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

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INTRODUCTION
1. Rationale of the thesis
The Middle East is of great importance and considered to be the potential
market for Vietnam since the early 2000s. This importance is not shown through
diplomatic policy but also through “Vietnam- Middle East cooperative relationship
promotion program in 2008- 2015 period” of the Government of Vietnam.
The Middle East market has high demand and purchasing level so Vietnam’s
agricultural product has to compete fiercely with many competitors from countries
like India, China, Pakistan, Thailand, Sri Lanka…Vietnam still have disadvantages
such as: Vietnam’s agricultural product joined after other countries’ products,
inconvenient geographical distance, difficult payment condition, export through
intermediary, packaging, labels mainly are in English but not in Arabic, trade
promotion and customer service has limitations.
2. Objective of the research
To build scientific basis and propose solutions to enhance the competitive
capacity of Vietnam’s agricultural product exported to the Middle East market
from now till 2025 and orientation towards 2030.
3. Object and scope of the research
3.1. Objective of the research
Objective of the research is scientific basis and solutions to enhance the
competitive capacity of Vietnam’s agricultural product exported to the Middle East
market.
3.2. Scope of the research
As for spatial dimension: Study on enhance the competitive capacity of
Vietnam’s agricultural product exported to 15 countries in the Middle East (except
for Cyprus).
As for time dimension: Analyzing, evaluating the real situation of enhancing
the competitive capacity of Vietnam’s agricultural product exported to the Middle
East market from 2010 to 2017; proposing solutions for enhancing the competitive

capacity of Vietnam’s agricultural product exported to the Middle East market till
2025 and orientation towards 2030.
As for content: Focus on analyzing the competitive competence of rice, coffee,
tea and pepper of Vietnam on the Middle East market.
As for subject: Enhancing the competitive capacity of Vietnam’s agricultural
product exported to the Middle East market is studied both at the micro and macro
levels. It is a combination of the subjects that are the exporters and the manager that
are government agencies.
4. Research method
4.1. Data collection method
4.1.1. Secondary data collection method


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Secondary data of the research includes of information, opinions, theory system
and data related to enhancing the competitive capacity of Vietnam’s agricultural
product exported to the Middle East market.
4.1.2. Primary data collection method
Survey method, investigation method: PhD. Student investigated 90 managers of
50 Vietnamese companies exporting to the Middle East market based on the
investigation paper about approaching method to the Middle East market in recent
years.
Interview method: is the primary collection method which the author uses with
officers of Asia- Africa market Department, researchers in the Institute, universities
and Agriculture association.
4.2. Data analysis method
4.2.1. Meta- analysis method
This is popular method used in analyzing socio- economic subjects. On the base
of theory analysis combined with practical observation of internal and external

factors and then evaluation.
4.2.2. Comparative analysis method
Comparative analysis method is used to evaluate results as well as identify the location
to recognize
current trends of Vietnam’s agricultural product in Middle East
market. In the thesis, comparative analysis method is used to evaluate the
fluctuation in the quantity and turnover of Vietnam’s agricultural product in the
Middle East market.
4.2.3. Inductive method and interpretation method
Interpretation method is also used in analyzing the real situation of enhancing the
competitive capacity of Vietnam’s agricultural product exported to the Middle East
market on the basis of systemized theoretical basis and lessons for Vietnam as well
as suitable solutions for export activities in Vietnam.
Chapter 1
THEORETICAL AND PRACTICAL BASIS OF COMPETITIVE CAPACITY
OF AGRICULTURAL EXPORT PRODUCT
1.1. Theoretical basis of competitive capacity and competitive capacity of
agricultural export product
1.1.1. Definitions of competition and competitive capacity
1.1.1.1. Definition of competition
Competition is the contest between two or more competitors in order to gain
favorable conditions in a particular spatial and time dimension. Specifically,
competition in economy is the contest between two or more economic subjectsin a
particular context to get the market by different methods or consumers’ choice of its
products.


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1.1.1.2. Definition of competitive advantage and competitive strategy

- Definition of competitive advantage:
According to M.Porter, competitive advantage is from values which can be created
by companies for consumers, those values must be greater than what companies costed.
There are two basic competitive advantages that companies possesses, which are low
cost and differentiation. To make a profit above average and achieve different goals,
companies need to create and maintain sustainable competitive advantage.
- Definition of competitive strategy
Competitive strategy is a process seeking an advantageous position to attract
consumers for companies. The essence of strategy localization is to choose activites
which are different from enemies to bring higher values for consumers.
1.1.1.3. Definition of competitive capacity
Competitive capacity is the ability of companies or nations to transfer potentials
into competitive advantages. In other words, competitive capacity is the ability of
companies or nations to enhance strengths to make use of chances, minimize
weaknesses for efficiently dealing with challenges, to create and maintain
sustainable competitive advantage.
1.1.2. Technical and economic characteristics of Vietnamese agricultural products
for export
Currently Vietnam exports agricultural products mainly to traditional markets and
new markets such as Middle East mainly: Rice, coffee, cashew, pepper, tea, ...
including many nutrient-rich products. Vietnamese agricultural products are very
diverse in terms of economic value and can process many kinds of foods with high
nutritional value. However, agricultural products grow and develop depending much
on natural conditions, some agricultural products are difficult to preserve fresh and
perishable.
1.1.3. Competitive capacity of agricultural export product
1.1.3.1. Definitions of exporting, export product and types of export
- Export: is a lucrative business by selling products and services in foreign
markets to earn foreign currency. Export facilitates the country's participation in
international labor allocation and economic development.

- Types of export: Nowadays, export companies apply some types of export
which are: direct export, entrusted export, countertrade, temporary import and reexport, on-spot export and outward processing.
1.1.3.2. Definition, classification and charateristics of agricultural export product
a) Definition and classification of agricultural export product
Agricultural product is the product of agriculture, which includes: crop
production, husbandry and agricultural service. However, in a broad meaning,
agriculture includes forestry and aquaculture. According to new ideology, forestry
and aquaculture values are not counted in agriculture results. Nowadays, agricultural


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product has been understood more specifically, been mainly products from land,
which are made from land- means of production.
b) Characteristics of agricultural product
Agricultural product includes essential goods for life and production in every
country. This is the product of agriculture, which is the result of growth and
development of plants, livestock. Therefore, agricultural product has characteristics
of agricultural production activities: seasonality; agricultural product depends on
natural conditions; qualities of agricultural product affects actively to consumers’
healths; freshness of agricultural product; diversity of agricultural product;
Agricultural product is the sensitive type of commodities in international trade.
1.1.3.3. Definitions of competitive capacity of agricultural export product
Competitive capacity of agricultural export product is all of features,
constituents and potential characteristics that these agricultural commodities can
sustain and develop their position in the competitive export market in a long term.
In other words, the competitive capacity of agricultural export product of a country
is a dominant force in the consumption and development of its agricultural
commodities in the international market.
1.1.4. Opinion on the constitution of competitive capacity of agricultural export

product
Nowwadays, there are different opinions on the constitution of competitive
capacity of product, so there are opinions on the constitution of competitive
capacity of agricultural export product, such as:
1.1.4.1. Approaching method on the base of M.E. Porter’s strategy
According to M.E.Porter, to evaluate the constitution of competitive capacity
of export product, we must base on criteria: (1) Improvement in productivity; (2)
Quality of product; (3) Reasonable price; (4) The decrease in price; (5) Stability and
holding market share; (6) revealed comparative advantage; (7) Coefficient of local
resource costs; (8) The individual cost factor for the production of a particular
product.
1.1.4.2. Approaching method on the base of value chain analysis
The key feature of the value chain is to create a working synergy between
subjects involved in the value chain including producers, processors, retailers and
exporters. This requires good management to coordinate well in the process of making
exchange and production decision.
1.1.4.3. Approaching method of Ministry of Foreign Industry and Trade
The approaching method of the project “Enhancing competitive capacity of
Vietnam’s agricultural export product in 2014 – 2020 period and orientation
towards 2030” of Ministry of Foreign Industry and Trade in 2014 showed that
competitive capacity of product in general is composed by 2 factors: domestic
goods and international goods.


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1.1.5. Criteria to evaluate competitive capacity of agricultural export product
1.1.5.1. Criteria to evaluate the export scope of agricultural product
+ Agricultural export turnover: the amount of money from agricultural
exports of a country in a particular period of time, which is a year.

+ Agricultural export quantity: reflects the scope of agricultural export
product of a country in a particular time, which is a year.
1.1.5.2. Criteria reflecting market share and growth rate of agricultural exports
in market share
Market share criteria reflects a country's position on a particular item in the
market. The larger the market share of a commodity in a country is, the stronger the
competitive capacity of that commodity is, the higher the competitiveness of this
commodity.
1.1.5.3. Criteria to evaluate level of agricultural export product
- Quality of agricultural products for export
The quality of exported agricultural products is the whole characteristic of the
goods that gives it the ability to satisfy certain needs. A good quality agricultural
product when it is able to better satisfy customer needs compared to similar
products.
- Prices of agricultural products for export
Competitive price is one of the important factors to assess the competitive
competence of agricultural products for export because it is the cost that customers
have to spend to buy those items. However, agricultural products originated from
different countries, so they often have different prices, this is due to differences in
production conditions, farming, price, ...
- Cost of producing agricultural products for export
Cost competitiveness of products will depend on the effectiveness of all stages,
including production, procurement, transportation, processing, warehousing, jetty,
international shipping to create and bring that product to the international market.
Inadequacies, inefficiencies in any stage will increase costs and reduce the
competitiveness of products.
- RCA- Revealed Competitive Advantage
When the same commodity from two countries are compared, the one with
higher index of RCA- Revealed Competitive Advantage is more advantageous while
exporting. Up till now, RCA is used as an index to measure comparative advantage.

- Domestic Resource Cost-DRC
DRC is the index to measure competitive capacity of product in case of there is
no errors in price due to interfere of policy. The meaning of DRC is the actual
refeflection of cost that society must pay in order to produce a commodity. DRC is
the total cost of domestic sources used, which is equivalent with 1 dollar got from
products that are sold.


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1.2. Factors affecting to competitive capacity of agricutural export product
1.2.1. Internal factors
1.2.1.1. Diversfication of agricultural export product
Diversification of product categories, product improvement, production cost
reduction compared to competitors create the competitive capacity of agricultural
products on the international market. The more categories of the export product has,
the more likely it is to cover and exploit segments, gain more market share. The
more diverse the structure of agricultural export product is, the more suitable it is for
customs and tastes of customers.
1.2.1.2. Design, packaging, model and label of agricultural export product
The packaging design is not only paid attention to images packaging, design,
product instruction, content on the package ... but also paid attention to the
appropriateness of the picture on the package, the appropriateness of models with
consumers and policies of import markets. Package and model of agricultural
export product must ensure both the form and content. Besides the form, packaging
and model must provide sufficient information in accordance with the habits and
culture of consumption of each country, each ethnic group, each religion, each age.
1.2.1.3. Distribution channel
Distribution channel can be understood as a systematic collection of elements
involved in the process of transferring goods from the producer to the consumer.

Nowadays, agricultural products are distributed through direct and indirect channels.
Direct channels are export companies that sell directly through supermarkets, retail
stores, traditional markets, etc. on foreign markets. Indirect channels are exporters
selling to intermediaries, brokers, importers, dealers, distribution agents.
1.2.1.4. Trade promotion
Trade promotion is used to influence the target market, a powerful tool in
dominating the international market. The basic objective of trade promotion is to
create and develop the brand image of the product on the market, to distinguish the
product from other competitors’ ones, to increase the prestige and reputation. , to
establish trust and loyalty of customers.
1.2.1.5. Customer service
Along with competitiveness factors, providing customers with services that
outperform competitors’ ones, providing more and better value is also a factor
helping Vietnam’s agricultural product to have higher competitive capacity.
Listening to feedback from the Middle East consumers will help Vietnamese
companies to adjust in order to meet their expectations, thereby establishing their
trusts.
1.2.1.6. Brand of agricultural export product
Brand of agricultural export product is all of characteristics of the product such
as quality, profit, model and service of the product. Brand is not only the sign to


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recognize and distinguish this company’s product to the other’s ones but it is also a
valuable posession of the company, the prestige and it is shown the trust of
customers for the product.
1.2.1.7. The capacity of agricultural export product to join in the global agricultural
product value chain
Creating value and competitive capacity of agricultural export product have 3

stages, which are: producing stage (in agricultural production area), processing stage
(in industrial production area) and export stage ( in trade area), which means that to
create value and competitive capacity of agricultural export product, the most
important is to connect these three stages efficiently by affliation, cooperating on the
base of both sides gain benefits.
1.2.2. External factors
1.2.2.1. Condition of producing factors
Natural condition: including of factors such as: temperature, climate,
humidity.
Infrastructure: the road system, transportation, biotechnology, manufacturing
plants improvement, processing, irrigation works, irrigation systems.
Technique and producing teachnology: As we know, the productivity of crops
increasing or not depends on two main factors: the quality of the soil and the breed.
Processing and preservation technology: In the integration context,
processing process is considered to be a huge area consuming agricultural product.
Agricultural product plays a role as material for production and processing.
1.2.2.2. Condition of domestic demand for agricultural product.
The domestic demand for agricultural product determines what companies
produce and how, and also affect the competitive capacity of exports. Because
domestic demand develops, it will put pressure on companies to continually improve
their products, improve quality, and decrease price. Domestic demand also helps
forecasting demand trends of buyers in foreign markets to create new products
before competitors do.
1.2.2.3. Supporting and relating industry of agricultural export product
According to the flying geese paradigm (FGP), it can be seen that a thriving
key industry will inevitably lead to the consistent development of many supporting
and related industries. Besides, development of supporting and related industries
helps key industry gain competitive advantage, reduce input costs, improve service
quality, and support production.
1.2.2.4. Competitiveness environment and institution of the industry

The competitiveness level of agricultural industry in the domestic market
affects the success of domestic companies on the international market. The success
of a domestic company attracts new entrants into the industry and make the current
competitors seek out ways to improve production efficiency and increase the


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strength of companies. Increasing competitiveness in the domestic market puts
pressure on innovation, creativity, quality improvement, cost reduction and
investment in upgrading advanced elements to help companies more competitive in
both domestic and international markets.
1.2.2.5. Role of the State and chances
For markets with high potential but risky as the Middle East market, it is
important to analyze and evaluate the opportunities of this market for Vietnamese
agricultural exporters.
1.3. Experience of countries on enhancing the competitive capacity of
agricultural product exported to the Middle East market and lessons for
Vietnam
1.3.1. Experiences of Thailand
Improving the quality of agricultural export product:
Thailand has restructured agricultural products of the Ministry of Agriculture
of Thailand to improve the quality of 12 agricultural commodities through the
planning of key agricultural areas. Moreover, Thailand also implements the policy of
"one village one product" to promote local comparative advantage. For rice,
Thailand has technological lines, milling, modern rice polishing equipments,
ensuring the rate of broken rice from 5 to 10% for export.
Development of packaging, designs and brand of agricultural export product
Thailand has invested heavily in equipment, advanced technology lines,
transportation conditions, modern packaging technology to meet the market

requirements. Thai comapnies focus on building, registering and promoting the
brand. For example, Thai export rice are packed in bags from 5 to 10 kg, with
trademarks of the origin, name in English, Thai, and Arabic.
1.3.2. Experiences of China
Improving the quality of agricultural export product: China has had clear plans,
enacted policies for supporting farmers and export companies. Before joining in
WTO, China had already enacted policies on planning agricultural farming in
provinces such as Guangxi, Guangdong. Besides, China has had policy to encourage
companies to ask for international certificate such as ISO 9001, S1400 on
environment.
Trade promotion: China has promulgated policies on establishment of trade
promotion program for agricultural product in Middle East countries by establishing
fairs, advertisements in this market.
1.3.3. Learned lessons for Vietnam
- Improve the competitive capacity of agricultural product exported to the Middle
East by improving the quality of agricultural product, supporting market information
and trade promotion programs in the Middle East market.
- Trade promotion: Vietnam should place more trade offices in the Middle East


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countries which are in charge of market research, searching partners and
promotional activities for each agricultural sectors.
Chapter 2
REAL SITUATION OF THE COMPETITIVE CAPAPCITY OF
VIETNAM’S AGRICULTURAL PRODUCT EXPORTED TO THE
MIDDLE EAST MARKET
2.1. Socio- economic characteristics of the Middle East and real situation of
Vietnam’s agricultural roduct exported to the Middle East market

2.1.1. Socio- economic characteristics of the Middle East
2.1.1.1. Social characteristics of the Middle East
The Middle East is a large area, a bridge between Asia, Europe and Africa.
Due to the complex and diverse geography, politics, culture and religion, there are
still many political and unstable changes.
2.1.1.2. Cultural characterictics of the Middle East
The economic, political and cultural environment in the Middle East is heavily
influenced by the religious system. In the Middle East, there are three main
religions: Islam, Christianity and Judaism.
2.1.2. Agricultural export product in the Middle East market
2.1.2.1. Demand for importing agricultural product of the Middle East market
According to ITC, besides importing raw materials, industrial products, the demand
for agricultural import products from the world such as: Rice, pepper, cereals, tea,
cashew nuts, coffee, vegetables, fruits, and other spices is in large quantities. Among
them, rice, pepper, tea and coffee are the most frequently imported agricultural
products.
11%

10%
36%

9%

9%
3%

4%

4%

Rice
Sea product
Computer, electronic device, spare parts
Milk and dairy product
Plastic material
Other products

6%
4%

4%
Textile
Iron and steel
Footwear
Steel billet
Pepper

Table 2.1: Structure of products impoted to the Middle East in 2017
Source: Ministry of Foreign Industry and Trade
The Middle East imports agricultural products mainly from Europe, America


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and some countries such as China, India, Thailand, etc. For example, rice accounts
for 11% of the total import products from the Middle East, pepper accounts for 3%.
A prominent feature is that Turkey, Iran, Israel are big agricultural producers with
many agricultural products such as vegetables, fruits, nuts that not only export to the
world but also export to other countries within the Middle East.
2.1.2.2. Competitors of Vietnam’s gricultural product in the Middle East market

Vietnam’s key cooperators in the Middle East of agricultural product is
Thailand, India, countries in North Africa, the USA. These are all countries with
strengths in food supply, consumer goods.They are also strong competitors with
Vietnam in the field ò agricultural export product on the world. Besides, there are
agricultural companies of countries within the Middle East like: Turkey, Irael, Iran.
2.1.2.3. Macroeconomic policy and regulations for import product of the
Middle East
In general, the Middle East countries do not adopt restrictive policies on
agricultural import products. However, there are some remarks in the trade policy
for agricultural import product of some Middle Eastern countries:
For import procedures and documents, agricultural product imported to the
UAE should have the following documents: Customs declaration attached with
original bill of lading, notarized commercial invoice, packing slip, proof certificate
of origin certified by the UAE Consulate, the certificate of hygiene and
epidemiology required. The UAE applies the GCC Common Tariff to the Common
Tariff range of 0-5%.
2.1.3. Generalising the real situation of Vietnam’s agricultural product exported
to the Middle East market
Agricultural commodities takes high proportion of total export turnover to the
Middle East market, with main products: rice, pepper, cashew nuts, coffee, fruit, tea.
Table 2.2: Vietnam’s highest value agricultural product exported to the Middle
East market in 2016
Unit: million USD
Name of Turnover
Main market
Numb
commodit
er
y
1

Rice
44
Iraq, Iran, Yemen, UAE. Arap Saudia,...
2
Pepper
151
UAE, Yemen, Arap Saudia, Israel,...
3
Tea
16.5
UAE, Arap Saudia, Israel, Turkey, Iran...
4
Coffee
26
UAE, Arap Saudia, Israel, Turkey, Iran...
Fruit and
5
31.9
Mainly to 6 GCC countries, Cyprus..
vegetable
Nguồn: Africa, West Asia, South Asia Department, Ministry of Foreign Industry and Trade


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In recent years, Vietnam's main agricultural export product to the Middle East
market have fluctuated not only in export product but also in the market. Vietnam's
highest value export products include rice, pepper, cashew nuts, vegetables, coffee
and tea. The largest and most stable import markets in the Middle East are mainly
the six GCC countries and other countries: Turkey, Lebanon.

2.1.4. Characteritics of Vietnamese agricultural companies exported to the Middle
East market
Vietnamese agricultural exporters exporting to the Middle East market are
mainly small and medium-sized enterprises, while this market is still quite remote
for Vietnam, so the time for agricultural product circulation will be longer. , contains
many risks related to the quality of some agricultural products going down. This may
reduce the competitiveness of Vietnamese agricultural exports, and create a fear for
businesses when they intend to penetrate this market.
Companies followed agreement to pay through irrevocable letter of credit at
banks of partners. However, Vietnamese agricultural export companies to the Middle
East market have had difficulties in payment, especially late payment.
2.2. Real situation of the competitive capacity of Vietnam’s agricultural
commodities exported to the Middle East market
2.2.1. Analyzing the current situation of competitiveness of some agricultural
products for export to the Middle East market
2.2.1.1. The reality of competitiveness of Vietnamese rice exports to the Middle East
market
- Turnover and the quantity of Vietnamese rice exported to the Middle East market:
In recent years, Vietnam's rice export volume has increased sharply. So far Vietnam
has become the second largest rice exporter in the world, after Thailand. In the
Middle East region, in addition to Thailand, there are 3 other countries that are able
to compete with Vietnam: India, Pakistan and China.
- Market share of export rice: The increase in export rice production makes
Vietnam's rice market share in the Middle East market also increase. Compared to
some highly competitive countries such as Thailand, Pakistan and India, the speed of
expanding Vietnam's rice market share in the Middle East market increased faster.
By 2017, Pakistan's rice export market share accounts for 39%, India accounts for
32% and Thailand accounts for about 20%.
- Compared with competitors in the Middle East market such as India, Pakistan,
Thailand, China ... about the competitiveness and position of exported rice products

of countries in the Middle East market is possible. appear in the following table:


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Table 2.7: RCA coefficient of some countries exporting rice to the Middle East
market in the period of 2012 - 2017
Year
2012
2013
2014
2015
2016
2017
India
11,18
11,25
11,33
12.56
12,95
12,40
Pakistan
35,14
35,26
35,91
36,54
38,79
37,39
Thailand
4,05

4,16
4,40
4,45
4,25
7,44
Vietnam
0,62
0,78
0,99
0,924
1,22
3,12
China
0,0016
0,002
0,0025
0,003
0,007
0,05
Campuchia
0
0
0,0015
0,0021
0,004
0,022
Source: PhD. Student analyzes and generalizes from Trademap, General
Statistics Office of Vietnam
Followed by India's RCA from 11.18 in 2012 to 12.40 2017. RCA Thai export
rice to the Middle East is also very high, from 4.05 in 2012 to 7.44 in 2017.

Although there is no competition for rice with Pakistan, India or Thailand in the
Central market. East but Vietnam has a much higher RCA index than other
competitors such as China, Cambodia, ...
2.2.1.2. Current situation of competitiveness of Vietnamese coffee exports to the
Middle East market
The market share of Vietnamese coffee in the world market is increasingly
affirmed. In the past, Vietnam's coffee did not have a significant position in the
Middle East market, but now Vietnam has become a country with a large market
share of exported coffee in this market.
Comparing RCA coefficient of Vietnamese coffee products with some other
competitors in the Middle East in the period of 2012 - 2017, we see that Vietnam's
export coffee has a relatively high competitiveness compared to competitors in the
this market.
Table 2.9: RCA coefficient of some coffee exporting countries to the
Middle East market in the period of 2012 - 2017
Year
2012
2013
2014
2015
2016
2017
Brazil
18,74
19,92
21,9
21,68
19,14
20,05
Colombia

17,97
18,4
18,25
31,28
22,66
19,65
Indonesia
6,64
6,58
6,51
7,19
7,62
8,22
Vietnam
16,61
6,69
7,61
4,62
7,73
3,98
Honduras
3,17
1,41
1,54
1,65
1,32
2,40
Source: PhD. Student analyzes and generalizes from Trademap, General
Statistics Office of Vietnam

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South American countries are often the main competitors of Vietnam in the
Middle East market such as Brazil, Colombia, ... RCA index of coffee products of
these countries in the Middle East market is higher than with other countries like
Vietnam or Indonesia. The RCA levels of these South American countries are all on
average 20, much higher than Vietnam.
2.2.1.3. Actual competitiveness of tea exports of Vietnam to the Middle East market
Among Vietnam's tea exports to the Middle East market, mainly green tea.
However, tea exports tend to fall sharply in the period of 2012-2017. Specifically in
2012, the export turnover of tea to the Middle East market reached more than 20.45
million USD and only reached 7.7 million USD in 2016.
According to the author's calculations based on Trademap data, RCA of
Vietnam in the period 2012 - 2017 has an average of 2.1. This is lower than 2.5. This
proves that the competitive advantage of Vietnamese export tea in the Middle East
market is quite low. Compared with the biggest competitors like Srilanka, Keynia,
Paskistan, UAE, India, RCA tea products of Vietnam are much lower. As for the
direct competitors of Vietnam such as China, Indonesia, ... Vietnam has a higher
competitive advantage in the Middle East market.
2.2.1.4. Actual competitiveness of pepper exports to Vietnam to the Middle East
market
Vietnam pepper has been exported to 97 countries and territories and has
always led the world in exports in recent years. For the Middle East market in the
period of 2012 - 2017, Vietnam exported pepper to this market, increasing from
USD 138.609 million in 2012 to USD 154,732 million in 2017.
According to the author's calculations based on Trademap data and the
General Statistics Office of Vietnam, the RCA export pepper of Vietnam reached the
highest in the period 2012 - 2017 is 2016 with 87.2. RCA index of Vietnam is much
higher than the RCA index of main competitors in the Middle East market such as

India, China, Indonesia, UAE ... Although the Middle East market evaluates pepper
Vietnam is very fragrant and quite tasty, but Vietnamese pepper still mainly exports
black pepper, so the added value is not high.
2.2.2. The reality of the quality of Vietnamese agricultural products exported to
the Middle East market
Although Vietnamese agricultural quality standards meet the basic
requirements of Middle Eastern countries such as cashew nuts, pepper, peanuts,
coffee, tea, honey, processed spices. , rice and rice products, crispy flour, cereal
flour, brown rice flour, lotus seed, fresh-dried fruit, ... but now the proportion of
deep processing of Vietnamese agricultural products in general is only reached. 2530% of total agricultural export output. Many agricultural products are exported
only in the form of preliminary processing or raw processing, so the selling price is
not high and cannot compete with the products of competitors.


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On assessing the quality of Vietnamese agricultural products in conformity
with Halal standards, it is assessed that many Vietnamese agricultural products
conform to Halal standards and Muslim tastes "are evaluated at a low level ( 2.34 /
5.0) points. There are 60/90 opinions disagree with the above statement.
2.2.3. Current situation of prices of agricultural products exported to the Middle
East market of Vietnam
In general, the product price of each Vietnamese agricultural product is
generally quite competitive in the Middle East market. Each agricultural product is
often divided into different types. For example, rice, Middle East mainly imports
rice types such as Basmati rice, long grain white rice, dried coconut rice, etc.
Meanwhile, Vietnam mainly exports only long grain white rice, rice. Dried coconut
into this market. Basmati rice is mainly supplied by India and Pakistan. The types of
rice exported to the Middle East must compete quite fiercely with the rice varieties
of Thailand, China, India ...

2.2.4. Current situation of production costs of agricultural products for export
In countries exporting agricultural products to the Middle East market,
Vietnam is still a country with relatively cheap labor costs compared to its
competitors. Because of the low labor advantage, the price of Vietnamese
agricultural products has moderate competition, although the price of some
agricultural products is quite high in the Middle East market but still accepted by
customers.
As for the judgment "Prices of agricultural products are generally lower than
those of competitors such as Thailand, India, Pakistan and China in the Middle East
market" with an average score of 3.21. This is the average score. This shows that the
price of Vietnamese agricultural products is lower than its competitors such as
Thailand, India, Pakistan and China in the Middle East market in recent years.
2.3. Real situation of factors affecting to the competitive capacity of Vietnam’s
agricultural product exported to the Middle East market
2.3.1 Real situation of internal factors
2.3.1.1. Real situation of diversification of agricultural export product
Vietnam’s agricultural product has been more and more favored in the Middle
East agricultural product market because of improving quality, diversifying
categories, models and ensuring the stable supply. Additionally, diversification exprt
and import policy is not only about commodities categories but also promoting for
deep processing products such as: rice. Nowadays, Vietnam has not only exported
broken rice but also exported long grain white rice, dried coconut to the Middle East
market.

2.3.1.2. Real situation of design, packaging, model and trademark of agricultural


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export product

The brands of rice, coconut milk, tea, Trung Nguyen coffee have
continuously offered in the Middle East market with many different brands.
However, designs and models of Vietnam’s agricultural products are still
monotonous, not diverse, so competitive capacity has been at medium level. In
many Middle Eastern markets such as the GCC, competition of agricultural
products among countries is largely based on model, design because the price and
quality of agricultural products are relatively similar.
2.3.1.3. Real situation of distribution channel
The Middle East's current agricultural importers are mainly China, some
South Asian countries, the United States, India, etc. While Vietnam has only
exported agricultural product to the Middle East over 15 years and still have had
many difficulties in terms of geographical distance, culture, religion, customs, habits,
language so most of Vietnam's agricultural products still have to export through
intermediaries such as India, Malaysia, Pakistan, Turkey. These countries have
established a distribution system of agricultural product in the Middle East since
early.
2.3.1.4. Real situation of trade promotion
Vietnam has opened six trade offices in the Middle East: Iran, Kuwait, Israel,
Turkey, United Arab Emirates (UAE), Saudi Arabia, and Iraq (temporarily closed).
Basically, the national trade promotion program has had positive impacts on the export
promotion in general and the export of agricultural products promotion in particular,
contributed to raising the production capacity and competitiveness of companies.
2.3.1.5. Real situation of customer service
Due to geographic distance and the fact that there are not enough conditions to
directly distribute all of Vietnam's agricultural products in the Middle East, customer
service activities of Vietnamese companies is still limited. New commercial service
activities are mainly carried out with intermediary partners but not many direct
customer service activities with Middle East consumers so there is not a favorable
condition to understand more about habits, customs, business practices, consumption
habits of the Middle East people.

2.3.1.6. Real situation of agricultural export product
Major agricultural products exported to Middle East in the past years include:
Long grain white rice, dried coconut, Trung Nguyen coffee, Tan Cuong tea, O Long
tea, Phu Quoc pepper. , Binh Phuoc Cashew, Dong Giao Pineapple, Ninh Binh sweet
corn, Lao Cai Banana, Java Rambutan, Hoa Loc Mango, Tien Lang Cucumber.
These products have entered more deeply into the Middle East market, especially in
the GCC countries and Turkey.
2.3.1.7. The capacity of Vietnam’s agricultural export product to join in global


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agricultural product value chain
In recent years, the State has always paid attention, guidance and support to
the agriculture industry with the guideline of determination to change the mind, open
the market and accept the competition, to enhance the management skill, production
and business management. Besides, there is support from different levels of
government to urge farmers to cooperate with companies to build concentrated and
large-scale raw material areas in association with processing and consumption of
agricultural products to be able to compete in the global value chain.
2.3.2. Real situation of external factors
2.3.2.1. Real situation of production factors
Seed: Localities have actively innovated the structure of rice seeds in the direction
of increasing the proportion of high quality rice seeds in order to meet the export
demand better. Provinces in the Mekong Delta have focused on increasing the area
of high-quality rice for export such as An Giang, Tien Giang, etc. Red River Delta
provinces have initially formed special rice production areas such as Tam Thom,
Nam Dinh, Hung Yen ... However, the application and dissemination of high quality
rice is not really widespread.
Mechanization in agriculture: It can be seen that from the stage of tillage to

seeding, harvesting, preserving and processing have the participation of modern
machines repecing for physical labor. However, mechanization is mainly applied in
land preparation and harvesting, while the rest people still do.
2.3.2.2. Real situation of domestic demand for agricultural product.
In recent years, the demand for agricultural product in general has increased.
Total retail sales of agricultural commodities increase annually. However, companies
mainly focus on agricultural exports, accounting for 62%, while domestic
consumption accounts for only 38%.
2.3.2.3. Real situation of supporting and relating sector
To enhance the competitive capacity of agricultural exports, the role of
suppoting sector is truly important to enhance added value of agricultural exports.
These sectors are: producing technology, harvest technology and processing
technology. These supporting industrial sectors helps to diminish the damage after
harvest agricultural products.
2.3.2.4. The real situation of the competitive environment and the institution of
the sector
Currently, Vietnam's agricultural products have to compete fairly with ones of
countries such as Thailand, India, China, Pakistan, Sri Lanka, Brazil in the Middle
East market. Moreover, competitors are also coming from some countries in the
Middle East such as Isael, Turkey. Thus, the Government of Vietnam has identified
the importance of the research of the Middle East market by the establishment of
trade offices in many countries in the region.
2.3.2.5. The real situation of the State’s role and chances


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The role of the Goverment of Vietnam: In the recent time, in order to support for
enhancing competitive capacity of Vietnam’s agricultural product exported to
international market in general and the Middle East market in particular, the

Government has developed policies to positively affect the production and export of
agricultural goods.
Opportunities: Most of the Middle East countries are now members of the World
Trade Organization and in 2007, Vietnam joined this organization. Thus, Vietnam
may be more favorable in exporting agricultural products to these countries because
of MFN (Most Favor Nation) and National Treatment.
2.4. Evaluation of the real situation of the competitive capacity of Vietnam’s
agricultural product exported to the Middle East market
2.4.1. Evaluation of the competitive capacity of agricultural export product based
on SWOT
Table 2.17: Evaluation of the competitive capacity of Vietnam’s agricultural
product exported to the Middle East by SWOT
Strengths
- RCA index of many relatively high
agricultural products such as coffee
and pepper on the Middle East market.
While the DRC of many agricultural
products is still smaller than 1.
- Vietnam's agricultural products are
increasingly expanded and penetrated
deeper into the Middle East market.

Weaknesses
- Export turnover and output are still
low and not really stable
- Prices of some agricultural products
are not really competitive in the
Middle East market
- RCA of rice and tea in the Middle
East market is still low

- Mainly exported through third
countries
- Packaging, labels are still mainly
English, not many brands use Arabic.
Challenges
- The political and social situation of
some countries in the Middle East is still
unstable.
- Great influence of religions such as
Islam, Judaism, Christianity on the
demand for agricultural products.

Chances
- Middle East market demand is
increasing on imported agricultural
products
-Agricultural products are commodities
with poor comparative advantages of
the Middle East
- Middle East agricultural products
import policy is not too strict.
Source: PhD. Student generalizes
2.4.2. Achievements
Firstly, the turnover and export volume of Vietnamese agricultural products to


18

the Middle East market generally have a certain increase.
Secondly, the quality of Vietnam's export agricultural products has been

increasingly enhanced and met the consumption demand of the Middle East market.
Third, a number of Vietnam's agricultural exports have gradually established
and affirmed a certain position in the Middle East market.
2.4.3. Some limitations and causes
2.4.3.1. Some limitations
The turnover and export volume of agricultural products to the Middle East
market in recent years has not been really stable and commensurate with the
potential of each party.
The ability to meet the standards, import regulations of the Middle East
market of Vietnamese agricultural products is still limited.
2.4.3.2. The cause of the limitations
a) Subjective causes
- Causes from the state agencies: The role of the State in orientation and creating a
favorable environment to improve the competitiveness of agricultural products
exported to Vietnam in the Middle East market is still limited; The quality of
Vietnamese agricultural products despite meeting many world standards but with the
Middle East market.
- The reason is from the enterprise exporting agricultural products to Trung Do
Enterprises have not invested much in technologies, especially agricultural product
processing technology; Export enterprises still mainly export to traditional markets
of Vietnam such as the US, EU, Japan, China, ... but have not really paid much
attention to the Middle East market.
- Causes of agricultural product associations: not much support for agricultural
export enterprises in providing Middle East market information, import standards,
Halal standards, and Islamic culture. .. for businesses, farmer households to produce
and trade in agricultural products.
b) Objective causes
The Middle East region still has many uncertainties in politics, war, nuclear issues,
religious conflicts and geographical distance quite far from Vietnam.
The difference in culture and information on the Middle East market has made it less

difficult for Vietnamese agricultural products exporters to enter the Middle East
market in determining market demand.
The custom of purchasing goods, payment habits, criteria for selecting importers of
Middle East countries is different from other markets.

Chapter 3
SOLUTIONS FOR ENHANCING THE COMPETITIVENESS CAPACITY OF


19

VIETNAM’S AGRICULTURAL PRODUCT EXPORTED TO THE MIDDLE
EAST FROM NOW TILL 2025 AND ORIENTATION TOWARDS 2030
3.1. Domestic and international context affect to the competitive capacity of
Vietnam’s agricultural product exported to the Middle East market
3.1.1. International context
Nowadays, the Middle East is the region on the world which is particularly
concerned because this area has a geopolitical and economic position which is very
important. This is a very sensitive area, the largest oil supplier in the world.
International contexts have important influence to exports and trade policy
development to boost Vietnam's agricultural exports to this market.
3.1.2. Domestic context
Industrial Revolution 4.0 is a precious opportunity for Vietnam to embrace
new technologies to accelerate the process of industrialization and modernization in
order to narrow the development gap with other developed economies in the world
generally and promote the development of Vietnamese agriculture particularly. The
application of 4.0 technology in agricultural production has become a trend and been
effective in terms of product quality, cost and risk of damage reduction.
3.2. Opinions and orientation to enhance the competitive capacity of
Vietnam’s agricultural product exported to the Middle East market

3.2.1. Opinions on enhancing the competitive capacity of Vietnam’s
agricultural product exported to the Middle East market
- Improving the competitiveness of agricultural products exported to the Middle
East market must ensure consistency, with a suitable roadmap according to the
domestic and international context on the basis of competitiveness of core
agricultural products
- The high competitiveness for agricultural products exported to the Middle East
market must gradually contribute to the export of Vietnamese agricultural products
to the global value chain of agricultural products.
3.2.2. Orientations to enhance the competitive capacity of Vietnam’s
agricultural product exported to the Middle East market
3.2.2.1. General orientaiton
Based on the Resolution No. 2471/QD-TTg of the Prime Minister on
2011/28/12 on Strategy on exports and imports in 2011-2020 period, orientation
towards 2030 as well as general goal of the agriculture in 2016- 2020 period, the
average growth rate in 2016- 2020 period reaches 2.5- 3%; average production value
in 5 years reaches 3.5-4%. Exports of forestry and aquaculture will be about 39- 40
billion USD in 2020.
3.2.2.2. Specific orientation
a) Regarding the production and processing targets of some agricultural


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products
Rice processing: Investing in processing capacity to reach the aim as 25 million
ton each year, therefore 60% of total quantity of grain can be processed.
Coffee processing: By economic cooperation between companies and farmers,
the amount of processed coffee in industrial scale increases from 40% in 2015 to
70% in 2025.

Pepper processing: By investing in capacity expansion and new industries for
processing white pepper, the quantity of pepper products increases from 22% in
2025 to 30% in 2030.
Tea processing: Transfering product structure in the direction of 55% of black
tea and 45% of green tea; by 2025, price of Vietnam’s export tea is similar to the
average global price.
b) Export target of agricultural products
Vietnam’s orientation is the growth rate of agricultural exports reaches 22% to
25% each year, increasing the institution propotion of deep producing products in
agricultural exports, which reaches 40 to 60% of the total agricultural exports
turnover.
c) Export target of Vietnamese agricultural products to the Middle East
market
To the UAE market: By 2025, Vietnam’s agricultural export turnover to the
UAE will have average growth rate which is 25% per year. Main agricultural export
commodities are: pepper, seafood, furniture, tea, rice, fruit. This is the most essential
market of Vietnam in the Middle East..
To Turkey: By 2025, Vietnam’s agricultural export turnover to Turkey will
reach 1.505 million USD with the average growth rate as 22% each year. Main
agricultural export commodities are: pepper, tea, rubber, coffee..
To Arab Saudia: By 2025, Vietnam’s agricultural export turnover to Arab
Saudia will be above 800 million USD with the average groth rate as 22% each year.
Main agricultural export commodities are: seafood, cashew, pepper, tea...
d) Objectives to improve the competitiveness of agricultural products
exported to Vietnam to the Middle East market
Eenhancing competitive capacity of agricultural product exported to the
Middle East market is the important, continuous and long – term mission. Vietnam
needs to emphasize the importance through detailed strategy, plan, program carried
out by the State management agencies, agricultural exports companies, associations
and households.

Vietnam both enhances competitive capacity of agricultural export product
that Vietnam has advantages and prepares conditions to enter rising value stages
inglobal value chain of agricultural product.
Besides focusing on enhancing competitive capacity of Vietnam’s agricultural


21

products that has already been sold in the Middle East market, it is needed to
orientation for creating competitive capcity of new agricultural products in this
market.
3.3. Some solutions and recommendations to improve competitiveness of
agricultural products for export to Vietnam Middle East market until 2025 and
orientation to 2030
3.3.1. Solutions for the State
3.3.1.1. Creating a competitive environment for the competitive capacity of
Vietnam's agricultural product exported to the Middle East market.
Negotiating and concluding trade agreements between Vietnam and the
Middle East.
Providing sufficient information to assist comapnies in developing export
markets for agricultural products exported to the Middle East.
3.3.1.2. Improving the quality of Vietnam’s agricultural product exported to the
Middle East market
Making use of policy that WTO does not allow to support strongly research,
transfer, apply science and technology in processing, producing to increase
productivity, value of agricultural product, improving the competitive capacity of
Vietnam’s agricultural productoôn the world.
It is necessary to have a synchronous system, from producing, gathering,
processing and consuming to improve the quality of Vietnam’s agricultural product
exported to the Middle East market.

3.3.1.3. Completing programs on trade promotion for agricultural product exported
to the Middle East market
Besides proactively entering traditional markets such as The USA, EU and
China, Vietnam also needs to have other new export markets. Specifically, with the
Middle East market, it is needed for policy to promote exports to this country.
3.3.1.4. Solutions for brand development of agricultural export product
Vietnam needs to have a general program on buiding and developing brand of
key agricultural product exported to the Middle East, which is also the orientation
for localities, companies to identify commodities, markets to focus on building
brand. Vietnam needs to have a synchronous legal system in this term, especially
intellectual property guidance, trade-mark, geographical guidance on agricultural
export product of Vietnam.
3.3.1.5. Enhancing the role of the State in the joint of agricultural product value
chain
To join in the agricultural product value chain, the State needs to have policies
to unite farrmers and companies for sustainability, and breaking contract
preventation. To decrease risks, it is necessary to information transparency in two
ways which are through contract for specific products and customers diversity.


22

3.3.1.6. Completing policy on key markets in the Middle East
The Dubai market in particular and UAE in general have great demand of
many kinds of goods that Vietnam can supply and have strengths such as:
agricultural products, electronics, furniture, textiles, footwear, seafood, milk, fruit
and vegetables. The market are not too strict in terms of quality, orders are not huge
which is suitable for the capacity of Vietnamese comapnies.
Urging Trade Office to find more suitable customers to introduce to
companies of both countries, specifically to find more Turkish customers who have

the need of importing commodities that Vietnam have strengths such as: pepper,
copra, coffee, native rubber to introduce to Vietnamese companies.
Enhancing delegation exchanges as well as urging companies to join in fairs
to gather market information for export promotion with commodities that Vietnam
have strengthssuch as: pepper, rice, tea, cashew, fruit and vegetables, coffee, native
rubber.
3.3.1.7. Other solutions
Simplifying the legal documents, standards, national technological standards
built for efficient legal corridor of each commodity.
Policies on human resources development for processing industry includes
policies for attraction, preference for labor sources in agricultural product’s term
such as: training establishment, connection between training agencies and training
companies, re-training establishment, training attached to on – spot labor use.
3.3.2. Some petitions for Vietnamese agricultural product exporters
3.3.2.1. Improving the quality of agricultural export product
To compete in the international market, increasing productivity and improving
product quality should be focused. Besides processing stage completion and
improving product quality, companies must focus on preservation stage. Due to the
long distance between Vietnam and Middle East, it is necessary for companies to
improve preservation stage.
3.3.2.2. Market development and trade promotion
Arabs respect individual relationships, they prefer long – term business
relationship with a specific agreement, so companies want to do business in this
market, they must spend time and have relationships to gain trust. If companies
onlys care profits, it will not be possible in Middle East market.
3.3.2.3. Enhance the brand of agricultural products for export
Companies needs to cooperate actively with each other to build national
agricultural brand. Vietnamese agricultural export product needs to actively join in
global value chain of agricultural product. Companies needs strategies and specific
plans to join in and become a member of global agricultural supply chain which was

founded by leading agricultural production corporations.
3.3.2.4. Improve the quality of human resources