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1 THE STATE BANK OF VIETNAM BANKING ACADEMY THE INTERNATIONAL TRADE AND FINANCE TOPIC Dong Xuan knitting Co , Ltd (DOXIMEX) entries Canada market Lecturer Nguyễn Thu Hương Group 10 Hanoi 05/2021 2 Gro[.]

THE STATE BANK OF VIETNAM

BANKING ACADEMY -

THE INTERNATIONAL TRADE AND FINANCE

TOPIC: Dong Xuan knitting Co., Ltd (DOXIMEX)

entries Canada market

Lecturer: Nguyễn Thu Hương Group: 10

Hanoi - 05/2021

Group 10

Table of contents

Introduction 4

I Overview of Dong Xuan knitting Co., Ltd 5

1 General Information 5

2 Introduce background 5

3 Mission and development goals 6

4 Products 6

5 Awards 6

6 Reasons for finding a new foreign market 7

II PESTEL Analysis Canada 8

1 Economic 8

2 Social environment 9

3 Legal Environment 9

4 Politics 9

5 Technology 10

6 Environment 11

III Method entry new market 11

1 Controlled product delivery and quality 11

2 Tariff preferences 11

3 Potential sales 12

4 Closer relationship with overseas market 12

5 Higher profit 12

6 Experience working with foreign partners 12

Conclusion……… 13

Introduction

Entering the 21st century, the trend of internationalization is getting stronger and stronger Most countries open their economies to take full advantage of their comparative advantages For a country in the early stages of industrialization and modernization like Vietnam, the textile industry is an industry that plays an important and indispensable role in the construction of the country Besides the role of supplying goods to the domestic market, the textile and garment industry has now reached out to foreign markets, and is increasingly holding an important position in the Vietnamese economy with many companies such as Hanosimex, Viettien May10, DOXIMEX Some markets in the export map of Vietnam's textile and garment industry can be mentioned such as the US, EU, Japan with an export value of 260 millions USD/month and are continuing to increase However, it does not stop there, the textile and garment industry can continue to grow by stepping up to penetrate and dominate new markets

With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) taking effect from the beginning of 2019, Canada has become the latest billion-dollar export market of Vietnam's textile and garment industry

In this article, we will learn and analyze the case of DOXIMEX if this company decides

to enter the Canadian market

I Overview of Dong Xuan knitting Co., Ltd

1 General Information

- Company name: Công ty TNHH một thành viên Dệt kim Đông xuân (DOXIMEX)

- Head office: 524 Minh Khai Street, Hai Ba Trung District, Ha Noi

- Telephone number: 043.633.6726

- Tax code: 04.633.6717

- Email: doximex@hn.vnn.vn

- Founded in 1959

2 Introduce background

Being the first state-owned enterprise of Vietnam's knitting industry, with a complete production line from weaving, fabric finishing, cutting, sewing, printing, embroidery on European equipment lines and production technology

of Japan The Company's products meet the high-quality requirements, especially 100% Cotton knitted products and low rate modified synthetic fiber products, which are favored by domestic and foreign customers and retain their prestige credit for more than 50 years

Dong Xuan brand has been becoming popular with domestic and foreign consumers after more than 55 years of innovation and development Dong Xuan has been improving, creating and determining new directions in order to develop Consider these milestones:

- 1959- 1979: Dong Xuan knitting sole member limited liability was

established in 1959 From the beginning, our factory had 4 workshops, 380 labors, 180 sewing and knitting machines of China with annual capacity of 1 million products At the end of 1967, Dong Xuan won The leading company

of industry in Hanoi capital city

- 1989- 1990: Dong Xuan singed 10- year cooperative agreement with Japan

because of high quality products and our prestigious and renewed more than

10 years in 1996 In the July 2009, Japan continued signed the agreement with Dong Xuan in 10 years

- 1992: The Ministry of Industry had Decision No 704/CNNTCLĐ, approving

conversion activity of Dong Xuan knitting factory into Dong Xuan knitting Company

- 2006: The Prime Minister had Decision No 18/2006/QĐ-TTG converted

Dong Xuan knitting Company into Dong Xuan knitting sole member limited liability

- 2011: Dong Xuan Company has the product capacity of 10 million tons per

year

3 Mission and development goals

With the desire to improve the quality of community life through the provision of product and service quality, safety for health is of real value to not only meet the customer’s need but also spur economic and society development

DOXIMEX always aims to become a leading manufacturer of Vietnam in producing and providing the best knitting goods that are safe for health and environmental friendly business system based on knitting, dyeing and finishing technology

With the goal of bringing profit for consumers, partners and stakeholders base on value chains of Japanese technology and quality of yarn, weave, finishing and sewing processing;

Providing high quality and health safety goods for customers;

Bring social and economic benefits for local area and nation through utilizing of eco technology, safe for our health, friendly and equal working environment

4 Products

Dong Xuan knitting has main business activities in investing, manufacturing, trading and export-import garment products and raw materials Our major products are circular knitting ones, T-shirt, Poloshirt and shapewear for women Export products are mainly underwear products, in direct contact with the skin and most recently antibacterial cloth masks to countries such as: Japan, France, USA… In addition, DOXIMEX also accepts work for a number of markets including the EU and the US

(Some typical products of DOXIMEX)

5 Awards

Dong Xuan has been using modern and eco-friendly production line from Japan Besides, textile finishing chemicals is not listed in banned toxic ones Dong Xuan’s clothes are produced from 100 % cotton fiber and PE that are tested formaldehyde concentration on Japanese standard In addition, Dong Xuan has been applying SEEN wastewater treatment of America so as to guarantee keeping our waters safe

and healthy after finishing wastewater treatment work according to Vietnam government regulations We affirm that our products are safe for consumer’s health Over 80% of Dong Xuan’s total production are exported to Japanese market consisting of leading brand such as Aeon’s Top Valu, Triumph,Tutuanna, Cecile,etc Similarly, domestic consumers believe and like Dong Xuan’s goods To prove its point, Dong Xuan’s products has been archived the Vietnamese High Quality Goods award, voted by consumers, the top 10 Vietnam

6 Reasons for finding a new foreign market

 Domestic distribution market share is relatively low compared to capacity

 As one of the oldest enterprises in the textile industry but Dong Xuan is not known as a fashion brand suitable for young people's tastes Their products are diverse, they serve customers from adults to children, provide basic styles to meet daily needs Besides, the company concentrates on two main aspects are the high quality and the safety ones, while the others company usually focus on aesthetics and catching up with trends Although there is

a certain popularity in the general market, it is still difficult to compete in the domestic market with other enterprises

 The company's main export market reduced orders due to Covid 19

 Since the Covid-19 epidemic appeared and caused a serious impact on the world economy and consumption, the company's familiar export markets, Japan- the market accounted for 80% of the company's total salary and the

US, EU, was also affected by a decline in consumption and services Dong Xuan needs to find new markets to reduce risks and maintain business operations

 Because of the effects of Covid-19, the new type of mask for epidemic prevention of Dong Xuan company has been made This is the first unit to have a cloth mask product that has been granted a test certificate of standardization according to the Technical Guidelines for cloth masks to prevent epidemics of the Ministry of Health this is a potential product when during the epidemic period masks become an essential product for people all over the world

 For the above reasons, it is necessary for the company to find new potential markets One of the great potential markets of Vietnam's garment industry

today is Canada It is estimated that the compound annual growth rate of

our country's textile and garment exports to Canada in the past 5 years is 11.8%, better than the annual export growth rate of the textile industry In particular, the import scale of up to 14 billion USD in Canada is the room for Vietnam's textile and garment to expand its market share, when Vietnam currently only accounts for about 8% of the market share In addition, Vietnam and Canada have signed CTTPP and FTA agreements to help Vietnamese garment enterprises like Dong Xuan access this market more conveniently

II PESTEL Analysis Canada

1 Economic

The first element to mention in PESTLE analysis of Canada is the economic environment Canada is one of the 10 largest economies in the world It has membership in the Organization for Economic Co-operation and Development (OECD), the World Trade Organization (WTO), the G20 and the Commonwealth of Nations

The estimated worth of GDP in Canada for the year 2020 was $1590.00 Billion (Trading Economics, 2021) With a strong and dynamic economy, diverse and entrepreneurial people, world-class infrastructure, and one of the best banking systems in the world, Canada draws the attention of investors and businesses around the world However, it is worth mentioning that the impact of economic lockdown in 2020 was deeper than expected

Besides, Canada also has free trade agreements with a lot of countries, which holds a great potential for Viet Nam to export garment to Canada

Canada is one of the countries with the highest garment trade decifit in the world with the consumption of clothes over 20 billion Canadian dollars Although Canada has more than 2000 garment manufactures, the Canadian fashion industry is highly depend on imported yarns which are taxable items ( the tax rate can range from 9% for wool yarns, up to 16%) This tax plus the high labour cost in Canada makes domestic garment prices much higher than imported goods Therefore, the company’s garment with reasonable prices can penetrate deep into market segment of low to mid price goods in Canada

COMTRADE database on international trade

1 Social environment

Canada is the 2nd largest country in the world by area; however, its population is not that big Its total population is 37.92 million and the population density is 4 per Km2 (Worldometers, 2021) Population growth has been fairly consistent over the last four decades and currently there is no sign of slowing down

The living standard in Canada is one of the highest in the world The Canadian consumers are confident about the sustainability of their jobs, and the economy

in general They almost always demand high quality products/services and after-sale customer support The rate of online shopping is growing very fast as the young customers are increasingly using their tech devices to shop online Appearance is very important to Canadians Canadians business costumes represents aesthetics and convenience For women, the most suitable clothes are

office dresses or traditional suits For men appropriate costumes are especially

the suit and tie

2 Legal Environment

There are many methods to do business in Canada For instance, corporations, joint ventures, general or limited partnerships, trusts, sole proprietorships, co-operatives, and Branch plant operations are the most common ones For international businesses, corporation is the most popular method of entry into Canada (Mercier & Woodman, 2019)

In principle, the Government of Canada pursues a transparent, fair and mutually beneficial economic and trade policy system Canada has been negotiating and signing many trade agreements to remove trade barriers, resolve trade disputes Specifically, Canada is a member of the World Trade Organization (WTO), the North American Free Trade Area (NAFTA), the upcoming Free Trade Area of the Americas (FTAA)…

3 Politics

Canada is a founding member of the United Nations and is a powerful country It maintains good relations with the most powerful country in the world, the USA It also maintains good relations with the United Kingdom, France and many other countries in the world Ottawa is the capital of Canada

Canada is a democratic country with a parliamentary system in place It also has a constitutional monarchy The Prime Minister is the head of the government and holds the executive power

Canada enjoys a very good political stability It is in fact one of the safest countries in the world With a low crime rate and trustworthy policing services, Canada positions itself a very good place for business and tourism It is worth mentioning that Canada’s focus on international peacekeeping has earned it a very good global image

4 Technology

Like all other major economies, technology plays a big role in the Canadian economy

In fact, technology is one of the fastest growing sectors in the country Canada is home

to a well-developed manufacturing country, which serves as the base for the further development of high-end products Canadians make use of technology for many purposes, most notably education, careers and leisure The technology sector provides people with high-paying jobs as well

Both public and private investments in Canada’s technology industry are growing swiftly In fact, many international IT professionals and firms see Canada as one of the best countries in the world to advance their careers and grow their businesses Across Canada, technology is changing the landscape of many traditional industries and is offering both people and companies a lot of opportunities