Phân tích môi trường kinh doanh của Công ty Cổ phần Vĩnh Hoàn để thấy được điểm mạnh, điểm yếu, cơ hội và đe doạ. Và từ đó đưa ra chiến lược Marketing của Công ty Cổ phần Vĩnh Hoàn tại thị trường Châu Âu
COMPANY INTRODUCTION
OVERVIEW OF VINH HOAN JOINT STOCK COMPANY
Vinh Hoan Joint Stock Company, originally established as Vinh Hoan Company Limited on December 19, 1997, transitioned to a joint stock company in 2007 As a leading basa processing and exporting enterprise in Vietnam, Vinh Hoan boasts a significant operational scale, with a daily capacity of 250 tons of raw fish Situated in Dong Thap Province, the company benefits from optimal environmental conditions for basa farming, supported by eight farming areas covering 136.5 hectares that supply 34% of its raw material needs Vinh Hoan's products meet international export standards, allowing access to global markets, including the United States.
EU countries, the most demanding market in the food export industry from overseas markets and gradually become a brand name reputable both at home and abroad
• Trading name: VINH HOAN JOINT STOCK COMPANY
• English name: VINH HOAN CORPORATION
• Address: Route 30, Ward 11, Cao Lanh City, Dong Thap Province
HISTORY OF FORMATION AND DEVELOPMENT
- 1997: Ms Truong Thi Le Khanh founded Vinh Hoan Private Enterprise
- 1998: Converting the business model to Vinh Hoan Co., Ltd
- 1999: The first fisheries processing factory in Cao Lanh Town, Dong Thap province came into operation
- 2007: Publicly listed on the Vietnam Stock Exchange Established Vinh Hoan Feed Established Vinh Hoan USA in Milpitas, California
- 2009: Vinh Hoan Laboratory was accredited to ISO / IEC 17025:2005
- 2010: Become the world's largest basa producer
- 2012: The world's first basa producer received ASC (Aquaculture Stewardship Council) certification
- 2015: First company in the world to achieve 4-Star Best Aquaculture Practices (BAP) for hatcheries, feed production, farming and processing of basa Modern collagen/gelatin production facility begins production
In 2016, the Government of Vietnam honored the company with the prestigious First Class Labor Medal Additionally, it was recognized by Forbes as one of the top 50 companies on the Vietnamese stock market for three consecutive years To further enhance its impact, the company established the Vinh Aquaculture division, focusing on research, development, and education while ensuring a stable supply of inputs for production.
- 2017: Focus on growth and innovation through Vinh Foods division to provide a wide range of value-added products Celebrated 20th year anniversary of Vinh Hoan's journey
In 2018, the focus was on identifying and expanding into new markets while enhancing farming and production capacities to secure a steady supply of high-quality raw materials The strategy emphasized the development of value-added products and aimed to strengthen direct distribution channels to restaurants and supermarkets.
In January 2019, Vinh Hoan received the prestigious "Innovation of the Year" award from Woolworths for its Fish Bites product Additionally, Ms Truong Thi Le Khanh, the Chairman of the Board, was recognized by Forbes Vietnam as one of the 50 most influential women of the year Vinh Hoan was also celebrated as one of the 50 best listed companies in Vietnam, marking its sixth consecutive appearance on the Forbes list since 2014 Furthermore, in September 2019, Vinh Hoan Pangasius Seed Production Co., Ltd commenced construction on a new breeding area aimed at researching and developing advanced technologies to enhance the production of high-quality fingerlings.
In November 2019, the Food Safety Inspection Service (“FSIS”) under the US Department of Agriculture (“USDA”) officially recognized the equivalent for the Vietnamese basa industry
VISION, MISSION AND CORE VALUES
Table 0: Vision, Mission And Core Values
Mission Affirming the position and potential development of sustainable aquaculture in the world through continuous improvement, environmental protection and efficiency improvement in all production and business activities
Vision Becoming a leading company in sustainable aquaculture products, contributing to building a world of safe, delicious, healthy food and environmental protection
• COMMITMENT: Right speech and right action
• IMPROVEMENT: Constantly differentiating to develop
• DISTRIBUTION: Working with all your heart, not for personal gain
• SHARE: Being willing to give is also happy to receive
• PRO: Compliance and speed in every action
RESEARCH OBJECTIVES
This article examines the business environment of Vinh Hoan Joint Stock Company by identifying its strengths, weaknesses, opportunities, and threats (SWOT analysis) Based on this analysis, it introduces a targeted marketing strategy for Vinh Hoan in the European market, aiming to leverage its strengths and opportunities while addressing potential challenges.
Control Board Internal Audit Department
Domestic and foreign subsidiaries and affiliates
ANALYSIS OF BUSINESS ENVIRONMENT
MACRO ENVIRONMENT
2.1.1 Overview of the EU’s market
The European Union (EU) is a political and economic union of 27 European member states that has established a single market, ensuring the free movement of people, goods, services, and capital through a unified legal framework The EU also implements common policies in areas such as trade, agriculture, fisheries, and regional development.
As of 2020, the EU 27 market encompasses 500 million individuals, with a GDP projected at 15.193 trillion USD, according to World Bank data The European Union has emerged as one of Vietnam's key trading partners, experiencing an impressive annual growth rate of 15-20% in two-way trade.
Figure 2: Proportion of Products Exported to EU (2018)
(Source: Ministry of Industry and Trade, General Department of Customs)
Vietnam, with its extensive 3,200-kilometer coastline and vast inland waters of 1.4 million hectares, particularly in the Mekong Delta, offers ideal conditions for the aquaculture and fisheries processing industries Key provinces like Tien Giang, An Giang, and Dong Thap are pivotal for basa fish farming, effectively supplying raw materials for export-oriented fisheries processing companies Basa fish thrive in the region due to their resilience to disease, high fertility, and adaptability to the local environmental conditions.
Proportion of Products Exported to EU (2018) textile (9,8%) leather (for shoes) (11,1%) bag, suitcase, umbrella (2,2%) phones and components (31,4%) electronics and components (11,3%) machinery, mechanical equipment (4,9%) wooden (1,8%) fisheries (3,4%) coffee (3,2%) others (20,7%)
The COVID-19 pandemic has led to significant and unprecedented changes in the European Union, with the region experiencing a notable economic downturn In the first quarter of 2020, the EU recorded a decrease of 2.7%, which escalated to a staggering decline of 13.8% in the second quarter.
The COVID-19 crisis has sent shock waves through the EU food supply chain in
In 2020, the COVID-19 crisis highlighted the EU agriculture sector's reliance on cross-border seasonal workers, potentially pushing millions of vulnerable EU citizens into poverty However, amidst these challenges, there is a positive outlook for Vietnam's food export industry, particularly in fisheries exports to Europe.
The European market is known for its stringent import regulations, making it essential for companies to thoroughly understand these rules to develop effective sales strategies tailored to this competitive landscape.
Required Furthermore, it is not allowed to treat the company's basa with carbon dioxide for the European market and control the chlorate content of the product
Food safety standards must be met
Products deemed non-compliant will be reported in the Rapid Alert System for Food and Feed, leading to thorough inspections of their containers at the port of entry Importers must ensure constant temperature control and provide a hygiene certificate for products entering the EU Prioritizing health and hygiene is crucial for customer satisfaction, and it is essential to guarantee that finished products are free from contaminants.
The European Union has yet to establish a specific maximum residue level (MRL) for chlorate in food, currently applying a default MRL of 0.01 milligrams/kg Efforts are underway to enhance regulations regarding residue levels in food and water However, many products frequently exceed this default MRL due to elevated chlorate content Notably, in October 2019, several shipments of frozen basa fillets from Vietnam, which contained added water, were flagged on the RASFF quick alert for exceeding chlorate levels.
Do not treat basa fish with carbon oxide
Carbon dioxide treatment enhances the visual appeal of basa fish products by maintaining the red color of the blood and the white hue of the flesh However, the European Union prohibits carbon monoxide treatment, as it can conceal signs of product deterioration.
Vietnam's primary export products to the European market include shrimp, tuna, and basa fish, providing fisheries enterprises with significant advantages in tax rates and legal regulations for exports.
Recently, inaccurate information regarding Vietnam's basa fish industry has been circulated in Romanian online newspapers, such as Realitate.net and Adevarul.ro, which has negatively impacted export activities to the EU Some websites have even suggested that the Romanian public boycott basa fish and restaurants serving it As a result of this negative media coverage, exports of basa fish to the European market have declined In response, the Vietnam Association of Seafood Exporters and Producers (VASEP) has partnered with Globally Cool Company to launch a promotional campaign for basa fish in this market, running from March to December.
MICRO ENVIRONMENT
2.2.1.1 Direct competitors a Inside Vietnam : Organizations that give the same product or service and use in the same market as a business such as:
Table 2: Vinh Hoan’s Competitor inside Vietnam
No Company Name Year of export
1 Nam Viet Joint Stock Company 2019 136.1 6.80%
2 Bien Dong Fisheries Co., Ltd 2019 130.3 6.52%
3 IDI Multinational Development and Investment Joint Stock Company
4 Go Dang Joint Stock Company 2019 94.7 4.74%
7 b At Europe: Currently, there is no significant competitor for Vietnam in the EU market Most basa fish products exported to the European Union originate from Vietnam
Table 3: Vinh Hoan’s Competitor at EU
Bangladeshi exporters face supply chain challenges that hinder their ability to access high-end markets, particularly in the retail sector, where certifications for traceability, quality, and durability are essential As a result, Bangladeshi basa is predominantly found in the lower end of the foodservice market.
China China is another country that exports small quantities of basa to the European Union Every year, no more than 50-100 tons to Europe
Potential competitors in the fisheries industry include businesses that are either absent from the sector or newly established without prior service offerings, posing a future threat to the industry The emergence of these new enterprises is likely to heighten competition among existing companies, although the intensity of this competition will be influenced by various entry conditions and factors.
The national fisheries industry is gaining significant appeal due to various signed agreements like EVFTA and UKFTA, coupled with substantial government support for its development Key factors contributing to this attractiveness include advanced technology, capital requirements, and commercial elements such as an effective distribution system, strong branding, and a loyal customer base Additionally, specific resources like controlled inputs, patents, skilled human resources, and government protection further enhance the industry's potential.
The basa fish market faces intense competition not only from other basa products but also from global catfish varieties and alternatives like tilapia, salmon, pangasius, and various white-meat fish As consumer incomes rise, there is an increased demand for high-quality, safe, and hygienic food options If Vinh Hoan's products fail to satisfy these consumer needs, the availability of substitute products could negatively impact the company's business performance.
Vinh Hoan is set to invest 580 billion VND in various projects, including the construction of new hatcheries, renovation of existing farms, and expansion of production plants In 2020, the company announced the development of a fish oil factory in Chau Thanh district, Dong Thap province Its closed production chain, along with strong management capabilities and advanced technology, has enabled Vinh Hoan to outpace small and medium-sized enterprises in raw material procurement and gain access to larger markets.
Table 4: Vinh Hoan’s food supply system
Fingerling Fish fingerlings are an indispensable part of the farming process and now Vinh Hoan owns over
30 hectares of breeding area Fish farming process is divided into several stages as follows:
Fish egg (2 weeks) → Newly hatched fish (3 - 4 weeks) → Fingerling
Vinh Hoan specializes in fish farming by sourcing newly hatched fish from hatcheries, ensuring they are at an optimal size for easy raising and effective feeding management.
Vinh Hoan 1 Joint Stock Company, formerly a subsidiary of Vinh Hoan, has transitioned to a new partnership with a Philippine company, becoming the official distributor of fish feed This strategic move allows Vinh Hoan to purchase high-quality feed at lower prices while benefiting from the partner's focus on research and development The collaboration aims to enhance the nutritional value of the feed and reduce environmental pollution, ensuring a sustainable approach to aquatic food production.
Recirculating fish farming project without water change:
The company has successfully implemented its first project in Tan Hung, Long An, focusing on the innovative model of raising river fish in ponds within the local farming area.
Basa fish appeals to a wide European audience due to its white meat, neutral flavor, competitive pricing, and versatility in various dishes Additionally, there is a growing trend among consumers in both developed and developing countries to prefer natural, organic products that are clearly labeled and have minimal environmental impact, making basa fish an attractive choice in the market.
SWOT ANALYSIS
Table 5: Vinh Hoan SWOT analysis
Strength • Leading company in product quality and quality management system, pioneering in sustainable farming Vinh
Hoan brand is reputable, effectively supporting the Company's activities;
• A closed system of farming and processing finished products and by-products, value-added products;
• A network of loyal customers and loyal partnerships spanning the globe and diversified across two traditional sales channels and modern sales channels;
• A dedicated and professional workforce and a good, committed and experienced management team;
• Having a wide understanding and connections in different foreign markets to support brand promotion and development strategy;
• Healthy financial situation with high accumulation
Weakness • High labor demand for new factories and new projects;
• The product brand has not yet developed to the end consumer;
• Smart science and technology have not yet been applied to keep up with the rapid progress of the information age;
• The domestic market has not yet developed a suitable name to create wide recognition in the country;
• There is still a lot of untapped potential from the application of the circular economy in the chain of farming, processing and exporting
Opportunity • Vietnam is one of the few countries in the world that has well controlled the spread of the COVID-19 epidemic and maintained economic growth;
• Potential for development of new products, especially ready-made products for online sales;
• Increasing consumer awareness about food safety, product origin and sustainability factors;
• Basa fish still maintains a competitive advantage in price compared to other white fish products, there is no direct and significant substitute;
• Several FTAs that Vietnam has signed are effective: EVFTA, EAEU FTAs, RCEP, UK VFTA
Threat • The COVID-19 epidemic affects the import demand of key markets;
• Shipping costs increased from the fourth quarter of 2020 and showed no sign of cooling down;
• Competitors are growing stronger and more developed;
• Customers' consumption trends are always fluctuating;
• Increasing domestic demand for raw materials leads to the risk of shortage
2.3.5 S – O strategy: Take advantage of product strengths (quality and output) and take advantage of external conditions to penetrate the market
2.3.6 W – O strategy: Building a strong brand, effectively mobilizing capital, managing human resources well to penetrate the target market
2.3.7 S – T strategy: Promote the strengths and advantages of the company to limit the threats of the market and competitors
2.3.8 W – T strategy: Overcome weaknesses in brand, capital, and human resources to prevent threats.
DESCRIPTION OF TARGET MARKET
2.4.1 Main markets of Vinh Hoan Company
The pandemic has significantly impacted revenue across most markets, particularly affecting food service chains, one of the primary consumption channels In 2020, Vinh Hoan expanded its reach to 47 markets, marking a growth of 9 markets compared to 2019 The company's largest markets include the United States, Europe (including the UK), and China.
In 2020, the European market emerged as a significant growth area, surpassing China to become the second largest market for Vinh Hoan, following the United States This region accounted for 18% of the company’s total revenue, highlighting its importance in the global market landscape.
VASEP reports that Northern Europe is the largest market for basa, driven by consumer priorities such as sustainability, price, and convenience Most basa is imported to Europe in the form of frozen fillets, with Vietnamese exporters dominating this market segment.
In Germany, there is a growing consumer interest in preserved and processed fisheries products A significant trend is the introduction of innovative fisheries items designed for special occasions, including Spanish savory dishes, fish appetizers, sushi, and breaded products By making fisheries products more convenient and providing cooking education to consumers, there is potential for increased sales in the fisheries sector.
With a population of approximately 500 million, the European Union (EU) boasted a GDP of $15.193 trillion in 2020 Notably, food and non-alcoholic beverages accounted for 13% of consumption, while restaurants and hotels represented 8.7% Collectively, EU residents allocate around 10.85% of their GDP, equating to $1.648 trillion, towards food and drink activities This significant expenditure highlights a substantial market opportunity for Vinh Hoan to tap into.
In 2020, Vinh Hoan's exports of pangasius and basa to Europe amounted to just 54 million USD, indicating a modest share of the overall market and highlighting significant opportunities for further market expansion.
Figure 3: Household Expenditure by EU’s consumption purpose
2.4.2.3 Competitive advantage of Vinh Hoan Company
Ms Le Khanh's assertive leadership has enabled her to make timely strategic decisions, allowing Vinh Hoan to proactively address rising raw material prices By enhancing productivity and reducing costs, the company has successfully met growing market demand and pioneered the development of high-value-added basa products, such as breaded basa and artichoke rolls Her exceptional talent and courage have provided Vinh Hoan with a significant competitive advantage over its rivals.
INTRODUCTION STRATEGY
INTRUSION METHODS
This is a business model in which the business owner or franchisor distributes its products and services through affiliated agents or franchisees Franchising usually comes with certain benefits
Here, the franchisor will give the franchisee with the trademark, the right to use the developed formula, the experts, and even the necessary equipment or materials
Table 7: Advantages and Disadvantages of Franchising
Franchising offers significant advantages by uniting independent retailers under a single brand and business philosophy, enhancing consumer brand awareness and ensuring a consistent response to customer needs This synergy leads to focused advertising efforts and improved customer purchasing efficiency For business owners, franchising reduces the risk of failure by leveraging a proven business model and a well-known brand, which saves on the costs of brand establishment and promotion Additionally, the collective purchasing power among franchisees boosts profitability, making franchising an appealing option for entrepreneurs.
- Trading in a reputable brand with a smaller investment than building an equal brand
- Minimize the risk of not having to invest in building a new brand
- Support from the brand's marketing and promotion programs
Disadvantages - Share the business risk of the franchisor
- Business activities according to a predetermined framework
- Failing to promote creativity in business
Franchising may not suit everyone, particularly those who thrive in independent business environments, as it often involves adhering to strict operational guidelines It's crucial to recognize that some franchise models are more effective than others; ineffective methods can leave franchisees unprepared for challenging situations, provide insufficient support during difficulties, and fail to optimize advertising expenditures.
Licensing involves establishing and managing a contract between a trademark owner and a company seeking to utilize the trademark for its products This process ensures that only designated organizations are authorized to operate within specific territories.
Table 8: Advantages and Disadvantages of Licensing
Advantages For international licensing, the receiving party needs to have enough capital to put the factory in the contract
One significant advantage of licensing is that it allows companies to avoid the development costs and risks tied to entering foreign markets For businesses that lack the necessary funds for international expansion, licensing presents an appealing solution.
Licensing serves as an appealing strategy for companies looking to enter unfamiliar or politically unstable foreign markets without significant investment It provides a viable solution for businesses facing investment restrictions, allowing them to navigate barriers to market entry effectively.
The company's lack of stringent control over production, marketing, and strategy can hinder its expansion efforts, particularly in diverse regional economies Licensing necessitates that the assignee develop their own business, which restricts the company's capacity to leverage centralized production for regional economic experience Consequently, when addressing significant economic factors, licensing may not be the most effective approach for overseas expansion.
To succeed in global markets, companies must often coordinate cross-border strategies, leveraging profits from one country to enhance competitiveness in another However, licensing restrictions can hinder this approach, as license assignments prevent multinational corporations from utilizing profits to support agreements in different countries.
In the import-export business, the unit responsible for signing foreign trade contracts must ensure compliance with both national and international laws while safeguarding national interests and the company's reputation When a company aims to enhance its international market presence through significant export volumes, establishing an export organization—either domestically or in foreign markets—becomes essential This organization will manage all export functions, including market identification, segmentation, documentation, transportation, and the execution of marketing plans that encompass pricing, promotion, and distribution strategies for international markets.
Table 9: Advantages and Disadvantages of Direct export
Direct access to foreign markets enables businesses to understand market trends and consumer needs effectively This insight allows companies to develop tailored strategies for each specific market, ultimately enhancing their operational efficiency in the international landscape.
Business units play a crucial role in the marketplace by independently penetrating markets and addressing consumer needs Effective organization of business activities enhances operational efficiency, strengthens product positioning, and boosts brand recognition, ultimately elevating the prestige of products globally.
Startups face significant challenges when attempting direct export, primarily due to limited production capabilities and a lack of understanding of the international market Additionally, their product brands are often unfamiliar to potential customers, which hinders market penetration Furthermore, these businesses must contend with substantial export taxes, adding to their financial burdens.
The significant gap between buyers and sellers can lead to various unforeseen risks during transactions, primarily due to a lack of knowledge about products, partners, and market conditions.
INFILTRATION STRATEGY CHOSEN BY VINH HOAN
Vinh Hoan Company is establishing a direct distribution system in the European market, allowing for direct sales of final products to consumers This initiative requires support from the government and the Vietnam Association of Fisheries Exporters and Producers (VASEP) to be successful.
Establishing representative offices in European markets involves key tasks such as gathering market intelligence on fisheries management mechanisms, monitoring supply and demand fluctuations, and analyzing competitors Additionally, these offices will seek partnerships for fisheries procurement, collaborate with other organizations to host exhibitions and customer conferences, and explore effective distribution methods for aquatic products Emphasizing e-commerce, the offices will also facilitate online sales to enhance market reach.
Our fisheries industry benefits from a strong workforce characterized by a diligent and resilient nature This dedicated team has played a crucial role in enhancing production and export activities Additionally, the continuous improvement of technical and professional qualifications among our workers further strengthens our competitive edge in the market.
Table 10: Some Decision about Direct Export
Decree No 13/CP dated 2/3/1993 aroused the potential of the whole country in developing the fisheries sector, especially towards export
Decision No 400/TTg dated 7/8/93 allowing royalty exemption, sales tax and profit tax, export tax refund for 3 years for offshore fishing activities
Decision 428/TTg, issued on August 7, 1995, focuses on enhancing and restoring fisheries infrastructure Key initiatives include the construction of fishing ports, the provision of long-term loans at preferential interest rates, the promotion of research and the application of scientific advancements, and the development of post-harvest processing technologies.
Decision No 251/1998/QD-TTg on policies to promote fisheries export
The implementation of the EVFTA Agreement on August 1, 2020, significantly enhances direct export opportunities for Vietnam, particularly in diversifying its export markets and products, especially in the agricultural and aquatic sectors where Vietnam holds competitive advantages The commitments outlined in the IPA Agreement ensure fair and equal treatment, along with comprehensive protection for investments, fostering a transparent legal and investment environment that is likely to attract more investors from the EU and beyond.
Table 11: Difficult of Direct Export
One significant challenge for Vinh Hoan Company in exporting to the European market is market concentration Established competitors with stable distribution channels and strong brand recognition pose a barrier, making it difficult for Vinh Hoan to build its own brand and enhance its visibility in this competitive landscape.
Second is the need to find a reliable partner Because if you choose the wrong partner, it will greatly affect the business direction and reputation of the company
The legal system in each country can significantly impact foreign businesses, as local laws may not offer the same protections In disputes, foreign companies often find themselves at a disadvantage due to a lack of supportive policies and a judicial bias favoring local enterprises Additionally, language barriers can further complicate legal proceedings, making it crucial for foreign businesses to navigate these challenges carefully.
EU dropped sharply because of the
On August 10, the World Bank and the Vietnam Association of Fisheries Exporters and Producers (VASEP) hosted a webinar to present a report assessing the impacts of non-compliance with regulations aimed at combating illegal, unreported, and unregulated (IUU) fishing.
The European Commission's issuance of an IUU yellow card has led to a continuous decline in Vietnam's fisheries exports to the European Union since 2017, as reported by VASEP This situation has persisted for two years, significantly impacting the industry.
IUU yellow card being affected by the IUU yellow card, fisheries export turnover to the EU decreased by 12%, equal to 183.5 million USD
The downward trend in fisheries exports is expected to persist into 2020, primarily driven by the dual challenges of the COVID-19 pandemic and the IUU yellow card, alongside the implications of Brexit As a result, exports to this market have seen a decline of 5.7% compared to 2019.
Experts indicate that the "yellow card" issued for illegal, unreported, and unregulated (IUU) fishing has significantly impacted Vietnam's fisheries industry, leading to substantial losses in both fishing and export activities As a result, Vietnam's fisheries exports to Europe have declined by 35% since 2017.
As a fisheries exporter, Vinh Hoan company is also greatly affected by IUU yellow card
The Vietnam Association of Fisheries Exporters and Producers reports a notable decline in fisheries production and exports in the southern provinces and cities, following the implementation of Directive 16/CT-TTg by the Prime Minister in July 2021.
Businesses are burdened with costs arising from COVID-19 such as equipping workers to work 3 on-site, paying extra wages, weekly testing costs, while advice and logistics costs increase strong
The ongoing epidemic has forced Southeast Asian nations, particularly Vietnam, to implement strict lockdown measures to curb the spread of the virus, significantly hindering the country's export activities.
• Regarding IUU yellow card issue
To address the European Commission's "yellow card" warning, it is essential to implement stringent management of fishing log recording and submission, ensuring the traceability of caught fisheries.
In 2017, Vietnam implemented the Fisheries Law and a range of initiatives to address the European Commission's recommendations and eliminate the IUU "yellow card." This included the establishment of a comprehensive database for fishing vessels, which encompasses registration, licensing, and connectivity from the central to local levels.
INTERNATIONAL MARKETING STRATEGY OF VINH HOAN
INTERNATIONAL MARKETING STRATEGY OF VINH HOAN COMPANY
In recent decades, international marketing has rapidly evolved, prompting Vinh Hoan Company to enhance its marketing strategies amidst fierce competition and a strong trend towards economic internationalization These efforts are focused on entering new markets and boosting both sales and the brand's reputation globally Successfully executing these marketing initiatives is crucial for Vinh Hoan to establish a solid presence in the fisheries sector, particularly with its pangasius fillet products As the company primarily exports basa products, its 4Ps marketing strategy emphasizes a thorough understanding and analysis of its activities related to these offerings.
PRODUCT STRATEGY
In international marketing, product decisions play a crucial role as they influence pricing, distribution, and promotional strategies, ultimately determining a company's success in the global market To effectively navigate these challenges, international marketers must adapt their approach based on the distinct needs and preferences of diverse markets, considering factors such as product attributes, packaging materials, formats, and standards.
The significance of product strategy is paramount, as a company's products reflect its market image To remain competitive, an international product policy must adapt to evolving consumer needs, preferences, and increasingly stringent regulations Therefore, robust research and development are crucial for success Vinh Hoan Company has consistently prioritized R&D, actively participating in domestic and international fairs and exhibitions to innovate and develop new products Over the past two decades, the company has successfully launched numerous value-added products that meet market demands and consumer tastes while integrating advanced technologies to enhance product value and diversity.
Vinh Hoan recognizes that product quality is essential for the growth and success of its business activities in the global market Given the nature of its industry, the company consistently adheres to stringent quality standards to meet the demands of its customers.
In fastidious markets like the US, China, and the European Union (EU), the company adheres to 20 specific measures, types, and technical standards to ensure product quality To maintain these standards, the company has invested in training quality managers and production workers on essential quality components and levels Notably, it is the first fish processing unit to comply with stringent food safety and hygiene regulations, having earned prestigious certifications such as HACCP, ISO 9001, BRC, and IFS This commitment guarantees that consumers receive high-quality products.
The Company's products are divided into several categories based on different sizes and packaging:
+ By size: depending on orders and different requirements of customers, products are packed in different sizes and weights
The Company offers two primary packaging options: block and loose (IQF) Block packaging, typically available in larger weights of 5kg and 10kg, is more cost-effective, while loose packaging, or individually quick frozen (IQF), is smaller in volume and priced higher.
The product packaging is made from carton paper and features trademarks that comply with Vietnam's TCVN standards for exported goods The company operates a workshop dedicated to producing PE packaging and printing product labels, while all cartons and boxes are sourced from external suppliers Overall, the packaging meets the VIEW criteria—Visibility, Information, Emotional impact, and Workability—ensuring it effectively engages consumers.
Vinh Hoan also has an expansion policy to promote goods to Eastern Europe, the Middle East and Mexico.
PRICING STRATEGY
Pricing is crucial for a product's success, as even the best product and marketing strategies can fail without the right pricing In today's market, while various factors influence consumer choices, price remains a key determinant of market share and profitability Factors such as production and transportation costs, market demand, competition, and regulatory influences all play a role in pricing decisions, making it one of the most challenging aspects of business strategy.
Since 2015, the ratio of COGS to revenue has decreased from 91.83% to 90.19% due to the Company's stringent control over input material costs Various measures have been implemented to reduce production costs, optimize raw material usage, and enhance equipment productivity while maintaining a balanced inventory of raw materials and finished goods In the first nine months of 2007, despite rising raw material prices, the Company successfully maintained a COGS ratio of 88.46%, a reduction of over 1.73% compared to 2016 This stability is attributed to the Company's policy of adjusting product prices in line with market raw material prices and collaborating with partners on product imports Additionally, when raw material prices decline, the Company proactively reduces product prices to foster mutually beneficial relationships with key partners.
The COVID-19 pandemic has significantly impacted the demand for basa fish, particularly in Vietnam's primary export markets—China, the US, and Europe—where large-scale social distancing measures were implemented This decline in demand has led to a notable drop in prices; for instance, the export price of basa fish in the US plummeted from nearly $5 per kg in January 2019 to approximately $2.60 per kg by September 2020, marking a staggering 46% decrease.
DISTRIBUTION STRATEGY
Distributing products internationally presents significant challenges due to various factors unique to each host country, including cultural differences, political conditions, legal regulations, customs, and consumer habits To successfully navigate these complexities, companies must conduct thorough research on these elements and develop a flexible distribution strategy tailored to each specific market.
Vinh Hoan Company has established a global presence, with a strong focus on key markets including the US, EU countries such as Spain, Germany, and the Netherlands, as well as Australia and Hong Kong Notably, the US and EU markets account for 80% of the company's export turnover, highlighting their significance The consumer demand in the US market has shown consistent growth, particularly evident in the first two months of 2017.
In a significant boost to its export efforts, Vinh Hoan imported 5,104 tons of frozen basa fillets valued at nearly $17.5 million, marking a remarkable 217% increase in volume With a competitive edge in the U.S market, the company anticipates continued growth in export value in the near future.
In addition to maintaining existing markets, the company is actively expanding its distribution channels and exploring new markets By the end of 2016, this strategy had successfully added five new markets—Pakistan, Thailand, India, Greece, and Reunion—resulting in an increase of approximately 300 customers across more than 40 countries Notably, Japan, China, and Mexico have shown exceptional growth, with increases of 60%, 135%, and 80%, respectively A significant achievement was the introduction of Vinh Foods products into Spain's largest supermarket chain, Mercadona.
Vinh Hoan is transitioning from a B2B to a B2C model by signing a memorandum of understanding with 20 fresh food suppliers and partnering with Amazon This strategic move aims to enhance product accessibility for customers Additionally, the company is planning to establish a representative office in the EU to further expand its market presence.
Vinh Hoan is expanding its presence in the US market by establishing a branch in California, following the approval of its offshore investment certificate (No 09/BKH-DTRNN) issued by the Ministry of Planning and Investment on December 1, 2006 This strategic move aims to enhance the distribution of Vinh Hoan's products across the United States.
PROMOTION STRATEGY
Marketing efforts go beyond merely promoting products or services; they also play a crucial role in informing and guiding customers in their purchasing decisions For international marketers to succeed, it is essential to comprehend the foreign business environment and navigate various local barriers to effectively execute promotional activities.
Vinh Hoan Company collaborates with the Vietnam Association of Fisheries Exporters and Producers (VASEP) to participate in annual international fisheries fairs, such as Vietfish in Vietnam and events in Boston and San Francisco, to showcase their products and explore trading opportunities Additionally, the company seeks customers through various channels, including newspapers, online platforms, and referrals from industry peers and existing clients They also focus on developing business strategies for basa products in different markets while promoting their brand in conjunction with quality standards and food safety.
23 hygiene The company considers this to be a big, long-term goal that needs to be implemented professionally and on a larger scale
The growing preference for natural, organic, and clearly labeled products with minimal environmental impact is driving consumers to seek higher-quality options In response, Vinh Hoan is dedicated to producing delicious and nutritious fishery products that offer fast and convenient preparation, enhancing the culinary experience for consumers This year, Vinh Hoan has successfully developed nine new breaded and seasoned products, catering to export markets in Europe and the Middle East.
CONCLUSION AND RECOMMENDATIONS
CONCLUSION
Europe is a key market for the Company, aligning with its commitment to quality and sustainable development This alignment supports the Company's growth in sales and market presence Currently, Europe ranks as the Company's third largest export market, accounting for 14% of total basa product sales.
Vinh Hoan has effectively leveraged the EVFTA trade agreement to boost sales in Europe by reducing the basa tax rate, enhancing its competitive edge The UK market has shown remarkable growth, soaring by 63%, primarily driven by retail consumption of basa Additionally, sales have increased in other European nations such as Belgium, the Netherlands, Italy, and Spain compared to 2019 Consequently, Vinh Hoan's overall growth in the European market reached 35% in 2020, allowing Europe, including the UK, to surpass China as Vinh Hoan's second-largest market after the US, contributing to 18% of the company's total revenue.
The Company ensures that all expenses are meticulously documented, allowing for an assessment of capital effectiveness and enabling timely adjustments Additionally, through strategic planning, the Company organizes its export promotion efforts systematically, facilitating efficient and swift execution of tasks.
Through analysis, it can be seen that Vietnam's fisheries industry has had many great developments, is a competitive industry, due to its advantages in natural resources and cheap labor.
RECOMMENDATIONS 24 LIST OF REFERENCES a APPENDIX b
To effectively align with local environmental conditions, it is essential to monitor, update, and coordinate the implementation of state and association promotion and support policies, as well as local government initiatives related to farming, processing, and finished products.
- Regularly update information on export markets to have reasonable export measures and plans
- To rationally use marketing policies, strengthen trade promotion measures in order to effectively expand and exploit export markets
- The company needs to have a promotion and communication strategy to make the world's consumers know well The company needs to improve its sales strategy, each country has a
25 different market Developing basa fish to the way of distribution channels into supermarkets and restaurants
To achieve success, it is essential to prepare and promote your brand effectively Currently, basa fish is perceived as a low-cost commodity, but its products can serve as nutritious options for industrial meals in schools, companies, and hospitals Each market segment has unique distribution channels and requires tailored strategies for successful penetration.
To effectively build and promote the image of basa fish, it is essential to shift EU consumers' perceptions towards viewing basa fish products as safe, hygienic, and environmentally friendly from pond to plate Companies must adhere to VietGAP, GlobalGAP, and ASC standards while implementing advanced technologies in seed production, rearing, and feed production to ensure that their products meet the stringent quality requirements of the EU market.
To meet market demands and ensure traceability, the company must effectively process and export while establishing robust raw material sourcing areas Additionally, it is crucial to enhance oversight of food safety standards, particularly concerning antibiotic residues in export shipments.
- Strengthen the ability to self-supply raw materials to limit the risks of raw materials
Developing a skilled team of officers and employees is essential for swiftly adapting to market changes and responding to competitor actions By leveraging management and export experiences from previous companies, we can enhance our strategies and improve overall performance.
- Exploiting the domestic market to help the company solve inventory problems when exporting
- Gradually diversifying products, creating more new products to meet consumer demand and increase the company's competitiveness against other competitors From there, review and export these items
- Building a risk analysis and assessment department to avoid unfortunate mistakes that may occur a
(1) Ministry of Industry and Trade, General Department of Customs https://vinhhoan.com/wp-content/uploads/2019/05/12B_BCTN-2018.pdf
(2) Worldbank.org https://documents1.worldbank.org/curated/en/738371628512941190/pdf/A-Trade- Based-Analysis-of-the-Economic-Impact-of-Non-Compliance-with-Illegal-
Unreported-and-Unregulated-Fishing-The-Case-of-Vietnam.pdf
(3) VH's Annual report 2020 & 2019 ec.europa.eu https://vinhhoan.com/investor-annual-reports/
(4) Vinh Hoan Joint Stock Company https://vinhhoan.com/
(5) Vietnam Association of Fisheries Exporters and Producers
Vinh Hoan Joint Stock Company http://vasep.com.vn/hoi-vien/thong-tin/cong-ty-co-phan-vinh-hoan-137.html
(6) Vinh Hoan Corporation https://vinhhoan.com/wp-content/uploads/2021/06/VHC_Anual-Report-
Table 13: Revenue, Expense & Profit Forecast
1 Cost of finished products sold 2.762.408.525.379
2 Cost of by-products sold 1.820.017.259.090
5 Cost of raw materials sold 14.811.408.913
Total cost 6.320.026.198.917 NET PROFIT (Revenue - Expense) 717.153.458.381
Table 14: Action plan for the first year
Create familiarity of brand identity and image of Vinh Hoan company in customers' mind
Introducing Vinh Hoan new product
Video to introduce products more intuitively: instructions on how to preserve basafish product products, talk about the story of finding materials
Videos and articles about the story of building a brand
Videos and articles about the nutritional and health value of basa fish
Introducing basa fish products in fisheries fair
Place outdoor advertising billboards in UK and Belgium
Place outdoor advertising pano in