The resources and capabilities of the Nafoods Group

The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group The resources and capabilities of the Nafoods Group

TABLE OF CONTENTS

1 Highlights about Nafoods Group 1

2 The resources and capabilities of the Nafoods Group 1

2.1 Resources of the Nafoods group 1

2.1.1 Tangible resources 1

2.1.2 Intangible resources 2

2.2.The capacity of the Nafoods group 3

2.2.1 Management capacity: 3

2.2.2 Production capacity: 4

2.3 Nafoods Group's core competencies 4

2.3.2 Rare 6

2.3.3 Inimitable & Non-substitutable 7

3.The competitive advantages of the Nafoods Group 9

3.1 Advantage in low cost 9

3.3 The advantage of centralization 9

4.Factors affecting competitive advantage of Nafoods 10

4.1 Productivity 10

4.2 Quality 11

4.4 Customer feedback 14

5.Value chain of the Nafoods Group 15

5.1 Logistics input 15

5.2 Manufacturing 15

1 Highlights about Nafoods Group

Nafoods Group is among the most innovative fruit and vegetable growers,processors and exporters in Vietnam, specializing in Fruit Juice/NFC, Puree,Concentrate, IQF and Fresh Fruits The Company sources more than 13,300 tonnes of fresh and processed fruits annually from various regions in Vietnam including the Central Highlands, Northwest, and North Central Coast The Company's products are distributed all over the world, especially in Europe, the United States, Oceania, the Middle East,Japan and South Korea.Nafoods Group is one of the front-runners in Asia in the field of integrated agricultural processing Nafoods has taken full control over their own value chain including: raw material areas (seedling, cultivating),harvesting (fresh fruits), processing & manufacturing, exporting & distribution in order to bring the highest added value to customers, employees, shareholders and the market

2 The resources and capabilities of the Nafoods Group

2.1 Resources of the Nafoods group

2.1.1 Tangible resources

a, Financial resource

Nafoods group has expanded cooperation relationship with a number of financial and investment partners IFC's investment helps Nafoods expand their numbers into cold chain companies that match them to receive the system ISO: 22000 food is widely recognized in the world Besides investment and technical advice of IFC

Nafoods in an effort to add value to our products use principles of safe and sustainable agricultural practices production department That gives Nafoods the upper hand

prominent paintings such as AFIEX, Quang Ngai Agricultural and Foodstuff Joint Stock Company Exported agricultural food in Nam Dinh when they are not the development and supply of new products to the market

b,Physical resource

Regarding agricultural product procurement: Nafoods raw materials are collected from monopolistic farms With the goal of expanding the material area to

directions Cambodia Currently, Nafoods has a system of factories in many localities across the country Typically the Naprod factory Que Phong seedling, Nasoco Long

An factory, that factory

c, Human resource

Resource development is paid atten-tion by Nafoods through organizing training courses on skills, knowledge and especially attitudes to ensure quantity Previously, Nafoods applied human resource management method The salary and bonus system has not clearly reflected capacity and results implementing a new way: innovative application of BSC & KPI; Policy 3P for the entire organization; Talent management system and successor team treat Nafoods; internal pricing system for efficient operation With effective human resources, including many professionals with

a deep understanding of agricultural practices Nafoods world has boldly integrated information technology into the garden management and control system, building middle, agent and customer management application development; step by step agriculture, asymptotic digital agriculture background

d, Organizational resource

At factories, the Group strictly applies quality management standards, effectively and rationally controls food safety and hygiene

2.1.2 Intangible resources

a Resources for skills

In 2013, Nafoods Group invested in more multi-production lines

diversify products and expand export markets In 2019, Nafoods is the first and only business 3 varieties of passion fruit are protected by the Ministry of Agriculture and Agricultural Development, including Nafoods 1, Que Phong 1

b Resources for innovation

The Nafoods Group focuses on training especially attitude The Group has organized a training of 1,467 taels hours of training In which, the outstanding training programs such as: responsibility and do not blame internally; Training on standards PRP, hazards affecting product quality at Use the program selectively suitable for each object The more you improve your skills, perfect yourself, in order to meet the needs Corporate business in 4.0 era

c Reputation, position

Nafoods Group is one of the growing and processing groups the most innovative fruit in Vietnam, specializing in fruit juice / NF Fresh fruit, IQF, and condensed fruit are produced on industrial lines with strict quality requirements, ensuring the standards

ISO 22000: 2500, HACCP, SGF In Vietnam, Nafoods Group is the pioneer and leader in the production of concentrated passion fruit juice Currently, the Company accounts for more than 80% Concentrated passion fruit made in Vietnam with a wide range of raw materials stretching across regions and neighboring countries In the international arena, Nafoods Group's passion fruit products in the most demanding markets such as Europe, America, and Japan, the company provides about 8% of the above concentrated passion fruit

2.2.The capacity of the Nafoods group

2.2.1 Management capacity:

Towards sustainable development, managers Nafoods is constantly learning, exploring and developing and diversifying According to experience from developed countries, want to develop production All along the value chain, S&T application is an inevitable trend.Meanwhile, the Nafoods manager has proactively developed agriculture

high, helping to create a breakthrough to improve productivity and quality of the product At the same time actively promote the media, give effective, strong enough to enhance competitiveness Put food safety as the top principle, and strictly control the management and quality control in international standards Human resources are defined by the company as one of the assets that contributes to a competitive advantage Hence staff development, is focused through the organization of training in skills, knowledge, day by day perfecting and building a corporate culture mcreate a solid foundation, civilized, guaranteed to be of employees in the company Employees are guaranteed benefits that rule out laws, are respected, developed, and recognized Regarding environmental protection, Nafoods Group always takes care of the matter Every crop and production has impacts on the environment

So all solutions are aimed at the main purposes: use inputs (materials, energy, water sources) and controls minimizing the impact on the environment, supporting the community and striving to build a rich, beautiful and civilized homeland In all its activities, the company development is linked with the common development of the country

2.2.2 Production capacity:

Raw material area:

Material areas of Nafoods Group spread Group has been cooperating to work with farmers and associations partners in all three regions of North, Central, and South and some major partners in La

- Production facilities:

Fruit and vegetable processing factory for export in Quynh Chau, Quy

Capacity: 5,000 tons of product / year concentrate line and line

tons of products / year Vegetable and fruit processing factory for export at Ap Hoc Thom 1, Duc Hoa District, Long An Province Capacity: Line she

product / year and line IQF 5,000 tons of products / year Plant producing passion fruit juice in Pleiku City - Gia Lai tons of epidemics / month Nursery nursery with a scale of 5 ha, a capacity of 6 million Tri Le commune, Que Phong, Nghe An And a number of coin facilities Nafoods Group outsourcing

- Human capacity:

For employees, employees: At Nafoods, awareness of developing employees in regard to building an environment And positively, Nafoods spends a big part of the budget

Annual employee training through training programs out The Group wishes to create the best opportunities and conditions I improve my knowledge, develop myself and contribute company and community For partners and experts: Nafoods cooperates with many and internationally with a deep understanding of agricultural activities

Thereby, Nafoods received the investment and technical consultation as well important role for development, giving due competitive advantage

2.3 Nafoods Group's core competencies

2.3.1 Value

During its business operation, Nafoods Group relies on Vietnam's strengths in tropical fruits and agricultural products to develop its product portfolio The diversified product portfolio is divided into four main groups: concentrated juice, juice / NFC / Puree, fresh fruit and seedling (passion fruit)

While the majority of Vietnam's agricultural products are traded on both domestic and export markets in fresh, unprocessed form and at low prices due to poor quality compared to other countries While the prominent competitors of Nafoods such as AFIEX, Lafooco, have no breakthroughs in the development and supply of new products in the market, the investment and technical advice of The IFC has provided great support to Nafoods in enhancing the value of its products by adopting principles of safe, sustainable agricultural practices and improving production facilities The Group's increased production capacity will enable more opportunities for local farmers to increase income and meet the market requirements of high value export markets

In cooperation and support relationship: The Company expands the cooperation relationship with a number of financial and investment partners such as IFC -Financial Institution under the World Bank In 2019, successfully calling for 8 million USD of investment in preferential stocks from IFC, IFC advised Nafoods to implement a food safety management system for the company's cold supply chain in accordance with the system certification Food Safety System ISO: 22000 is widely recognized in the world IFC's investment and technical advisory greatly support Nafoods in their efforts to add value to their products by applying the principles of safe and sustainable agricultural practices and improving mechanisms production department, which helps the group to improve production capacity, expand export markets and develop a new fruit seed business

In addition, the company cooperates with Chung Hsing University of Taiwan The Plant Research and Breeding Institute was established with a capacity of 6 million plant varieties per year, meeting domestic demand and exporting to Laos and China

Nafoods Group has exploited Southeast Asia's competitive advantage in growing vspecific fruits including passion fruit, banana, dragon fruit, coconut and citrus fruit to develop material areas of Nafoods Group in Vietnam, Laos, and Cambodia

Along with the convenient location of warehouses and factories near local seaports, more than 5000 tons of the company's fruit products (~ 85% of export losses) are shipped to all over the country each year

2.3.2 Rare

Management's mindset: The different mindset made Mr Nguyen Manh Hung decide to choose Que Phong, a poor border district of Nghe An province, to build the Nafoods Seed Institute, which surprised many people when he was far away lack of conditions He has a right mindset and vision when he sees that Nghe An has a suitable climate, clean soil, low virus infection for breeds, and keeps technological know-how safe And so far, passion fruit has become the main crop of Que Phong district when 1,200ha is planned for this plant

When Nafoods identified key products, the Company found that many fruit and vegetable products suffered from great competition from China, Thailand and the Philippines There are only a few products such as passion fruit, gac, we have a competitive advantage and other products such as pineapple, lychee, banana we do not have a competitive advantage compared to regional competitors Furthermore, we are also at a more tax disadvantage During the development of passion fruit tree, the company found this to be the most suitable variety in Vietnam, although passion fruit appeared first in Taiwan, Thailand, Malaysia, China 30 years ago, but in terms of efficiency then in Vietnam is still the most effective In 2019, Nafoods is the first and only enterprise in Vietnam to create 3 varieties of passion fruit certified and granted protection rights by the Ministry of Agriculture and Rural Development, including Nafoods 1, Que Phong 1 and Bach Huong 1

- Passion fruit seedlings:

The seedling product of Dai Nong 1 passion fruit seedling is produced by Nafoods Seed Institute in a modern greenhouse system with a closed process, strictly controlling the virus and introduced to the market since 2014 The launch of the product This product creates a closed circle of a vertical agricultural value chain at

Nafoods Group, not only gives Nafoods Group a significant revenue structure but also acts as a bridge, a vehicle for Nafoods Group to control and well manage raw material areas, ensure stable sources of raw materials for production Therefore, Nafoods Group has determined that passion fruit seedling will be an important product contributing to its differentiation and sustainable development

- IQF frozen fruits and vegetables:

Including fast frozen processed vegetables, tubers and fruits such as: Banana IQF, Red Dragon fruit IQF, IQF Coconut, IQF Mango, IQF Pineapple, IQF Passion Fruit, IQF Carrot, IQF Ginger After the production complex and fruit processing for export in Long An came into operation in April 2018, the processing output and sales

of these products have increased strongly, contributing more and more to the revenue structure of Nafoods Group, especially IQF Dragon fruit, IQF Mango and IQF Coconut In addition, the company has expanded cooperation relationships with a number of financial and investment partners, such as IFC - a financial institution under the World Bank Nafoods is the second agricultural company in Vietnam, invested by IFC in phase 1 with 8 million USD and committed to continue long-term investment

2.3.3 Inimitable & Non-substitutable

The management's leadership ability for the staff has a great influence on Nafoods Group Because in the production and processing of these fruits products can

be easily replicated, but people themselves are the only difference that cannot be reproduced, and then from different people create products product difference For that reason, since its inception, Nafoods has attached great importance to building staff to create a core competency through organizing training on skills, knowledge and especially attitudes to ensure that the quantity and quality are suitable for the job and the inheritance The Group has trained 1467 people, with 5205 hours of training This

is the hardest resource to imitate and the company has exploited it well to create differentiated products, successfully developing in areas where there are many big competitors to complete its value chain

2.3.4 Exploitable by the firm

With existing human resources, including many domestic and international experts, with a deep understanding of the agricultural activities of Vietnam and the world Nafoods has boldly integrated information technology (IoT - Internet of Things) into the garden management and control system, built a centralized database, developed the application of agent and customer management; step by step modernize agricultural activities, asymptotic to smart digital agriculture

The company also started construction of a factory processing passion fruit, vegetables, fruits for export; received Global GAP certification for Nafoods passion fruit farm in Moc Chau The passion fruit, vegetable and fruit processing factory was built in Bo Bun Industrial Park, Dong Sang Commune, Moc Chau District, Son La Province on an area of 2ha, the total investment for 2 phases is 200 billion VND Nafoods has boldly invested in a chain of frozen fruits and vegetables and is now a reputable frozen fruit and vegetable producer and exporter to fastidious markets such

as Europe, Australia, America, and Korea National, Japanese Nafoods' products all achieved prestigious international certificates such as: System international quality assurance control system (SGF IRMA); Certificate of global food safety and quality standards for retail food KOSHER, HALAL, BRC; Food safety management system ISO 22000: 2005 / HACCP Some typical products of Nafoods have a significant impact on the revenue growth of the business such as:

- Cashew nuts - value added products These are the newly tested products of Nafoods Group in Q4 2018, including value-added products such as cashew kernel, dried mango exported to Russia, Middle East However, these products have yielded remarkable and promising sales results in a short time period

- Fresh fruit: At the end of 2017, Nafoods 'fresh fruit passion fruit products were officially exported to the European market, marking an important step in Nafoods' business strategy Following that success, in 2018, fresh fruit products such as dragon fruit, sour lemon, banana, were exported to Asian and Middle East markets, especially China - Market the world's greatest potential for fresh fruit demand

→ Assess the core competencies of Nafoods

At Nafood group, people are the core values of the business, so the company always focuses on building a team of human resources with enough talent and virtue

to participate and dedicate themselves in the construction career business development is more and more successful The company determines that human resources are one of the most important assets, contributing to creating a competitive advantage for businesses

Therefore, resource development is really focused on by Nafoods Group through training of skills, knowledge and especially attitude to ensure quantity, quality, suitability and inheritance The enterprise has organized training courses for 1,467 people, with 5,205 hours of training Including outstanding training programs such as Responsible Cultural Training and do not blame internally; training on ISO standards, PRP regulations, hazards affecting product quality at factories Selective program content, suitable for each object, helps employees increasingly raise their hands career, self-improvement to meet the production and business requirements of the Company in the 4.0 era

3.The competitive advantages of the Nafoods Group

3.1 Advantage in low cost

When the business offers similar products / services at a lower price than its competitors

+ According to the website of Nafoods, their first competitive advantage is the raw material area Taking advantage of local agricultural products is cheaper for Nafoods The company drafted cooperation contracts with clear commitments that the Nafoods Group purchased all types of fruit every year that farmers co-produced This ensures farmers benefit in stable quantity and competitive price

+ Regarding the technological process, in order to reduce production costs, including transporting and handling post-harvest damage to fresh produce, Nafoods Group has developed its processing plants close to raw supply

3.2 Advantage of differentiation

When the business offers different products / services from the competition + Nafoods Group has exploited Southeast Asia's competitive advantage in growing specific fruits including passion fruit, banana, dragon fruit, coconut and citrus fruit