REPORT TOPIC PLAN FOR SUGAR EXPORT ESTABLISH THE COMPANY’S APPROPRIATE GOALS REGARDING THE NEW BUSINESS

THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS The faculty of International Business  REPORT TOPIC PLAN FOR SUGAR EXPORT Subject Export – Import Business Lecturer MSc Nguyen Thi Phuong Thao Class[.]

The faculty of International Business

……….………

REPORT TOPIC

PLAN FOR SUGAR EXPORT

Da Nang, 2022

TABLE OF CONTENTS

TABLE OF CONTENTS 2

TABLE OF FIGURES 4

TABLE OF TABLES 5

I ESTABLISH THE COMPANY’S APPROPRIATE GOALS REGARDING THE NEW BUSINESS 6

1 Company overview 6

2 Goals 6

2.1 Overview of Vietnam's sugar market 6

2.2 Set export goals of the business 8

II SELECTING A PRODUCT 9

III CHOOSING A TARGET MARKET 11

1 Preliminary screening (basic needs) 11

1.1 Sugar world import situation 11

1.2 Vietnam sugar export situation 11

2 Secondary screening (financial and economic conditions) 12

2.1 China 12

2.2 The USA 14

3 Final screening (political and legal condition) 16

3.1 Import Tariff of USA 16

3.2 Import Tariff of China 17

4 Conclusion the most desirable market 18

IV PRODUCT ADAPTATION 19

1 Mandatory 19

1.1 Trademark 19

1.2 Labels 19

1.3 Package 20

2 Voluntary 20

2.1 Physical product core 20

2.2 Product package 21

2.3 Auxiliary services 23

V CHANNELS OF DISTRIBUTION 24

1 Analyzing Export Channel Options 24

1.1 Direct channel 24

1.2 Indirect channel 25

2 Model of Indirect channels of MSC 27

VI PRODUCT PROMOTION 32

1 Promotion strategy 32

2 Export promotional tools 32

2.1 Sales Promotion 32

2.2 Advertising 36

VII PRODUCT PRICE 37

1 Export pricing objectives 37

2 Pricing and markup policy 37

3 Approaching export pricing 37

4 Determinants of export prices 38

4.1 External variables 38

4.2 Internal variables: 40

5 Cost determination 41

5.1 Freight cost: 40$ / 20’DC 41

5.2 China tariff and tax 41

5.3 Cost of production 42

5.4 Insurance fees 42

6 Actual product price sheet 42

7 Conclusion 43

VIII REFERENCES 44

TABLE OF FIGURES

Figure 1 Domestically produced sugar and imported Thai sugar into Vietnam 7

Figure 2 Export situation of sugar product line in HS code 17 9

Figure 3 Export situation of sugar product line in HS code 1702 10

Figure 4 List of markets that import sugar from Vietnam 11

Figure 5 List of supplying markets for sugar imported by China 12

Figure 6 Inflation rate of China 13

Figure 7 Interest rate of China 14

Figure 8 Inflation rate of the USA 15

Figure 9 Interest rate of the USA 15

Figure 10 Import Tariff of USA on Vietnam sugar products 16

Figure 11 Import Tariff of China on Vietnam sugar products 17

Figure 12 Model of Indirect channels of MSC 27

Figure 13 RT-Mart in China 28

Figure 14 Walmart in China 28

Figure 15 Metro in China 28

Figure 16 Jiajiayue in China 29

Figure 17 Carrefour 29

Figure 18 Shanghai New World Daimaru 29

Figure 19 Family Mart 30

Figure 20 Tianfu 30

Figure 21 Easy Joy 31

Figure 22 China Import and Export Fair in Guangzhou 34

Figure 23 SIAL China 34

Figure 24 World Centrifugal Sugar: Production and Consumption 38

Figure 25 List of supplying countries for sugar imported by China 39

Figure 26 China Import Customs Duty, Tax 41

TABLE OF TABLES

Table 1 Sugar world import situation 11

Table 2 GDP, GNI per capita 14

Table 3 Container freight rates for some export routes 40

Table 4 Detailed price list 42

Table 5 Actual product price sheet 43

I ESTABLISH THE COMPANY’S APPROPRIATE GOALS REGARDING

THE NEW BUSINESS

1 Company overview

Myan Sugar Company (MSC) is a sugar manufacturer, located at 71 Ngu Hanh Son

Street, Ngu Hanh Son District, Da Nang, Vietnam Our major line of business is

manufacturing, processing and selling sugar in the domestic market

Regarding the workforce, the company has more than 500 employees After several

years of effective operation and successful sale, MSC produces 50,000 tons of product per

year with a modern processing plant system Production lines closed on materials to

finished products for export

MSC produces a lot of kinds of sugar with international standards including Glucose,

Fructose, cane sugar, beet sugar and mixed form of products

2 Goals

2.1 Overview of Vietnam's sugar market

a Reality

Sugar cane output in the year 2019-2020 is about 7.4 million tons (-39% YoY) and

produces nearly 770 thousand tons of sugar (-35% YoY) In addition, the area of raw sugar

cane is estimated to decrease by 18%YoY to 156 ha One-third of sugar mills in the

Association had to close due to a shortage of raw materials

The volume of sugar imported from Thailand into Vietnam skyrocketed after the

quota was removed and the import tax for ASEAN countries was only 5% The average

price of Thai sugar exported to Vietnam (including raw and refined) has increased, but is

still only at 327.7 USD/ton, lower than the cost of cane to make domestic sugar (currently

about 410 USD/ton) leading to serious damage to the competitiveness of the domestic

market

Figure 1 Domestically produced sugar and imported Thai sugar into Vietnam

Source: VSSA, Ministry of Commerce of Thailand, PHFM

In the context of a slow economic recovery and serious impacts from smuggled sugar,

dumped imported sugar, and unfair competition, the output of sugar produced from

sugarcane faces many difficulties "In that situation, the mills, despite their efforts to reduce

the selling price of sugar in order to have money to pay sugarcane to farmers and invest in

the next sugarcane crop, could not push sales," VSSA emphasized

In the last 5 years, Vietnam has 9/38 sugar factories that have to close because they

cannot compete at home Many experts predict that the sugar industry is at risk of being

completely dependent on imports

These things have led many Vietnamese enterprises to plan to promote the export of

products to foreign countries in order to expand consumption markets

b Positive export prospects of Vietnam's sugar market

Export to China: Under the impact of the Covid-19 epidemic and the flood situation

that occurred in the third quarter of 2020, China has increased sugar imports to reserve

essential food, including Vietnam

Export to EU: The effective EVFTA has opened up opportunities to export

high-quality sugar to the EU Tariff quotas on 10,000 tons of white sugar and 10,000 tons of

products containing more than 80% sugar, and tax rates of 339 EUR/ton for raw sugar and

419 EUR/ton for refined sugar will be gradually reduced over time According to USDA

forecast, EU sugar import volume in the 2020/2021 crop year is estimated at 3 million tons

(up 43% YoY)

2.2 Set export goals of the business

Myan Sugar Company is a sugar producer in Vietnam, which has many years of

experience in successful production and consumption in the domestic market and has never

exported to foreign countries Therefore, the initial goal of the company is entering foreign

markets by selling in large volumes, at competitive prices while still achieving profits for

the company to attract international demand

Currently, although the Government has imposed anti-dumping tax on a number of

sugar products originating from Thailand for a period of 5 years, from June 16, 2021, the

amount of sugar imported from other ASEAN countries spiked again, there were signs that

Thailand evaded dumping and subsidy taxes, reducing the effectiveness of

anti-dumping and anti-subsidy measures This can lead to a threat to Vietnamese sugar

producers, so they need to find new markets abroad to prevent, protect and compensate for

their domestic market share

Furthermore, MSC also builds up a strategy of sustainably developing the

Vietnamese sugar industry and increasing competitiveness in the long term

II SELECTING A PRODUCT

HS code: 170290

HS Chapter 17 - Sugars and sugar confectionery

1702 - Other sugars, incl chemically pure lactose, maltose, glucose and fructose, in

solid form; sugar syrups not containing added flavouring or colouring matter; artificial

honey, whether or not mixed with natural honey; caramel

170290 - Sugars in solid form, incl invert sugar and chemically pure maltose, and

sugar and sugar syrup blends containing in the dry state 50% by weight of fructose, not

flavoured or coloured, artificial honey, whether or not mixed with natural honey and

caramel (excluding cane or beet sugar, chemically pure sucrose, lactose, maple sugar,

glucose, fructose, and syrups thereof)

The decision to select the above product to develop an export plan is based on the

following factors:

Figure 2 Export situation of sugar product line in HS code 17

Source: Trade map

According to data from Trade map presented by the above picture, it can be seen that

the sugar product line with HS code 1702 has lower value exported than the 1704 product

line, but the remaining indexes of this product line show a superior advantage Specifically,

annual growth in both value and quantity tend to increase very quickly compared to the

rest of the product lines Therefore, products with HS code 1702 should be selected for

export to foreign countries

Figure 3 Export situation of sugar product line in HS code 1702

Source: Trade map

When it comes to the specific product lines of HS code 1702, it is easy to see that

products with HS code 170290 recorded a top number in all indicators Most notably, only

this product has a positive trade balance, showing that this item is tending to increase in

export demand when the import-export balance is at $8,732 thousand

In conclusion, based on the actual data and the above analysis, the product with HS

code 170290 is a reasonable selection for MSC to export first to the world

III CHOOSING A TARGET MARKET

1 Preliminary screening (basic needs)

1.1 Sugar world import situation

The first goal of the enterprise is to expand the consumption market, so when

choosing the target market, the markets with large scale and high demand for sugar use

will be the most potential markets Based on the following indexes: Value imported,

quantity imported, share in world imports, we can find some target markets as follows:

Table 1 Sugar world import situation Target

Source: Trade map

1.2 Vietnam sugar export situation

Figure 4 List of markets that import sugar from Vietnam

Source: Trade map

In addition to data from the picture above, MSC was able to select the two best

potential target markets out of the five filtered markets: China and the USA

a China

Value imported: The export value of Vietnamese sugar to this country is the largest

of the total; accounted for the highest proportion of Vietnam's exports (95.7%)

Growth in imported value and quantity: Growth in imported value is higher than

growth in imported quantity that shows an increased tendency in sugar price

Trade balance: The trade balance is positive (22,990 USD thousand) and reaches the

largest value out of the total number of countries that we export

Other criteria: Vietnam is the country ranked second in terms of sugar import volume

to China, showing strong competitiveness with competitors entering this market

Figure 5 List of supplying markets for sugar imported by China

Source: Trade map

Vietnam also has a territory bordering China, so it has the advantage of geographical

distance when conducting exports, helping businesses reduce a large amount of

transportation costs

b USA

Value imported: The value of Vietnamese sugar exported to the US is quite high,

ranking second only to China

Unit price: The very high unit price (1,056 USD/unit) creates opportunities for

businesses to boost profits, which is an attractive price that attracts many importers to

penetrate

2 Secondary screening (financial and economic conditions)

2.1 China

Market size: China's population currently accounts for 18.17% of the world's

population China is ranked 1st in the world in the ranking of the population of countries

and territories, besides, the demand for sugar in this country is also ranked first in the world,

which is shown through the value of sugar imports from countries around the world This

is beneficial for enterprises to export to this market in increasing their accessibility to many

potential customers

Inflation rate: Although recently China's inflation rate has increased, it still accounts

for a relatively low rate compared to other countries in the world, lower than the inflation

rate of the world economy (4.3%) Keeping the inflation rate at a low level helps stabilize

the economy, improve forecasting ability and plan production to match the affordability of

importers

Figure 6 Inflation rate of China

Source: National Bureau of Statistics of China

Interest rate: The one-year loan prime rate (LPR), which is used for corporate and

household loans, was kept at 3.65%; while the five-year rate, a reference for mortgages,

was maintained at 4.3% In August, China cut benchmark interest rates following a

resurgence of COVID-19 cases and a lingering property downturn The central bank

maintains its medium-term policy rate at 2.75% Lowering interest rates aims to save

borrowers' debt situation and at the same time promote more credit growth This helps

sugar exporters feel more secure in knowing the retailer's ability to pay

Figure 7 Interest rate of China

Source: People’s Bank of China

Table 2 GDP, GNI per capita

Target market GDP per capita

Source: World Bank

GDP, GNI per capita: China's GDP and GNI are lower than those of the USA, but

based on the data, we can see that the ability of this country to pay in the future is high so

the company can invest in exporting to this whole country

2.2 The USA

Market size: According to data based on the latest United Nations population

estimates, it is estimated that there are 7.8 billion people in the world With the US

population census in 2021, the total US population currently accounts for 4.25% of the

world's population Accordingly, the US population is ranked 3rd in the world in the

ranking of the population of countries and territories This shows that the country's import

demand will account for a large part of the world and a large decrease in sugar consumption

in the US is unlikely On the other hand, sugar is an essential product for life, so the demand

for this product always exists So businesses can trust that this is a good market to approach

Inflation: The annual inflation rate in the US represents the third month running to

8.2% in September of 2022, the lowest in seven months, compared to 8.3% in August but

above market forecasts of 8.1% High inflation will depreciate the value of currency and

thus make transactions between the company and the import country more difficult in

determining the price of goods Although inflation is at a high level due to the unstable

world situation but is showing signs of slowing down, the US market will recover a stable

economy and exporters will feel more secure when entering the market in the future

Figure 8 Inflation rate of the USA

Source: U.S Bureau of Labor Statistics

Interest rate: The Fed raised the federal funds rate by 75 bps to the 3% - 3.25% range

during its September meeting, the third straight three-quarter point increase, pushing

borrowing costs to the highest since 2008 The increase in interest rates will affect countries

that are exporting goods to the US market Because high interest rates will affect the

consumer demand for goods of the American people, leading to a decrease in the demand

for foreign goods

Figure 9 Interest rate of the USA

Source: Federal Reserve Board

GDP, GNI per capita: The US is leading in terms of GDP and GNI, so this is a strong

point when businesses have the opportunity to export to the market with this developed

economy

3 Final screening (political and legal condition)

3.1 Import Tariff of USA

Figure 10 Import Tariff of USA on Vietnam sugar products

Source: Market Access Map

The tax rate that MSC may face is 5.1% when Vietnam and the US do not have an

agreement

3.2 Import Tariff of China

Figure 11 Import Tariff of China on Vietnam sugar products

Source: Market Access Map

The general tax rate that China applies to sugar products imported from Vietnam is

30% In addition, Vietnam also enjoys a Preferential tariff for ASEAN countries with a

preferential rate of 0%

Therefore, enterprises should choose Preferential tariff for ASEAN countries because

they will be exempt from tax when exporting sugar to China

4 Conclusion the most desirable market

Through the entire filtering process above, China is the most potential market that

Myan Sugar Company should choose to penetrate

The specific type of product that MSC would choose to export to China is product

with HS code 1702901200

1702901200 – Other sugars, including chemically pure lactose, maltose, glucose and

fructose, in solid form; sugar syrups not containing added flavouring or colouring matter;

artificial honey, whether or not mixed with natural honey; caramel: Simple solid mixture

of cane sugar, beet sugar and other sugars containing more than 50% sucrose

IV PRODUCT ADAPTATION

1 Mandatory

China is one of the markets with strict requirements for products originating from

abroad, as evidenced by The General Administration of Customs (GAC) released the

Measures for the Safety Administration of Imported and Exported Food (GAC Decree

No.249) and the Administrative Provisions on Registration of Overseas Manufacturers of

Imported Food (GAC Decree No.248) on April 12, 2021 And from January 1, 2022, China

has enforced new rules on food safety imports and exports related to both of these

regulations Therefore, businesses need to ensure regulations and requirements for food

when exporting to the Chinese market

1.1 Trademark

According to the regulations of the National Office of Intellectual Property of

Vietnam (NOIP), a protected brand name valid for 10 years within the territory of Vietnam

and does not violate the regulations on registration of trade names In addition, in order to

get trademark protection in China, it is mandatory for the applicant to submit a set of

trademark registration documents and be accepted for protection by the China Intellectual

Property Administration (CNIPA) Registration can be done directly at the China Patent &

Trademark Office or through an application on the World Intellectual Property

Organization (WIPO)

1.2 Labels

a According to China’s 2015 Food Safety Law

Pre-packaged food must be labeled and must include the following information:

Name, specification, net content, and date of production;

Table of ingredients or formulation;

Producer name, address and contact information;

Shelf life;

Code of product standard(s);

Storage requirements;

Generic name of the food additives as used in the national standard;

Production License Number;

Other information that must be indicated in accordance with applicable laws,

regulations, and food safety standards

b According to GAC Decree No.249 (Article 30)

The packaging, labels, and markings of food imports shall conform with the

provisions of Chinese laws, regulations, and national food safety standards; if product

instructions are required, instructions in Chinese shall be attached

The destination must be marked as the People’s Republic of China The Chinese

labels of imported health food and foods for special dietary purposes must be printed on

the minimum sales packages; (Chinese labels) must not be affixed

If special marks/logos are required on the inner and outer packaging of food imports,

such requirements shall be followed

c According to GAC Decree No.248 (Article 15)

An overseas producer of imported food that has been registered shall faithfully label

the registration number, name and address of the producer on the minimum sales package

of the foods to be imported to China

1.3 Package

China has paid increasingly more attention to the sustainable development of

industries and environment protection A series of laws and regulations (including the

Opinions on Further Strengthening the Clean-up of Plastic Pollution, the Implementing

Plan for Improving the Mechanism to Boost Consumption 2018 - 2020, and the Guiding

Opinions on Actively Promoting the Innovation and Application of Supply Chains) have

been published setting out the basic principles and national strategies The government

intends to guide the plastic and packaging industry towards sustainability, environmental

protection and recyclability

2 Voluntary

2.1 Physical product core

a Ingredients and content

Sugarcane is the main raw material used for sugar processing, besides there is a small

amount of saccarozo obtained from sugar beets, so the processing process and technical

conditions of sugar processing are based on sugarcane, especially the properties and

composition of sugarcane juice Therefore, sugarcane must be harvested at the time when

the plant is ripe, then the sugarcane will have a high sugar part, low sugar-free substance,

so the purity is relatively high In addition, processing plants are built near the harvest area

to ensure the highest quality input materials as well as standardized production processes

with high-tech machinery and equipment with the aim of providing the best products to

customers

b Functional features

Characteristics: The type of sugar selected for export is solid state, ivory white,

odorless, tasteless Like other spices, sugar is a sweetener commonly used in daily life,

especially in culinary preparation It is also an essential nutrient that plays an important

role in helping to metabolize, replenish energy supply and maintain the body's activities

In addition, sugar is also used in preserving food, curing some simple diseases or in the

field of beauty

Size: Sugar is packed with a weight of 1kg/package, compact, convenient and suitable

for daily use of individuals and households

c Style

The finished sugar obtained through processing and cleaning will be ivory-white

crystals of relatively uniform size, glossy, loose, without lumps

2.2 Product package

a Brand name: Myan Sugar

The brand name is given in English with the meaning of "Sugar" which is the main

product that the manufacturing company and Myan are symbolic for My An ward, the

location of the company's headquarters was established Such naming helps customers

clearly identify the commodity that the company provides

b Product name

Named after the structure "Level of quality + main ingredients + (uses) + sugar", this

naming method helps consumers choose the right product for their needs as well as their

health status

c Trademark

Brand name and logo copyrighted successfully by the company on 12/08/2015 and

did not violate any of the above provisions on any brand name of the National Office of

Intellectual Property of Vietnam (NOIP) When starting to export items to the Chinese

market, the company has registered to protect additional trademark names in the importing

country, effective from 12/07/2022, without violating the regulations of the China

Intellectual Property Administration (CNIPA)

d Labels

The left, right, top, bottom edges of the box represent only the business name and

product line name, excluding details The front of the packaging has the main color of red,

with the image symbolic illustrations of the main ingredients of the product (sugarcane,

beets) and some basic information:

+ Brand name: Myan Sugar;

+ Product name: Standard Mixed Sugar (标准混合糖);

+ Country of manufacture: Vietnam;

+ Net weight: 1kg

The back of the product has detailed information about nutritional value, ingredients,

instructions for use, information about the production facility and some other notes, printed

in parallel English and Chinese:

+ Table of specific nutritional values per serving (50g);

+ Ingredient: sugarcane, beets (no preservatives, flavors, food coloring)

+ Signs of registered quality certificates: HACCP, ISO 9001:2008;

+ Note usage:

• Can be used immediately after opening the packaging;

• Store in a cool place, away from the sun;

+ Business information:

• Business name: Myan Sugar Joint Stock Company;

• Address: 71 Ngu Hanh Son, My An Ward, Da Nang City, Vietnam;

• Customer care phone number: 1900 1999;

• Website: www.myansugar.comBarcode;

Date of manufacture: written in Chinese chronological format;

Expiry date: 24 months from the date of production

e Package

To maintain the quality of the product, the packaging used for sugar packaging is

OPP/PE bags, meeting the standard of commercial packaging - Plastic bags - TCVN

5653:1992 with a weight in each small bag will be 1kg Besides, the packaging will have

the main color of red (lucky color according to Chinese culture) thus creating a sense of

closeness and attracting customer tastes

For export, the product will be exported in the form of cartons weighing 50kg

(including 50 small bags), and meeting the standards of shipping and packaging

2.3 Auxiliary services

Products belong to the group of basic consumer foods, so they do not include detailed

manuals or installation instructions such as component groups, technology,

The product is used immediately upon opening, so there is no return or warranty

service Any other problems arising due to product quality, customers can contact the

customer service center via the company's hotline