
Although China is potential country for exporting Vietnam's fruit and vegetables,
however, it is leading in the world in exporting fruit and vegetable, and its products are
assessed to have higher competitiveness than Vietnam's.
Regarding to tropical fruits, Vietnam's manufacture is still spontaneous, tattery and
dispersive, thus our yield is lower than Thailand and Philippine- two countries
exporting mainly these products.
As a whole, productivity of types of Vietnamese vegetables is lower in comparison
with mean level of area and world, fruits are more expensive than other tropical
countries. For this reason, Vietnamese fruits and vegetables nearly have ever achieved
success in competition due to bad product quality, high prime cost. Typically, in
exporting pineapple products, one of Vietnam's main force commodities, while
Thailand's pineapple productivity gains 24.5 tons/ha, Vietnam's one gets 13 tons/ha,
thus, Thailand's pineapple price is lower than Vietnam's, so their products compete
drastically with us. Or Thailand's durian price is three times lower than Vietnam's.
Now, main force fruit and vegetable export countries such as United States, China, and
Thailand have agricultural developing strategy that direct toward exporting target, and
with strengths, investment in agricultural industry in general and fruit and vegetable in


particular, Vietnamese fruit and vegetables will be able to compete toughly with these
countries' products in international market.
1.3.4. Needs for fruit and vegetables
In recent years, annual fruit and vegetables quantity increases, needs for some certain
fruit and vegetables increase due to fluctuation of population and earnings in countries.
Together with increasing customers' income, fruit and vegetables products bringing
high utility for them will be chose to buy, and they will purchase a lot these types if
prices are reasonable. At present, living standard increase, needs for products that have
high quality and safety is enormous. This element effects directly to fruit and
vegetables business situation on markets. Therefore, any fruit and vegetables export

enterprises must do market research to catch up demands on products, then, give
decision on manufacturing and selling at domestic or exporting.
1.3.5. Customs on purchasing and trend to import fruit and vegetables
Custom and trend on using effect greatly on Vietnamese enterprises' fruit and
vegetables exporting activities. Vietnam's large fruit and vegetables export markets at
present and in the future as well are United States, EU, Japan, Singapore, Russia, these
are markets concerning with health and safety. Thus, green products will be used a lot
there, they are good products and not harmful for people. They are produced following
to new technology process; only use organic fertilizer of if using chemical fertilizer or
insecticide, they are within permitted limit. Vegetables must be clean, fresh, not have
pestilent insects, not be bluish black, not be broken and scratched. For fruits, peel has
to be tidy and shiny; especially, color, shape, weigh, size and ripeness have to be alike.
Processed fruit and vegetables products have to be wrapped carefully, hygienic, and
written enough information related to products, have users' guiding book.
In addition, these markets' consumers like fruit and vegetables juice, which are pure, do
not have any sugar and additives.


In busy life and trend to live alone, processed and instant fruit and vegetables products
are purchased with big quantities because they bring customers conveniences.
Therefore, fruit and vegetables export enterprises cannot unfocused on trend in using in
markets where the company intends to export, thenceforth, it must have suitable
adjustments in business into these markets.
1.3.6. Vietnam's potentiality in manufacturing and exporting fruits and vegetables
With many advantages in manufacturing fruit, vegetables and diversified commodities,
Vietnam exported many types of fresh fruit and vegetables, and processed ones as well
into over 50 countries all over the world. Up to now, fruit and vegetables area reaches
to 1.4 million ha; yield gets more than 16 million tons.
Vietnam's potentiality in manufacturing and exporting fruits and vegetables bases on
following strengths:

Vietnam has favorable conditions on lands, weather (tropical climate at the south, and
subtropical climate at the north) with many specific types of fruits and vegetables; and
has comparative advantage against countries in areas and world
A lot of fruits and vegetables produced following to modern technology line, and
quality, model, design are improved better and better.
Growth rate of fruit and vegetables is very fast, especially in key areas such as the
South-Eastern Area, Cuulong River Delta and Central Highlands.
These are advantages, which create a premise for Vietnam's fruit, and vegetables
export. However, weakness of Vietnamese businesses cannot be denied, for example,
technology in growing, harvesting, preserving and processing fruit and vegetables is
out of dated; lack of strategy in establishing main force commodities, sorts are
widespread; don't create guarantee in relation among industries, phases in fruit and
vegetables industry; lack of knowledge in market demand. Therefore, it is necessary to
have appropriate measures of enterprises, Government, and related departments in
order to overcome above obstacles, exploit potentiality in exporting fruit and


vegetables of Vietnam, reach to 350 million USD in export value, increase by 16.7% in
2008.
1.3.7. Barriers for export fruit and vegetables products
To protect domestic fruit and vegetables industry, prevent other countries' fruit and
vegetable products from overflowing, import countries always use tools of taxes,
quotas, and technical barriers. However, free trade trend make countries have to reject
gradually tools of taxes, quotas, and gradually increase technical barriers. Following is
some technical barriers which fruit and vegetables import countries always apply:
a) Standardizing product quality
Requirements on fruit and vegetables quality are standardized quality standardization
system ISO. These quality standardizations are passport for export enterprises such as
standardization system ISO 9000-2000, ISO 9000-1994. Specifically, EU requires
integrated product certification, namely applies ISO 9000-1994, and United States

requires to be had Green card HACCP, namely ISO 9000-2000.
Besides, when fruit and vegetables products enter EU market, they have to meet
criteria on health and safety according to instructions of common product safety
92/59/EC.
b) Environment target
Nowadays, fruit and vegetable export enterprises have to meet not only quality
standardization, but also requirement on environment protection when manufacturing
products. These standardize into directions in packing and discarded packing
(96/62/EC), environment administration system ISO 14000, and further, confirmation
of environment standardization for products or ecological brand. Fruit and vegetables
import countries bring out tough regulations, laws on packing, and some countries
establish website specialize in supplying information on environmental pollution,
manufacturing condition of export fruit and vegetables enterprises and countries. These
regulations actually exceed ability of fruit, vegetables manufacturing businesses in


developing countries, for example, in Vietnam, ecological brand is too strange, and
there are not any companies, which have met. Meanwhile, advertising campaign,
information on websites continues to propagandize negative impact of products, which
do not have ecological brand. That makes fruits and vegetables import countries'
customers ready to ostracize these products.
c) Criteria on social responsibility
This criteria originates form moral element of customers, requires products have to be
certificated clearly what conditions they are produced, whether have discrimination
between employees or not, whether use children labor or not. And SA8000 is the most
popular standard system.
They are policies for labors in salaries, incomes, working safety... Especially,
customers in Canada, United States, and EU take interest in these terms when
purchasing products that have origin from developing countries. Thus, SA8000 is
considered a solution to affirm products' moral value and a passport of Vietnamese

goods into enormous markets.


CHAPTER 2. REAL SITUATION ON VEGETEXCO VIETNAM’S FRUITS
AND VEGETABLES EXPORT ACTIVITIES
2.1.
Establishment and development of Vegetexco Vietnam
2.1.1. Establishing and developing process of Vegetexco Vietnam
Full name: Vietnam national fruit, vegetable and agricultural product
corporation
Trade name: VEGETEXCO VIETNAM
Head office: No.2 Pham Ngoc Thach Street, Dong Da Dist., Ha Noi
Chief Executive Officer: Nguyen Van Thanh
Member units, include:
5 subordinated companies, branches, representative offices
6 subsidiary companies
25 affiliated companies
The corporation’s main business activities include:
 Agriculture production, processing, import/export and local sales of

vegetables, fruit, agro-forestry commodities, seafood, foodstuff and drinks, essential
oils, assorted seeds of tropical vegetables, fruit, flowers; fertilizer and chemical
products, material and packaging for agro-production and food processing; machinery
and equipments, spare-parts, vehicles, handicrafts, household goods,...
 Research and transfer of technology, technical training in processing of

vegetables and fruit, agro-forestry products
 Providing consultant service for investment in agricultural processing sector
 Financial business and other business related to stock market.
 Other business related to services such as logistics, port handling,

warehouses, transportation and transport agent, real estate, industrial and civil building,


hotel, and office renting.
 Associating with local and foreign partners and investors for projects in line

with the corporation’s strategic development
2.1.2. Framework of organization and management apparatus of Vegetexco Vietnam
Since January 2006, the corporation has officially operated following parent-subsidiary
corporation model. This conversion means changing organization structure and
management apparatus as well as departments’ function and authority.
Organization chart of Vegetexco Vietnam under a holding company structure:
MANAGEMENT
BOARD

BOARD OF
AUDITORS

GENERAL
DIRECTOR

DEPUTY GENERAL
DIRECTORS

SUBORDINATED
COMPANIES

SUBSIDIARY
COMPANIES

5 MANAGEMENT DEPARTMENTS

1. Personnel & Administrative Dept.
2. Financial & Accounting Dept.
3. Planning- General Dept.
4. Investment Consultant- Trade
Promotion Dept.
5. Quality Control Dept.

AFFILIATED
COMPANIES


2.2. Characteristics of manufacturing and trading, and their influence on VN's
fruit and vegetables export activities
2.2.1. Commodity business
The company trades in a lot of commodities, each unit trades some suitable ones. The
company’s commodities include fresh, dry-salt, canned, frozen fruit and vegetables,
and condensed juice.
The company’s products are agricultural so they have seasonableness, then the business
is affected by the characteristic. For example, pineapple is a main product; its crop is in
January, May, July, October, November, and December. Banana, lemon, star apple,
papaya are from May to November; tomato, cucumber are from October to January; or
kohlrabi, cabbage are from August to March. Thus, products, which the company
trades, are different in other periods, depending on products’ crop
2.2.2. Markets
The company’s essential markets are export markets, and main markets are China,
United State, Russia, Japan, Singapore, and Korea.
The markets are spread over areas in the world:

-

Asia:

+ ASEAN: Singapore, Indonesia, Thailand, Malaysia, Philippine, Laos
+ Other countries: China, Japan, Korea, Taiwan, Hong Kong, India, Arab, Jordan,
Pakistan, Syria, Sri Lanka
-

European:

+ EU: German, Great Britain, France, Holland, Switzerland, Austria, Spain, Portugal,
Italy, Belgium, Denmark, Greece, Ireland
+ Other countries: Russia, Turkey, Slovakia, Poland, Ukraine, Mondovi, Hungary,
Norway, Hungary, Latonia, Latvia, Rumania
-

America: United States, Canada, Mexico

-

Australia: New Zealand


-

Africa: Egypt, Sudan, Morocco, Senegal

The company’s export markets are plentiful and diversified. Each market with distinct
characteristics in consumer habits and has different regulations, this create big

challenge in expanding and developing markets of the company.
2.2.3. Competitors
Now there are a lot of enterprises trading in fruit and vegetables, so the competition is
naturally.
Vegetexco’s competitors are both domestic and foreign companies.
At present, there are over 300 companies trading in this field, among them are several
considerable ones such as Dong Nai food and agricultural products import- Export
Company, Lam Dong food and agricultural products joint stock company, Thanh Long
Hoang Hau limited company, Truong Phat limited company, Hai Phong logistics and
import- export company, Bao Thanh trade and service limited company, Long An
agricultural, aquatic products and sea food processing limited company.
Chinese, Thai, Malaysian, North African, South African, New Zealand, Chilean,
Brazilian export companies are toughest competitors. Quality and price are two
elements making Vietnamese companies weaker in competition. Especially, Chinese
enterprises will be biggest competitors in the future, because they have advantage in
labor, and technology in growing, cropping, preserving, processing higher than
Vietnam, besides they have diversity of model and type, equality in specification.
2.2.4. Capital

Situation on Vegetexco’s assets and source of capital


2005
Value
Criteria

(million

vnd)
1. Assets

592.347
-Fixed assets
284.354
-Liquid assets
307.993
2.Source
of 592.347
capital
-Budget
-Other

372.825
219.522

Structure
(%)

2006
Value
(million

100
48
52
100

vnd)
762.638
310.927
451.711

762.638

62.94
37.06

485.146
277.492

Structure
(%)

2007
Value
(million

100
40.77
59.23
100

vnd)
831.153
284.338
546.815
831.153

63.61
36.39

520.077

311.076

Structure
(%)
100
34.21
65.79
100
62.57
37.43

Because of being a state company, capital from budget account for a big density in
source of capital, over 60%. However, density of other source is increasing
continuously due to be complemented from result of production and trade developing,
or borrowing from banks.
About nature of capital, liquid capital is more and more, its density is increasing. That
is suitable with fact because of being import export company, when quantity of
transaction is more and more, ability in capital stagnant.
In addition, large capital helps the company invest for modern equipment in order to
meet needs in quality of product to export.
2.2.5. Human resources
Workforce is a key element for every enterprise. Vegetexco is interested in labor of
both producing and trading, because effect of export activities depends not only on
export staff but also producing workers, due to quality of their labor will decide
productivity and quality of export products.
In period of 2005-2007, the company's labor amount increased steadily year after year,
average increase was 120 persons per year. And structure of labor changed positively,
specifically:

Situation on Vegetexco's labor

Criterion
Total labor
1. Nature of labor
- Direct labor
- Indirect labor
2. Industry
- Agricultural production
- Processing industry
- Import-export business
3. Labor level
- Bachelor and over
- Apprentice
- Untrained

2005
Amount Struct

2006
Amount Struct

2007
Amount

(person

ure

(person

ure

(person

)
4997

(%)
100

)
5085

(%)
100

)
5243

4747
250

95
5

4834
251

95.07

4.93

4986
257

95.1
4.9

1092
2747
1158

21.85
54.97
23.18

1091
2632
1362

21.46
51.76
26.78

1122
2674
1447

21.4
51

27.6

622
1786
2589

12.44
35.75
51.81

684
2012
2389

13.46
39.56
46.98

729
2129
2385

13.9
40.6
45.5

Structu
re (%)
100

- Following nature of labor: Direct labor increased year by year, average increase was
120 persons per year; indirect labor trended to reduce. It's positive sign proving that
reducing the company's workforce in management staff (indirect labor) is
implementing well.
- Industry: Structure of labor according to industry fluctuated steadily year after year, at
the same time it trended to increase labor in import- export business and decrease labor
in production and processing gradually by means of intensifying mechanization in
production.
- Labor level: Trained labor occupied more and more, and untrained one reduced
correlatively. Specifically, labor being bachelor and over bachelor increased 53
persons/ year on average; labor being apprentice increased rapidly, average increase
was 172 persons/ year, while untrained labor decreased 101 persons/ year on average.


2.2.6. Raw materials
Fruit and vegetables are diverse and abundant; it takes a long time to product (early
within 2-3 months, long within 3-5 years and longer). Products are consumed, but
almost are sold at home and abroad. Products can be eaten freshly, or processed to be
convenient for preserving in a long time and transporting far to consumer. Thus, from
producing raw material, processing to consuming is a closed process; it requires
science, specification and complication.
Characteristics of raw materials affect strongly to Vegetexco's export. These
characteristics lead to tough requirements in export activities, especially at preservation
phase from harvest to production and export. At the same time, concerned departments
have to coordinate closely and harmoniously in order that products can be consumed or
processed opportunely.
2.2.7. Quality management system
Applying advanced quality management system will ensure quality of products to meet
consumers' demand, improve competitiveness of companies. It is especially important
to export companies. Awaking of this, Vegetexco applied quality management system

according to ISO 9001:2000. Scope of application of ISO 9001:200 showed on a below
diagram:


Enterprise
Designing
products

Supply output

Producing

Selling

Customer
Services after

products

products

selling

ISO 9001
In addition, the company carries out HACCP and has policies on quality such as:
- Always listens to customers' opinion on products, prices, selling services, payment,
and complaint.
- Improving continuously in awareness and professional ability all over company on
quality, food safety

2.3. Analyzing real situation on Vegetexco Vietnam's fruit and vegetables export
activities
2.3.1. The tenor of fruit and vegetables export
As other fruit and vegetables exports companies, Vegetexco also carries out export
activities following a process from researching markets, defining commodities, finding
out partners, planning project on export, dealing, negotiating, and signing contracts,
purchasing and creating inputs for export, implementing export contract, evaluating
export activities. In above process, implementing export contract is the most
complicated and vital, and it includes smaller parts, which Vegetexco has to carry out
according to international customs and law.
After mobilizing inputs for exporting, Vegetexco bases on sales contract to implement
testing on quantity and quality of goods, in order to adjust suitably for contract. Next,
preparing export documents, customs clearance, bringing products to a certain
destination. The company often exports by sea (at Haiphong port) or air (at Noibai
airport), however, always export with FOB so has not to charter and selling insurance


for products. And payment is by TT (for familiar and prestigious customers), but
almost is by letter of credit. Export process can be described such as:
Signing contract → Applying for a permit for exporting → Checking L/C→
Preparing goods→ Doing customs procedure → Checking goods → Delivering →
Doing payment procedure → Solving dispute (if any)
2.3.2. Results of fruit and vegetables export
2.3.2.1. Turnover and export value
In 2007, in total sales turnover (92.8 m USD), fruit and vegetables export turnover
accounted for 27%. Thus, fruit and vegetables export played an important role in the
company.
Situation on Vegetexco's export value
2005
Value

2006
Rate Value

2007
Rate Value

Rate

(USD)
∑ Export value
65,552,901
Exporting fruit and 21,894,669

(%) (USD)
100 76,103,473
33.4 24,572,158

(%)
100
32.3

(USD)
92,846,237
25,258,946

(%)
100
27.2

vegetables
Exporting others

66.6

67.7

67,587,291

72.8

Year

43,658,232

51,531,315

80,000,000

67,587,291

70,000,000
60,000,000
50,000,000

51,531,315
43,658,232

40,000,000
30,000,000 21,894,669

20,000,000

24,572,158

25,258,946

Exporting fruit and
vegetables
Exporting others

10,000,000
0
2005

2006

2007

Ve
getexco's export value increased year by year, and exporting fruit and vegetables