Recommendations to enhance exported activities of tien phong plastic join stock company in new zealand market

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Recommendations to enhance exported activities of Tien Phong Plastic Join Stock Company in
New Zealand market
PREFACE
I declare that this report is my own unaided work. It has not been submitted
before.
If violated, I am solely responsible for and bear the punishments of the Institution
and University.
Student Name and Signature
Nguyen Thi Anh Hong
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Recommendations to enhance exported activities of Tien Phong Plastic Join Stock Company in
New Zealand market
ACKNOWLEGEMENT
Firstly, I would like to express my sincere gratitude to my advisor Msc. Tran Thi
Minh Trang and Pham Thi Yen for the continuous support of my study and related
research, for her patience, motivation, and immense knowledge. Her guidance
helped me in all the time of research and writing of this thesis. I could not have
imagined having a better advisor and mentor for my study...
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Recommendations to enhance exported activities of Tien Phong Plastic Join Stock Company in
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TABLE OF CONTENTS
PREFACE.................................................................................................................. i
ACKNOWLEGEMENT...........................................................................................ii
TABLE OF CONTENTS.........................................................................................iii
LIST OF ABBREVIATIONS..................................................................................vi
LIST OF TABLES..................................................................................................vii
LIST OF FIGURES................................................................................................viii
INTRODUCTION.....................................................................................................9
CHAPTER 1: LITERATURE REVIEW................................................................11
1.1 General information of Export...........................................................................11
1.1.1 Definition........................................................................................................11
1.1.2 Roles of export activities................................................................................11
1.1.3 Export forms...................................................................................................14
1.2 The factors affect exported activities.................................................................18
1.2.1 Capital............................................................................................................18
1.2.2 Quality and production capacity.....................................................................18
1.2.3 Technology.....................................................................................................18
1.2.4 Human resources............................................................................................19
1.2.5 Foreign marketing...........................................................................................19
1.3 The legal framework of Vietnam Government for export..................................19
1.3.1 Export promotion policy.................................................................................19
1.3.2 Financial and credit policy..............................................................................20
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1.3.3 Trade liberalization policy..............................................................................22
1.3.4 Participate in world economic organizations..................................................22
CHAPTER 2: EVALUATION EXPORTED ACTIVITIES OF TIEN PHONG
PLASTIC J.S.C IN NEW ZEALAND MARKET...................................................24
2.1 General information of Tien Phong Plastic J.S.C..............................................24
2.1.1 The foundation................................................................................................24
2.1.2 Achievements.................................................................................................25
2.1.3 Organization...................................................................................................27
2.1.4 Business services............................................................................................29
2.1.5 Products and markets......................................................................................29
2.1.6 Results of business activities..........................................................................32
2.2 New Zealand market and the situation of exported activities in New Zealand
market...................................................................................................................... 33
2.2.1 The characteristics of New Zealand market and the legal basic of exported
activities between Vietnam and New Zealand.........................................................33
2.2.2 The current situation of exported activities in New Zealand market...............36
2.3 SWOT analysis of exported activities in New Zealand market..........................43
2.3.1 Strengths.........................................................................................................43
2.3.2 Weaknesses....................................................................................................46
2.3.3 Opportunities..................................................................................................49
2.3.4 Threats............................................................................................................51
CHAPTER 3: RECOMMENDATIONS TO ENHANCE EXPORTED
ACTIVITIES OF TIEN PHONG PLASTIC J.S.C IN NEW ZEALAND MARKET
................................................................................................................................. 53
3.1 Recommendations to solve the immediate problems.........................................53
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3.1.1 Use plastic recycled materials.........................................................................53
3.1.2 Focus on high quality product lines................................................................53
3.2 Recommendations to promote further in the future...........................................53
3.2.1 Determine clearly marketing strategies for export..........................................53
3.2.2 Establish an export marketing department......................................................58
3.2.3 Develop corporate culture...............................................................................58
CONCLUSION.......................................................................................................61
REFFERENCES......................................................................................................62
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Recommendations to enhance exported activities of Tien Phong Plastic Join Stock Company in
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LIST OF ABBREVIATIONS
AANZFTA Asian-Australia-New Zealand Free Trade Agreement
ASEAN Association of Southeast Asian Nations
EPFR Emerging Portfolio Fund Research
FDI Foreign Direct Investment
J.S.C Joint Stock Company
HPDE High-density Polyethylene
PP Polypropylen
PPR Polypropylene Random
PT Production Team
PVC-U Unplasticised Polyvinyl Chloride
TPP Trans-Pacific Partnership
VPA Vietnam Plastic Association
WTO World Trade Organization
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LIST OF TABLES
Table 2.1: Business Results of Tien Phong Plastic J.S.C from 2012 to 2014..........32
Table 2.2: Export Turnovers from 2013 to 2014.....................................................37
Table 2.3: Export profit rate from New Zealand market..........................................39
Table 2.4: Structure of export goods to New Zealand from 2012 to 2014...............40
Table 2.5: Structure of New Zealand market from 2012 to 2014............................42
Table 3.6: Percentages of export profit in total revenue..........................................46
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Recommendations to enhance exported activities of Tien Phong Plastic Join Stock Company in
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LIST OF FIGURES
Figure 2.1: Organizational Chart.............................................................................27
Figure 2.2: Revenue structure in 2014.....................................................................37
Figure 3.3: Process of making marketing strategy for export..................................55
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INTRODUCTION
Vietnam is in the opening period, the domestic firms are gradually
integrating into the regional and the world economy. In recent years, the economy
of Vietnam is constantly evolving following by the increasing sharply of export
turnover with the requirements of a highly qualified force of economy and foreign
trade. To meet this need, many universities concerning economic and foreign
business including ISE are continually improving the economic bachelor training.
However the study in classroom is not all the studying in fact. To really having an
actual experience necessary for finding a future job, an economics student should
obtains a really rewarding internship.
As a student of economics at the Vietnam Maritime University, I aware this
is the extremely meaningful internship to gain actual knowledge and experiences.
To better understand the exportation of Vietnamese firms, I chose TIEN PHONG
PLASTIC JOIN STOCK COMPANY for my dissertation because it is the place
having enough major for me to understand and learn.
After one month, I really get the actual knowledge about the export activities of
the company to New Zealand. Therefore I pleased to present my recommendations
about enhancing exported business activities in New Zealand in my dissertation.
Necessity
Exporting is an important activity in the integration process of world
economy. Participating and developing export activities helps Vietnamese
businesses to become stronger and more comprehensive development. Recognizing
such importance, the author understood and analyzed the export activity of
Tienphong Plastic J.S.C in a big market such as New Zealand to see the panoramic
view of the current export situation of Vietnamese firms.
Methodology
The paper is based on the actual observation and describe the situation of
exported activities on the perspective of Tien Phong Plastic J.S.C. Besides the
author collected the results of business activities related to the activities from export
business in New Zealand market.
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Scope of Research
The enterprise has been operating since 1960. However the paper only
focuses on the exported activities of the company in New Zealand market over last
three years.
Research Finding
The author understands the situation of exported activities results in New
Zealand from which evaluate that results then provide recommendations to enhance
the export activities in New Zealand market.
The structure of dissertation
There are three main parts in my report:
Chapter I: Literature Review
Chapter II: Evaluation exported activities of Tien Phong Plastic Join Stock
Company in New Zealand
Chapter III: Recommendation to enhance exported activities of Tien Phong
Plastic Join Stock Company in New Zealand
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CHAPTER 1: LITERATURE REVIEW
1.1 General information of Export
1.1.1 Definition
Exports of goods are activities that goods and services are transmitted to out
of Vietnam's territory or special area located on the territory of Vietnam considered
as separate customs areas prescribed by law (Commercial Law, 2005).
In other words, “Export means an actual shipment or transmission of items
out of the United States.” (See § 734.2(b) of the Export Administration Regulation.)
Export is considered as a form of foreign market penetration with less risks
and low costs. A function of international trade whereby goods produced in one
country are shipped to another country for future sale or trade. The sale of such
goods adds to the producing nation's gross output. If used for trade, exports are
exchanged for other products or services. Exports are one of the oldest forms of
economic transfer, and occur on a large scale between nations that have fewer
restrictions on trade, such as tariffs or subsidies.
1.1.2 Roles of export activities
1.1.2.1 Support for the development of economic
According to Export and Import Syllabus of National Economy University,
export is recognized as a basic activity of external economic activities and a mean
of promoting economic development. The expansion of exports to increase foreign
currency income for the country and for import demands serving for economic
development is an important objective of trade policy.
a. Exports create capital sources primarily for serving industrial imports of the
country.
Industrializing country in appropriate steps is the essential way to overcome
poverty and slow development of our country. To industrialize the country in a
short time, the country needs a huge capital to buy import machineries, equipment
and advanced technology.
Funds for imports may be formed from sources such as:
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- Exports of goods
- Foreign investment
- Loan and Aid
- Income from tourism activities and services
- Export of labor
Sources of capital from foreign investment, debts, loans or aids are important
but also have to pay one way or the other way in the latter periods. The most
important source of capital for industrialization and import is export. Exports decide
upon the scope and pace of import growth.
b. Exports contribute to economic restructuring
The structure of production and consumption has changed immensely powerful.
It is the result of the technological revolution and the modern science. The
economic restructuring during industrialization conformity with the development
trend of the world economy and be necessary for our country.
There are two perspectives on the impact of exports on production and economic
restructuring:
First of all, exports just only are the consuming of residual products from
production exceeding domestic demand. In backward and developing country,
production basically not enough for domestic consumption. Therefore, if only
passively waiting in the "excess" of production, exports still small and growing
slowly. The domestic production and the economic structural changes will occur
very slowly.
The second is considering the market, especially the world market, as an
important direction for the organization of production. This second perspective is
starting from the needs of the world market to organize production. This direction
impacts positively on economic restructuring, promote the development of
production. This impact on production can be realized through:
- Exports facilitate favorable development opportunity for related sectors. For
example, the development of plastic pipe exports will create growth
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opportunities for plastics manufacturing industry or raw materials for the
plastics industry. The development of industry food processing exports such
as vegetable oil, tea, etc. can be accompanied by the development of the
manufacturing processing tools industry.
- Exports create the scalability for consumer market, contributing to the
production development and stability.
- Exports facilitate expanded ability to provide inputs for production and
improve the production capacity of the country.
- Exports create economic and technical premises aimed at improving and
enhancing the production capacity in the country. This mean export is an
important mean create capital, techniques and advanced technologies from
the external world into Vietnam to modernize the country's economy,
creating a new production capacity.
- Through export, commodity of our country will participate in the
competition on the world market in terms of price and quality. This
competition requires us to reorganize production and production structure
formation constantly adapting to the market.
- Exports also requires companies to keep innovating and finishing the work of
business management, boosting production and expanding the market.
c. Exports have positive impact to solving employment and improve people's
lives.
The impact of exports on employment and life includes many aspects.
Developing exportation is directed attracting millions of workers to work with a
quiet attractive salary.
Exports also create capital sources to import essential consumption items
directly serving life and meeting on abundance demands of the people.
Importantly, exports direct impact on production, making both scale and speed
of production increasing, restoring old trades and creating new industries. The new
division of labor requires labor used more, higher labor productivity and people's
living standards be improved.
d. Exports is the basis for expanding and boosting the external economic
relations of our country.
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It is clearly to see that export and foreign economic relations have
interdependence interaction. Although exports appear sooner the external economic
activity, but it creates conditions that promote economic activities grow. For
example export and production technology export promote credit relations,
investment and international transportation. On the other hand, that external
economic relations pave the way for export expansion.
In summary, promoting export is considered as an issue of strategic significance
for economic development and implementation of national industrialization.
1.1.2.2 Support for enterprises
Export is the form penetrate foreign markets with less risk, not costly and
easy to apply in the early stages of international market penetration of enterprises.
Exports can bring to business many benefits as following:
- Increase sales of businesses
- Enterprises are able to gain experience in international business, using
excess capacity to engage in export activities.
- Exports help businesses reduce risks when the domestic market has some
fluctuations
- Some foreign markets bring higher profits for businesses than the domestic
market
- Enterprises can develop a larger customer system to serve the business
strategic of its business.
1.1.3 Export forms
According to Marketing of Exports and Imports Syllabus, there are five main
types of exportation: direct and indirect exports, export outsourcing, re-export and
transshipment.
1.1.3.1 Direct export
Direct export is a direct sales activities of a company to their customers in
overseas markets.
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Direct export includes two following forms:
- Sales agent is a form of sales not on behalf of the trustees to receive salary or
any part of commissions based on the value of goods sold. In fact, sales
agents works as salesman of the company in foreign markets. The company
will contract directly with their overseas customers.
- Distribution agents who buy the company's products for sale under the
distribution channel in areas where the company assigned. Company
controlled distribution scope and distribution channels in foreign markets.
Distribution agents accept the entire risks of the sale of goods in the market
was demarcated and profit through the difference between the purchase price
and sale price.
1.1.3.2 Indirect export
Indirect export is a form of selling goods and services abroad through
intermediaries (third party). The major third parties in the export business are:
agents, export management companies and export business companies. These
middlemen do not possess the goods of the company but assist other companies
exporting goods to foreign markets.
- Agents are individuals or organizations representing exporters perform one or
a certain number of activities in foreign markets. Agents only perform a
certain task entrusted to the company and receive remuneration. Agents do
not take possession and ownership of goods. Agents are who establish
contractual relations between the company and customers in foreign markets.
- Export Management Company is the company entrusted and managing the
export of goods. The company operates on behalf of companies exporting, so
they are considered as the indirect exporters. Export management companies
simply make the export procedures and receive export service charges. The
essence of management works are doing export management services and
gain a certain remuneration from such activities.
- Export Business Company is a company operating as an independent
distributor with the function of connecting foreign customers with the
domestic export companies to export consumption goods to foreign
countries. The essence of export business companies is performing export
services to connecting foreign clients to domestic export companies.
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- Transport Agent is the company performing transport services and activities
related to the importing and exporting of commodities such as customs
declaration, applying tariffs, forwarding and insurance.
1.1.3.3 Export outsourcing
Export outsourcing is an activity of which one party (called the Order)
delivery of materials, semi-finished products, with the all machines, equipment,
experts to the other parties (called the Outsourcing) to produce a new item at the
request of the order. After manufacturing completed, the Order receive these
merchandise ordered from the outsourcing then paying for the manufacturer called
outsourcing. When processing activities beyond national boundaries, it is called
export outsourcing.
In summary, the export outsourcing is bringing the production elements
(mainly raw materials) from abroad to produce goods not for domestic consumption
but for export to gain profit from the different currency due to wages brought.
Ultimately, the export outsourcing is an exports form that labor is used (shown in
the goods), not as a labor export to foreign countries.
There are two types of offshore outsourcing:
- The one type is that the ordering party supports raw materials or semi-
finished products (not subject to tariffs) for the outsourcing company to
produce goods then return goods to the ordering party. Here is still no
transfer of property rights for raw materials, semi-finished products. In fact,
this is a form of "hired" for the ordering party so the outsourcing party does
not have the right to control their products.
- Another type is that raw materials or semi-finished products are exported to
outsourcing of processing and then import finished products back. In this
relation, property rights of raw materials, semi-finished products have been
delivered. Therefore, when importing back, all components of the actual
value added are subject to tariffs. In essence this is a form of ordering party
delivering materials and technical assistance for outsourcing party then
buying the products.
There are two exports outsourcing forms:
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- Outsourcing industrial products for export (including handicrafts)
- Outsourcing agricultural products for export (including crop products and
livestock production).
1.1.3.4 Re-export and transshipment
Each country has its own definition of re-export. Many Western European
countries and Latin America concept re-export as the exports foreign goods not yet
been processed in their country from the customs warehouse. UK, US and some
other countries consider it as the export of foreign goods unprocessed in domestic
whether such goods already circulated inland or not. Therefore, almost countries
agreed that the conception of re-exports is export again goods previously imported
to foreign countries that not yet been processed in the re-export country.
According to Export Administration Regulation, “Re-export means an actual
shipment or transmission of items subject to the EAR from one foreign country to
another foreign country. For purposes of the EAR, the export or re-export of items
subject to the EAR that will transit through a country or countries, or be
transshipped in a country or countries to a new country, or are intended for re-
export to the new country, are deemed to be exports to the new country.” (See §
734.2(b) of the EAR.)
Re-export transactions include import and export activities for the purpose of
earning larger foreign currency than initial capital outlay. This transaction always
attract three types of countries: export countries, re-export countries and import
countries. Re-export can be done in one of two following forms:
- Re-export in the true sense, cargoes shipped from the export country to the
re-export country then be exported from the re-export country to the import
country. Opposite to the movement of goods is the movement of money. The
re-exporter pay money for the exporter and receive money from the importer.
- Transshipment is a form of buying goods from a country or territory to sell to
a country or territory outside the territory of Vietnam without procedures for
import into Vietnam and procedures for export from Vietnam. The goods are
shipped directly from the exporting country to an importing country without
crossing the border of Vietnam; or goods are transported from exporting
countries to importing countries through border gates of Vietnam but without
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procedures for import into Vietnam and procedures for export out of
Vietnam (Commercial Law, 2005).
1.2 The factors affect exported activities
From the perspective of businesses, export promotion may be understood as the
sum of the measures that businesses can use to increase the ability, scope and
effectiveness of their export activities. Basically, the factors affecting the export
promotion of enterprises include 6 elements as follow:
1.2.1 Capital
In international trade, trading contracts often have very big values. Therefore, it
requires a lot of capital for businesses engaged in exports. Moreover, the payment in
international trading activities are not quick as domestic trading activities, not to
mention the risks comes from the partners, so the ability to mobilize capital
influences greatly to the ability of performing the contract later of exports
enterprises.
1.2.2 Quality and production capacity
The quality of products is a prerequisite for market domination because foreign
markets, especially in developed countries, often be very difficult markets. If
quality of products is not guaranteed, it's difficult to compete with other competitors
in the international market.
Besides the quality, the production capacity is also a key factor influence to the
decisions of efficiency of business. Because the production capacity expressed in
the time, speed, both quality and quantity of production.
1.2.3 Technology
Technology has always been the core issue of every business. It has a decisive
effect on productivity, product quality, production costs, etc. Therefore, it decided
to competitiveness of enterprises in the international market where the competition
usually takes place very harshly.
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1.2.4 Human resources
Human Resources is the most important internal factor of all types of businesses
and productivity, labor quality will determine the success or failure of the
enterprise.
1.2.5 Foreign marketing
Foreign market and domestic market always have a great differences.
Marketing activities will adapt the operation and products of the business with the
needs of the exports market.
In foreign marketing, information of foreign market is the key factor for
international businesses enables enterprises to understand the needs, trends and
abnormal changes of the world market or the volatility related to politic and military
might affect the operation of the business. Businesses can access and capture this
information or not have great influence on the efficiency of international business of
the companies.
1.3 The legal framework of Vietnam Government for export
1.3.1 Export promotion policy
First of all, the government always try to make political-social stability, good
international relations, legal framework is complete, clear, transparent and under the
stable direction; policy mechanisms and tools of Macroeconomic governance
reasonable, including interest rates and exchange rates, have the effects of
promoting exports and restricting imports.
Government invests finance and facilities for the collecting world market
information to support export businesses, helping they communicate with foreign
partners to look for potential markets and business opportunities; and promote
export activities such as participating in international fairs to exchange information
on trade with foreign businesses.
Vietnam currently has three types of promote exports policy including
Commodity Policy, Market Policy and other Supporting Policies. Firstly,
Commodity Policy in which the State give regulations on the list of goods and
services that be allowed or not allowed to export to foreign countries in order to
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help businesses more easily in the selected export products. Second, Market Policy
gives orientations and measures made by Government to support for enterprises in
maintaining and expanding the market. Besides the policy help to build traditional
markets and major markets while providing information on the route of
international economic integration, particularly in the commercial fields as well as
the right support measures to helps the national involved organizations to be
successful. Finally, Supporting policies such as tax policy, investment policy, credit
policy and exchange rate policy. Such policies do not exist in isolation but are
combined together in overall to serve the development goals of the international
trade relations in particular and socio-economic development in general.
1.3.2 Financial and credit policy
Along with measures to promote investment in the field of manufacturing export
goods, the Government also encourages various economic sectors involved in
export business by fiscal and credit measures:
Export subsidies: In the WTO, subsidies are understood as any financial support
from the State or a public organization (central or local) benefits for business or
manufacturing industry. Vietnam was an official member of the WTO since 2007,
after joining the organization, some form of subsidies in Vietnam no longer
suitable. Accordingly, Vietnam committed to the complete elimination of subsidies
for import substitution (such as preferential tax at the rate of localization) and
exports subsidies in the form of direct grant from the state budget (as subsidy for
export activities, exports turnover reward, interest support for export contracts ...)
will not be performing since joining the WTO.
Tax incentives for export goods: the impacts of tax to exports is the downstream
impact to stimulate exports. Most countries now tend to encourages exports so the
taxing on exported goods or inputs used for exports shall enjoy certain incentives.
Especially in Vietnam, when lacking of foreign currency to import new
technologies, the tax policies for exports are considered carefully by the policy
makers to so that the most beneficial to enterprises engaged in exports.
Vietnam offering tax incentives with many items such as goods imported for
direct using in scientific research and technological development; goods produced,
outsourced, recycled or assembled in non-tariff areas unused materials and
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