MIDTERM REPORT REPORT OF EXPORT BUSINESS PROCESS ANALYSIS CASE OF VIETNAM’S SEAFOOD EXPORTATION

Regulations on food safety for exported fishery products.. Regulations on Siluriformes fish products exportation into the United States... Mainstream markets Vietnam exports seafood to o

FOREIGN TRADE UNIVERSITYFACULTY OF INTERNATIONAL ECONOMICS AND BUSINESS

MIDTERM REPORTREPORT OF EXPORT BUSINESS PROCESS ANALYSIS:CASE OF VIETNAM’S SEAFOOD EXPORTATION

Lecturer: Phan Thi Thu Hien (Dr.)

Course: International Trade Transactions

Group: 3

Class: TMAE302.2

Hanoi, 17 December 2021

TEAM MEMBER

Birth

1 1911150013 Phạm Gia Tùng Chi 11/04/2001 K58-ANH 05-CLCKT

2 1911150015 Nguyễn Tuấn Cường 19/12/2001 K58-ANH 06-CLCKT

3 1911150018 Nguyễn Ngọc Diệp 30/01/2001 K58-ANH 04-CLCKT

4 1911150022 Nguyễn Ngọc Quang 21/04/2001 K58-ANH 05-CLCKT

Dũng

5 1911150715 Nguyễn Bá Thái Duy 26/10/2001 K58-ANH 02-CLCKT

6 1911150571 Nguyễn Thị Thùy Dương 05/11/2001 K58-ANH 01-CLCKT

7 1911150023 Nguyễn Tùng Dương 15/02/2001 K58-ANH 06-CLCKT

9 1911150016 Nguyễn Văn Đạt 21/11/2001 K58-ANH 05-CLCKT

INTRODUCTION 5

5 Vietnamese regulations on exporting fishery products 105.1 Regulations on food safety for exported fishery products 105.2 Regulations on Siluriformes fish products exportation into the United States

4 Packing, labeling and marking 16

5 Corresponding recommendations to improve bottlenecks 19

Asia is a leading provider of seafood products to the developed markets andmany other regions in the world The area is reported to provide 6 million tons ofseafood to the global trade market annually with two staples: fish and shrimp Thisfigure is more than half of the world’s total seafood exports In particular, Vietnamcontributes significantly to the overall value of seafood supplied globally Theseseafood exports play a major role in worldwide consumption and enhance domesticeconomic development

To carry hundreds of tons of seafood out of the Vietnam border, contracts are aprerequisite and paramount international transaction For the purpose of betterunderstanding the procedures and requirements involved in the formation of a tradingcontract, our team conducted research “Export business process analysis: Case ofVietnam’s seafood exportation”

Our report is under the instructions and supervision of Dr Phan Thi Thu Hien

We are so grateful for her support and the precious knowledge she helped us to finishthe course International Trade Transaction However, because of time limitations, thegroup's report unavoidably contained flaws We eagerly await readers' feedback tohelp us improve the content

A OVERVIEW OF VIETNAM SEAFOOD EXPORT

1 Overview

Fishery is identified as a key economic sector of the country Seafood exportvalue in 2020: 8.5 billion USD- accounted for 4-5% of GDP or 9-10% of total nationalexports Seafood export ranks 5th place in terms of value exports (after: electronics,apparel, crude oil, footwear) From 1997-2020: Exports increased 11 times, growing at

an average annual rate of 10%, from 758 million USD to 8.5 billion USD (seeappendix A)

It is estimated that in the first eight months of 2021, Vietnam's seafood exportsare 1,283 million tons, worth $5.578 billion, up 4.19% in volume and 7.14% in valueover the same period in 2020 (appendix B)

2 Key exported products and mainstream markets

2.1 Key exported products

Aquaculture for export is mainly shrimp and pangasius Shrimp exportsaccounted for the highest proportion, the highest growth and the greatest stability.From 1998-2020: Export increased more than 8 times from 457 million USD to 3.73billion USD per year; average annual growth rate of 10% The proportion of totalassets is increasing: from 36% to 50%

Pangasius exports increased 162 times from 9.3 million USD to 1.5 billion USD;average annual growth of 26% Seafood exports account for 30-35% of total seafoodexports From 1998 to 2020: Turnover increased 10 times from 315 million USD to 3.2billion USD; average annual growth of 11%

2.2 Mainstream markets

Vietnam exports seafood to over 160 countries and territories across the world.The top ten markets are the United States, the European Union, Japan, China, Korea,ASEAN, Australia, the United Kingdom, Canada, and Russia, which account for 92-93percent of Vietnam's total seafood exports (see appendix C)

In the top six major markets (the United States, the European Union, Japan,China, Korea, and ASEAN), exports to the EU have slowed in recent years, whileexports to ASEAN and Korea have remained constant, and exports to China havesurged Exports to the United States and Japan had the most rapid rise.

The recent COVID-19 pandemic, however, interrupted supply, hamperedlogistics, caused high freight costs, and impacted important markets, according to Ms

Le Hang, Deputy Director of VASEP Center PRO, Vietnam Association of Exportersand Producers (VASEP)

The country's seafood exports reached about 6.2 billion USD by the end of thethird quarter of 2021, up 3% from the same time the previous year

Exports of seafood to the United States rose in September, up 3% over theprevious month to US$159 million Meanwhile, exports to other markets continued tofall, with China seeing the largest loss (almost 50%), followed by Japan, Canada, theUnited Kingdom, and Australia, all of which had 35-45 percent drops While exports tothe EU and Russia fell by more than 15%, exports to Korea fell by 5%

3 Opportunities and Threats

1 The Government of Vietnam, the Seafoods industry and the Seafoodsenterprises are increasingly interested in food safety, environmental and socialresponsibility All processing plants apply HACCP More and more farming areas andprocessing plants have obtained sustainability certifications such as ASC, GLOBALGAP, MSC, VietGAP…

2 The Government, the Ministry of Agriculture, the Association of Seafoodsexporters and producers and other agencies and sectors are increasingly interested indeveloping the Seafoods industry with large development goals and plans (Decision No.1445/QD-TTg dated August 16, 2013, approving the master plan for development of theSeafoods industry to 2020, vision to 2030)

3 Being able to supply a large amount of safe and stable quality seafood thanks to the abundant supply with a potential of 28 coastal provinces, aquaculture land/water resources and a developed processing industry with more than 600 export enterprises.

4 All processing and exporting enterprises are private and can actively invest inthe seafood industry

5 Developed processing technology can create many diversified products with high added value

6 Satisfy all needs of customers in other countries thanks to stable supply, and application of closed models, good chain links in industries

7 Have a stable and skilled workforce

8 There are many FTAs with countries and territories that bring advantages inimport and export taxes and opportunities to improve product quality Up to now, Vietnamhas joined 16 FTAs, with participating countries accounting for 73% of Vietnam's seafoodexports, of which 13 FTAs have been signed (accounting for 71% of exports)

9 The EVFTA Agreement takes effect from August 2020 and the UKVFTA agreement will promote exports to the EU and UK

(Vietnam Association of Seafoods Exporters and Producers, 2020)

4 Impact of the Covid-19 pandemic

In 2021, Vietnam's economy will continue to be affected by the Covid-19epidemic, especially the epidemic wave that broke out at the end of April with a newstrain that has a rapid and dangerous spread complicated in many localities, seriouslyaffecting the socio-economic situation of the whole country, which creates the risk ofbreaking the seafood production - processing - export chain due to the impact of theCovid-19 epidemic

8

Firstly, the operating capacity of seafood processing businesses plummeted.Only 30% of seafood processing firms in the South operate with an average capacitycut to 30-35 percent, according to the Ministry of Agriculture and Rural Development.Case F0 forced the closure of the seafood processing plant According to the GeneralStatistics Office's IIP survey results, the production index of frozen shrimp increased

by 16 percent in the first six months of the year, but only 95.7 percent in Julycompared to the same period, 78.8 percent in August, and an estimated 77.8 percent

in September; the production index of frozen fillets only increased by 81.8 percent inthe first nine months of the year

Second, purchasing raw materials is difficult for businesses and traders.Businesses find it difficult to obtain raw materials due to the strict and rigid control overpeople and modes of transportation Procurement is behind schedule owing tocomplicated control systems and procedures; workers at the purchasing, harvesting,and transportation phases do not want to join the labor due to fear of illness orbecause they have not been vaccinated

Third, the consumption of fish processing businesses has dropped dramatically.According to the results of the IIP survey conducted by the General Statistics Office,the consumption index of "frozen shrimp" increased by 17.7% in the first six months ofthe year, but then decreased by 10% in July, 34% in August, and 34% in August InSeptember, it's expected to drop by 35% Consumption fell substantially asmanufacturers shut down or cut output, and export activities were hampered by avariety of factors

Fourth, pressure in ensuring wages for employees to retain employees.Workers in the seafood processing industry often have to undergo training Theseafood processing industry is inherently difficult to attract workers due to the specifics

of the profession, but now it is even more difficult to maintain workers and ensurewages for workers to retain employees when businesses are unable to do so.Enterprises must stop operating or reduce capacity or move or reduce profits to incurmore costs related to epidemic prevention and control, logistics, etc

5 Vietnamese regulations on exporting fishery products

5.1 Regulations on food safety for exported fishery products

On October 29, 2018, the Ministry of Agriculture and Rural Developmentpromulgates the Circular No 16/2018/TT-BNNPTNT on amending and supplementing

a number of Articles of the Circular No 48/2013/TT-BNNPTNT on inspection andvalidation of food safety for exported fishery products

This Circular regulate on progress on granting certificate for export consignment

of establishments which is not in the list of priority as follow:

● Within 2 working days after a consignment is exported, the consignment ownermust provide in written forms all necessary information as specified in the certificate atthe request of competent agencies of the importing state or territory to the Evaluationauthority for the issuance of certificates

● Within 01 working day after receiving all valid information, the Evaluationauthority shall conduct the evaluation to issue certificates for the exported consignment

in accordance with the form of the respective importing country or territory if theevaluation result of such consignment is satisfactory

This Circular takes effect from December 13, 2018

5.2 Regulations on Siluriformes fish products exportation into the United States market

In accordance with the new provisions of the Fisheries Law 2017, Decree26/2019 / ND-CP dated March 8, 2019 of the Government, the MARD has issuedDecision No 1802/QD- BNN-QLCL dated 22/5/2020 about the "Food Safety ControlProgram for Siluriformes fish and its products which are exported to the United Statesmarket”

Sub-departments of Fisheries, Agro-Forestry-Fishery Quality under the Provincial Departments of Agriculture and Rural Development directly under the Central Government are responsible for controlling the food safety conditions for the whole

industry from the stage of raising commercial Catfish to harvest and the transportationprocess The Department of Agro-forestry-Fisheries Quality Assurance and itssubordinate units are responsible for controlling food safety during transportation,processing, storage and export of Catfish as follows:

(1) Department of Agro-Forestry-Fisheries Quality Assurance and Departments in Central and Southern Vietnam appraise the conditions to ensure foodsafety for processing and preservation establishments for exporting to the United States;(2) Regional Agro-Forestry-Fishery Quality Centers carry out monitoring of foodsafety assurance conditions during transportation (in case of transportation are underprocessing facilities), slaughtering/processing, preserving at the establishments andappraised, certified for the catfish shipments to the US market

Sub-5.3 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CTPPP)

The CPTPP includes 11 member countries: Australia, Brunei, Canada, Chile,Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam Theagreement was signed on March 8, 2018 in the city of Sanpo, Chile The CPTPPprovides for almost complete liberalisation of tariffs among the participants Tariffs areretained in only a few highly sensitive areas – for example, Japan keeps tariffs on rice,while Canada’s dairy industry is also protected It provides a single set of rules oforigin, and allows content from all CPTPP countries to be ‘cumulated’ If a good has tohave at least 70% ‘CPTPP content’ to qualify for preferential tariffs, for instance, that70% can come from any combination of CPTPP countries

Right after taking office as US president, Joe Biden committed to rebuilding relations with allies, and this has sparked speculation about the US returning to the fold If this comes true, more benefits are expected to be given to both the US and Vietnam.

“Biden stated in 2019 that the US should renegotiate parts of the CPTPP and assemble a coalition to counterbalance China’s perceived expansionist policies,” said analysts Fitch Solutions “The Trump administration withdrew from the TPP in 2017

re-11

under the pretext that it would harm US workers If the US rejoins, the CPTPP woulddeliver substantial tailwinds to Vietnamese exports to the US from lower tariffs in majorexport categories.”

B SALES CONTRACT

SELLER: ABM FOODS., Ltd

61/2 Binh Gia, Tan Binh District

Ho Chi Minh City

VIETNAM

Tel: (+84) 856-652-345

BUYER: American Seafoods Co., LLC

2025 First Avenue, Suite 900

● Packing in PE/PA bag 2kg/vacuum bag, 10kg/carton

● Shelf Life: 24 months

● Place of Origin: Vietnam

3 Quantity

● 50 MT (more or less 5% at buyer's option)

4 Price - Delivery - Transfer of Ownership

4.1 Price

● Currency: USD

● Total price: 230,450 +/- 5%

● Unit price: 4609/MT/FCA Cat Lai port, Vietnam Incoterms 2020

● Amount in letters: Two hundred and thirty thousand, four hundred and fifty more

or less five percent

4.2 Delivery

● Time of shipment: Within at least 45 days after L/C opening date

● Term of delivery: FCA Cat Lai port, Vietnam Incoterms 2020

● Port of loading: Cat Lai port, Vietnam

● Port of unloading: San Diego port, U.S

● Notice of shipment

Within 24 hours after finishing the shipment, the Seller must inform the Buyerthe details of shipment, including date of shipment, GW, NW, Vessel's name,ETA and ETD, which is sent by fax first and confirmed in written documents

● Other delivery terms