OVERVIEW OF DRAGON FRUIT EXPORT INTO CHINESE MARKET
Dragon fruit production in Viet Nam
Vietnam is the leading global exporter of dragon fruit, boasting the largest cultivation area and yield in Asia While dragon fruit is cultivated across nearly all provinces, significant large-scale farming is concentrated in Binh Thuan, Tien Giang, and Long An These three provinces account for approximately 92% of the total cultivation area and around 96% of the nation's dragon fruit production.
Binh Thuan province dominates dragon fruit cultivation in Vietnam, contributing 63.2% of the total area and 68.4% of the national output, far surpassing Long An's 17.3% area and 14.2% output, and Tien Giang's 10.9% area and 13.7% output Additional planting regions are found in southern provinces such as Vinh Long, Tra Vinh, Tay Ninh, and Ba Ria-Vung Tau, as well as northern provinces including Lang Son, Vinh Phuc, Hai Duong, Quang Ninh, Thanh Hoa, and Hanoi.
Recent years have seen dragon fruit cultivation yield high profits for growers, with prices during the low season ranging from USD $0.15 to $0.25, often surpassing those in peak season The dragon fruit harvest period spans from April to October, peaking between May and August Various dragon fruit varieties have been developed to enhance productivity, quality, and adaptability to different land and climate conditions Consequently, dragon fruit has become an economically viable crop, offering a significant competitive advantage over other agricultural products.
China is the primary consumer market for Vietnam's dragon fruit, with exports from 2011 to 2015 comprising 81.2% of the total volume and 72.8% of the total value Since 2011, Vietnamese dragon fruit has been exported to China through two border gates.
In the border regions of Po Chai in Guangxi province and Ha Khau in Yunnan province, residents engage in the buying and selling of dragon fruit, facilitated by various border gates Notably, Chinese citizens benefit from an exemption on import taxes and VAT, allowing them to bring in goods valued up to 8,000 yuan per person per day.
In November 2020, the export value of various dragon fruit products, including fresh, frozen, juice, and dried forms, was estimated at 82 million USD, marking an 8.9% decline compared to the same period in 2019, according to the Import and Export Department of the Ministry of Industry and Trade.
11 months of 2020, dragon fruit exports of all kinds were estimated at 1.08 billion USD, down 10.2% over the same period (vnbusiness.vn, 2020)
Figure 1.1: The export situation of dragon fruit (2019 - 2020)
Export activity of dragon fruit in Viet Nam
1.2.1 Dragon fruit export theory a The definition
Exporting involves promoting and transporting goods from Vietnam to distinct customs areas, as defined by regulations for industrial and business growth This process is more complex than domestic transactions due to the use of foreign currency for payments Exports are a crucial component of international trade and significantly impact global business dynamics.
Dragon fruit export involves the sale and transportation of dragon fruit from Vietnam to international markets, utilizing currency as the payment method This process adheres to established regulations and legal frameworks The significance of export activities lies in their contribution to the economy and the promotion of Vietnamese agricultural products on a global scale.
The export of agricultural products serves as a crucial source of capital accumulation for importing and enhancing production, which is vital for the country's industrialization and modernization Additionally, it positively impacts living standards by generating jobs and increasing workers' incomes Furthermore, agricultural exports play a significant role in expanding external economic relations, thereby strengthening the nation's position in the global market Lastly, these export activities facilitate the improvement of economic policies and management practices in alignment with international laws and standards.
1.2.2 Criteria for evaluating the quality of exported dragon fruit
Dragon fruit that wants to be exported to the Chinese market must fully meet the following criteria (ratracosolutions.com, 2020):
Table 1: Quality standard table for exporting dragon fruit to China
Fresh dragon fruit, red skin, white flesh.
A number of broken ears ≤ 3 years/left, blue to yellow-green, bright green ears.
Materials with broken ears close to the left are not accepted.
The left peduncle must be cut close.
The left throat must be cleaned.
The ripeness of the fruit reaches 4-6 colors according to the following standards:
- About 75% of the deep red color appears on the surface of the fruit skin, the ears are blue.
- About 90% of the surface of the shell is pink with a few spots of blue, the ears turn from yellow-green to bright green.
- About 95% of the surface of the shell is bright pink with some blue spots, the ears turn from yellow-green to bright green.
Make sure the fruit has enough weight:
Rate of the unused portion About 40% of fruit weight (Including left skin, left stalk, left ear) Inner state White flesh, black seeds, firm flesh.
1.2.3 Dragon fruit export policy in Viet Nam
To enhance dragon fruit production, improve product quality, and facilitate optimal export conditions to the Chinese market amid the Covid-19 pandemic, the Ministry of Industry and Trade has urged the Ministry of Agriculture and Rural Development, along with provincial People's Committees, to collaborate on implementing specific policies.
For the Ministry of Agriculture and Rural Development:
Collaborate with key agencies under the Ministry of Industry and Trade, along with associations and businesses, to enhance supply and demand connections Focus on boosting the domestic purchase and consumption of dragon fruit and other seasonal fruit products This initiative aims to ensure a safe production process in compliance with Covid-19 prevention and control measures.
For the People's Committees of the provinces in the growing areas:
Gardeners, cooperatives, and companies should adjust their production plans and harvest schedules until customs clearance at the border normalizes Collaboration with the Ministry of Industry and Trade and other key sectors is essential to activate the distribution system and enhance the supply-demand relationship Emphasizing e-commerce platforms will be crucial for product launch and distribution efforts.
ANALYSIS OF VIETNAM DRAGON FRUIT EXPORT ACTIVITIES
The quantity and dragon fruit export price
Vietnam's unique geography and external factors have positioned dragon fruit as a promising market, with expectations of a 3.7% revenue increase in exports from 2020 to 2025 Despite the potential, the export quantity has faced significant challenges since 2020, leading to oversupply in the domestic market Key obstacles include restrictions during the Covid-19 pandemic, which hindered export flows and logistics As a result, the total revenue from dragon fruit exports in the first three quarters of 2020 fell to $961.4 million, reflecting a 10.8% decline compared to the previous year.
Vietnam has a total dragon fruit cultivation area of 50,000 hectares, with 95% dedicated to white flesh varieties and 5% to red flesh The primary regions for dragon fruit production are Tien Giang, Long An, and Binh Thuan, which collectively account for 37,000 hectares With an impressive yield of 22.7 tons per hectare, Vietnam's annual dragon fruit production reaches 700,000 tons Notably, 80-85% of this production is exported to 40 countries, with Thailand being a significant market, generating a turnover of US$1.09 million.
Prior to the COVID-19 pandemic, the prices of white and red flesh dragon fruit ranged between 25,000 VND to 33,000 VND and 35,000 VND to 40,000 VND, respectively However, due to restrictions on cross-border trade, the price of this tropical fruit has significantly decreased by approximately 5,000 VND to 6,000 VND per kilogram.
(Dragon fruit price rises as export opportunities open up, 2021).
The quality and categories of dragon fruit export in Vietnam
a The quality of dragon fruit export
Dragon fruit, a member of the cactus family, originates primarily from tropical regions and is in peak season from April to October To ensure year-round productivity, Vietnamese farmers employ the Lightning technique during the off-season, which helps maintain both the yield and quality of the fruit.
Dragon fruit, recognized as a superfood, is rich in natural antioxidants such as betalains, which may help lower cholesterol, possess anti-inflammatory properties, and promote new blood vessel growth This low-calorie fruit is also a great source of essential vitamins, minerals, and dietary fiber, along with beneficial plant compounds like polyphenols, carotenoids, and betacyanins However, to successfully export dragon fruit to other countries, it must meet specific nutritional and quality criteria (Tridge, 2021).
Weight: depending on the import market:
The fruit does not contain harmful fungi or insects.
The fruit’s facade is good, 70% of the surface is smooth.
The nasal cavity is not more than 1cm deep and the fruit has no protruding nose.
The ears are straight, hard, green and over 1.5cm long (for the Chinese market, the longer the ear, the better).
The flesh is white and hard, the seeds are black.
The fruit has no mechanical damage or dark spots and no green spots or blemishes due to sun exposure or chemical spraying. b The categories of dragon fruit export
Dragon fruit, a significant export fruit, has emerged as one of Vietnam's "billion-dollar export products" in recent years The country primarily exports three popular varieties of dragon fruit.
Red dragon fruit, also referred to as pink flesh dragon fruit, is known for its striking red-pink flesh and preference for sunlight and well-drained soil These plants thrive in well-ventilated areas and typically bear fruit during the summer or autumn However, advancements in technology and agricultural engineering now allow for the manipulation of their fruiting season, enabling year-round harvesting.
White dragon fruit, characterized by its pink or red outer skin and white flesh, thrives in sunny environments and cool conditions This refreshing fruit, known for its hydrating properties and subtle sweetness, offers numerous health benefits, including weight loss, skin beautification, and cardiovascular support.
Purple dragon fruit is a hybrid of red and white dragon fruit, known for its remarkable pollination and flowering capabilities This variety features large, oval or egg-shaped fruits with vibrant pinkish-purple flesh, which can easily be mistaken for red dragon fruit Additionally, purple dragon fruit is easy to cultivate and yields high-quality fruit, making it an attractive option for growers.
The competitors of Vietnam's export dragon fruit
Vietnamese dragon fruit is facing fierce competition with other suppliers in Thailand, Cambodia, Indonesia, Malaysia, etc.
Fresh dragon fruit in the Chinese market has traditionally been sourced from domestic growers and imports from Vietnam However, Indonesia has now emerged as a third supplier, diversifying the sources of this popular fruit.
Chinese Customs has recently announced the approval of certain fresh dragon fruit imports from Indonesia, alongside those from Vietnam, as they meet stringent hygiene and quarantine standards The varieties permitted for import include purple, red, and white dragon fruit.
Thailand is currently a formidable opponent of Vietnamese dragon fruit About
In the past 6 to 7 years, Thailand has transformed dragon fruit into a key agricultural crop, aiming to develop it as a primary product As a result, the market share of Vietnamese dragon fruit exported to Europe has declined to just over 50%, while Thai dragon fruit has surged to the second position in the market, largely due to the temporary import and re-export of Vietnamese dragon fruit.
Cambodia is set to export dragon fruit to China, following a project initiated by the Cambodia Agricultural Research and Development Center in May 2020 to cultivate the fruit on 1,000 hectares of land, aiming to plant one million trees Additionally, plans are in place to establish a dragon fruit processing factory targeting exports to China and Vietnam If Cambodia secures an official export license for its dragon fruit, it will directly compete with Vietnamese dragon fruit, which is primarily consumed in China Experts express concern over this development, noting that Cambodia's limited dragon fruit cultivation area contrasts with the increasing demand in the Chinese market each year.
The process of exporting dragon fruit in Vietnam
A complete export process will help exporters save time and manpower For the dragon fruit export, exporters must follow the correct process and law.
The dragon fruit export process has the following steps:
Step 1: Negotiate and sign export contracts:
A dragon fruit export contract involves a Vietnamese trader selling dragon fruit to a buyer based in China, facilitating the transfer of ownership To establish this contract, the Vietnamese trader must be a registered legal entity or individual engaged in regular commercial activities The Chinese counterpart must also possess legal capacity and civil act capacity, ensuring both parties can engage in the transaction effectively.
When using a Letter of Credit (L/C) for payment, the seller should prompt the buyer to ensure the bank opens the L/C in accordance with their agreement It is essential to review the L/C for accuracy; if everything is in order, the seller can proceed with the delivery process However, if there are discrepancies, the seller must inform both the buyer and the bank to make the necessary corrections before continuing.
When making a payment via T/T in advance, the seller advises the buyer to ensure the full amount is transferred promptly It is essential to wait for the bank's confirmation before proceeding with the delivery.
With other payment methods such as postpaid T/T, the seller must deliver the goods before they can perform the payment work.
Step 3: Prepare goods for export:
To successfully export dragon fruit, producers must ensure that their goods meet specific contract requirements regarding quantity, quality, packaging, and preservation Given the perishable nature of fresh fruit, it is crucial to purchase and package the product on the same day, followed by immediate cold storage This necessitates selecting a skilled and healthy packing team capable of working diligently Once the goods arrive at the warehouse, they should be processed and packed without delay, regardless of the time of day.
Step 4: Check goods before delivery:
To prevent the return of substandard goods, the exporting party must thoroughly inspect the products for quantity, weight, quality, and potential disease transmission This inspection process should take place at both the production site and the border gate.
Step 5: Make the customs procedures:
To export dragon fruit, the exporter must declare the shipment and submit the necessary customs documentation This customs dossier includes a customs declaration or an equivalent document, along with other relevant paperwork.
Step 6: Hire vehicles and deliver goods for transport:
Dragon fruit exports to China are mainly by road Vehicle rental can be carried out by the seller or the buyer.
When the export contract specifies that the seller is responsible for hiring a vehicle to transport the goods, it is essential for the seller to arrange suitable transportation This requirement applies specifically under the delivery terms of CPT, CIP, DAT, DAP, and DDP.
If the export contract specifies delivery in the exporting party's country, the buyer is responsible for hiring transportation to return home This requirement applies when the delivery terms of the export contract are EXW (Ex Works) or FCA (Free Carrier).
Once the goods are loaded and set to depart, the importer should be prompted to settle the total payment to the exporter or pay any outstanding balance after the initial prepayment.
Contract liquidation marks the concluding phase of the official export process for dragon fruit However, when exporting dragon fruit under quota without a signed contract, this step is unnecessary.
The documents of dragon fruit export
Some points to notice when drafting and signing a contract:
Before signing, the conditions should be agreed upon
The contract must be explicit, precise, detailed and unambiguous.
The vendor of dragon fruit can directly export or entrust another unit (specializing in exporting) to export.
Mandatory terms within the contract:
In a global contract for the sale of products, the product name is crucial as it establishes the basis for product delivery and identifies the specific items being traded To ensure clarity and avoid ambiguity, the naming of products must be explicit and precise, adhering to the terms outlined in the sales agreement.
The term "dragon fruit" is commonly used to refer to various varieties available in the market To accurately describe dragon fruit, it's essential to include specific details such as the type of dragon fruit, its place of origin, and any necessary specifications.
Commodity: Vietnamese white flesh dragon fruit.
When negotiating a contract, importers prioritize the standard of merchandise, emphasizing clear criteria for product quality Essential factors to consider include shape, weight, color, taste, physical properties, composition, and other relevant aspects to ensure the products meet specified standards.
Dragon fruit typically exhibits a vibrant red or light red hue, which can vary based on the specific type and size of the fruit Upon harvesting, the color must be classified to ensure uniformity among large and small specimens.
Size, color, and harvested dragon fruit must be divided into 3 types (types 1, 2, 3).
There's no fruit with decay or defects.
The skin of the dragon fruit skin must be naturally beautiful, without black spots on the skin of the dragon fruit.
Codes are essential symbols and letters that facilitate the delivery, transportation, and preservation of products They should be easy to read and interpret, printed in durable ink or paint to prevent smudging, and displayed in a sufficiently large size Additionally, the use of images should not compromise the product's standards, and the codes must be composed of specific characters for clarity and effectiveness.
The seller is obliged to deliver the right quantity required within the contract. (v) Payment:
Payment is a crucial aspect of the purchasing process, with various methods available such as L/C, D/A, D/P, T/T, M/T, CAD, and cash, each offering distinct advantages and disadvantages It is essential to carefully evaluate these options to select the most suitable payment method For instance, when using L/C, the bank verifies the documents provided by the seller; if everything is in order, the bank processes the payment and notifies the buyer, who then reimburses the bank to obtain the documents needed to collect the goods In cases of quota exports, the buyer pays the seller directly.
A key element of the contract is the provision outlining the exporter's specific obligations, which ensures that both parties are committed to fulfilling their responsibilities The payment can only be released after the exporter has successfully delivered the goods Without this essential clause, the validity of the contract is compromised.
2.5.2 The custom clearance a Customs documents include
An economic contract between the seller and the buyer.
If the buyer is required to pay the seller, commercial invoices or documents of similar value will be required.
Essential documents for customs declaration include the Certificate of Origin (C/O), cargo details, phytosanitary certificate, declaration of transportation, customs certification, and border guard declarations Additionally, it is crucial to be aware of the time limits for submitting these customs declarations to ensure compliance with regulations.
Declarants must ensure they have adequate goods available for inspection at least four hours prior to the departure of the transport from the country For goods sent via express delivery service, this requirement is reduced to a minimum of two hours before departure This regulation is stipulated in the Law on Customs, 2015, emphasizing the importance of timely customs declaration.
15 days from the date of registration ( Law on Customs, 2014) d Ascertaining the provenance of exported products
Customs offices are responsible for reviewing customs declarations, associated documents, and the outcomes of physical inspections of goods In cases where the origin of exported products is unclear, customs authorities will request additional paperwork from customs declarants and conduct verifications at the manufacturing sites of the exported goods.
THE SOLUTIONS OF IMPROVING EXPORT ACTIVITIES
6 Le Phan Bao Duy 720I0139 Chapter 2 (2.3) 100%
VietGAP Vietnamese Good Agricultural Practices GlobalGAP Global Good Agricultural Practices
ACFTA ASEAN - China Free Trade Agreement
CHAPTER 1: OVERVIEW OF DRAGON FRUIT EXPORT INTO CHINESE MARKET 7
1.1 Dragon fruit production in Viet Nam 7
1.2 Export activity of dragon fruit in Viet Nam 8
1.2.2 Criteria for evaluating the quality of exported dragon fruit 9
1.2.3 Dragon fruit export policy in Viet Nam 10
CHAPTER 2: ANALYSIS OF VIETNAM DRAGON FRUIT EXPORT ACTIVITIES 12
2.1 The quantity and dragon fruit export price 12
2.2 The quality and categories of dragon fruit export in Vietnam 13
2.3 The competitors of Vietnam's export dragon fruit 15
2.4 The process of exporting dragon fruit in Vietnam 16
2.5 The documents of dragon fruit export 18
2.6 SWOT analysis of dragon fruit export 21
CHAPTER 3: THE SOLUTIONS OF IMPROVING EXPORT ACTIVITIES 25
Globalization is increasingly prevalent, particularly in the economic sector, as international trade fosters connections between diverse economies This trend has created numerous opportunities for countries to enhance their economic development, especially for rapidly developing nations like Vietnam.
China is a significant export market for Vietnamese fruit, accounting for approximately 70% of total fresh fruit exports Among the twelve key fruit trees in Vietnam, dragon fruit stands out as one of the five crops harvested throughout the year and is recognized as a vital component of Vietnam's competitive advantage in the global market Consequently, dragon fruit has emerged as the primary export product, contributing the largest share to the country's fruit export revenue in recent years.
Vietnam's integration into global trade is exemplified by its participation in the ASEAN-China Free Trade Agreement (ACFTA), effective since 2010 This agreement is anticipated to provide significant advantages for Vietnamese industries, with tariff rates slashed to 0% on nearly 8,000 product categories.
In 2021, Vietnam's dragon fruit exports predominantly targeted the Chinese market, representing 91.8% of the total export revenue for this fruit, which amounted to $301.8 million This figure reflects a growth of approximately 5.3% compared to the previous year, 2020.
Our team has selected the topic "Analysis of Dragon Fruit Export Activities in Vietnam" for our final report to examine the export process of dragon fruits to the Chinese market Additionally, we aim to provide recommendations to enhance Vietnam's dragon fruit export activities.
CHAPTER 1: OVERVIEW OF DRAGON FRUIT EXPORT
1.1 Dragon fruit production in Viet Nam
Vietnam is the leading country in dragon fruit exports, boasting the largest acreage and yield in Asia This fruit is cultivated across nearly all provinces, with significant large-scale farming concentrated in Binh Thuan, Tien Giang, and Long An These three provinces account for approximately 92% of the total cultivation area and around 96% of the nation's dragon fruit production.
Binh Thuan province leads in dragon fruit production, contributing 63.2% of the total area and 68.4% of the national output, significantly surpassing Long An at 17.3% and 14.2%, and Tien Giang at 10.9% and 13.7% Dragon fruit is also cultivated in several southern provinces, including Vinh Long, Tra Vinh, Tay Ninh, and Ba Ria-Vung Tau, as well as northern provinces such as Lang Son, Vinh Phuc, Hai Duong, Quang Ninh, Thanh Hoa, and Hanoi.
Recent years have seen dragon fruit cultivation yield high profits for growers, with prices ranging from USD $0.15 to $0.25 during the low season, surpassing those in the main season The dragon fruit season runs from April to October, peaking between May and August Various dragon fruit varieties have been developed to enhance productivity, quality, and adaptability to different land and climate conditions, making dragon fruit a viable and competitive crop compared to others.
China is the primary consumer market for Vietnam's dragon fruit, with exports to China representing 81.2% of the volume and 72.8% of the value from 2011 to 2015 Since 2011, Vietnamese dragon fruit has been exported to China via two border gates.
In the border regions of Po Chai in Guangxi province and Ha Khau in Yunnan province, residents engage in the trade of dragon fruit, with additional transactions occurring at various border gates Notably, Chinese citizens benefit from an exemption on import taxes and VAT, allowing them to bring in goods valued up to 8,000 yuan per person per day.
In November 2020, the export value of various dragon fruit products, including fresh and frozen dragon fruit, dragon fruit juice, and dried dragon fruit, was estimated at 82 million USD, representing an 8.9% decline compared to the same period in 2019, according to the Import and Export Department of the Ministry of Industry and Trade.
11 months of 2020, dragon fruit exports of all kinds were estimated at 1.08 billion USD, down 10.2% over the same period (vnbusiness.vn, 2020)
Figure 1.1: The export situation of dragon fruit (2019 - 2020)
1.2 Export activity of dragon fruit in Viet Nam
1.2.1 Dragon fruit export theory a The definition
Exporting involves promoting and transporting goods out of Vietnam or to specific customs areas within the country, as regulated by manufacturing and business development laws This process is more complex than domestic transactions due to the use of foreign currencies for payment Exports are a crucial aspect of international trade and play an essential role in the global economy.
Dragon fruit export involves the sale and transportation of dragon fruit from Vietnam to international markets, utilizing currency as the payment method This process is conducted in accordance with established regulations and legal frameworks The export activity plays a crucial role in promoting Vietnam's agricultural products globally and contributing to the country's economic growth.
The export of agricultural products plays a crucial role in accumulating capital for production development and advancing the country's industrialization and modernization It significantly enhances living standards by generating jobs and increasing worker incomes Additionally, agricultural exports foster external economic relations, bolstering the nation's position in the global market Finally, this export activity aids in refining the state's economic policies and management practices to align with international standards and regulations.
1.2.2 Criteria for evaluating the quality of exported dragon fruit
Dragon fruit that wants to be exported to the Chinese market must fully meet the following criteria (ratracosolutions.com, 2020):
Table 1: Quality standard table for exporting dragon fruit to China
Fresh dragon fruit, red skin, white flesh.
A number of broken ears ≤ 3 years/left, blue to yellow-green, bright green ears.
Materials with broken ears close to the left are not accepted.
The left peduncle must be cut close.
The left throat must be cleaned.
The ripeness of the fruit reaches 4-6 colors according to the following standards:
- About 75% of the deep red color appears on the surface of the fruit skin, the ears are blue.
- About 90% of the surface of the shell is pink with a few spots of blue, the ears turn from yellow-green to bright green.
- About 95% of the surface of the shell is bright pink with some blue spots, the ears turn from yellow-green to bright green.
Make sure the fruit has enough weight:
Rate of the unused portion About 40% of fruit weight (Including left skin, left stalk, left ear) Inner state White flesh, black seeds, firm flesh.
1.2.3 Dragon fruit export policy in Viet Nam
To enhance dragon fruit production, improve product quality, and optimize export conditions to the Chinese market amid the Covid-19 pandemic, the Ministry of Industry and Trade has urged the Ministry of Agriculture and Rural Development, along with provincial People's Committees, to collaborate on implementing key policies.
For the Ministry of Agriculture and Rural Development: