The imperative of subject
Internet was born as a turning point in communications history of mankind and plays more important role in all activities of man Experienced two boom in 1986,
Since its inception in 1991, the Internet has transcended the limitations of space and time, leading to the emergence of E-commerce as a vital component of global economic activities and trade Today, E-commerce is a rapidly growing trend that drives economic advancement worldwide.
In developed countries, E-commerce has rapidly gained popularity across various models such as B2B, B2C, and C2C, reshaping consumer habits and leading to a significant increase in the proportion of E-commerce transactions compared to traditional trading This trend is particularly evident in the agricultural and food product sectors, where E-commerce enhances product distribution, allowing customers to access products quickly and enabling companies like Alibaba and Japonshop to achieve substantial revenue growth.
Vietnam's e-commerce sector has experienced significant growth in recent years, as highlighted in the Ministry of Industry and Trade's 2009 e-commerce report The rapid expansion of the Internet has facilitated the rise of online trading, which has gained popularity among consumers, particularly office workers and students in major urban areas.
E-commerce websites have become the leading platform for online trading, enabling businesses to buy and sell goods and services effectively Various industries, including aviation, tourism, and supermarkets, have successfully leveraged these platforms to reach a broader audience and enhance their sales.
With the situation as on the development, sale and purchase of goods and services online has become a real trend, and certainly there will be strong growth in the
1 Viet Nam E-Commerce Report 2009, Page vi coming period as electronic payments become more popular and are familiar with both individual consumers and businesses
The Trade Promotion Center for Agriculture (Agritrade), a department of the Ministry of Agriculture and Rural Development (MARD), plays a crucial role in promoting trade activities within Vietnam's agricultural and rural development sectors Located at No 2 Hoang Quoc Viet Street, Cau Giay District, Hanoi, Agritrade manages the Exhibition Fair and Commerce Transaction Area Each year, Agritrade organizes numerous trade promotion events, both domestically and internationally, including the notable International Agricultural Trade Fair (Agroviet), workshops, training sessions in various provinces, and market research initiatives in foreign markets.
Agritrade has launched a significant promotional initiative focused on displaying agricultural products by establishing a permanent display area at the "Exhibition Fair and Commerce Transaction Area." This initiative aims to showcase, introduce, and sell local agricultural products and specialties to markets in Hanoi and surrounding provinces As a result, numerous products, including Gao tam Dien Bien, Seng Cu rice, Da Dui rice, and Son La mushrooms, have successfully secured their market presence and developed stable brands Agritrade envisions transforming this area into a prominent agricultural showroom, serving as a regular meeting point for buyers and sellers to exchange product information and negotiate deals Through this display area and organized trade promotion events, Agritrade effectively facilitates connections between producers and consumers.
The effectiveness of current display areas and traditional trade promotion programs for agricultural products in Vietnam is limited and faces several challenges To enhance trade promotion in this sector, it is essential to explore new models Embracing e-commerce appears to be a promising solution for improving agricultural trade in Vietnam, aligning with contemporary trends.
The integration of e-commerce models is essential and practical for Agritrade, as it enhances the promotion and marketing of regional agricultural products This strategic shift towards e-commerce applications not only supports Agritrade in fulfilling its responsibilities but also facilitates significant business expansion in the current market landscape.
Establish the main research subject
Through the learning process, survey and investigation, the authors found that the required objectivity and subjectivity are imposed Agritrade in the short term (1-3 years) and long term are:
- AGRITRADE will become a focal point for trade promotion activities in Vietnam Agriculture
- Approach E-commerce development trend and apply IT into operation on promoting agricultural products and local specialties
- Develop E-commerce model to provide a link between producers, traders and consumer of agricultural products
So I would propose the subject of my graduate thesis is “ E-Commerce development in agricultural trade promotion in Vietnam ”.
Research’s objectives
- To systematize basic concepts relating to E-commerce model and trade promotion
- Survey and research the activities of trade promotion activities of agricultural products and local specialties at Agritrade
- To propose solutions to develop E-commerce for agricultural trade promotion.
Research scope
The research focuses on the micro and limited aspects of Agritrade, specifically examining fundamental concepts related to agribusiness and the current situation in the sector The objective is to propose solutions for developing an e-commerce model that enhances agricultural trade promotion activities for Agritrade.
The research on the subject was conducted between January and March 2010 at Agritrade, focusing on the collection of survey data This primary data was subsequently enhanced by incorporating relevant secondary data from the past three years.
Delimitation of the research’s contents
The basic elements of E-commerce model
Table 0.1: The basic elements of E-commerce model for agricultural trade promotion
Developing a useful channel for both providers and consumers, ensuring that the process of resource management is done strictly, comprehensively and effectively
Revenue models Products trading are agricultural products and local specialties provided by the providers, producers and other source
Trend of internet shopping in Vietnam created a potential market for trade agricultural products online
Sum of all factors in the business scope of enterprises It includes numbers, revenue and profits of the competitors
In addition, the increasing number and quality of suppliers is the basis for evaluating market potential
Agritrade's primary objective is to ensure consistency in its strategic direction while fostering optimal conditions in infrastructure, finance, and personnel to effectively implement its model Additionally, it benefits from the support of various functional departments and the crucial assistance of the Ministry of Agriculture and Rural Development (MARD).
Researching and developing a convenience and simple E- commerce website for providers and customers
To effectively promote your website, it is essential to plan and implement strategic activities, including a comprehensive marketing campaign that highlights its features Additionally, organizing training courses for sellers will empower them with the necessary skills to successfully market and sell their products online.
The company wanted to sustainable development needs a well organized system to ensure effective implementation of plans and business strategy
Management Team responsible for making management strategy of enterprises Good team governance can make decisions to change or restructure business models when needed, contribute to build customers confidence.
Assign content to develop E-commerce model for Agritrade
This research aims to develop an E-commerce model for Agritrade by employing comprehensive research methods, including surveys to assess the current state of Agritrade’s activities It will involve an overall evaluation of internal and external impact factors, along with an analysis of results gathered from surveys and interviews with Agritrade staff, customers, and agricultural experts Ultimately, this study will evaluate the feasibility and strategic plans for implementing an effective E-commerce model tailored for Agritrade.
Utilizing survey findings and a thorough analysis of both primary and secondary data, I will create an E-commerce model that incorporates key market factors, human resources, financial considerations, and infrastructure requirements Additionally, I will enhance the sales process, streamline order management, and ensure efficient product delivery along with comprehensive support services.
Research methods
Data collection methods
6.1.1 Method of investigation of primary data
+ Candidates of survey: The main Candidates of survey are Agritrade’s staffs and customers (suppliers, producers and buyers)
For Agritrade’s staff: promotion situation of agricultural products, needs, capabilities and methods of application E-commerce model
For customers of Agritrade: The need of the applying E-commerce model on promoting agricultural products
For Agritrade’s staff: issue and collect directly at the Agritrade’s office
Agritrade prioritizes its customers by engaging with providers, producers, and consumers in the Northwest provinces Most questionnaires are distributed and collected during visits and at Agritrade's trade fairs, while others are sent via email to customers, including officers and students.
The survey data will be compiled and updated in a Microsoft Excel database for efficient processing and analysis This method is designed to gather information quickly, cost-effectively, and accurately, ensuring the most precise assessment and reliable results.
+ Advantages and disadvantages of this method
Advantages: Fast, convenient and efficient
Disadvantages: customers have little time to study carefully the questionnaire and they may feedback with incorrect answers
+ Sample of survey: I issue 45 questionnaires to Agritrade’s staffs and 30 copies to the Agritrade’s customers
In an insightful interview conducted at Agritrade's office, experts discussed the future of the agricultural products and foodstuffs market, emphasizing the company's strategic focus on local specialties and food They highlighted the necessity of adopting an appropriate E-commerce model to enhance current trade promotion activities The conversation also addressed the challenges and advantages of implementing E-commerce in agricultural promotion, shedding light on how Agritrade can navigate this evolving landscape to better serve its customers and boost market presence.
+ Objects of interview: Director and head of Business Department
+ Advantages and disadvantages of this method:
The advantages of this assessment include observing visual attitudes and response methods, which will allow us to evaluate the accuracy of the information provided Additionally, we will gather subjective comments from Agritrade regarding agriculture.
Disadvantages: Difficult to get an overview and objective assessment of the market, the business model of Agritrade
6.1.2 Methodology of Survey with secondary data
Through documents, reports and statistical relevance of reputable sources such as E- commerce report of Ministry of Industry and Trade, the relevant documents on the website of Agritrade
Data analysis methods
The synthesis and analysis of data will utilize the average value method, with results processed using Microsoft Excel after collecting all survey forms Company performance statistics will be presented through detailed analytical illustrations and diagrams, ensuring a comprehensive understanding of the data.
Analyzing and evaluating information through interview questions involves developing inquiries that span the entire industry and focus on specific companies Utilizing a meta-analysis method based on induction allows for the assessment of various issues, facilitating the collection and identification of common traits and characteristics.
THEORETICAL FRAMEWORK
E-commerce
E-commerce, also known as online trade, cyber trade, electronic business, and paperless commerce, is a rapidly evolving field that has gained significant recognition in recent years The term "E-commerce" has become the standard terminology, commonly appearing in international legal documents, while other names continue to be used interchangeably to convey the same concept.
- The concept of e-commerce in the narrow sense
In narrow sense, E-commerce merely restricted in sale and purchase of goods and services through electronic facilities, especially Internet and other communication networks
E-commerce, as defined by the World Trade Organization (WTO), refers to the electronic exchange of goods across borders, encompassing the production, marketing, sale, and distribution of products through telecommunications networks Prominent examples of electronically distributed products include books, music, and videos, which are transmitted via telephone lines or the Internet.
According to the E-commerce Commission of the Asia - Pacific Economic Cooperation (APEC), “E-commerce is business that conducted through the data transferring and digital information technology.”
- Broadly defined concept of e-commerce
In broad sense, E-commerce is financial and commerce transactions by electronic means such as electronic data interchange, electronic funds transfer, sending or withdrawals by credit card and other activities
According to this view, there are two definitions generalize the most complete range of E-commerce activities:
1 Source : “Thương mại điện tử”, www.wikipedia.org
2 Understanding WTO: Electronic Commerce, www.wto.org
The UNCITRAL Model Law defines e-commerce as encompassing a broad range of economic activities, with the sale and purchase of goods and services being just a small part of it The term "commercial" is interpreted widely to include all relationships of a commercial nature, whether contractual or not This encompasses various transactions such as trade for the supply or exchange of goods and services, distribution agreements, commercial representation, factoring, leasing, construction, consulting, engineering, licensing, investment, financing, banking, insurance, joint ventures, and the carriage of goods or passengers by different modes of transport.
E-commerce, as defined by the European Commission, involves conducting business through electronic means, utilizing the processing and transmission of electronic data such as text, sound, and images This broad definition of "commerce" encompasses not only the trade of goods and services but also a wider array of business activities The rise of E-commerce is poised to transform the operational dynamics of economies worldwide.
E-commerce encompasses all business strategies and management processes conducted through electronic channels, primarily utilizing the Internet and its associated technologies It is essential to recognize that e-commerce does not merely replace traditional business methods; instead, it enhances them through the integration of various business features Understanding this integration is crucial for leveraging the full potential of e-commerce.
Enterprise application integration traditionally focuses on connecting diverse systems and applications across organizational boundaries A key technology in this domain is Enterprise Content Management (ECM), which plays a crucial role in facilitating e-business operations.
1 UNCITRAL Model Law on Electronic Commerce with Guide to Enactment 1996, Page 3
E-commerce and traditional commerce, including the steps:
1 Consumers and providers find each other, consumers want to find a reliable supplier, while suppliers are conducting promotional activities, marketing, consulting and customer support, create trust and entice consumers to own
3 Organization coordination and delivery of goods;
5 Confirm the correctness of every step in the purchasing process
E-commerce distinguishes itself from traditional trade through its unique features, such as the creation of a "virtual store" that operates 24/7, eliminating the constraints of time and geographical distance This online platform allows for direct transactions without intermediaries, facilitating the development of online marketing channels and conducting surveys E-commerce is particularly effective for distributing digital products and services like movies, music, e-books, and consulting Success in the network economy is not solely determined by the size or wealth of a company, but rather by its ability to adapt quickly and flexibly to changes in the market, highlighting the importance of sensitivity to economic shifts.
The formation of E-commerce
E-commerce was born as an inevitable development in the harsh competitive environment To survive, Businesses must apply technological advances in effective way IT brings the magic of transformation itself and affects most sectors including the economy It changes the world The development of mature tools such as Internet, Email, and World Wide Web is the reason to release a new trading method: E-commerce
Traditional transactions involving documents are costly and time-consuming, significantly impeding international trade, especially with increasing trading volumes Additionally, these conventional methods expose numerous weaknesses Consequently, now is the ideal time to introduce innovative trading methods that offer greater advantages.
In 1969, the US Department of Defense launched the Advanced Research Projects Agency Network (ARPANET), marking the inception of the world's first operational packet switching network and the foundation of the global Internet During this period, the financial services industry began to automate processes such as check processing, credit card transactions, and Electronic Funds Transfer (EFT), which facilitated online payments and direct debits By the early 1980s, e-commerce activities expanded among businesses through electronic data interchange (EDI) and email, enabling the exchange of business documents like purchase orders By the late 1980s, e-commerce became increasingly integral to business operations, although it had not yet fully transitioned to the public Internet At this time, e-commerce technology was emerging alongside the growing global Internet, yet it remained unfamiliar to users, with many processes still lacking convenience and automation.
The launch of the World Wide Web in 1992 revolutionized the Internet, making it more user-friendly with improved interfaces and graphics, significantly reducing the technical skills required for navigation compared to earlier times.
E-commerce is developing rapidly on the global scale based on the industrial development of information technology (IT) IT industry is gradually occupied the leading position in the national economy of many countries Especially the organic combination of three components: industrial computers (networks, computers, electronics, software and other services), communications (landline telephone and satellite) and internal information (databases, audio-visual products, entertainment, publishing and providing information ) This combination is creating a new nature and role of the IT industry.
The situation of E-commerce development in Vietnam
The quality and quantity of websites play a crucial role in assessing the growth of E-commerce, even though they do not directly measure E-commerce application levels In Vietnam, as the integration of strategic partners for direct electronic data exchange continues to evolve, websites remain the primary platform for businesses to market products, promote services, and facilitate E-commerce transactions in both B2B and B2C formats.
According to a 2005 E-commerce report by MoIT, 46.2% of the 504 surveyed enterprises had a website, primarily located in urban areas with developed IT infrastructure By 2008, a survey of 1,600 companies revealed that most had adopted E-commerce applications to varying degrees Investment in E-commerce has proven effective, with the percentage of businesses having websites rising to 45%, a 7% increase from 2007 By 2010, nearly all surveyed businesses were utilizing E-commerce applications of various sizes and levels The survey also indicated that 100% of businesses were equipped with computers, averaging 25.8 per enterprise, and 98% had Internet connections, with 89% using broadband or leased lines Additionally, over 81% of enterprises utilized email for business, with usage rates of 96% among large enterprises and 80% among small and medium-sized enterprises.
After four years of implementing the overall Plan for E-commerce development from 2006 to 2010, E-commerce is not only located on two major cities, Hanoi and
Ho Chi Minh City, it has grown at most provinces of the country In the survey in
According to a 2009 survey by the Ministry of Information and Technology (MoIT), 53% of the enterprises surveyed are located outside Ho Chi Minh City and Hanoi The survey revealed that all local businesses are equipped with computers, with an average of 21.5 computers per enterprise, indicating that approximately 10.3 employees share each computer Furthermore, the majority of these businesses are connected to the Internet, predominantly through ADSL, while only about 2% still rely on dial-up connections.
In recent years, the rapid growth of the Internet and e-commerce has led to a significant increase in online sales, particularly among urban officers, students, and housewives The most common form of online sales now involves trading goods and services through e-commerce websites, which gained popularity for various products, including airline tickets, electronics, and hotel bookings, by late 2009 Businesses have adapted flexible payment methods, such as online payments, bank transfers, and cash, to cater to diverse buyer preferences Additionally, the rise of social networks with large member bases has transformed these platforms into viable marketplaces, allowing businesses and individuals to effectively engage with potential customers As online trading continues to evolve, it is poised for substantial growth in the coming years, especially as electronic payments become more widely accepted and familiar to consumers.
A recent survey of E-commerce website owners revealed that 87.6% of businesses are targeting other businesses and organizations, while 65.7% are focused on consumers This indicates that B2B transactions are becoming the preferred method for companies looking to implement E-commerce applications in the future.
The frequency of website updates is a key indicator of a business's professionalism and commitment to quality A survey revealed that over half of businesses only update their websites monthly or less, while fewer than 30% conduct daily reviews Additionally, only about 30% of these websites feature e-commerce capabilities These statistics suggest that many Vietnamese businesses fail to recognize the website's essential role as a communication channel and a means of ongoing customer interaction, leading to inadequate investment of time and resources in developing and maintaining their online presence.
A recent analysis revealed that 56.2% of businesses manage their own websites, while 43.8% rely on external service providers This disparity contributes to the inadequate information and communication features commonly found on these websites.
A recent survey revealed that the investment density in E-commerce applications is relatively low, with over 80% of businesses allocating a maximum of 5% of their annual operating expenses to E-commerce initiatives This investment primarily covers E-commerce software, website maintenance, and associated human resources Only 14% of businesses dedicate between 5-15% of their operational costs to E-commerce, while a mere 3.6% invest more than 15%.
The operation forms and E-commerce transactions
1.4.1 The forms of E-commerce activities a E-mail
Email, or electronic mail, allows partners such as consumers, businesses, and government agencies to exchange information online quickly and efficiently With its rapid transfer speed, email enables users to send the same message to multiple recipients simultaneously, regardless of their location Additionally, the cost of using email is significantly lower compared to traditional mailing and telephone communication.
Electronic payment is payment via electronic messages instead of cash handing With the development of E-commerce, electronic payment has expanded into new areas should be addressed:
Financial Electronic Data Interchange (FEDI) specializes in serving the electronic payments between companies trading electronically with each other
Internet cash, also known as digital cash, refers to money that can be purchased from banks or credit institutions and easily converted into other currencies online This form of payment is increasingly popular both domestically and internationally, thanks to advancements in digital technology Users buy internet cash using their local currency and transfer it to sellers via the Internet The rise in internet cash payments is attributed to several advantages: it allows for transactions of small value items and subscriptions with minimal transaction costs, eliminates the need for prior regulatory agreements between parties, and ensures the security of real money, reducing the risk of counterfeit currency.
An electronic purse, commonly referred to as an electronic wallet, serves as a digital storage for internet currency, primarily utilizing smart card technology This innovative payment method allows users to transfer funds seamlessly to anyone who can read the card, employing techniques akin to those used in online cash transactions.
The card resembles a credit card but features an electronic chip on the back instead of a magnetic strip, allowing it to store digital currency securely This digital money is only utilized upon transaction, ensuring that payment confirmations are authenticated and reliable This innovation plays a significant role in the realms of digital banking and digital securities trading.
The electronic payment system of banks encompasses various subsystems, including customer transactions through telephone and Internet payments, electronic funds transfers, and credit card processing It also facilitates payments between banks and settlement agents, such as restaurants and supermarkets, as well as internal payments within the banking system and between different banking systems Additionally, it incorporates Electronic Data Interchange (EDI) for streamlined transaction processing.
Electronic Data Interchange (EDI) facilitates the automated transfer of structured information between computers of various organizations, allowing them to conduct transactions without human intervention This method relies on predefined formats for data exchange, making it the most commonly utilized form of electronic communication in business, as recognized by UNCITRAL.
EDI, or Electronic Data Interchange, refers to the electronic transfer of information between computers using a standardized format It is extensively utilized globally, primarily for purchasing and distributing goods, including sending orders, confirmations, shipping documents, and invoices Additionally, EDI serves various other functions, such as facilitating payments for medical examinations and exchanging test results This process typically occurs over external networks, known as extranets.
“commercial networks” (net commerce) EDI came out into society before Internet
A Value Added Network (VAN) serves as a crucial link for EDI partners by facilitating communication between electronic computers This electronic system not only enables businesses to connect with computers globally but also provides efficient storage and search capabilities By utilizing a VAN, companies can seamlessly exchange digital content across various locations worldwide.
Content data is the goods that people need its content (in other words, the content is a commodity) not themselves carrying content such as news, books newspapers,
The UNCITRAL Model Law on Electronic Commerce, established in 1996, recognizes a broad range of content data, including music, movies, radio programs, television shows, software applications, and various types of tickets such as plane and movie tickets, as well as insurance policies.
In the past, content was delivered in physical formats such as disks, tapes, printed books, and packaging, requiring users to visit distribution points like shops and newsstands to make purchases Today, content is digitized and transmitted over networks, leading to a wealth of economic and business information available online As a result, a key focus of modern communication is the effective exploitation and comprehensive analysis of this digital information, particularly in the retail of tangible goods.
Sellers leverage multimedia technology through Web and Java to create virtual stores for online sales Internet users can browse these websites, view displayed products, and confirm their purchases through electronic payments Initially, the purchasing process was basic, with buyers selecting items and placing orders via forms on the website.
E-commerce transactions involve three primary groups: businesses, government entities, and customers These transactions are facilitated through various active forms of e-commerce and occur at multiple levels.
Figure 1.1: Models of E-commerce transactions
In these types of transactions mentioned above, these are three types will be common applied in Vietnam a Business to Business transaction (B2B)
“B2B describes commerce transactions between businesses, such as between a manufacturer and a wholesaler or between a wholesaler and a retailer” 1
Electronic transactions between businesses have been around for decades, with the use of Electronic Data Interchange (EDI) for sending and receiving orders, invoices, and receipts dating back to the late 1970s Initially, participation was limited to large enterprises due to the high costs associated with data transfer and employee training.
The rapid growth of Business to Business (B2B) e-commerce is transforming the landscape of commerce, offering numerous advantages for businesses By collaborating with specialized partners, companies can significantly shorten their production cycles, enhancing efficiency and driving innovation in their respective fields.
Business-to-business (B2B) transactions enable companies to save both time and costs in sourcing and purchasing raw materials for their production processes By utilizing online sales networks, businesses can efficiently acquire the necessary materials, streamlining their operations and enhancing overall productivity.
Benefits of E-commerce for businesses
E-commerce affects to most major types of business costs in the production process and conducting commercial transactions, including:
The rise of E-commerce significantly reduces costs for businesses by enabling them to replace multiple grocery stores with a single virtual platform that operates 24/7 This constant accessibility allows companies to reach a broader customer base while minimizing management expenses, particularly in inventory management The convenience of 24-hour access to virtual stores is a key advantage, enhancing the overall shopping experience for customers.
The rise of online product and service information empowers customers to enhance their skills in evaluating pricing and implementation processes As the E-commerce landscape evolves, consumers will gain continuous access to comprehensive product details and pricing, fostering improved communication with sales and support teams Additionally, E-commerce enterprises benefit significantly from cost savings associated with direct online payments; for instance, while traditional bank service fees for check transactions can reach approximately $1.20, electronic payment processing costs can be reduced to around $0.01 or even less.
Clearly, E-commerce is changing fundamentally the sales process of the enterprise
Businesses must reevaluate their communication strategies with customers in light of market changes Additionally, new enterprises should conduct research to effectively embrace e-commerce, leveraging its benefits to reach and engage new customers.
- Expenses related to procurement of the enterprise
E-commerce has significantly impacted procurement costs for businesses, particularly in the area of maintenance, repair, and operations (MRO) This shift emphasizes the importance of efficient purchasing strategies while excluding expenses related to the acquisition of final products and raw materials.
In traditional commerce, the procurement of Maintenance, Repair, and Operations (MRO) supplies involves a complex process where purchasing staff fill out requirement forms and research various catalogs for suitable products, often leading to high administrative costs that can exceed the value of the items ordered According to the OECD, companies with revenues over $500 million incur costs of $75 to $150 for each MRO order By implementing e-commerce in procurement, businesses can connect buyers and suppliers directly, streamlining the purchasing process through online platforms Electronic catalogs facilitate quick access to necessary products and ensure accurate product information, ultimately reducing input costs for enterprises.
In the past, large companies relied on proprietary value-added networks (VAN) for MRO supply through Electronic Data Interchange (EDI) However, the cost of EDI via the web has significantly decreased, now being only one-tenth of the expense associated with VAN As a result, many large organizations are transitioning their MRO procurement from VAN to the more cost-effective web-based solutions.
E-commerce has changed the logistics activities of business such as packing, delivery and turns it into information- business The impact of E-commerce to the cost of logistics enterprises is great significance, especially for logistic companies such as Federal Express (FedEx) or DHL
FedEx is a good example It began receiving orders online, shipping parcel packages and tracking them through their own networks since 1983 It took nearly
In just 12 years, the company grew its client base to 50,000, but after implementing FedEx-like services online from 1995 to 1998, it skyrocketed to 1 million customers in just three years Today, it is estimated that over 70% of the 3 million packages and parcels processed daily originate from online orders.
Thanks to internet applications, businesses can swiftly handle complex orders while effectively tracking and monitoring them Consequently, leading logistics companies like DHL, FedEx, and United Parcel Service (UPS) have integrated their logistics services—such as transportation, distribution, packing, loading, and unloading—into their websites.
In today's digital landscape, businesses can effortlessly track their packages globally, thanks to the advantages of online tools This streamlined shipping and goods inspection process not only accelerates payments but also enhances decision-making flexibility regarding production plans Additionally, it significantly reduces unnecessary transportation and unloading costs, ultimately improving overall operational efficiency.
In summary, by changing the structure, cutting costs of sales, cost of procurement and cost of logistics, E-commerce are making new success factors
Information technology and communication have revolutionized the way businesses operate, enabling them to trade, cooperate, and compete at unprecedented speed and lower costs The rise of e-commerce has facilitated the formation of interconnected business groups, establishing new production rules and divisions that enhance efficiency beyond traditional unstructured networking This "virtual networking" mechanism empowers enterprises to share real business risks and fosters innovative cooperation across all activities, driven by comprehensive reforms.
Early adopters of E-commerce often enjoy favorable conditions for developing innovative business models However, as E-commerce transactions become dominated by large enterprises, creating new models becomes increasingly complex Companies that attempt to redefine their strategies based on technology may encounter significant risks, particularly if leadership fails to clearly understand the rationale behind strategic shifts A notable example is IBM, which in 1996 launched two key initiatives: an electronic content platform and an E-supermarket called World Avenue Despite their efforts, IBM recognized early on that they lacked essential capabilities in editing, marketing, and retail, which hindered their success.
To operate as a 24/7 enterprise, businesses must prioritize the qualifications and adaptability of their workforce alongside their innovative capabilities In the fast-paced world of e-commerce, companies must continuously learn to navigate the complexities of evolving markets and technologies This requires the acquisition and processing of diverse information, enabling businesses to innovate consistently and gain a deep understanding of their own operations, as well as insights into customers, suppliers, and market trends.
The E-commerce requirements
E-commerce is not a spontaneous initiative; it is the consequences of the development of digitalize IT, and the electronic computer engineering Therefore, we just only really have and truly carry out rich content and effective E-commerce when we have a stable infrastructure of information technology (including the two divisions: electronic computing and electronic media)
The infrastructure encompasses both enterprise and national standards, aligning them with international benchmarks, engineering practices, and devices This system is not limited to individual businesses; it also functions as a national framework, contributing to a broader global information technology network that includes extensive distribution and telecommunications systems Additionally, it integrates individual trading systems, catering to the needs of each consumer.
Technological infrastructure encompasses both availability and affordability, highlighting the importance of cost-effective IT equipment and communication services This affordability is crucial for users, particularly in developing countries where living standards are typically lower, ensuring that essential tools like telephones, computers, and internet access are within reach for a broader population.
With the rapid growth of e-commerce, there is an increasing emphasis on integrating advanced security technologies into its infrastructure Ensuring security and safety is crucial not only for economic organizations but also for national security.
E-commerce touches to all people, from consumers to producers, distributors, government agencies, and both the technology and development
The rise of e-commerce necessitates two key requirements: individuals must be adept at navigating online platforms, and there is a critical need for skilled IT professionals who can keep pace with emerging technologies These experts should be capable of developing software tailored to the operational demands of the digital economy, reducing dependency on external resources.
In the realm of online business, proficiency in English is essential for all participants, as it serves as the primary language for both traditional trade and e-commerce This necessity predominantly affects developed countries and highlights a significant challenge within the e-commerce landscape Consequently, this requirement is poised to drive substantial transformations in education and training systems to better equip individuals for the demands of the digital marketplace.
Commercial transactions by electronic is setting up very high demands on security and safety, especially when it operates on the Internet/Web
Many individuals remain hesitant to conduct business online due to concerns about credit card security and the risk of financial fraud Buyers worry that their sensitive information could be compromised, while sellers fear non-payment for electronically signed contracts Additionally, data security is a significant concern across various sectors, as the frequency of cyberattacks continues to rise, even on well-protected networks Hackers employ various tactics, including phishing, password cracking, and sophisticated methods like IP spoofing and Denial of Service (DOS) attacks, heightening these fears.
Modern encryption techniques, such as public key and secret key encoding with key lengths of 1024 to 2048 bits, alongside technologies like SSL (Secure Sockets Layer) and SET (Secure Electronic Transaction), are essential for enhancing digital security Digital signatures, represented by electrical bits and validated through decoding, play a crucial role in this process However, sophisticated decoding techniques can still detect encryption, highlighting the need for a comprehensive national strategy on encryption and information safety programs by agencies, enterprises, and individuals.
E-commerce can only be done when there actually exists a development financial payment system It allows automatic payments (smart cards that have special importance for retail business) Without this system, the E-commerce application is only exchange the information and transaction still ends with direct payment or the traditional means of payment Then the effects of E-commerce are lower and it may not enough to offset the costs of technology equipment spent
The financial payment system linked to product coding and numbering is a global issue, governed by international standards set by EAN International and the Uniform Code Council, which are represented through barcodes Consequently, every product and service is encoded with a 13-digit number, while companies are assigned a unique code number ranging from 100 upwards.
100 000 digits The integration and establishing the system of product and companies code (commercial coding) for an economy (especially the economies of developing countries) is not simple
Market collapses can often be traced back to asymmetric information, a concept rooted in trade theory and information theory This disparity arises when sellers possess more knowledge about their products than buyers, leading to a lack of trust in product quality Consequently, buyers are only willing to pay an average price, which results in a market dominated by low-quality products, as sellers of high-quality goods are unable to effectively communicate their value.
In E-commerce, consumers lack the ability to physically inspect products before purchase, relying solely on digital information, which raises concerns about potential misinformation and fraudulent activities This highlights the need for an efficient and cost-effective quality assurance intermediary to mitigate risks that could negatively impact consumer interests Such quality assurance mechanisms are particularly crucial in developing countries, where traditional shopping practices involve direct interaction with products—allowing consumers to see, touch, taste, and test items before making a purchase.
Governments must determine whether the information society and the Internet pose a threat or an opportunity, a decision that can be complex For instance, France only reached a conclusion between 1997 and 1998, ultimately recognizing it as an opportunity Following this strategic decision, France began to establish a conducive economic, legal, and social environment for the digital economy, particularly focusing on E-commerce This included implementing various administrative services, such as income tax processing and other utilities like mail services, weather forecasts, and train schedules.
+ Recognize the legality of E-commerce transactions
Electronic signatures are legally recognized as valid forms of signing documents, including data messages and digital signatures Various legal institutions and appropriate agencies are responsible for the authentication and certification of these electronic signatures, ensuring their legitimacy in legal contexts.
+ Legal Protection of E-commerce contracts
+ Legal Protection of electronic payment (including the legislation of the agency issuing the payment card)
+ Legal Regulations for data that originate from state (government agencies and the Central Government), local government, state enterprises
+ Legal protection for intellectual property rights (including copyright) relating to all forms of electronic transactions
Protecting privacy is essential to prevent the unauthorized disclosure of sensitive information, including personal secrets beyond just names and faces This encompasses various aspects such as health data, religious beliefs, political opinions, gender identity, and educational background Ensuring robust privacy measures safeguards individuals' rights and maintains the confidentiality of their personal information.
Definition and content of Trade promotion
According to Vietnam's Commercial Law 2005, Trade Promotion encompasses activities aimed at enhancing and discovering opportunities for buying or selling goods and services This includes sales promotions, commercial advertising, and the display and exhibition of products and services at trade fairs and exhibitions.
Trade Promotion encompasses marketing initiatives conducted between retailers and manufacturers to boost product demand in stores This technique utilizes various strategies, including special pricing, display fixtures, product demonstrations, value-added bonuses, and complimentary gifts, to attract customers and enhance sales.
1.7.2 The purposes of trade promotion
The purposes of trade promotion are supporting businesses to sell out their products when they face to the competition of others providers on the market
Trade promotion plays a crucial role in business operations and is essential to the production process Many businesses and countries allocate a significant portion of their total costs—ranging from 10% to 25%—to trade promotion activities, which directly impacts the selling price.
Trade promotion activities particularly developed in the capitalist countries, where competition is regular occurrence and very severe on the market
For that characteristic, the main purposes of using trade promotion as following:
Promotion policies have a large role in marketing activities of business With these policies, businesses can impulse product offering and sales, increase revenues, and improve business efficiency
Promotion and business support activities enhance the trade processes of enterprises, making them more efficient and effective By increasing sales volume, these strategies enable businesses to enter new markets, expand their market share, and attract potential customers As a result, enterprises can achieve steady growth and successfully navigate challenges and setbacks in the marketplace.
* Create competitive advantage for businesses
Trade promotion activities not only attract attention and interest of customers, but also enhance the prestige and reputation of the business In the long run, trade
1 Term 10, Article 3, Commercial Law of Vietnam, 2005
Trade promotion activities enhance the business's image and build customer trust By leveraging these promotions, businesses can attract more potential customers and gain a competitive edge in the market.
* Communicate information about business and products to consumers
The promotion policy serves to effectively communicate product and business information to consumers, ensuring that potential customers not only receive but also comprehend this information It is crucial that the information provided is valuable, encouraging positive consumer engagement Without a robust promotion policy, businesses risk missing out on essential feedback regarding product quality, design, after-sales services, pricing, and distribution networks.
Promotions are strategic activities undertaken by traders to enhance the sale of goods or services by offering customers specific benefits The primary aim of these promotions is to stimulate consumer interest and encourage increased purchases of products and services.
Commercial advertising involves promotional activities by businesses to showcase their goods and services to potential clients It encompasses various elements such as images, sounds, voices, words, symbols, colors, and lights that convey the advertising message effectively.
Means of commercial advertising is including: the mass media, the means of communication, the types of publications, all kinds of boards, signs, banners, panels, posters…
1.7.3.3 Displaying and introducing goods and services
Displaying and introducing goods and services is the trade promotion activity of traders that use goods, services and documentation to introduce customers those goods and services
Effective methods for showcasing and promoting products and services encompass the establishment of showrooms, presentations at trade centers, participation in sports, cultural, and artistic events, as well as organizing conferences and seminars Additionally, leveraging the internet for product and service introductions is crucial for reaching a wider audience.
Fairs and trade shows are organized events that promote trade by showcasing goods and services at designated times and locations These events provide traders with the opportunity to display their offerings, network with potential clients, and explore contract signing opportunities for their products and services.
Trade Promotion in E-commerce
Trade promotion in E-commerce involves leveraging digital platforms to effectively present products and services to consumers, encouraging them to make informed purchasing decisions Utilizing tools such as email and websites, businesses can showcase their offerings while enhancing their reputation and building a strong brand image This approach targets the growing number of internet users, ensuring that promotional efforts reach a wide audience.
Trade promotion in E-commerce is actually the way businesses use the Internet features to deliver the product or service to market
The rule of trade promotion in E-commerce as well as promotion in the traditional business environment is the order: Product - Price - Promotion – Place
E-commerce promotion encounters challenges due to inadequate technological infrastructure in target markets, including limited Internet users, low usage levels, and slow network access Poor infrastructure restricts consumer access to the Internet, hindering their ability to find information, shop online, or participate in online auctions Consequently, trade promotion activities in e-commerce struggle to make a significant impact on consumers in these markets.
The difference of E-commerce applications in agricultural trade promotion
Trade promotion for agricultural products is crucial for enhancing their market reach Recently, the government has implemented policies to bolster support for both domestic and international trade promotion activities This initiative not only facilitates the export of Vietnamese agricultural products to new and promising markets but also empowers local products to strengthen their presence in the domestic market.
Many agricultural products possess high quality but suffer from low added value compared to industrial goods These products are primarily linked to small and medium enterprises, which are often dispersed locally and dependent on the interests of larger agricultural producers Consequently, trade promotion activities play a crucial role in discovering new markets for agricultural products while also enhancing social security and fostering rural development.
Despite recognizing the importance of trade promotion for agricultural products, many agricultural businesses hesitate to engage due to high funding requirements and a lack of support resources This situation calls for the exploration of new, cost-effective methods for promoting agricultural trade The integration of e-commerce presents a viable solution for implementing efficient and consistent promotional strategies However, the low-profit margins on agricultural products discourage businesses from fully developing an e-commerce network Therefore, it is essential for government agencies to take the lead in establishing effective channels for marketing and trading agricultural products, creating a platform where producers and trading enterprises can connect, collaborate, and transact directly.
BACKGROUND AND REAL SITUATION OF AGRICULTURAL
Overall assessment of domestic market for Agricultural product
Vietnam is an agricultural country with many agricultural export products ranked
In 2010, Vietnam's agricultural exports reached a record high of approximately $19.15 billion, marking a significant 22.6% increase from 2009, as reported by MARD Agricultural products dominated this growth, contributing $9.95 billion with a 24.22% rise compared to the previous year This year proved to be particularly successful for Vietnam's agricultural, forestry, and fisheries sectors, with three key products—seafood, wood products, and rice—each exceeding $3 billion in export value, alongside rubber surpassing $2 billion.
1 billion (coffee and cashew nuts)
Vietnam's agricultural sector primarily focuses on export-oriented products, with only a small fraction allocated for domestic consumption To gain a deeper understanding of the domestic agricultural market, we will analyze four key export products: rice, pepper, coffee, and cashew nuts.
Table 2.1: Vietnam Rice production and exporting (2005 – 2009)
(Sources: GSO + Institute of Policy and Strategy for Agriculture and Rural development (IPSARD), 2010)
According to Table 2.1, annual domestic rice consumption accounts for over 70% of total production; however, this rate is decreasing as a result of rising production levels and a growing preference for alternative food sources.
Despite being among the leading rice-exporting countries, imported rice dominates the high-quality rice market in Vietnam In the southwest provinces, rice from Cambodia and Thailand constitutes 50% to 80% of the total market volume While local brands like Tam Hai Hau, Du Huong, and Bac Huong were top contenders last year in the north, premium rice from Thailand is increasingly taking over In Ho Chi Minh City, the variety of foreign rice is even more extensive, with imports from Korea, Japan, Taiwan, and the USA supplementing the offerings from Thailand and Cambodia.
Many consumers prefer imported rice due to its affordability, enticing aroma, and superior taste compared to locally grown varieties in Vietnam While premium Vietnamese rice types like Nang Huong, Cho Dao, Nang Nhang, and Tam Xoan are exceptionally flavorful, their limited cultivation areas and lower production volumes hinder their ability to satisfy the market's demand for high-quality rice.
Since the Prime Minister issued decision of development cashew nut industry into
Since 2010, the cashew nut industry has experienced significant growth in yield, raw nut production, and export turnover Two years ago, it ranked fourth in export turnover among agricultural products, following rice, rubber, and coffee, highlighting its competitive advantages in global markets.
Currently, Vietnam is one of three major exporter of world, but both Vietnam producers and traders are leaving out domestic market The data for that consumption as follows:
Table 2.2: Domestic consumption of cashew nut (1995-2010)
Year Domestic Using (tons) Rate of domestic consumption (%)
(Source:Institute of Agricultural Planning and Design, 2010)
The domestic market for Vietnamese cashew nuts is quite limited, with production heavily reliant on export markets This situation arises from several key factors that contribute to the current state of the industry.
- The businesses are less attention or leaving out domestic market Their products are monotonous and marketing activity to promote products is poor
- Most cashew nuts for domestic consumption is the low quality, do not meet export standards
- Price of cashew nut in supermarkets, high-level stores higher than the export cashew nut and other eatable nuts
- Products made from cashew nut is widely available only in the Lunar New Year (within 15 to 30 days per year), or in high-class boutiques
- The instant products from cashew nut are less attractive domestic consumers as well as not create consumer habits, while the price is too high
In the past five years, the Vietnamese pepper industry has experienced significant growth in terms of area, production, and export turnover, positioning the country as a global leader in pepper production and exports Vietnam now accounts for over 50% of the world's total pepper export volume, with recent statistics from the International Pepper Community (IPC) indicating an impressive annual output of approximately 100,000 tons This places Vietnam ahead of other major producers, including India with 50,000 tons, Brazil with 35,000 tons, and Indonesia with 25,000 tons, while Malaysia, China, and Sri Lanka contribute more than 23,000 tons and 18,000 tons, respectively.
Despite being the world's leading exporter of pepper, Vietnam has the lowest domestic consumption rate among major producing countries, consuming only about 3,500 tons annually, which accounts for just 3.5% of its total production In contrast, countries like India consume 42,000 tons (82% of production), China 26,500 tons (15-20% imports), Indonesia 16,000 tons (64% yield), Sri Lanka 7,260 tons (40.3% yield), Brazil 5,000 tons (14.3% output), and Malaysia 4,800 tons (20.8% yield) This low domestic consumption poses a significant risk for Vietnam's pepper industry, especially when facing challenges in the export market.
Vietnam's coffee industry has experienced significant growth, with production increasing dramatically over the past 15-20 years Today, coffee ranks as the second most important agricultural export after rice, with coffee beans accounting for 99% of exports Despite this success, the industry faces potential risks, as export prices are heavily influenced by fluctuations in global markets.
Vietnam is the second-largest coffee exporter globally, trailing only Brazil, which dominates 30% to 40% of the world market Despite this ranking, Vietnam's coffee consumption is notably low, averaging just 0.64 kg per person annually With a production capacity ranging from 800,000 to 1 million tons, domestic consumption accounts for less than 10% of total output, in stark contrast to the 25.16% average among members of the International Coffee Organization (ICO) The high export rate of 90% creates significant pressure on the industry, making it vulnerable to overproduction, particularly when challenges arise in the export market.
The analysis indicates the volatile nature of Vietnam's agriculture sector, despite its top rankings in global export volume and value for key agricultural products Fluctuations in the global market directly impact farmers, as downturns lead to increased consumption pressures Additionally, the export value of Vietnamese agricultural products heavily relies on international buyers, while domestic markets favor foreign distributors, limiting local farmers' ability to effectively position their products.
According to Mr Nguyen Xuan Minh, Foreign Trade University, Ho Chi Minh City Campus, the most common problems today with the consumption of agricultural products in the domestic market:
- The selling price is often change (good crop – devalue)
- Profit for producers is low
- Penetrating to the distribution channels is limited
Individual production creates a disadvantage for sellers in price negotiations with buyers Additionally, varying production, harvesting, and preservation methods among households lead to inconsistent product quality, making it challenging to purchase in bulk and process effectively.
Many agricultural producers fail to honor their selling contracts, often opting to sell to other buyers when market prices rise This breach of contract undermines buyer confidence and increases consumption risks Additionally, agricultural purchasers and processors show little interest in establishing stable strategies for sustainable supply development Overall, both producers and businesses do not recognize their crucial roles within the collaborative chain involving the state, entrepreneurs, scientists, and farmers.
Mr Le Ba Trinh, the Permanent Head of the "Buy Vietnamese Goods" campaign, emphasizes that today's consumers will not accept local products that are overpriced, of poor quality, or unsafe He insists that traders and producers must commit to product quality and conduct honest promotional activities to gain consumer trust in domestic goods Mr Trinh also highlights the importance of promoting agricultural products in the domestic market, viewing it as a crucial immediate solution to current challenges and a strategy for long-term goals This includes positioning Vietnam's branded agricultural products—such as pepper, cashew, rice, coffee, rubber, Nam Roi grapefruit, Binh Thuan dragon fruit, Tay Ninh custard, and Hoa Loc mango—within the export market.
Overall assessment of agricultural trade promotion activity of Agritrade
2.2.1 Overview of Trade Promotion Center for Agriculture (Agritrade)
Trade name (Vietnamese): Trung tâm Xúc tiến thương mại nông nghiệp
English Name: Trade Promotion Center for Agriculture
Abbreviation: AGRITRADE Địa chỉ: Fair Exhibition, Economic transaction and Commerce Area , No 02 Hoang Quoc Viet - Cau Giay - Hanoi
Website: http://agritrade.mard.gov.vn
Email: Info-media@agritrade.com.vn
The Vietnam Trade Promotion Center for Agriculture (AGRITRADE), previously known as the Vietnam Agriculture Fair Exhibition Center (VAFEC), operates under the Ministry of Agriculture and Rural Development Its primary role is to serve as the central hub for trade promotion in Vietnam's agricultural sector while managing the Vietnam Agricultural Exhibition located at No 2 Hoang Quoc Viet, Cau Giay district, Hanoi.
There are 2 phases of forming a today AGRITRADE:
+ Phase 1: 2003 – 2008: Vietnam Agriculture Fair Exhibition Center (VAFEC) + Phase 2: 2008 – up to date: Vietnam Trade Promotion Center of Agriculture (AGRITRADE)
According to Decision 3253/QD-BNN from the Ministry of Agriculture and Rural Development (MARD), Agritrade is organized into six functional departments: the Administration and Personnel Department, the Planning and Finance Department, the Business Department, the IT and Market Research Department, the Exhibition and Fair Department, and the Events and Media Department.
The employees in each Department will be arranged in order to ensure adequate operating conditions based on the functions and tasks of all departments
The Board of Directors at Agritrade is composed of one Director and two Deputy Directors The Director oversees the overall operations, strategic planning, and personnel management of the company One Deputy Director is responsible for trade promotion, while the other manages internal affairs and business operations.
Chart 2.1: Organization structure of Agritrade:
Agritrade employs a total of 42 individuals across six functional departments, with an average employee age of 36, which is notably lower than that of other government agencies Most employees have received their education from national colleges and universities, including three who hold master's degrees and 25 who have bachelor's degrees, while the remainder possess higher elementary and intermediate qualifications.
2.2.2.1 Planning and implementing trade promotion programs for Vietnam agriculture:
- Planning and implementing annual trade promotion programs
- Organizing events, seminars, meeting of agricultural trade promotion
Administra tion and Personal Department
IT and Market Research Department
- Organizing synthesis promotion activities: combining commercial and tourism investment
- Organizing business delegations to survey the agricultural market, attend trade fairs, domestic and foreign investment forums
2.2.2.2 Information, communications, market research and trade promotion policies:
- Database collection, research, analysis, forecasting and providing information of production and agricultural, forestry, fisheries, handicrafts markets
- Support to policies of Ministry of Agriculture and Rural Development about export promotion, trade development for agricultural, forestry and fisheries, handicrafts…
- Construction, management and development e-commerce website
- Branding, product promotion, and introducing scientific and technological achievements in agriculture, forestry, irrigation, fisheries
- Compiling, printing and distribution of trade promotion publications
- Construction and implementation consulting activities in training; transfer of scientific and technological fields related to manufacturing, business and trade promotion
- Coordinate training and support on technical training, management and trade promotion
- Consulting, supporting business for market development
- Design, construction, decorating booths for trade fairs, seminars, conferences and events
- Restaurant business, office, travels agencies serving the agricultural trade promotion activities
- Agents, trading, consignment of agricultural commodities and organizing activities in care goods and means of appropriate tasks
- Implementation of joint ventures, contracting with other organizations and individuals serve domestic and foreign trade promotion activities
- Organizing entertainment services to serve the agricultural trade promotion
2.2.3.1 Organizing various local trade fairs annually:
Lunar New Year Trade Fair
Fair of Trade village and Viet Nam competitive festival of handicraft and fine arts
AgroViet – Vietnam International Agriculture Trade Fair
Vietnam Exhibition on Agriculture Machines and Tools
2.2.3.2 Organizing the MARD’s trade promotion activities in overseas markets
Participating Beijing Agriculture trade fair 2005
Participating ANUGA 2005- the International trade fair of foodstuff, vegetables and fruit, and beverage in Germany
Foodex Japan 2006- the International trade fair of foodstuff and beverage
Participating EURO FLORA 2006- the international trade fair of flower and decorative plan and surveying the Italy’s market
Participating the fourth China International Small and Medium Enterprise Fair 2007 in Guang Zhou- China
Participating SIAL 2006, 2008 and 2010 in Paris- France
Participating SIAL China 2009 in Shanghai and Supplyside West 2009 in Las Vegas- USA
2.2.3.3 Coordinating with domestic and foreign organization to organize the professional events:
Viet Nam Trade fair of technology in processing, packing and maintaining agricultural products- AP/PS
Safe vegetable and high quality agricultural products market – day
Vietnam Best food – Foodstuffs with high technology and standard fitting trade fair
Organizing tens of Professional seminars and advices for farmers
Organizing “Agriculture golden cup” to respect typical agricultural products and materials
Organizing national conference of training for human resource in agriculture and forest products processing
2.2.4 Overview of agricultural trade promotion activities of Agritrade
To promote agricultural products and local specialties, Agritrade deploys two main activities:
- Organizing trade promotion program that includes trade fairs, events, conferences, seminars, training, market surveys…
- Establishing display area to display, introduce and sale agricultural products, local specialties and others agricultural materials to Hanoi market and neighboring provinces
Annual trade promotion programs aim to provide Vietnamese enterprises with the opportunity to showcase their products and brand to global importers Agritrade facilitates a platform for both Vietnamese and foreign companies to exchange information on products, as well as innovative technologies and machinery related to agriculture, livestock breeding, and the processing and preservation of agricultural, forestry, and aquatic products Through these initiatives, Agritrade assists Vietnamese agricultural producers and sellers in accessing domestic and international markets.
The display area developed in 2006 under Document No 554/BNN- KH on 09/3/2006 signed by Mr Diep Kinh Tan, the Deputy Minister of MARD with the trade promotion purpose as follows:
- Product displaying: Through this area, many agricultural products gradually built the value trademark and stable market such as Gao Tam Dien Bien, Seng
Cu Rice, Da Dui Rice, mushrooms Son La
- As one of the stable and long term trade promotion activities
- Attracting consumers to visit and purchase goods at the exhibition area
- This area will help producers expand the market for their products
- Performing the tasks of MARD, contributed to the growing of Agritrade
The Agritrade Board of Directors has established three key initiatives to enhance the agricultural market: (1) assisting local suppliers, including farmers and producers, in promoting their products and connecting with customers in Hanoi and surrounding areas; (2) creating a reliable platform for consumers to consult on the quality and pricing of agricultural products and local specialties; and (3) fostering connections between producers and consumers to ensure a fair trading environment However, in recent years, Agritrade has faced challenges due to insufficient IT and commercial human resources, limiting its operations primarily to the display and sale of agricultural products to consumers.
Agritrade serves as a vital intermediary between suppliers and customers, targeting not only consumers in the Hanoi market but also suppliers from various provinces Consequently, Agritrade's primary clientele includes both suppliers and consumers.
Based on the frequency of access to customers, I divide customer of Agritrade into two kinds: regular customers and seasonal customers
Frequent buyers of agricultural products and food at the display area include housewives, husbands, office workers, and local residents near Agritrade's office.
Suppliers consist of local enterprises, producers, and farmers from various provinces who showcase their products in the display area Additionally, regular suppliers include numerous traders who participate in the annual trade fairs organized by Agritrade.
Because of lack promotion campaign, marketing activities, and incentive policies; the location is unfavorable, thus the number of regular customer remains very low
Agritrade's trade fairs attract a diverse range of visitors, primarily new customers from neighboring areas, including both buyers and suppliers However, many of these seasonal customers struggle to visit the display area regularly after the fair, leading to inconsistent purchasing habits To better support these businesses, Agritrade needs to adopt new approaches that align with their current operational needs, ensuring a more consistent engagement and fostering long-term relationships.
Agritrade organizes trade promotion programs through two key departments: the Exhibition and Fair Department, which plans and executes trade fairs and agricultural exhibitions, and the Events and Media Department, responsible for organizing events such as training sessions and seminars throughout the year These programs primarily target farmers, producers, and traders from across the country.
Agritrade's Director has designated the Business department to manage the display area, primarily focusing on the sale of agricultural products through a "fixed-income" project In this arrangement, the area manager enters into a contract with Agritrade, committing to pay a fixed annual income The key objectives of this initiative are to ensure consistent revenue and effective management of the display area.
- To exploit the product resources of businesses and manufacturers especially sources of the local specialties products to increase number of exhibit categories
- Focus on sales and marketing for key products such as “Gao tam Dien Bien”, Quang Hai Fish Sauce, Thai Nguyen tea (of Tan Cuong Hoang Binh Group,
JSC), Seng Cu rice (Lao Cai), Da Dui rice (Ha Giang), Cuong Ngan Fish sauce, Sa Pa Tea, Hoa Binh Shan Tea, Nha Trang fish sauce.
Assessing the impact of external environmental factors to E-commerce
According to the International Monetary Fund (IMF), the world economy will go into the recovery phase after the crisis According to announced on 02/09/2010 of
According to Mr Pascal Lamy, General Director of the WTO, recent statistics indicate that the global economy has successfully emerged from the crisis, with trade figures from 70 countries—accounting for 90% of global trade—showing a remarkable 25% increase in the second quarter of 2010 Notably, Asia demonstrated the strongest growth, contributing 37.5% to this rise, further confirming the upward trend in global trade.
In 2010, Vietnam's economy demonstrated a strong recovery from the global economic crisis, as highlighted in the government's report during the 8th Session of the Eight National Assembly The GDP growth rates showed consistent improvement throughout the year, with the first quarter at 5.83%, the second at 6.4%, the third at 7.14%, and peaking in the fourth quarter at approximately 7.41% According to the General Statistics Office of Vietnam (GSO), the overall GDP for the entire year reflected this positive trend.
1980 trillion dong, or about 104.6 billion USD, more than about 13 billion USD in
2009 Compared with 2009, GDP growth in Vietnam this year reached 6.78%, higher than 0.3% against the plan approved by Congress early this year
Despite the slow global economic recovery and various challenges faced by the country, Vietnam's economy has demonstrated impressive growth From 2006 to 2010, the average GDP growth rate reached 7% per year, with the national income per capita estimated at $1,160 in 2010.
Figure 2.1: GDP quarterly growth from 2008 – 2010
(Source: Government report on the economic and social situation in 2010 and development plan in 2011)
Based on the Report, “Securing the Present, Shaping the Future” of World Bank, the estimated GDP of Vietnam in 2011 and 2012 are 6.3% and 6.7%
Table 2.3: East Asia and the pacific: GDP growth projections
(Sources: World Bank data and staff estimates)
In 2010, inflation posed significant challenges for development, with the consumer price index (CPI) remaining relatively stable at low levels until September, when it began to rise sharply The initial months of the year saw elevated CPI levels due to the New Year festivities, but by November, the CPI had surged by 9.58%, surpassing the National Assembly's target of keeping inflation below 8%.
Figure 2.2: Monthly CPI development in 2010
(Source: Government report on the economic and social situation in 2010 and development plan in 2011)
Inflation and rising prices in 2010 were driven by several factors, including increased demand for goods and services due to economic recovery and natural disasters, such as floods in central provinces, which heightened the need for food and construction materials Additionally, global economic recovery led to higher prices for imported goods, raising production costs for many enterprises The depreciation of the local currency further escalated import costs, contributing to overall price increases Persistent issues, such as a lack of financial discipline in public investment and the operations of state-owned enterprises (SOEs), exacerbated inflation Furthermore, efforts to stimulate investment through eased credit for state enterprises, coupled with insufficient evaluation and monitoring, fueled inflationary pressures Lastly, adjustments in the base rate by state banks and rising lending rates from commercial banks in late 2010 are expected to continue exerting inflationary pressure beyond the year.
Despite efforts to reduce the budget deficit, the cultural and social sectors continue to thrive, leading to an improvement in people's lives Monthly per capita income has risen to 1.365 million VND, reflecting an 8.9% increase when adjusted for inflation.
Government continued implements salary reform roadmap and increases minimum wage from May 1, 2010 and some related policy
To combat economic decline, the Vietnamese government has introduced substantial economic stimulus packages totaling approximately 145 trillion VND, which is about 9% of the country's GDP These packages include a 17 trillion VND interest rate support package, a 28 trillion VND tax reduction package, over 90 trillion VND for increased public investment, and nearly 10 trillion VND for social security enhancements Compared to global standards, Vietnam's economic stimulus efforts are significant, aiming to inject substantial funds into businesses and households for spending and investment While the results have been mixed, these measures have enabled struggling companies to access low-interest funds, helping them recover, rehire workers, create new jobs, and enhance overall income levels.
The recent economic stimulus packages are likely to lead to inflation, particularly if the capital is misallocated, poorly managed, or used inefficiently In June, the Consumer Price Index (CPI) rose by 0.55%, surpassing the 0.44% increase in May and the 0.33% rise in March.
According to GSO data, the average Consumer Price Index (CPI) for the first half of 2009 rose by 10.27% compared to the same period in 2008 While the increase in CPI was modest at 0.55% in the second quarter of 2010, it has shown a consistent upward trend This inflation has had a significant and direct impact on the lives of workers, particularly those with low incomes.
In Hanoi, according to the report of Hanoi Committee of the Party, GDP growth in
2010 to 11%, more than 1.5 times compared to 6.7% in 2009, approximately figure 10.9% in 2008 and 11.2% in 2007 1
The economic structure is in the right direction, in which services makes up 52.5%, industry and construction 41.4%, agriculture 6.1% In 2010, average income per
In 2010, the Hanoi Committee of the Party reported a significant improvement in the economic and social situation, with the per capita income rising to between 36.5 and 37.5 million, up from 32 million in 2009 The city successfully created 135,800 jobs, exceeding its target by 100.6%, which contributed to a notable decrease in unemployment rates Urban unemployment fell to 2.59%, a reduction of 1.81% from January 2009, while rural unemployment decreased to 1.18%, down by 1.32%.
2.3.2 Impact of political legal environment
Vietnam's political environment is characterized by high stability, which supports ongoing improvements in the legal system to better serve societal and business needs Over the past five years, the government has enacted numerous laws, decrees, and circulars aimed at establishing a favorable legal framework that fosters the growth of E-commerce in the country.
The Electronic Transaction Law, enacted by the Eleventh National Assembly during its 8th Session on November 29, 2005, and effective from March 1, 2006, establishes the fundamental legal framework for electronic transactions in Vietnam, alongside the Commercial Law 2005 and Business Law 2005.
The Master Plan on E-commerce Development for 2006-2010, approved by the Prime Minister in Decision 222/2005/QD-TTg, marked Vietnam's inaugural long-term strategy for e-commerce This comprehensive plan outlines a clear vision, roadmap, and actionable solutions aimed at enhancing the application of e-commerce across the nation over a five-year period.
In recent years, Vietnam has strengthened its e-commerce policy framework through the 2006-2010 Master Plan and various national programs, focusing on enhancing Internet and telecommunications infrastructure, developing IT human resources, and promoting IT application among government agencies These initiatives aim to create an information society built on advanced technology, significantly supporting and fostering the growth of e-commerce in the country.
The list of basic legal framework for electronic transactions in Vietnam is displayed in Appendix 4
2.3.3 Impact of socio-cultural environment
E-commerce has become essential for businesses globally, including in Vietnam, as entrepreneurs recognize its significant impact on operations and customer interactions.
Assessing the impact of internal environmental factors to the E-Commerce
Agritrade currently employs a total of 45 individuals, including 4 master's degree holders, 34 bachelor's degree holders across various disciplines, 3 college graduates, and 4 unskilled workers Specific trade promotion tasks will be delegated to the relevant functional departments accordingly.
The Board of Directors of Agritrade has designated the Exhibition and Events Department and the Media Department to execute its programs The Exhibition and Fair Department consists of eight qualified personnel, including a manager, two deputy managers, and five employees, all with a minimum of three years' experience in organizing domestic and international exhibitions Their extensive experience has enabled them to build a robust customer database and foster strong relationships, making them well-equipped to implement e-commerce applications for agricultural product promotion Meanwhile, the Events and Media Department comprises five members, including a manager, a deputy manager, and three employees, with qualifications that include one master's degree and four bachelor's degrees in general management, journalism, and economics This department is responsible for planning and executing training programs, conferences, and professional seminars designed to equip farmers, producers, and manufacturers with the essential information and skills to enhance product quality, boost competitiveness, scale production, and seek investment opportunities.
The product promotion activities conducted in the display area will be managed by the Business Department, which consists of 11 members, including a Manager who also serves as the Deputy Director of Agritrade, a Deputy Manager, and 9 employees handling various tasks Currently, the display area is primarily focused on sales, leading the department to allocate only two personnel for its management.
The manager is responsible for overseeing operations, optimizing product resources, analyzing output, and managing financial statements Meanwhile, the seller handles the management and receipt of goods, storage, and direct sales in the exhibition area, while also preparing monthly reports on product input and output.
To implement E-commerce applications in Agritrade, the main performer is IT and Market Research Department Currently, there are 5 employees in this department:
The team consists of a Manager, a Deputy Manager specializing in IT, and three task-specific employees, all equipped with relevant professional training This includes one Master of Information Technology, two Bachelor's degrees in IT, and two Bachelor's degrees in economics and management To effectively implement E-commerce applications, the IT and Market Research Department must collaborate closely with other functional departments, such as the Exhibition and Fair Department, Events and Media Department, and Business Department, to gather data, enhance promotion, and improve the overall effectiveness of the E-commerce initiatives.
Currently, the IT and Market Research Department lacks sufficient staff to effectively develop and manage technical facilities for the E-commerce application To enhance operational efficiency, Agritrade should consider recruiting additional skilled employees.
Agritrade, a division of the Ministry of Agriculture and Rural Development, plays a crucial role in promoting Vietnam's agricultural trade, particularly through the implementation of E-commerce applications Recognizing the significance of E-commerce in agricultural trade promotion, MARD has established supportive policies to foster its development The Board of Directors at Agritrade is dedicated to advancing this model, ensuring optimal conditions for E-commerce growth Consequently, the Director of Agritrade has committed to providing extensive financial resources to support the successful execution of E-commerce initiatives.
Agritrade has successfully equipped all departments and employees with adequate computer systems, ensuring optimal functionality These systems are regularly upgraded, maintained, and managed by specialized personnel Additionally, the company boasts a robust LAN and Wi-Fi network that covers the entire building, supported by high-speed internet services from VNPT and Viettel.
The IT and Market Research Department at Agritrade oversees the management and utilization of computer and network systems Currently, the department is staffed by just two highly trained officers who possess strong IT expertise These professionals bring valuable experience in various technology fields, ensuring effective operation and support for Agritrade's technological needs.
- Programming Languages: Java, JSP, Servlet, Struts, JSF, C #, VB.NET, ASP.NET, ASP, C / C + +, Visual Basic, JavaScript, PL / SQL, Oracle, XML, Python
- Operating system: Microsoft Windows NT/2K/2003/2008, Linux, UNIX
- Databases: Oracle, SQL Server, DB2, MySQL, Postgre SQL
- Network protocols: SNMP, TCP / IP, NAT, IP Sec, VPN
These are favorable conditions for the deployment of the system and website designed for the online sale model of Agritrade.
Analysis the results of survey and discussions
To evaluate the effectiveness of E-commerce applications in trade promotion activities at Agritrade, I conducted a survey targeting both employees and customers The focus with employees was on assessing the current IT infrastructure and its capability to support E-commerce applications, while also examining the existing trade promotion activities and their impact on the development of Vietnam's agriculture For customers, both consumers and providers were surveyed to understand their current agricultural purchasing methods and the necessity of E-commerce in enhancing trade promotion efforts The findings from this survey are detailed below.
Subjects Issue Notes (IN) Receive Note (RN) Rate RN/IN
The questionnaire includes two parts: part 1 (IT infrastructure and IT application capacity) and part 2 (IT application to agricultural trade promotion at Agritrade)
Table 2.6: Summary of survey results (Part 1):
Personal computer equipped at work
Internet connection of these computers
LAN network of Agritrade equipped with firewall
The basic IT applications at Agritrade
Rate of using email at work
The main tasks of Agritrade’s website
Provide information of trade promotion 37 82.22
Rate of website/portal updating
IT support to employees during work
The attention of the leadership to IT application
Do not care or care very little 0 0
Agritrade has ensured that all functional employees are equipped with high-quality computers, with nearly all of them connected to the Internet via ADSL, the most common connection method in Vietnam The Finance Department has a few computers that remain offline due to network security concerns The data indicates that Agritrade has effectively integrated IT into its operations at various levels, as evidenced by a high email usage rate of 77.78%, highlighting the company's commitment to leveraging technology in the workplace.
Despite the uneven IT skills among Agritrade's employees, the overall proficiency in using technology is commendable, often surpassing that of other state agencies This success can be attributed to several factors: the relatively young workforce, with most employees born after 1975, which facilitates quicker adaptation to IT applications; the necessity of finding and communicating with new and remote customers; and the prompt technical support provided by the IT and Market Research Department, both during work and through targeted training initiatives requested by employees.
The survey results indicate a strong commitment from Agritrade's leadership towards IT applications, with 23 out of 45 employees recognizing the Board of Directors' keen interest and encouragement for integrating IT into their work The Director has actively tasked the IT and Market Research Departments with supporting other teams in IT implementation and providing training for effective IT use This focus on IT readiness, including factors like computer access, internet usage, email functionality, and security, suggests that Agritrade is well-prepared to initiate e-commerce applications However, to enhance its e-commerce infrastructure, Agritrade should invest in upgrading computer systems, improving internet services, and establishing a robust server system for its e-commerce portal.
Table 2.7: Summary of survey results (Part 2):
Current agricultural trade promotion activities at Agritrade
Trade fairs and professional events 45 100.00
Ability to achieve the target set for trade promotion activities?
Should Agritrade applied E-commerce in agricultural trade promotion
If applying IT and E-commerce, what model Agritrade should apply?
The important factors when applying E-commerce?
Marketing to introduce new forms 30 66.67
To upgrade the technical infrastructure 37 82.22
Marketing to introduce new forms 8 17.78
To upgrade the technical infrastructure 13 28.89
According to the findings in Table 2.8, all Agritrade employees are aware of the company's key activities and functions related to trade promotion However, they also acknowledge that the likelihood of successfully achieving trade promotion goals through traditional methods is relatively low, with 35 employees, representing 77.78% of the workforce, expressing concerns about the effectiveness of these conventional strategies.
Figure 2.12: Ability to achieve the target set for trade promotion activities of traditional methods
Accordingly, 75.56% of Agritrade’s employees also propose to deploy e-commerce applications in the trade promotion of agricultural products
Figure 2.13: Evaluation of Agritrade’s employees on whether to apply E- commerce in agricultural trade promotion
A recent survey reveals that 60% of Agritrade employees believe the company should establish a dedicated E-commerce website, suggesting that the current site should prioritize agricultural information and trade promotion They advocate for a more professional and interactive online presence To successfully implement E-commerce, employees emphasize four key areas: personnel preparation, marketing plan development, website design, and technical infrastructure upgrades Notably, personnel preparation is deemed the most critical factor, with 42.22% agreement, followed by technical infrastructure upgrades at over 28.89%.
Figure 2.14: The E-commerce model to apply
Figure 2.15: The most important factor when apply E-commerce
Table 2.8: Evaluation of Agritrade’s employees about necessary level of contents of E-commerce application
The necessary level of electronic payment 45 2 5 187 4.16
The necessary level of online support 45 3 5 206 4.58
The necessary level of network security 45 3 5 205 4.56
The necessary level of organizing training course for users
When implementing an E-commerce model, four key areas are crucial: electronic payment, online support, network security, and user training A survey of Agritrade employees highlighted the significance of these elements, with all four receiving the highest score of 5, and average scores exceeding 4 points The prioritized order of importance for E-commerce implementation is as follows: online support (4.58), network security (4.56), user training (4.38), and electronic payment (4.16) This ranking serves as a strategic recommendation for Agritrade, suggesting that they should focus on enhancing their online support system first, followed by upgrading security measures, implementing user training—particularly for those in local provinces—and finally, establishing a robust electronic payment system.
The questionnaire is structured into two sections: the first part targets private consumers purchasing agricultural products for household use, while the second part focuses on agricultural suppliers from Hanoi and other provinces who have participated in trade fairs organized by Agritrade.
Table 2.9: Summary of survey results (Consumers)
Current method of buying agricultural products
The form of selling agricultural product via internet that consumer can be use?
Payment method that customer use in E-commerce
Understanding of customers about Agritrade’s tasks?
Should Agritrade apply IT in trade promotion activities?
Changing buying habits is crucial for individual customers purchasing agricultural products A survey conducted among housewives, office workers, and students revealed that 100% of respondents still rely on traditional methods, shopping directly at markets and supermarkets However, 40% of customers, primarily office workers, have begun buying agricultural products online The survey indicates a strong demand for new selling models, with 86.67% supporting E-commerce websites and 80.00% favoring company websites Despite this shift, 53.33% of customers still prefer cash payments.
Survey results indicate that Agritrade's marketing activities have significantly increased consumer awareness of its trade promotion programs A substantial majority of consumers, 80%, advocate for the integration of IT and E-commerce to enhance their access to agricultural products and information, highlighting the demand for more convenient solutions in the market.
Figure 2.16: Evaluation of Agritrade’s consumers on whether to apply E- commerce in agricultural trade promotion
About suppliers who also selling products on E-commerce website of Agritrade, survey results showed the positive signal for deployment E-commerce model in Agritrade in the near future
Table 2.10: Summary of survey results (Suppliers)
Current cooperation between suppliers and Agritrade
Participating trade fair organized by
Consigning their products at the display area 2 15.38
Hiring permanent space at Agritrade to display and sale 2 15.38
The willing of suppliers to provide agricultural product information
The factors should be focused on If Agritrade applies E-commerce model
Marketing to introduce new forms 5 38.46
To upgrade the technical infrastructure 11 84.62
Many suppliers engage seasonally with Agritrade's trade fairs, which significantly boost the promotion and sales of agricultural products However, the brief duration of these events hampers their ability to sustain customer relationships post-fair While some companies display their products in Agritrade's exhibition area, this primarily offers promotional benefits rather than substantial sales Few companies are interested in renting permanent exhibition space at Agritrade's office According to Table 2.12, suppliers rated the effectiveness of current advertising and trade promotion methods for agricultural products and local specialties as low, with an average score of only 3.54.
Figure 2.17: Evaluation willing level of Agritrade’s consumers to participate in E-commerce website
The supplier expressed enthusiasm for the Agritrade E-commerce application program, eager to share product information and actively participate in the platform This commitment is evident, with 84.62% of companies indicating their willingness to provide information for the website.
The evaluation results indicate that suppliers rated the necessary level of E-commerce application in Agritrade at an average of 4.31 points Furthermore, suppliers suggest that Agritrade should focus on five key elements for effective E-commerce implementation: personnel preparation, marketing campaigns for new formats, enhancement of payment methods, upgrading technical infrastructure, and improving the delivery process.
Table 2.11: Evaluation of Agritrade’s customers (consumers and suppliers) about necessary level of E-commerce application
The satisfaction level of consumer when purchase agricultural products online
The effectiveness of current cooperation methods between
Agritrade and suppliers in promoting agricultural product?
The necessary level of E- commerce application at
Survey results indicate that customers have accurately identified key issues in E-commerce applications, prompting Agritrade to refine its strategic direction Both consumers and suppliers rated electronic payment systems relatively low, with scores of 3.80 and 3.92, respectively, reflecting their lack of confidence in the safety of this payment method despite its recognized effectiveness Consequently, Agritrade must develop a targeted strategy and enhance its online payment processes to address these concerns.
A recent survey indicates that consumer trust in the product information provided by Agritrade is exceptionally high, with an average rating of 4.33 points This strong reliability serves as a significant external advantage for Agritrade, as consumer trust is crucial for successful transactions Consequently, this increased trust is expected to drive a rise in online transactions on Agritrade's e-commerce platform.