Recommendations to enhance exported activities of tien phong plastic join stock company in new zealand market

23 CHAPTER 2: EVALUATION EXPORTED ACTIVITIES OF TIEN PHONG PLASTIC J.S.C IN NEW ZEALAND MARKET .... 51 CHAPTER 3: RECOMMENDATIONS TO ENHANCE EXPORTED ACTIVITIES OF TIEN PHONG PLASTIC J.S

Student Name and Signature

Nguyen ThiAnh Hong

ACKNOWLEGEMENT

Firstly, I would like to express my sincere gratitude to my advisor Msc Tran Thi Minh Trangand Pham Thi Yen for the continuous support of my study and related research, for her patience, motivation, and immense knowledge Her guidance helped me in all the time of research and writing of this thesis I could not have imagined having a better advisor and mentor for my study

TABLE OF CONTENTS

PREFACE i

ACKNOWLEGEMENT ii

TABLE OF CONTENTS iii

LIST OF ABBREVIATIONS vi

LIST OF TABLES vii

LIST OF FIGURES viii

INTRODUCTION 9

CHAPTER 1: LITERATURE REVIEW 11

1.1 General information of Export 11

1.1.1 Definition 11

1.1.2 Roles of export activities 11

1.1.3 Export forms 14

1.2 The factors affect exported activities 18

1.2.1 Capital 18

1.2.2 Quality and production capacity 18

1.2.3 Technology 19

1.2.4 Human resources 19

1.2.5 Foreign marketing 19

1.3 The legal framework of Vietnam Government for export 19

1.3.1 Export promotion policy 19

1.3.2 Financial and credit policy 20

1.3.3 Trade liberalization policy 22

1.3.4 Participate in world economic organizations 23

CHAPTER 2: EVALUATION EXPORTED ACTIVITIES OF TIEN PHONG PLASTIC J.S.C IN NEW ZEALAND MARKET 24

2.1 General information of Tien Phong Plastic J.S.C 24

2.1.1 The foundation 24

2.1.2 Achievements 25

2.1.3 Organization 27

2.1.4 Business services 29

2.1.5 Products and markets 29

2.1.6 Results of business activities 32

2.2 New Zealand market and the situation of exported activities in New Zealand market 33

2.2.1 The characteristics of New Zealand market and the legal basic of exported activities between Vietnam and New Zealand 33

2.2.2 The current situation of exported activities in New Zealand market 36

2.3 SWOT analysis of exported activities in New Zealand market 43

2.3.1 Strengths 43

2.3.2 Weaknesses 45

2.3.3 Opportunities 49

2.3.4 Threats 51

CHAPTER 3: RECOMMENDATIONS TO ENHANCE EXPORTED ACTIVITIES OF TIEN PHONG PLASTIC J.S.C IN NEW ZEALAND MARKET53 3.1 Recommendations to solve the immediate problems 53

3.1.1 Use plastic recycled materials 53

3.1.2 Focus on high quality product lines 53

3.2 Recommendations to promote further in the future 53

3.2.1 Determine clearly marketing strategies for export 53

3.2.2 Establish an export marketing department 58

3.2.3 Develop corporate culture 58

CONCLUSION 61

REFFERENCES 62

LIST OF ABBREVIATIONS

AANZFTA Asian-Australia-New Zealand Free Trade Agreement

ASEAN Association of Southeast Asian Nations

EPFR Emerging Portfolio Fund Research

FDI Foreign Direct Investment

J.S.C Joint Stock Company

HPDE High-density Polyethylene

VPA Vietnam Plastic Association

WTO World Trade Organization

LIST OF TABLES

Table 2.1: Business Results of Tien Phong Plastic J.S.C from 2012 to 2014 32

Table 2.2: Export Turnovers from 2013 to 2014 37

Table 2.3: Export profit rate from New Zealand market 39

Table 2.4: Structure of export goods to New Zealand from 2012 to 2014 40

Table 2.5: Structure of New Zealand market from 2012 to 2014 42

Table 3.6: Percentages of export profit in total revenue 46

LIST OF FIGURES

Figure 2.1: Organizational Chart 27 Figure 2.2: Revenue structure in 2014 37 Figure 3.3: Process of making marketing strategy for export 55

As a student of economics at the Vietnam Maritime University, I aware this

is the extremely meaningful internship to gain actual knowledge and experiences

To better understand the exportation of Vietnamese firms, I chose TIEN PHONG PLASTIC JOIN STOCK COMPANY for my dissertationbecause it is the place having enough majorfor me to understand and learn

After one month, I really get the actual knowledge about theexport activities of the company to New Zealand Therefore I pleased to present my recommendations about enhancing exported business activities in New Zealand in my dissertation

Necessity

Exporting is an important activity in the integration process of world economy Participating and developing export activities helps Vietnamese businesses to become stronger and more comprehensive development Recognizing such importance, the author understood and analyzed the export activity of Tienphong Plastic J.S.C in a big market such as New Zealand to see the panoramic view of the current export situation of Vietnamese firms

Methodology

The paper is based on the actual observation and describe the situation of exported activities on the perspective of Tien Phong Plastic J.S.C Besides the author collected the results of business activities related to the activities from export business in New Zealand market

Scope of Research

The enterprise has been operating since 1960 However the paper only focuses on the exported activities of the company in New Zealand market over last three years

Research Finding

The author understands the situation of exported activities results in New Zealand from which evaluate that results then provide recommendations to enhance the export activities in New Zealand market

The structure of dissertation

There are three main parts in my report:

Chapter I: Literature Review

Chapter II: Evaluation exported activities of Tien Phong Plastic Join Stock Company in New Zealand

Chapter III: Recommendation to enhance exported activities of Tien Phong Plastic Join Stock Company in New Zealand

CHAPTER 1: LITERATURE REVIEW

1.1 General information of Export

1.1.1 Definition

Exports of goods are activities that goods and services are transmitted to out

of Vietnam's territory or special area located on the territory of Vietnam considered

as separate customs areas prescribed by law (Commercial Law, 2005)

In other words, “Export means an actual shipment or transmission of items out of the United States.” (See § 734.2(b) of the Export Administration Regulation.)

Export is considered as a form of foreign market penetration with less risks and low costs A function of international trade whereby goods produced in one country are shipped to another country for future sale or trade The sale of such goods adds to the producing nation's gross output If used for trade, exports are exchanged for other products or services Exports are one of the oldest forms of economic transfer, and occur on a large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies

1.1.2 Roles of export activities

1.1.2.1 Support for the development of economic

According to Export and Import Syllabus of National Economy University,export is recognized as a basic activity of external economic activities and a mean of promoting economic development The expansion of exports to increase foreign currency income for the country and for import demands serving for economic development is an important objective of trade policy

a Exports create capital sources primarily for serving industrial imports of the country

Industrializing country in appropriate steps is the essential way to overcome poverty and slow development of our country To industrialize the country in a short time, the country needs a huge capital to buy import machineries, equipment and advanced technology

Funds for imports may be formed from sources such as:

- Exports of goods

- Foreign investment

- Loan and Aid

- Income from tourism activities and services

- Export of labor

Sources of capital from foreign investment, debts, loans or aids are important but also have to pay one way or the other way in the latter periods The most important source of capital for industrialization and import is export Exports decide upon the scope and pace of import growth

b Exports contribute to economic restructuring

The structure of production and consumption has changed immensely powerful

It is the result of the technological revolution and the modern science The economic restructuring during industrialization conformity with the development trend of the world economy and be necessary for our country

There are two perspectives on the impact of exports on production and economic restructuring:

First of all, exports just only are the consuming of residual products from production exceeding domestic demand In backward and developing country, production basically not enough for domestic consumption Therefore, if only passively waiting in the "excess" of production, exports still small and growing slowly The domestic production and the economic structural changes will occur very slowly

The second is considering the market, especially the world market, as an important direction for the organization of production This second perspective is starting from the needs of the world market to organize production This direction impacts positively on economic restructuring, promote the development of production This impact on production can be realized through:

- Exports facilitate favorable development opportunity for related sectors For example, the development of plastic pipe exports will create growth opportunities for plastics manufacturing industry or raw materials for the plastics industry The development of industry food processing exports such

as vegetable oil, tea, etc can be accompanied by the development of the manufacturing processing tools industry

- Exports create the scalability for consumer market, contributing to the production development and stability

- Exports facilitate expanded ability to provide inputs for production and improve the production capacity of the country

- Exports create economic and technical premises aimed at improving and enhancing the production capacity in the country This mean export is an important mean create capital, techniques and advanced technologies from the external world into Vietnam to modernize the country's economy, creating a new production capacity

- Through export, commodity of our country will participate in the competition on the world market in terms of price and quality This competition requires us to reorganize production and production structure formation constantly adapting to the market

- Exports also requires companies to keep innovating and finishing the work of business management, boosting production and expanding the market

c Exports have positive impact to solving employment and improve people's lives

The impact of exports on employment and life includes many aspects Developing exportation is directed attracting millions of workers to work with a quiet attractive salary

Exports also create capital sources to import essential consumption items directly serving life and meeting on abundance demands of the people

Importantly, exports direct impact on production, making both scale and speed

of production increasing, restoring old trades and creating new industries The new division of labor requires labor used more, higher labor productivity and people's living standards be improved

d Exports is the basis for expanding and boosting the external economic relations of our country

It is clearly to see that export and foreign economic relations have interdependence interaction Although exports appear sooner the external economic activity, but it creates conditions that promote economic activities grow For example export and production technology export promote credit relations, investment and international transportation On the other hand, that external economic relations pave the way for export expansion

In summary, promoting export is considered as an issue of strategic significance for economic development and implementation of national industrialization

1.1.2.2 Support for enterprises

Export is the form penetrate foreign markets with less risk, not costly and easy to apply in the early stages of international market penetration of enterprises

Exports can bring to business many benefits as following:

- Increase sales of businesses

- Enterprises are able to gain experience in international business, using excess capacity to engage in export activities

- Exports help businesses reduce risks when the domestic market has some fluctuations

- Some foreign markets bring higher profits for businesses than the domestic market

- Enterprises can develop a larger customer system to serve the business strategic of its business

1.1.3 Export forms

According to Marketing of Exports and Imports Syllabus, there are five main types of exportation: direct and indirect exports, export outsourcing, re-export and transshipment

1.1.3.1 Direct export

Direct export is a direct sales activities of a company to their customers in overseas markets

Direct export includes two following forms:

- Sales agent is a form of sales not on behalf of the trustees to receive salary or any part of commissions based on the value of goods sold In fact, sales agents works as salesman of the company in foreign markets The company will contract directly with their overseas customers

- Distribution agents who buy the company's products for sale under the distribution channel in areas where the company assigned Company controlled distribution scope and distribution channels in foreign markets Distribution agents accept the entire risks of the sale of goods in the market was demarcated and profit through the difference between the purchase price and sale price

1.1.3.2 Indirect export

Indirect export is a form of selling goods and services abroad through intermediaries (third party) The major third parties in the export business are: agents, export management companies and export business companies These middlemen do not possess the goods of the company but assist other companies exporting goods to foreign markets

- Agents are individuals or organizations representing exporters perform one or

a certain number of activities in foreign markets Agents only perform a certain task entrusted to the company and receive remuneration Agents do not take possession and ownership of goods Agents are who establish contractual relations between the company and customers in foreign markets

- Export Management Company is the company entrusted and managing the

export of goods The company operates on behalf of companies exporting, so they are considered as the indirect exporters Export management companies simply make the export procedures and receive export service charges The essence of management works are doing export management services and gain a certain remuneration from such activities

- Export Business Company is a company operating as an independent

distributor with the function of connecting foreign customers with the domestic export companies to export consumption goods to foreign countries The essence of export business companies is performing export services to connecting foreign clients to domestic export companies

- Transport Agent is the company performing transport services and activities

related to the importing and exporting of commodities such as customs declaration, applying tariffs, forwarding and insurance

1.1.3.3Export outsourcing

Export outsourcing is an activity of which one party (called the Order) delivery of materials, semi-finished products, with the all machines, equipment, experts to the other parties (called the Outsourcing) to produce a new item at the request of the order After manufacturing completed, the Order receive these merchandise ordered from the outsourcing then paying for the manufacturer called outsourcing When processing activities beyond national boundaries, it is called export outsourcing

In summary, the export outsourcing is bringing the production elements (mainly raw materials) from abroad to produce goods not for domestic consumption but for export to gain profit from the different currency due to wages brought Ultimately, the export outsourcing is an exports form that labor is used (shown in the goods), not as a labor export to foreign countries

There are two types of offshore outsourcing:

- The one type is that the ordering party supports raw materials or finished products (not subject to tariffs) for the outsourcing company to produce goods then return goods to the ordering party Here is still no transfer of property rights for raw materials, semi-finished products In fact, this is a form of "hired" for the ordering party so the outsourcing party does not have the right to control their products

semi Another type is that raw materials or semisemi finished products are exported to outsourcing of processing and then import finished products back In this relation, property rights of raw materials, semi-finished products have been delivered Therefore, when importing back, all components of the actual

value added are subject to tariffs In essence this is a form of ordering party delivering materials and technical assistance for outsourcing party then buying the products

There are two exports outsourcing forms:

- Outsourcing industrial products for export (including handicrafts)

- Outsourcing agricultural products for export (including crop products and livestock production)

1.1.3.4 Re-export and transshipment

Each country has its own definition of re-export Many Western European countries and Latin America concept re-export as the exports foreign goods not yet been processed in their country from the customs warehouse UK, US and some other countries consider it as the export of foreign goods unprocessed in domestic whether such goods already circulated inland or not Therefore, almost countries agreed that the conception of re-exports is export again goods previously imported

to foreign countries that not yet been processed in the re-export country

According to Export Administration Regulation, “Re-export means an actual shipment or transmission of items subject to the EAR from one foreign country to another foreign country For purposes of the EAR, the export or re-export of items subject to the EAR that will transit through a country or countries, or be transshipped in a country or countries to a new country, or are intended for re-export to the new country, are deemed to be exports to the new country.”(See § 734.2(b)of the EAR.)

Re-export transactions include import and export activities for the purpose of earning larger foreign currency than initial capital outlay This transaction always attract three types of countries: export countries, re-export countries and import countries Re-export can be done in one of two following forms:

- Re-export in the true sense, cargoes shipped from the export country to the re-export country then be exported from the re-export country to the import country Opposite to the movement of goods is the movement of money The re-exporter pay money for the exporter and receive money from the importer

- Transshipment is a form of buying goods from a country or territory to sell to

a country or territory outside the territory of Vietnam without procedures for import into Vietnam and procedures for export from Vietnam The goods are shipped directly from the exporting country to an importing country without crossing the border of Vietnam; or goods are transported from exporting countries to importing countries through border gates of Vietnam but without procedures for import into Vietnam and procedures for export out of Vietnam (Commercial Law, 2005)

1.2 The factors affect exported activities

From the perspective of businesses, export promotion may be understood as the sum of the measures that businesses can use to increase the ability, scope and effectiveness of their export activities Basically, the factors affecting the export promotion of enterprises include 6 elements as follow:

1.2.1 Capital

In international trade, trading contracts often have very big values Therefore, it requires a lot of capital for businesses engaged in exports Moreover, the payment in international trading activities are not quick as domestic trading activities, not to mention the risks comes from the partners, so the ability to mobilize capital influences greatly to the ability of performing the contract later of exports enterprises

1.2.2 Quality and production capacity

The quality of products is a prerequisite for market domination because foreign markets, especially in developed countries, often be very difficult markets If quality of products is not guaranteed, it's difficult to compete with other competitors

in the international market

Besides the quality, the productioncapacity is also a key factor influence to the decisions of efficiency of business Because the production capacity expressed in the time, speed, both quality and quantity of production

1.2.5Foreign marketing

Foreign market and domestic market always have a great differences Marketing activities will adapt the operation and products of the business with the needs of the exports market

In foreign marketing, information of foreign market is the key factor for international businesses enables enterprises to understand the needs, trends and abnormal changes of the world market or the volatility related to politic and military might affect the operation of the business Businesses can access and capture this information or not have great influence on the efficiency of international business of the companies

1.3 The legal framework of Vietnam Government for export

1.3.1Export promotion policy

First of all, the government always try to make political-social stability, good international relations, legal framework is complete, clear, transparent and under the stable direction; policy mechanisms and tools of Macroeconomic governance reasonable, including interest rates and exchange rates, have the effects of promoting exports and restricting imports

Government invests finance and facilities for the collecting world market information to support export businesses, helping they communicate with foreign partners to look for potential markets and business opportunities; and promote

export activities such as participating in international fairs to exchange information

on trade with foreign businesses

Vietnam currently has three types of promote exports policy including Commodity Policy, Market Policy and other Supporting Policies Firstly,

Commodity Policy in which the State give regulations on the list of goods and

services that be allowed or not allowed to export to foreign countries in order to

help businesses more easily in the selected export products Second, Market Policy

gives orientations and measures made by Government to support for enterprises in maintaining and expanding the market Besides the policy help to build traditional markets and major markets while providing information on the route of international economic integration, particularly in the commercial fields as well as the right support measures to helps the national involved organizations to be

successful Finally, Supporting policies such as tax policy, investment policy, credit

policy and exchange rate policy Such policies do not exist in isolation but are combined together in overall to serve the development goals of the international trade relations in particular and socio-economic development in general

1.3.2Financial and credit policy

Along with measures to promote investment in the field of manufacturing export goods, the Government also encourages various economic sectors involved in export business by fiscal and credit measures:

Export subsidies: In the WTO, subsidies are understood as any financial support

from the State or a public organization (central or local) benefits for business or manufacturing industry Vietnam was an official member of the WTO since 2007, after joining the organization, some form of subsidies in Vietnam no longer suitable Accordingly, Vietnam committed to the complete elimination of subsidies for import substitution (such as preferential tax at the rate of localization) and exports subsidies in the form of direct grant from the state budget (as subsidy for export activities, exports turnover reward, interest support for export contracts .) will not be performing since joining the WTO

Tax incentives for export goods: the impacts of tax to exports is the downstream

impact to stimulate exports Most countries now tend to encourages exports so the taxing on exported goods or inputs used for exports shall enjoy certain incentives

Especially in Vietnam, when lacking of foreign currency to import new technologies, the tax policies for exports are considered carefully by the policy makers to so that the most beneficial to enterprises engaged in exports

Vietnam offering tax incentives with many items such as goods imported for direct using in scientific research and technological development; goods produced, outsourced, recycled or assembled in non-tariff areas unused materials and components imported from overseas when importing into domestic of Vietnam (The Government News, 2015)

Export credit: In our country, the policy initiated in 2001 for participants as

traders exporting goods Until now this measure is still uncommon in Vietnam, while businesses have huge demand, the insurance companies and banks still appear

to be quite cautious The reason is that the State has no specific actions Insurance organizations and banks not enough strength and relationships Almost companies are using these safer forms of export support or payment methods with lower risk levels

The State Bank has many incentive policies for small and medium-sized enterprises such as the loans supporting policy from the Fund Development to support small and medium-sized enterprises having projects or plans for production

or possible business of priority areas, in encourage policy of Government and consistent with operation of the Fund to enhance the competitiveness of enterprises, contributing to increasing incomes and creating jobs for employees(Enterprise Development Department, 2015)

Export Credit Guarantees are deployed in Vietnam since 2007 under Decree

No 151/2006 / ND-CP However, in recent years this policy fails to promote efficient business because applying this method have to pay both interest rates of commercial loans to credit institutions and the guarantee fee to the Bank so not be entitled to incentives in the form of direct loans from banks This is a typical example of the inefficiency and unrealistic in the policy promulgation by Vietnam

Exchange rate policy: As the macroeconomic variables, exchange rates are very

sensitive to very complex changes of its affecting the national economy according

to different impacts, leading to unpredictable results, touching not only to imports and exports, trade balance, but also to the price index, inflation and real wages,

investment and external borrowing, the state budget, the international balance of payments as well as affecting to the Macro-economic stability in general Vietnamese Government has adjusted the currency rise or fell against the foreign currency to discourage or encourage the export in a certain phases During that time, government continues to maintain appropriate exchange rate policy, while State Bank adjusts exchange rate in a flexible manner and suitable for supply and demand that did not cause significant changes to contribute to export promotion in the short and medium term without encouraging exports by dumping instruments and foreign exchange deregulation but stop at the exchange rate policy does not hinder export

1.3.3Trade liberalization policy

Trade liberalization is a necessary condition that every countries wants to join the economic integration must be implemented Trade liberalization makes foreign trade system of global smoothly For Vietnam, trade liberalization help our country integrates in the regional and world economic and help Vietnam can borrow money from the credit institutions in the world In order to perform this policy, Vietnam Government has implemented as follow:

- Reform of export business procedures towards simplification

- Quotas: Quotas are tools limited exports volume of an item or a group Export quotas are used to protect domestic production, protect natural resources and some rare items Every year, the government released a list of items controlled by quotas In recent years, the policy of our country’s quotas tend to minimize commodities managed by quotas, gradually simplifying exports quota management

Vietnam participated in WTO led to the establishment of Free Trade Agreements (FTAs) such as 6 agreements including the ASEAN - China Free Trade Agreement ASEAN - China (ACFTA), the ASEAN - South Korea Free Trade Agreement (AKFTA), AJFTA, ASEAN-India Free Trade Agreement (AIFTA), the Free Trade Agreement between ASEAN, Australia and New Zealand (AANZFTA) was signed in 2013

1.3.4Participate in world economic organizations

On the world market, there is happening fierce struggle between the two trends of trade liberalization and protectionism In that situations, participating in world economy and regional economics organizations plays a role as a neutral solution to create a free commercialized zone for members Vietnam is also actively negotiating and signing to join regional and world economic organizations, typically became an official member of the WTO in 2007

Participating in WTO, Vietnam has many opportunities The first benefits is accessing to the markets for goods and services in all member states with the import tariffs were slashedand the service sector are not discriminatory Moreover, Vietnamese still have opportunities to improve the business environment and economic legal system Besides Vietnam have equal status as the other members of the global trade policy making Integrating to the world economy also help Vietnam

to promote domestic reform process, ensuring that the process of reform in Vietnam more uniform and more effective Finally, becoming a WTO member will enhance Vietnam’s position in the international arena and enabling Vietnam to implementeffectively the foreign policy

CHAPTER 2: EVALUATION EXPORTED ACTIVITIES OF TIEN PHONG PLASTIC J.S.C IN NEW ZEALAND MARKET

2.1General information of Tien Phong Plastic J.S.C

Name of company: TIEN PHONG PLASTIC JOIN STOCK COMPANY

Logo:

Type of business: Join Stock Company

Address: 222, Mac Dang Doanh Street, Duong Kinh District, Haiphong City

On April 29 th1993, following the Decision No 386 / CN / CTLD of Light Industry Ministry (now is the Ministry of Industry and Trade), Tien Phong Plastic Factory was renamed Tien Phong Plastics Company

The company was required to equitize under Decision No 2979 / QD-TCCB November 10th 2003 of the Ministry of Industry In 2004, the Company successfully equitized in the form of selling a part of the State capital and mobilized

90 billion VND of increase charter capital

September 15th 2005, the Ministry of Finance issued Decision No 11652 / BTC-TCDN on approving the proposal for selling a part of the State capital corresponding to 13.78% of charter capital

October 24th 2006 the Company listed its shares at the Securities Trading Center, Hanoi The first trading date is December 11st 2006 Currently, the charter capital of the company is 216,689,980,000 dong Number of listed shares is 21,668,998 shares Entire shares of the Company are common stocks

The company had contributed capital to establish Southern Tien Phong Plastic Join Stock Company in Dong An II Industrial Zone, Binh Duong Province with 51% of the charter capital of 100 billion VND December 2008, Southern Tien Phong Plastic began to produce products and initial penetrate the market south which still be new and great potential

The company was implementing the project for establishment of a Tien Phong Plastic Join Venture in Republic of Lao People's Democratic with charter capital of $ 2.5 million (of which Tien Phong Plastic J.S.C contributed 51%) In

2009, project began to produce products supplied to the market in Laos and neighboring countries

2.1.2 Achievements

The efficiency of business is not only expressed in the figure of business results but also revealed in achievements and awards in last year:

- Vietnam Gold Star Award 2014

- Gold Culture Business 2014

- Sustainable Development Vietnamese Branch Award

- Vietnamese Excellent Branch Award

- For the ASEAN Commodity Development Award

- Famous Branch of ASEAN Award

Tien Phong Plastic J.S.C in Northern

Tien Phong Package J.S.C

Tien Phong Plastic

Deputy General

Director

Chief Accountant

Laborat ory Dep

Custo mer Servic

e Dep

Market ing Dep

Materi

al Planni

ng Dep

Basic Constr uction Dep

Admin istrati

on Dep

Huma

n Resou rce Dep

Financi

al Accoun ting Dep

Mechanical

Source: Collected by Author General Assembly

of Shareholders

The company operates in the model of Joint Stock Company headed by the General Assembly of Shareholders, the Board of Directors, the Control Board and

the Executive Board

The General Assembly of Shareholders is the highest authority of the

Company,including all shareholders with voting rights

The Board of Directors is the management department with full authority on

behalf of the Company to decide on all matters relating to the objectives and interests of the Company, except for matters within the jurisdiction of the General Meeting of Shareholders Board of Directors consists of 06 members

The Control Board is the supervisory authority of the General Assembly of

the shareholders with the right to inspect and supervise all activities of the Company The Control Board has 03 members, including one member has expertise

in accounting

The Executive Board includes General Director, 02 Deputy General Director

and Chief Accountant

The functional departments includes 10 departments:

- Production Techniques Department

- Research for Design Department

- Quality Management and Laboratory Department

- Administration Department

- Human Resource Department

- Basic Construction Department

- Financial Accounting Department

- Material Planning Department

- Marketing Department

- Customer Service Department

The production workshops consists of 6 workshops

- Workshop 1: production PVC-U with a diameter from 48mm or more;

- Workshop 2: production PVC-U with a diameter up to 60mm;

- Workshop 3: production of components for PVC-U

- Workshop 4: production of components for HDPE, PPR and glue for components

- Workshop 5: produce pipes with diameter up to 1200mm HDPE, PPR pipes with a diameter up to 200mm

- Mechanical Electrical Workshop: manufacture, repair and maintenance of machinery, equipment and molds

2.1.4 Business services

Currently, the company has expanded its business services to a lot of professions and services The main types of business services registered in the business license

of the company include the following types:

- Manufacturing plastic products for civil and technical serving the industrial, agricultural and transportation construction

- Building apartments, infrastructures, senior houses, Offices for Rent, business centers, markets, technical projects, industrial projects, transportation, irrigation and ground leveling

- Financial service and Monetary intermediation services

- Financial leasing and financial investment services

- Warehousing and transportation services

- Trucking services

2.1.5 Products and markets

2.1.5.1 Products

According to the information provided by the Deputy of Business Department of Tien Phong Plastic J.S.C, the company mainly produces and sales plastic products for civil, especially some kinds of plastic pipes to serve the construction The company has invested and expanded modern production lines and have appropriate training policies to help workers master the new technology Thanks to that company quickly dominate largely domestic market with the diverse product structure The main plastic products of the company include four groups:

a Group 1: PVC-U products

Unplasticised Polyvinyl Chloride (PVC-U) is the most widely used of all plastics used for pipe installations This is the flagship product of company because PVC-U is rigid, versatile, and is suitable for both above or below ground installations It has excellent chemical resistance which, when combined with smoothness of bore, eliminates buildup of scale and gives good flow characteristics

It is odorless and tasteless, and is suitable for conveying potable water and many food or dairy products PVC-U is suitable for use at temperatures from 0ºC to 60ºC

at a wide range of operating pressures, depending upon the system chosen It is lightweight and easy to install with the durability over 50 years

PVC-U are manufactured under ISO 4422: 1996 PVC-U plastic pipes used more and more in life and gradually replacing steel, iron and cement pipes

b Group 2: HDPE products

HDPE pipe is ideal for many different applications including municipal, industrial, energy, geothermal, landfill and more because of many advanced features than other types of plastic pipe such as Lightweight, strong, durable, flexible and low coefficient of heat transfer to help water not frozen HDPE is suitable for all the harsh climate thanks to ionized resistant to ultraviolet light and high flexural, not fractured by earthquakes HDPE pipes are easy to install with low cost

HDPE pipes are manufactured according to ISO 4427:1996 with imported raw materials from the leading raw material manufacturers as Borouge and Deahlim

by the modern production equipment of Germany and Italy

c Group 3: PPR (Polypropylene Random) pipe products

PPR pipes are a hot and cold water supply system suitable for all potable water applications and heating systems Since 2004, the company imported the production line of manufacturing PPR pipes and became the first PPR seller in Vietnam market PPR plastic pipes of the company are manufactured according to DIN 8007:

1999 Currently, PPR is applied in many countries around the world for the water heater and be gradually replaced by zinc pipes because of its outstanding features: lightweight, rigid, durable (over 50 years), no encrusting, large coefficient of expansion (can use the temperature between 70 and 95 degrees C) and low install cost

d Group 4: fitting products for PVC-U, HDPE, PPR and other products

To provide products in a comprehensive manner and synchronous for customers, the company constantly improve equipment and molds, providing adequate fittings following the requests of consumers Fittings of the company have variety categories, beautiful design and facilitate to interfacing Besides, the company also manufactures auxiliary products such as glue, rubber rings and packages used to interfacing, products for the construction industry and water supply system

The company has large production capacity, around 40,000 tonnes / year, with the increase speed in output from 10% to 15% per year The main products including PVC pipes, PE, PPR and fittings are widely sold in the domestic market

2.1.5.2 Markets

a Domestic market

Company has consumption markets throughout the country, mostly concentrated in the north and the central provinces, with more than 200 agents and 5 general distribution agents in which 4 general distribution agents in Hanoi and another in Haiphong

About 80% of the products used for purposes of building and 20% used for clean water program in rural and mountain regions