The Risk Precautions of Cashew Products in Binh Phuoc Province under the WTO Entry Process in the Period from 2011 to 2015: Masters thesis of Business Administration

MEIHO UNIVERSITY

Graduate Institute of Business and Management

MASTERS THESIS

The Risk Precautions of Cashew Products

in Binh Phuoc Province under the WTO

Entry Process in the Period

from 2011 to 2015

In partial fulfillment of the requirements for the degree of

Masters of Business Administration

Advisor: Dr. Shao-Hsi Chung

Co-advisor: Dr. Nguyen Minh Tuan

Graduate Student: Tran Van Hue

December, 2010

I

ACKNOWLEDGMENTS

First, I would like to express my gratitude to the Board of management of Ho Chi

Minh City University of industry and Meiho University, Taiwan who has been enabling

me to participate in training programs of Master of Business Administration in the past

two years.

Sincerely thank Associate Professor-Dr Le Van Tan, Deputy Principal of Ho Chi

Minh City University of Industry, Dr. Nguyen Minh Tuan, Dean of Business

Administration department, Associate Professor Dr. Vo-Phuoc Tan, Dean of post

graduate department of Ho Chi Minh City University of Industry, for giving me precious

encouragement so that I am motivated to attend all courses and the feedbacks help me

complete this research.

Sincerely thank Professor. Shao-Hsi Chung, University of Meiho, Taiwan (MIT

Taiwan), though he is very busy with his work, he spend time instructing and helping me

during my research, from choosing topics, doing research to completing it.

Thank lecturers of department of postgraduate, professors of management and

business at the University of Meiho, Taiwan (MIT Taiwan); my classmates of class

EMBA 2 of Ho Chi Minh City University of industry, for the assistance, support and

encouragement for me during the past two years. I learned a lot of valuable knowledge

and new skills from this course.

I would also like to thank the President, members of the Board of management of the

University of Meiho, Dr. Ron-Chuen Yeh, dean of postgraduate department at the

University of Meiho (MIT Taiwan); the Professors, officers and administrative staff, the

University of Meiho, Taiwan for devotion on helping me to do research, for warmly

welcome, warm caring, enthusiastic caring which make me and my friends impressed

during our staying at school.

Please thank postgraduate students of EMBA class, university of Meiho, Taiwan for

supporting me a lot in the process of taking this course.

Last but not least, I would like to thank people’s committee of Binh Phuoc province,

the Department of Trade and Industry, Department of Statistics in Binh Phuoc province,

Vietnam Cashew Association, Department of Crop Production, Processing Department,

Southern Agricultural and Technical Institute , the top experts, the farmers, Cashew

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processing and export - import enterprises of Binh Phuoc province that have helped me to

collect information, documents, answer the survey questions and interviews. Moreover,

they help me examine and access contents of this research properly, at the same time give

new points for the research and limit risks in the business of cashew import and export of

the province.

Sincerely thank you.

III

The Risk Precautions of Cashew Products

in Binh Phuoc Province under the WTO Entry

Process in the Period from 2011 to 2015

ABSTRACT

Binh Phuoc, a mountainous province located in the West of the South East, is a rich basalt

soil region, which is suitable for the cultivation of industrial crops such as rubber, cashew,

pepper, beans, sesame... In recently decades Binh Phuoc has strongly developed cultivation,

processing and export. Binh Phuoc now has 177 cashew processing enterprises and 298 small

processing units, with a total capacity of 47,700 tons per year. In 2009, Binh Phuoc exported

18 636 / 177, compared with the country, Binh Phuoc is now known as the capital of the

cashew.

However, in the production of import-export business, cashew enterprises in Binh Phuoc

provnce have a lot of risky shortcomings which limit import and export business of the

enterprises. Therefore, finding a risk factors in the import-export business in Binh Phuoc

province, Vietnam is very necessary, and then we should offer solutions that help businesses

minimize the risk of losses in import-export business in the WTO entry process during the

period from 2010 to 2015.

In recent years, the cashew processing and export industry of Binh Phuoc province hass

faced many difficulties, such as constant price fluctuation, quality, volatile production, and

food safety which does not meet the requirements of importing countries, the level of

management and application of scientific and technical advances in this industry are limited

and unbalanced.

The enterprises must always compete fiercely, foreign language skills and management

experiences of staff in the process of negotiation, contract drafting, contract signing, transport,

method of payment, in commitment contract are still restricted, which leave many risks in the

import-export business activities.

To have a base to do research, the study must identify research objectives such as: risk

factors relating to nature, to the processing, to export and import activities and even including

domestic business.

Limitations of the research: This research only focuses on the risk factors in the business

of import and export of the enterprises in Binh Phuoc province, and then propose some

solutions to prevent them.

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To make orientation for developing this business, the Prime Minister signed Decision No.

120/1999/QD-TTg approving the cashew development project in 2010 with the following

norms: cashew planting area is 340,000 ha of, raw cashew production is 230,000 tons, cashew

processing output is 45,000 tons, and export output is $220 million. The Ministry of

Agriculture and Rural Development issued a decision approving the planning of 39/2007/QD￾BNN cashew sector till 2010 and made orientation to 2020 with key indicators such as:

The area is 450,000 ha, raw cashew production is 500,000 tons (imported 150,000 tons),

the output of processing is 140,000 tons, export turnover is $ 670 million; people’s committee

of Binh Phuoc province issued Decision No. 31/2008 / QD-UBND dated 07/08/2008 on

approval of the planning sector of Binh Phuoc during the period from 2010 to 2015 and vision

of 2020, Decision No. 46/2009 on the production, processing under ISO, HACCP, GAP

process to meet the requirements of the importing country; decision No. 50/2009 on

promotion of innovative machinery and equipment in the processing and export and Festival

of Gold cashew in Vietnam, Binh Phuoc province was held in the beginning of March in 2010,

to introduce and confirm with global enterprises in this industry that Vietnam as well as Binh

Phuoc province develop and will develop strongly in cashew business.

Research methodology: The study was conducted by two methods, which are quantitative

and qualitative methods, (1) quantitative methods applied to the objects that are the managers

of import and export of processing enterprises, (2) qualitative methods applied to the subjects

that are experts, departments, industry associations and the scientists.

Designing survey questions: From the data collected in Chapter 2, research steps in

Chapter 3 and proposed research methods, the study conducted 16 questions for the two

groups, group one is business managers, with 9 questions, group 2 is specialists of the

departments, associations and scientists, with 7 questions, then sent to five professional

experts who are working in the institutes (Southern Institute of Agricultural Science and

Technology, HCM institute of mechanics), the professors, doctors are teaching at universities,

to assess the structure, content of the questions from the questionnaire, in accordance with the

objectives of the research. 9 questions of group 1 was printed out with the number of 123

sheets, 7 questions of group was printed 17 sheets and sent to each group (attached list), after

45 days, they were collected (on 15th October, 2010). Following was to classify the answers

and decide they were passed or failed on the request of instructions, to conduct and run the

program SPSS matrix method for analyzing and processing.

Basing on the analysis and results of treatment, the study pointed out the risk factors to the

processing, import and export business, then proposed solutions and recommendations for the

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processing and import-export business so that they can limit the risks in import-export

business in the WTO entry process during the period from 2010 to 2015.

Keywords: Cashew Product, Binh Phuoc Province, Risk Precaution, WTO

VI

The Risk Precautions of Cashew Products

in Binh Phuoc Province under the WTO Entry

Process in the Period from 2011 to 2015

Contents

ACKNOWLEDGMENTS .........................................................................................................I

ABSTRACT............................................................................................................................ III

Contents .................................................................................................................................. VI

Tables...................................................................................................................................... IX

Figures..................................................................................................................................... IX

Chapter1 Introduction ............................................................................................................... 1

1.1 Overview of Binh Phuoc................................................................................................. 1

1.2 Research Objectives........................................................................................................ 2

1.2.1 Research on risk factors relating to nature............................................................... 2

1.2.2 Research on risk factors relating to cashew processing........................................... 3

1.2.3 Research on risk factors relating to export activities............................................... 3

1.2.4 Research on risk factors relating to cashew import. ................................................ 3

1.2.5 Research on risk factors relating to the processing of domestic business. .............. 4

1.3 The Research Scope and Limitations.............................................................................. 4

1.3.1 Scope of research. .................................................................................................... 4

1.3.2 Limitations. .............................................................................................................. 4

1.4 Definitions ...................................................................................................................... 5

1.4.1 Definition of risk...................................................................................................... 5

1.4.2 Other concepts. ........................................................................................................ 5

1.5 Terminology.................................................................................................................... 6

Chapter 2 Literature Review..................................................................................................... 7

2.1 Orientation and Development Results of Vietnam’s Cashew Sector ............................. 7

2.2.1 Development goals................................................................................................. 12

2.3 Data Prves That Cashew Business Is a Key Economic Sector ..................................... 13

Chapter 3 Research Methodology........................................................................................... 16

3.1 Research Process .......................................................................................................... 16

3.2 Research Methodology ................................................................................................. 18

3.2.1 Survey method. ...................................................................................................... 18

VII

3.3 Deliver Survey Questionnaire....................................................................................... 20

3.4 Validity and Reliability................................................................................................. 21

3.5 Questionnaire Design.................................................................................................... 24

3.6 Collecting the Data ....................................................................................................... 25

3.7 Analytical Methods....................................................................................................... 25

Chapter 4 Research Results and Analysis............................................................................... 27

4.1 Elements within the Enterprises to Ensure the Sustainable Export .............................. 27

4.2 The Level of Interest in Fluctuations of the Domestic and the World Market............. 28

4.3 The Competitive Advantage of Enterprises in the Cashew Processing Industry in

the Province Compared to Other Enterprises in the Country ....................................... 30

4.3.1 Competitive factors of the brand............................................................................ 30

4.3.2 Competitive factors of advanced technology......................................................... 31

4.3.3 Competitive factors in management level.............................................................. 32

4.3.4 Competitive factors on capital for export activities............................................... 32

4.4 The Risk Level of External Factors Impact on the Business Activities of Enterprises 34

4.5 The Level of Risk in the Process of Buying Raw Cashew in the Country ................... 35

4.6 Assessment of Capability Limiting Business Risks in the Procurement of Raw

Cashew in the Country.................................................................................................. 36

4.6.1 Synthesis of limitation level of risks in buying the raw cashew............................ 36

4.7 The Level of Risks in the Import Process of Raw Products ......................................... 38

4.8 Ability to Limit the Risks of Importing Raw Cashew .................................................. 39

4.8.1 The ability to limit risks in foreign trade contract negotiations............................. 39

4.8.2 Limiting the risks of contract performance............................................................ 40

4.8.3 Synthesis of risk limitation ability in the process of raw cashew import. ............ 41

4.10 Ability to Limit the Risks of Cashew Exporting ........................................................ 44

4.10.1 The ability to limit the risks in transporting cashew exports (8b1). .................... 44

4.10.2 The ability to limit the risks in the implementation of the export contract. (8b2)

......................................................................................................................................... 44

4.10.3 The ability to limit the risks caused by lack of foreign language knowledge

and communication skills of negotiating staff. (8b3) ......................................... 45

4.11 The Risks of Cashew Manufacture Process for Export .............................................. 49

4.12 Assessment of the Ability to Eliminate the Risks in the Export Processing. ............. 49

4.13 Analyzing and Assessing the Survey Results from the Experts of Departments and

the Science Association. ............................................................................................. 53