Nhu cầu xuất khẩu cà phê: Công ty cổ phần Intimex Việt Nam

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton 0

A study of Export Demand for Coffee: The

Case of Intimex Vietnam JSC

Name : Nguyen GiaPhuc

English Name : Clinton

Date of Birth : 25/09/1963

Hanoi – 2013

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton i

ACKNOWLEDGMENTS

I would like to thank Dr. Eduardo T. Bagtang and the International

center Education of Thai Nguyen University, Southern Luzon State

University for guiding me throughout this research and for providing

me with the opportunity to conduct this research and for helping me to

carry out the necessary revisions to this dissertation.

I would also like to express my deep gratefulness to Vietnam

Intimex Company for providing me with useful and necessary

information for doing this research, to my wife, my son and daughter,

my colleagues for encouraging, inspiring me when I conduct this

research, giving necessary feedbacks for making this dissertation

successful.

Finally, I would like to thank all my classmates for giving me

constant support and encouragement as well as helping me with needed

materials and reference.

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton ii

APPROVAL SHEET.....................................................................................................x

CHAPTER I: THE PROBLEM AND ITS BACKGROUND................................11

1.1. Background of the study ...................................................................................14

1.2. Statement of the problem..................................................................................18

1.3. Objectives of the study......................................................................................18

1.4. Hypotheses of the study....................................................................................20

1.5. Significance of the study...................................................................................20

1.6. Scope and Limitations of the Study..................................................................20

1.7. Location of the study ........................................................................................21

CHAPTER II: REVIEW OF RELATED LITERATURE AND RELATED

STUDIES ....................................................................................................................23

2.1. Coffee Production in Vietnam ..........................................................................23

2.1.1. Coffee Export into USA‘s market..............................................................26

2.1.2. Vietnam coffee export: Lesson learnt........................................................29

2.1.3. Vietnam coffee industry at present ............................................................31

2.2. Future of Vietnam Coffee Export .....................................................................36

2.2.1. Quality Improvement for Vietnam coffee..................................................37

2.2.2. Production cost reduction ..........................................................................37

2.2.3. Variety and product shifting, production adjustment to the market

demands ...............................................................................................................38

2.2.4. Coffee consumption promotion in the domestic market as well as to great

potential countries................................................................................................39

2.2.5. Reorganization of production and export structure in a better scientific,

modern, effective and steady way........................................................................39

2.3. Major Market For Coffee Exports ....................................................................40

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton iii

2.3.1. Problems Encountered in Doing Business in the US.................................41

2.3.2. Countries Considered by Vietnam as Competitors....................................42

2.4. Company Analysis: The Intimex JSC Vietnam................................................43

2.4.1. Features..................................................................................................43

2.4.2. Organizing structure...............................................................................45

2.4.3. Management...........................................................................................46

2.4.4. Achievements of Intimex Vietnam........................................................50

2.5. Other Related Studies .......................................................................................51

2.6. Conceptual Framework.....................................................................................61

CHAPTER III: METHODOLOGY.........................................................................64

Methods and Procedures..........................................................................................64

3.1. Research Design and Methodology ..................................................................64

3.2. Respondents of the Study..................................................................................64

3.3. Data Gathering Tools........................................................................................65

3.4. Treatment of Data .............................................................................................67

CHAPTER IV: RESULT AND DISCUSSION .......................................................69

4.1. The Current Status of the Coffee Exporting Companies of Vietnam...............69

4.2. Qualitative Data Analysis.................................................................................89

4.2.1. Existing competitors and market structure of coffee export......................89

4.2.2. Product Quality ..........................................................................................91

4.2.3. Coffee drinking trends in the American.....................................................92

4.3. Test of Significant Relationship........................................................................94

4.3.1. Hypothesis testing....................................................................................100

4.3.2. Individual partial coefficient test .............................................................102

4.3.3. Testing overall significance of the multiple regressions..........................105

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton iv

4.3.4. Testing the drop variable in the regression model...................................106

4.3.5. Errors in the model...................................................................................108

CHAPTER V: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS116

5.1. Summary of Findings..................................................................................116

5.2. Conclusions.................................................................................................119

5.3. Recommendations.......................................................................................120

BIBLIOGRAPHY

APPENDICES

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton v

ABSTRACT

Following the trend of globalization, especially after Vietnam joins the WTO, in

order to enter the international playing field, Vietnam has determined that it needs to

boost exports. In terms of agricultural products, the export of coffee is one of the first

priorities. With that business orientation, enterprises specializing in processing and

exporting coffee are looking for strategy to penetrate international markets. One of the

leading enterprises pursuing this direction is the Vietnam Intimex Joint Stock

Corporation (Intimex). With its export turnover reaching an annual average of nearly

$300 million, Intimex is the leading enterprises in Vietnam of which product lines

have been certified by many associations of coffee in the world, namely 4C,

UtzKappeh, Organic coffee.

For several years, the United States (U.S) has become one of the biggest importers

of coffee products. The Intimex‘s export value of coffee to this market accounts for

US Dollar 200 million in 2009.

With a view to maintaining its dominant status in this field and increasing its

market shares in the U.S, Intimex always place much importance to the marketing

activities, having the good marketing mix will bring efficiency to the company‘s

export business.

Given the above-mentioned rationale, I have decided to choose the topic: A study

of export demand for coffee: The case of Intimex Vietnam JSC.

After collecting data from both primary sources by utilizing questionnaires,

interviews and secondary sources: articles, published documents, books and online

articles, regression analysis models were utilized to find out the factors affecting

coffee import demand of the US. By statistical approaches, the dissertation points out

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton vi

different qualitative and quantitative factors that have influence on the coffee import

demand. These factors are:

 Quantitative data: commodity price, coffee beverage price index,

price of the biggest substitute, and coffee market share.

In data analysis, E-view program was used to deal with figures from secondary

sources. By statistical methods, I draw the conclusion about the dependent variables

as follow

On the hypothesis of significant relationship, it was found out that the key

factors affecting coffee import demand are commodity price, price of the

biggest substitute (tea) and coffee market share of Vietnam in the US market.

The commodity beverage price index of the U.S. as one of the four has no

significant impact on the dependent variable.

The model of regression analysis has been checked for errors: multi-co

linearity, heteroskedasticity and autocorrelation. In general, after conducting

a set of statistical treatments, the model proves to be quite reliable and can

explain the dependent variable based on independent variables.

After data analysis using regression models, results are drawn and conclusions are

made. Based on those results and conclusions, I have point out the recommendations

to improve current situation of coffee export to the US markets in Chapter 5. These

conclusions are based on findings from the data analysis and qualitative data

assessment.

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton vii

LIST OF FIGURES

Figure 1: Organizational Chart of Intimex Vietnam....................................................17

Figure 3: Coffee productivity, area, and output in province Daklak in period 2006–

2012 (%).......................................................................................................................25

Figure 4: Vietnam coffee export market share 2st half of 2013 ..................................26

Figure 5: Amount and value of coffee export into USA‘s market for period 2006–

2012..............................................................................................................................27

Figure 2: Conceptual Paradigm ...................................................................................63

Figure 6: Data collection and process..........................................................................66

Figure 7: Coffee market shares....................................................................................80

Figure 8: World's export value of coffee .....................................................................90

Figure 9: Heteroskedasticity graph ............................................................................111

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton viii

LIST OF TABLES

Table 1: Vietnam Coffee export to the world ..............................................................36

Table 2: List of respondents.........................................................................................70

Table 3: No. of Companies with Coffee as Major Export ...........................................71

Table 4: Coffee Export destinations ............................................................................72

Table 5: Type of Coffee being exported to USA.........................................................72

Table 6: Possible problems when doing business in the US for Vietnam coffee

enterprises....................................................................................................................73

Table 7: Opportunities for Vietnam coffee exporters..................................................74

Table 8: Solutions posed by respondents.....................................................................75

Table 9: US Import Policies That Affected the Coffee Export Business of Intimex

Vietnam JSC to US......................................................................................................76

Table 10: Factors that affected the market share of Vietnam Coffee Export ..............77

Table 11: Vietnam Government Interventions to Help Coffee Industry .....................78

Table 12: Countries Considered as Competitors in Coffee Export..............................79

Table 13: Marketing Strategies Adopted and Found to be Effective as Identified by

Intimex Vietnam JSC...................................................................................................81

Table 14: Product Policies Adopted and Found to be Effective by Intimex Vietnam

JSC as Marketing Strategy...........................................................................................82

Table 15: Distributor chain Policies Adopted and Found to be Effective as Marketing

Strategy as Identified by Intimex Vietnam JSC...........................................................83

Table 16: Price Policies Adopted and Found to be Effective as Identified by Intimex

Vietnam JSC ................................................................................................................84

Table 17: Advertisement Policies Adopted and Found to be Effective as ..................85

Table 18: Challenges experienced by Intimex.............................................................86

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton ix

Table 19: Measures and Strategies Recommended by Intimex Vietnam JSC to

Increase Volume of coffee Export to the US...............................................................88

Table 23: Analysis of Covariance..............................................................................100

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton x

THAI NGUYEN UNIVERSITY SOUTHERN LUZON STATE UNIVERSITY

Socialist Republic of Vietnam Republic of the Philippines

APPROVAL SHEET

This thesis, entitled ―A STUDY OF EXPORT DEMAND FOR COFFEE:

THE CASE OF INTIMEX VIET NAM JSC‖, prepared and submitted by Nguyen

Gia Phuc in partial fulfillment of the requirements for the degree of Doctor in

Business Administration, has been examined and recommended for acceptance and

approval for FINAL ORAL EXAMINATION.

Adviser

July 25, 2013

Date

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton 11

CHAPTER I: THE PROBLEM AND ITS BACKGROUND

Introduction

Founded in 1979, Intimex Vietnam JSC has operated for 32 years with many ups

and downs along with the economy of Vietnam. Until now, the company has got

remarkable achievements during the operation and development process, Intimex has

affirmed its position in the domestic and international market, to become one of the

leading companies in import and export, supermarket business and manufacturing

sectors of Vietnam (Intimex Company Profile, 2010).

The success was recognized by the State, in 1986 the Government decided to put

Intimex into one of the largest corporations of the Ministry of Domestic Trade,

Intimex has been as important as the big corporations for many years in the industry

and in 1988 the company has been honored by the State with the third class Labor

medal (Intimex Business History, 2010).

A relatively new activity for beginning period, has been thoroughly exploited by

Intimex was sales of foreign currency for staff and oversea students,...( called spot

export) in order to take advantage of markets and products and that were legalized by

the States, Intimex implemented the strategy and the results were very encouraging.

The creative application of this policy increased the Company's foreign currency

funds a lot.

In the early 90s, the subsidy economic mechanism was eliminated, Intimex and

other businesses throughout the country are confident to get into the market economy.

State regulatory mechanism was the open but social upheaval was really complicated,

the economic policies of the Party and State are in the testing phase that was a time

series of companies protected by subsidy system failed to operate to generate income.

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton 12

Unemployment rose and there was a production surplus. Intimex was also one of the

units enjoying the advantages of the mechanism of the subsidy system, so it was also

inevitably affected by this storm surge. The company had to face lots of disadvantages

now.

Facing this difficult, company leaders, trade unions and staff tried their best to

overcome, the measures were set out in line with new situations, and the quota was

initially formed. Open regulations facilitate companies to promote creativeness in

doing business. Thanks to the positive measures, the company has survived and

developed until now.

In the following years, the company continued to perfect the by-the-piece

mechanism for departments that have taken initiative in creating a dynamic business,

breaking the deadlock and stagnation. The company's activities were close with the

market and brought about certain results, maintaining the company's development,

ensuring the lives of employees, while many other state enterprises went bankruptcy

or made losses.

Entering the new millennium, besides the basic advantages, the company faced

many difficulties and challenges. The world economy faces new recession cyclones.

Integration process poses new issues to businesses, especially trading companies: to

exist or not in the context of cumbersome structural apparatus, inappropriate labor and

wage policy with market economies, outdated and seriously degraded infrastructure,

working capital losses in the mechanism transition process. In that context, what to do

to bring the company through tough times and create the competitiveness in the

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton 13

market and integrate into the international economy? This is a difficult problem that

companies have to find an optimal solution. The 5-year business strategy (2001-2005)

was born in this situation and has demonstrated the validity through remarkable

results. In particular, the export performance of the Company continues to rise:

exports turn-over has soared admirably. A rapid rise in exports has contributed to

enlarge rapidly the scope of the company.

Over the past few years, Intimex had the boom in import and export business,

especially exports turn-over. In 1999, Intimex‘s export turnover was USD 23 million

and in 2007, it reached USD 227 million (Intimex Company Profile, 2010). The

company's exports accounts for 70% of the total import and export with mainly

agricultural products, especially coffee and pepper. For many consecutive years,

Intimex was number two on coffee exports and was the best pepper exporter in the

country. Thanks to Intimex‘s export activities, Vietnam's strong traditional

commodities such as coffee, pepper, agricultural and aquatic products ... have

affirmed its position in the world's largest market. The company has been very proud

of the results.

To achieve such great success, Intimex concentrated on developing export, export

growth was the company‘s first priority. Intimex actively enhance the value of goods

processing of exported products, production development by investing in a number of

manufacturing and processing factories of agricultural products such as: Clean pepper

processing plant in Binh Duong, cassava starch production plant in Nghe An, the

aquatic plant in Thanh Hoa... These projects are and will help ensure high-quality and

stable supply of goods for domestic market and export. Besides, Intimex always

focused on improving export business to raise the prestige in the domestic and

international market.

Export demand for coffee: The case of Intimex Vietnam JSC

Nguyen Gia Phuc– Clinton 14

Besides business, Intimex also focuses on market development. The company has

been doing business with more than 100 countries and is continuing to looking for

new customers. It also actively participates in business promoting activities and trade

fairs.

Intimex pays special attention to human factors. The staff of the company has

continuously improved their knowledge and raise qualifications as well as

professional abilities. The achievements of Intimex today were the contribution of the

Board of Directors and Company‘s employees.

With these achievements, the company has received numerous awards by State

agencies and organizations, namely Vietnam Gold Star Award in 2005, the title of the

most satisfying supermarket in 2008, golden Cup for supermarket brand in 2009, Top

500 enterprises in Vietnam in 2008, 2009 and 2010 ... Especially in 2009, to

commemorate the 30th anniversary, the company was honored by the State with the

Second Class Labor Medal (Intimex Company Profile, 2010).

Since 2009, the Company began operating paradigm from state-owned enterprises

into a joint stock companies. In the early days of operation under the new model,

there were difficulties to be solved, obstacles and many challenges that Intimex had to

overcome, but in the context of new opportunities and challenges, the company will

continue to utilize its available and potential strength to further confirm its leading

position in the field of import-export and domestic business and to promote

production. That is the goal orientation of Intimex Corporation Vietnam today.

1.1. Background of the study

Coffee was introduced to Vietnam in 1857 by the French and slowly grew as

producer of coffee in Asia. The height of coffee production occurred in the early 20th