SITUATION AND EVALUATION OF EXPORT ACTIVITIES AT BAC GIANG TOBACCO AND FOOD JOINT STOCK COMPANY FROM 2009 TO 2013

FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESSMAJOR: EXTERNAL ECONOMICS ---***---REPORT OF MID-TERM INTERNSHIP SITUATION AND EVALUATION OF EXPORT ACTIVITIES AT BAC GIANG TOBACCO AND FO

FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS

MAJOR: EXTERNAL ECONOMICS

-*** -REPORT OF MID-TERM INTERNSHIP

SITUATION AND EVALUATION OF EXPORT ACTIVITIES AT BAC GIANG TOBACCO AND FOOD JOINT STOCK COMPANY FROM 2009 TO 2013

Table 1: Products and Prices

Table 2: Export turnover by Goods from 2009-2013

Figure 1: Batfoco’s Organizational Structure

Figure 2: Manufacture and Export Procedure

Figure 3: Manufacture processing

Batfoco : Bắc Giang Tobacco and Food Joint Stock Company

CHAPTER I: OVERVIEW OF THE COMPANY 2

1 Company’s Information 2

2 Scope of business 2

3 Production Capacity and Products 2

4 Brief History 2

5 The development in the recent periods 3

6 Organizational structure of the company 4

CHAPTER II: SITUATION AND EVALUATION OF COMPANY’S EXPORT ACTIVITIES FROM 2009-2013 6

1 The situation of export activities over the past 5 years (2009-2013) 6

1.1 Exporting Method 6

1.2 Products 6

1.3 Markets and Market characteristics 7

1.4 Labors and Technology & Equipment 8

1.5 Procedure of manufacture and export 8

1.6 Export turnovers 11

2 Evaluation of Batfoco’s Export Activities 11

2.1 Advantages and Achievements 11

2.2 Existing problems and reasons 13

CHAPTER III: DEVELOPMENT PLAN AND SOME SUGGESTIONS FOR IMPROVEMENT IN COMPANY’S EXPORT ACTIVITIES 14

1 Development plan of Batfoco in the next three years 14

2 Suggestions for improvement 14

INTERNSHIP DIARY 16

CONCLUSION: 18

REFERENCE 19

Currently, in the field of export, agriculture products turnover tends toincrease at high speed and improve position in Vietnamese economy VietnameseAgriculture products are known and preferred in foreign markets Therefore, itcreate high reputation for Vietnamese agriculture products With many incentivespolicies of Government, enterprises, firms and companies are encouraged to dobusiness in the field of producing, processing and exporting agriculture foodproducts

Bac Giang Tobacco and Food Joint Stock Company is a manufacturing enterpriselocated in Bac Giang province, in addition to producing products for domesticconsumer demand, company does export duty aimed at creating jobs for localworkers, increasing foreign exchange earner, and bringing considerable profits forthe company The company has been growing and gained a foothold in the domesticmarket as well as the world The canned vegetable products of the company arevery popular in international markets

According to the schedule of Foreign Trade University, I spent a five-weekinternship at Bac Giang Tobacco and Food Joint Stock Company, which majors inproducing, processing and exporting canned agriculture products Under theinstruction of my guidance teacher, Ms Phạm Thanh Hà, as well as the help of thecompany’s staff, I have been given a great opportunity to apply my academicknowledge to practical problems and compare with the theories I have learned at theuniversity Based on my background knowledge and the experience I gained during

my internship, I decide to choose the topic for this report as “Situation and

Evaluation of Export activities at Bắc Giang Tobacco and Food Joint Stock Company form 2009-2013”

Due to my limitation of knowledge, skills and experience, mistakes and faultsare inevitable, I welcome all comments, advices and suggestions that help meimprove the quality of the report

Finally, I would like to express my gratitude to my instructors and Batfocostaff for helping me complete my mid-course internship

Hanoi, July 2014

CHAPTER I: OVERVIEW OF THE COMPANY

- Wholesaling and retailing food products

- Trading in import and export services

3 Production Capacity and Products

- Production capacity: 7000 tons/year

- Main products:

 Processed vegetables and fruits

 Chili sauce and other sauces

 Raw tobacco and rolling tobacco

4 Brief History

Bac Giang Tobacco and Food Joint Stock Company (Batfoco), formerlyknown as “Ha Bac Tobacco Company”, established in May 06/1986 with mainbusiness: Manufacturing and trading of raw tobacco and cigarettes

1991, Batfoco was merged into Ha Bac Commercial Union the renamed “HaBac Tobacco manufacturing and trading factory”

4/1997 Batfoco was renamed into “Ha Bac Tobacco trading factory”

12/2002, Batfoco was converted in to Joint Stock Company with the name as

we see nowadays

The main business of the company from the beginning is investing inplanting and purchasing raw tobacco In 2002, company expanded its business toproduce a new range of products: processing agriculture products for exporting suchas: pickled baby cucumbers, pickled tomatoes, tomatoes in tomato juice, cannedpineapple, syrup litchi, chili paste, sauce, chili garlic sauce, sweet and sour sauce

About the scale of operation, at first, the company only produced a littleamount and types for exporting into foreign markets Now the company'sproduction capacity reached 7,000 tons of various products per annual As a result,the revenue and export turnover are constantly increasing

To recognize the achievements of the company, Government, Party andOrganizations, gave many honors to the company:

2003, jarred baby cucumber, jarred cherry tomato and chili sauce wereawarded 3 gold medals at the Fair “Food Safety”

2004, Batfoco was chosen as the prestigious exporter by Ministry ofCommerce and Vietnam Chamber of Commerce and Industry

2005, Batfoco was certificated “Brand and Product Label”, awarded goldmedal for “Reputable brand”

2006, Batfoco was awarded certificates of merit and gold medal for 3consecutive years (2004-2006) prestigious exporter by Ministry of Commerce andPrime Minister

…

These are meaningful rewards, which are not only the recognition of thenonstop effort of the whole members of company but also the encouragement forthe company to develop stably in future

5 The development in the recent periods

Over the past few years, agriculture products and food products of thecompany always remain the high reputation because of high quality and stability.Despite the high competitions from other companies inside and outside the country,company’s products are still favored in the foreign markets such as : Russia, Japan,

Taiwan, etc… and gain consumers’ belief With the target that reputation is mostimportant and to meet consumers’ requirements, since 2003 the company hasapplied the quality management system ISO 9001-2008 Production and exportscale has constantly developed and expanded stably and sustainably.

6 Organizational structure of the company

In general, the organizational structure of the company is suitable for thescale and the business situation of the company

Figure 1: Batfoco’s Organizational Structure

- General shareholders’ meeting: the highest governing department of thecompany

- Supervisory Committee: the organization that supervise all thecompany’s business and management activities

- General Director: the member who is responsible for generalmanagement of the business activities of the company

- Sale vice chairman: responsible for planning and leading businessactivities

General shareholders’

meeting

Board of Management Supervisory

Committee

General Director

Technical Vice chairman

Sale Vice Chairman

Representative

Office Material Station

Tobacco manufacturing factory

Agriculture products manufacturing factory Sale agency

ISO department Administrative office Financial and Accounting

Department

Business planning office Project Department Technology Division

- Technical vice chairman: responsible for technical in production of thebranch factories.

• Representative office: Transacting, displaying and introducing products,expanding market, solving problems and doing tasks assigned by General Director

• Material Station: Collecting, storing materials, then providing enoughmaterials for production

• Tobacco manufacturing factory: producing raw tobacco, cigarettes forexporting

• Agriculture products manufacturing factory: producing agricultureproducts such as: canned cucumber, canned tomato, chili sauce, etc…

• Sale agency: promoting and introducing new products, guidingcustomers

• ISO department: working with consulting company about building andcontrolling quality management system 9001-2000, solving problems relating tobuilding, maintaining and improving quality system on behalf of the company

• Technology division: keeping secret about technology and formulas,directly guiding, supervising, managing technology process, controlling producingperformance and making sure that production complies with quality managementsystem

CHAPTER II: SITUATION AND EVALUATION OF COMPANY’S EXPORT ACTIVITIES FROM 2009-2013

1 The situation of export activities over the past 5 years (2009-2013)

Bac Giang Tobacco and Food Joint Stock Company (Batfoco), formerlyknown as Ha Bac Tobacco Company, has gone through many difficulties At first,the main business of the company was producing raw tobacco and cigarettes fordomestic markets and foreign markets The company’s brand is known in foreignmarkets such as Russia, Czech Republic, Slovakia,… But with the instability offoreign markets, especially the tobacco import restriction policy applied in Europe,the company faced many difficulties, export turnover constantly decreased In thatsituation, Batfoco found a new way, expanded business into the field of producingcanned agriculture products for exporting

1.1 Exporting Method

The exporting method of Batfoco is direct exporting As the company worksindependently, it completes all the process itself from collecting, storing andprocessing materials to finding markets and signing exporting contract

Products Prices

Canned baby cucumber

6$/1 carton

Canned tomato 5,5$/1 carton

Chili garlic sauce 4,5$/1 carton

Sweet and sour sauce 4,5$/1 carton

Table 1: Products and Prices Source: Financial and Accounting Department

1.3 Markets and Market characteristics

As we can see, finding and expanding markets is very important in exportactivities In the case of Batfoco, brand name of the company was known before insome foreign market such as Russia and Slovakia by producing and exporting rawtobacco and cigarettes into these markets In addition, thanks to the development ofe-commerce, finding customers and markets is much easier The company has hadthe trading relationship with many foreign markets The main markets are: Europe-America, Pacific Asia and East Europe with some countries like: Russia, Canada,Czech Republic, Japan, Taiwan, etc…

So the question is why the company chooses these markets to do business in.These countries are also the potential market with other companies, firms orenterprises doing business in export activities There are some commoncharacteristics of these markets which are very suitable and potential for importingagriculture products

First, these countries are not in tropical climate which is necessary to growagriculture plants As a result, they can’t have enough vegetables and otheragriculture products to meet the demand inside countries They have to find othersources of agriculture food to import to serve their population’s demand Second,they are also the countries with very cold winter Some kind of plants can’t grow up

in such a hazard weather Therefore, they are in lack of vegetables in winter Andcanned vegetables can be preserved in a long time from summer and then used inwinter And last but not least, because of some characteristics like weather, land orseeds, agriculture is not developed in these countries They are almost industrialones

1.4 Labors and Technology & Equipment

First thing we mention here is about labor Out of 200 employees, 35% hasgraduate and postgraduate degrees The rest are workers All employees areeducated to fulfill the requirements to produce food products whose quality is testedstrictly

Second is Technology & Equipment The most important feature ofagriculture products is their seasonal aspect So harvest and preservation afterharvest time must be most taken care of Right from the stage of harvest, companyuses freezers, dryers and mini refrigerators to deliver materials from fields to thefactories Most of equipment are imported from foreign countries such as SouthKorea, USA or Japan… The most important thing is complying the qualitymanagement system As an enterprise specializing in producing, processing andexporting agriculture products, company recognizes that consumers’ health are mostimportant Company applies modern techniques in planting materials, processing,packaging, in order to improve the quality of products to meet the increasinglydiverse needs of the market

1.5 Procedure of manufacture and export

There are 6 steps that Batfoco needs to complete for their products to bepresented in foreign markets They are illustrated as below

Figure 2: Manufacture and Export Procedure

We will go in detail with each step

- Step 1: Planning, Customer transaction, Signing Contracts

Before going to sign a contract, company must plan carefully, arrange labors,employees or materials These tasks are implemented by business planning office.Then representative office and sale agency are responsible for finding, contacting,negotiating with customers and doing other customer transaction procedure Aftergaining the agreement by both parties, company and customers go to sign an exportcontract

- Step 2: Investing, Preparing material areas

One thing that firms specializing in producing and exporting agricultureproducts must take into consideration is material Firms must make sure that theyhave enough material provided But there is a real situation that export companiesalways meet That is lack of material Common reason is that farmers usually sell todealers at a higher price So the solution is that Batfoco directly invests for farmers

to grow material, make material areas so that company can ensure enough material.Some material areas of company are Lạng Giang, Tân Yên, Hà Nam and Hưng Yên.These areas all have nice weather and good land which are suitable to grow materialthat company need like cucumbers, chili and tomatoes

- Step 3: Purchasing other materials

Beside main material like vegetables and fruits, company need other things

to have a complete product such as packaging, labels, bottles and additives Thesethings can be purchased inside country or imported from foreign countries,especially China

- Step 4: Harvesting

Maturity time of baby cucumbers and tomatoes is about 2 months Farmersharvest directly from the field with the supervisory of representative of thecompany They will reject material that are not good enough and use modernequipment to preserve vegetables to be fresh

- Step 5: Manufacture processing

Each kind of material has another way of process But commonly, there are 6steps to produce canned agriculture products illustrated as below:

Figure 3: Manufacture processing

This process complies strictly with the quality management system since they arefood products directly affecting consumers’ health Technology division and ISOdepartment take main responsibility for this step to ensure that company’s productsalways keep the high quality

- Step 6: Doing export procedures

• First, obtaining export license