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Department of Business Administration
I-Shou University
Master Thesis
Analysis and Forecast of Building Business strategies Rice Vinh Long Import
- Export Joint Stock Company period 2014 - 2020
Advisor: Dr. Chun-I Chen
Dr. Ho Sy Tan
Graduate Student: Nguyen Kien Nghiep
July 2014
i
Acknowledgements
First of all, I would like to thank the teaching staff of I-Shou University for dedicated,
enthusiastic help and knowledge impartation during my study process to solve this topic for
graduate thesis
Especially, I am grateful to Dr. Chun - I Chen from I-Shou University and Dr. Ho Sy
Tan from the Vietnam University of Electricity, who are always dedicated, taking time to
teach, provide information and guidance for me to complete my thesis
Finally, I wish all teachers have plenty of heath, success and happiness.
WISH ALL THE BEST FOR YOU!
ii
Abstract
When Vietnam became a member of the World Trade Organization (WTO) in 2007,
many countries and regions all over the world have to import goods from Vietnam mainly of
rice. In the trend of globalization, businesses must integrate into the world economy with very
fierce competition and many great challenges in operating their business.Therefore,
businesses must constantly strive to change to suit the growing trend to affirm his reputation
on the domestic market and international.
It is the leading exporter of the province Vinh Long Import - Export Joint Stock
Company (IMEX CUU LONG), it is the state-owned enterprises (51% of the state capital)
under the People's Committee of Vinh Long Province, specializes in buying sale of food,
agricultural raw materials, semi-processed agricultural products (plates, bran); husking rice,
polished rice and export agents, export trustee for other companies needs. Since its inception
it has played a big part in the economic development of the local society and the business is
certified as eligible enterprises engaged in export of rice under Decree 109 government.
Therefore, it is necessary to study and recommend solutions to build forecasting strategies
rice export business more effectively in the future.This is reasons that I decided to study
"Analysis and forecast of building business strategies rice Vinh Long Import - Export
Joint Stock Company Period 2014 -2020".
Research methods began collecting data (secondary) Vietnam's rice exports and
company about types, rice exports turnover from 2008 to 2013. Then conducted data analysis
(secondary):
-Using method of comparing the relative, absolute for comparison, compare types and
rice exports company over the years.
- Using the rate histograms showing the structure of exported rice varieties through the
years
- Analysis of the current situation clearly assess Vietnam's rice exports in the current
period
- Provide orientation perspective SWOT: strengths, weaknesses, opportunities and
threats of company
iii
Application of Grey theory models and we proposed Nonlinear Grey Bernoulli
Model (NGBM) to Improve the linear model to nonlinear one. The NGBM be applied to
forecast rice exports for next year.
After analysis we found GM (1,1) with 5 data, n = 0 has Average Relative Percentage
Error (%) is 1.41% and NGBM data with n = 5 data, n= - 0.18 average relative error (%)
0.64% is optimal and we use the GM (1,1) to forecast rice production for export next
year.Obtained results will be useful for planning the marketing strategy of company in the
future.
Keywords: Grey system theory, nonlinear grey Bernoulli model, GM(1,1), rice
forecasting.
iv
Table of Contents
Acknowledgements .............................................................................. i
Abstract ............................................................................................... ii
Table of Contents ............................................................................... iv
List of Tables ..................................................................................... vii
List of Figures .................................................................................. viii
List of Abbreviations ......................................................................... ix
Chapter 1 INTRODUCTION ............................................................ 1
1.1 Research background and motivation....................................................... 1
1.2 Research purposes .................................................................................... 2
1.2.1 General Purpose ................................................................................................... 2
1.2.2 Specific Purposes ................................................................................................. 2
1.3 Research significance ............................................................................... 2
1.4 Scope of research ...................................................................................... 3
1.5 Research flow chart .................................................................................. 3
Chapter 2 LITERATURE REVIEWS AND RESEARCH
MODEL OF RICE EXPORT ............................................................ 4
2.1 Characteristics of Vinh Long ................................................................... 4
2.2 The situation of rice exports in Vietnam in the period of 2008 - 2013 .... 4
2.2.1 The global rice market .......................................................................................... 4
2.2.2 The situation of rice exports in Vietnam in 2008-2013 ....................................... 6
2.3 Analysis of the competitiveness of Vietnam's rice exports .................... 15
2.4 Introduction about Vinh Long Import– Export Joint Stock Company ... 18
2.4.1 The development process ................................................................................... 18
v
2.4.2 Lines of business ................................................................................................ 18
2.4.3 Charter capital and shareholder structure in 2013 .............................................. 19
2.4.4 Organizational Structure .................................................................................... 19
2.4.5 Company image .................................................................................................. 20
2.4.6 Achievements ..................................................................................................... 21
2.5 Analysis of strategies of rice business and exports of Imexcuulong (2008
- 2013) ............................................................................................................. 22
2.5.1 Exported rice is mainly ...................................................................................... 22
2.5.2 Prices of exported rice from 2008 to 2013 ......................................................... 23
2.5.3 Main rice export markets of Imexcuulong ........................................................ 25
2.5.4 Forms of export of Imexcuulong ....................................................................... 26
2.5.5 Business situation of the Company in the period of 2008- 2013 ....................... 27
2.6 Analysis of competitiveness in rice export activities at Imexcuulong ... 28
2.6.1 Current status of rice exports in Vinh Long Province ........................................ 28
2.6.2 Competitiveness Analysis of Telecommunication companies ........................... 29
2.6.3 Foreign competitors ............................................................................................ 32
2.6.4 Analysis of strengths and weaknesses of Imexcuulong .................................... 34
2.6.4.1 Major strengths - weaknesses ..................................................................... 34
2.6.4.2 Major opportunities - threats ....................................................................... 35
2.7 Forecasting method: ................................................................................ 35
2.7.1 The concept: ....................................................................................................... 35
2.7.2 Characteristics of forecasting ............................................................................. 36
2.7.3 Forecasting methods ........................................................................................... 36
2.7.3.1 Qualitative forecasting method ................................................................... 36
2.7.3.2 Quantitative forecasting method ................................................................. 38
2.8 Grey theory ............................................................................................. 39
2.8.1 History of Grey theory ....................................................................................... 39
2.8.2 Recent progress of Grey System Theory. ........................................................... 40
2.9 Current research in forecasting of rice exports ....................................... 42
vi
Chapter 3 RESEARCH METHODOLOGY ................................. 44
3.1 Grey Forecasting Model ......................................................................... 44
3.1.1 Traditional grey model GM (1,1) ....................................................................... 44
3.1.2 Novel nonlinear grey Bernoulli model NGBM (1,1) ..................................... 47
3.2 Error analysis .......................................................................................... 48
3.3 Relative percentage error analysis .......................................................... 48
3.4 Topological rolling error analysis ........................................................... 49
3.5 Numerical Examples ............................................................................... 49
3.5.1 GM(1,1) with 4 data and 5 data .......................................................................... 50
3.5.1.1 GM(1,1) with 4 data………………………………………………………50
3.5.1.2 GM(1,1) with 5 data .................................................................................... 52
3.5.2 NGBM with 4 data ............................................................................................ 52
3.5.3 Rolling NGBM with 4 data ................................................................................ 54
Chapter 4 PRACTICAL CASE AND ANALYSIS ........................ 55
4.1 Data collecting ........................................................................................ 55
4.2 Results of forecast and analysis .............................................................. 55
4.2.1 GM (1,1) with 5 data .......................................................................................... 55
4.2.2 NGBM with 5 data ............................................................................................. 57
Chapter 5 CONCLUSION AND RECOMMENDATIONS ......... 60
5.1 Conclusions ............................................................................................. 60
5.2 Suggestions ............................................................................................. 60
References ......................................................................................... 63
vii
List of Tables
Table 2.1 Ten leading rice exporters - importers in the world in 2011 ...................................... 5
Table 2.2 Ten leading rice exporters in the world ...................................................................... 6
Table 2.3 Quantity and turnover of Vietnam’s rice exports (2008 – 2013 ) ....................... 13
Table 2.4 Prices of Vietnam’s rice exports in the period of 2008 - 2013 ................................ 13
Table 2.5 Price comparison of rice exports among countries .................................................. 15
Table 2.6 Standards for Vietnam's exported rice ..................................................................... 23
Table 2.7 Prices of exported rice of the Company in the period of 2008- 2013 .................... 24
Table 2.8 The fluctuation of rice outputs for export to the Company's main markets in the
period of 2008 - 2013 ............................................................................................................... 25
Table 2.9 Outputs of exported rice under forms of export of the Company in the period of
2008 – 2013 .............................................................................................................................. 27
Table 2.10 Business results of the Company in the period of 2008- 2010 ............................. 27
Table 2.11 Product structure and value of exported rice from 2011 to 2013 ........................... 28
Table 3.1 Rice exports from 2008 – 2013 ................................................................................ 50
Table 3.2 Forecasting results and errors by using GM(1,1) with 4 data .................................. 51
Table 3.3 Forecasting results and errors by using GM(1,1) with 5 data .................................. 52
Table 3.4 Error analysis of forecasting and rice exports from 2013 to 2016 by NGBM with 4
data (optimun n = -0.26) ........................................................................................................... 54
Table 4.1 Forecasting demands for rice exports ...................................................................... 55
Table 4.2 Forecasting demands for rice exports and the average error in GM(1,1) ................ 56
Table 4.3 Forecasting demands for rice exports and the average error. Errors in NGBM
(optimun n = -0,18) .................................................................................................................. 57
viii
List of Figures
Figure 1.1 Research Flow Chart ................................................................................................. 3
Figure 2.1 Top 10 largest rice import markets from Vietnam in 2008 ..................................... 7
Figure 2.2 Top 10 largest rice import markets from Vietnam in 2009 ...................................... 8
Figure 2.3 Top 10 largest rice import markets from Vietnam in 2010 ...................................... 9
Figure 2.4 Top 10 largest rice import markets from Vietnam in 2011 .................................... 10
Figure 2.5 Top 10 largest rice import markets from Vietnam in 2012 .................................... 11
Figure 2.6 Top 10 largest rice import markets from Vietnam in 2013 .................................... 12
Figure 2.7 Types of exported rice in 2013 ............................................................................... 14
Figure 2.8 Markets of rice exports in 2013 .............................................................................. 14
Figure 2.9 Market share of rice exports in Vinh Long province as of September 2013 .......... 29
Figure 4.1 Forecasting demands for rice exports and the average error in GM(1,1) ............... 57
Figure 4.2 Forecasting demands for rice exports and the average error. Errors in NGBM ..... 59
ix
List of Abbreviations
WTO : The World Trade Organization
FAO :Food and Agriculture Organization of the United Nations
NGBM : Nonlinear Grey Bernoulli Model
GM : The grey model
AGO : Accumulated Generating Operation
IAGO : Inverse Accumulated Generating Operation
SWOT :Strengths, Weaknesses, Opportunities andThreats
VN : Vietnam
VNĐ : Vietnam money
IMEXCUULONG : Vinh Long Import & Export Joint Stock Company
Eq : equation
LSM : Least Square Method
1
Chapter1 INTRODUCTION
1.1 Research background and motivation
Today, economic conditions are changing strongly, the process of globalization is
taking place rapidly in both depth and width and affecting most countries in the world.
Therefore, forecast is very important in range. All government departments have a statistical
analysis of economic data.. Planners can use these data to forecast future trends for the
economy to develop and to help them make decision.However, the sampled data is incomplete
or fewer samples, lack of information and experience, which transforms the system affected
by elements known and unknownsuch as: in business, techniques, marketing and weather …
So, scientists and economists forecast that using the information system limits and causes
difficulty in making decision. Grey System Theory proposed by Julong Deng Xiaoping
provides an efficient method to handle uncertain systems, to find developed law and to
establish corresponding forecast models. Thus, the theory has become quite popular with his
ability to deal with systems with unknown parameters section. As an advantage for the model
to count normally, Grey theory models only require a limited amount of data to estimate the
behavior of unknown systems
In two decades, Grey theory was developed quickly and attracted attention of many
researchers. It has been applied widely and successfully in various systems such as sociology,
economics, finance, science and technology, agriculture - chemistry, industry, transportation,
mechanics, meteorology, logical ecology, hydrology, geology, medical, military and so on.
Considering the complexity and uncertainty of the factors affecting the development of the
exporting market of Vietnam, forecasting demand on rice exports market can be regarded as a
Grey system with unknown and known information. Thus, we will analyze the Grey theory
system to forecast business strategies of IMEXCUULONG in the period of 2014 -2020.
In this thesis, we will apply the Grey forecasting model as a research tool to analyze
and forecast business strategy of rice exports at IMEXCUULONG in the period of 2014 -
2020 under GM (1, 1) and NGBM (1.1) used to compare, evaluate forecasts and propose for
following years.
2
1.2 Research purposes
1.2.1 General Purpose
Food commodities in general and rice in particular have special significance for human
life. Other hand, rice production is related to agriculture, rural,farmers, a sensitive area and
plays a very important role for the economy of many countries around the world. Moreover,
rice is one of the important comparative advantages of Vietnam. In the condition trade
liberalization, boosting rice production and exports will contribute to exploit comparative
advantages for economic development, political stability – social.
In Vietnam, over the years, rice production and export has achieved many important
accomplishments. Rice exports have become one of the major export items of Vietnam.
Contribute to the overall achievement including the production and export of rice in the
Mekong River Delta provinces, which has IMEXCUULONG. It is a major supplier of rice for
export markets of Vinh Long. Beside, it not only improve product quality but also meet the
needs of customers domestic and international
1.2.2 Specific Purposes
- Situation analysis of rice exporters of Vietnam in 2008 – 2013
- Situation analysis of the rice export activities of the IMEXCUULONGin 2008 – 2013
- Analyze the competitiveness of rice export activities of the company
- Application of Grey theory and Nonlinear Grey Bernoulli model for forecasting rice
production for export period 2014 - 2020 and give some solutions to improve operational
efficiency for its rice exports in the near future.
1.3 Research significance
At present, Vietnam's rice exports tend to increase in volume, but the export of rice
IMEXCUULONG to other countries still face many challenges. For research, we build GM
(1,1) and NBGM (1.1) and analysis Error analysis is based on the data being processed.
Therefore the subject is meant to help businesses may see again all the aspects related to rice
export volume of the company, so that might make a better strategy for the future about this
staples, it not only for the purpose of bringing revenue and prestige for the company but also
contributes to enhance brand reputation Vietnam Rice, contributing to the enrichment of the
country of Vietnam
3
1.4 Scope of research
- Situation Analys is of the rice export company in 2008 – 2013 and give somesolutions
to improve the yield and quality of rice exports.
- Forecast strategic business rice exports in IMEXCUULONG period 2014 - 2020.
1.5 Research flow chart
Firstly, we will research, identify the topic, update data from rice export markets of
Vietnam in countries around the world and collect data to report export outputs of the
company over time from 2008 to 2013. Then, we use GM (1,1) andNGBM (1.1); results will
compare their performance in forecasting the outputs of demand on rice exports in the period
of 2013 - 2018. Finally, we will decide which forecast has better precision.
Figure 1.1 Research Flow Chart
Literature Review
Research Topic
Data collecting
Suggestion to the company
Screen the Collected Data and
Choose the Appropriate Datafor Forecasting
Build GM(1,1) and NGBM( 1,1 )
Forecasting Model
Analyze the Forecasting resultsandExplain
Their Meaning inManagement
4
Chapter 2 LITERATURE REVIEWS AND RESEARCH
MODEL OF RICE EXPORT
2.1 Characteristics of Vinh Long
Vinh Long is a province located in Mekong Delta, 135 km distant from Ho Chi Minh
City and 33km distan tfrom Can Tho city to the South along
1A Highway. It has a natural area of 1,479 km2, 01 city
named Vinh Long, 07 districts (Binh Minh Town, Long Ho
District, Mang Thit District, Tra On District, Tam Binh
District, Vung Liem District and Binh Tan District) with
107 communes, wards and townships and townships and 846
clusters and hamlets). It is adjacent to Tien Giang province to
the North, Eastern adjacent to Ben Tre, bordering Tra Vinh
Province to the South, adjacent to Can Tho city to the west, adjacent to Dong Thap Province
to the Northwest, adjacent to Hau Giang and Soc Trang provinces to the Southwest.
Vinh Long has no mountains, basin topography in the center and higher toward the
North, Northeast and Southeast. Vinh Long is located between Tien and Hau rivers flowing
into the East Sea with the system of crisscrossed rivers and canals convenient for water
transport. It has mild climate, fertile land and located in tropical climates, there are two
distinct seasons: rainy and dry seasons. Its average annual of rain is 1400-1450 mm,
extending from April to November, the temperature is relatively high and stable, the average
temperature is 270C and the average moisture is 79.8% that are favorable for rice agricultural
development in the direction of multi and intensive cultivations. (Source: vinhlong.gov.vn)
2.2 The situation of rice exports in Vietnam in the period of2008-2013
2.2.1 The global rice market
In terms of consumption, rice is the staple food of about 55 % of the world's population
widely distributing from Asia to Africa and South America. In addition, although countries in
Europe and North America only uses rice as food additives, the consumed volume is also up
to millions of tons per year. Regarding the production, Asia accounts for over 90 % of the
world's rice outputs. According to calculations and forecasts of FAPRI (Food and Agricultural
Policy Research Institute) , the global outputs of rice production and consumption in the crop
MY THUAN Bridge
5
year of 2009-2010 would be approximately 436 million tons and increase to around 477
million tons in the crop year of 2019-2020. Besides, the issue of food security has bound
nations for regular rice reserves in large amount (ranging from 90-96 million tons). On that
basis, the volume of two -way trade of rice on the world market often accounts for 7 - 8.5 %
Compared to the yearly outputs of rice production and consumption (over 31 million
tons in 2010 and forecasted to increase by more than 41 million tons in 2020). Joining the
global rice market has 3 groups of countries as follows:
Group 1 isin excess and regularly export, including Thailand, Vietnam, Myanmar,
Cambodia, Pakistan and the United States …
Group2 islack of rice and regularly import, including Indoniesia, Philippines,
Malaysia, Iran, Iraq, Saudi Arabia, Nigeria and other African countries, some EU countries
InGroup 3, India and China are in particular, with the dominant level about 50% of
the world's rice production, consumption and reserves. Basically, two countries with the
largest population of the world can afford for food self-sufficiency and are regular net
exporters of rice; however, they also have strong ability to disrupt the world rice market due
to sudden increase in export outputs (when reversing the stockpile of food security &
insurance) or sudden increase in import outputs (when having bad harvest, it must buy to
supplement for the stockpile of food security & insurance).
According to the data of 10 countries leading in rice export & import in the world
(Table 1), regardless of sharply disturbed periods of the world rice market beacause of
Chinese and Indian sudden increase in the volume of export or import as mentioned above,
we can see the distribution of rice import markets is not too concentrated (10 largest
importing countries account for less than 50%). On the other hand, the supply of rice exports
is very concentrated (10 largest exporting countries account for more than 97%, particularly, 3
leading rice exporters, including Thailand, Vietnam and India account for a high proportion).
Table 2.1 Ten leading rice exporters - importers in the world in 2011
Exporters Million tons Importers Million tons
1. Thailand 10,64 1. Indonesia 3,09
2. Vietnam 7,00 2. Nigeria 2,55
3. India 4,63 3. Iran 1,87
4. Pakistan 3,41 4. Bangladesh 1,48
6
(Source:http://vinanet.vn/ )
Besides, demand on rice import of Latin American countries, namely Brazil,
Colombia, Peru Cuban, Caribbean and EU region is also forecasted to increase in 6%, by 3.7
million tons and 10.5 million tons in Africa in 2012. In Europe, the rice import of 27 EU
countries is forecasted to be about 1.3 million tons, increasing by 8% over 2011. According to
FAO, rice business in 2011 reached about 34.3 million tons (more 1 million tons than the
previous forecast), increased by 9% compared to 2010. This increase is the result following
the strong import demand, which is mainly in Asia (Bangladesh, China, Indonesia and Iran)
and Africa (Nigeria, Ivory Coast and so on)
However, 10 leading rice exporters in the world such as Thailand, Vietnam and India
usually vary by year as in Table 2, in 2012, India replaced Thailand to be the 1st rice exporter
Table 2.2 Ten leading rice exporters in the world
Unit: Million tons
No. Countries Export in
2012 No. Countries
Export in
2012
1 India 8,0 6 Uruguay 0,85
2 Vietnam 7,72 7 Cambodia 0,8
3 Thailand 7,5 8 Argentina 0,65
4 Pakistan 3,75 9 Myanmar 0,6
5 Brazil 0,9 10 China 0,48
(Source: http://www.ngheandost.gov.vn/journalDetail/)
2.2.2 The situation of rice exports in Vietnam in 2008-2013
* In 2008: 2008 is considered as the year most successful in rice exports of Vietnam
in this period. If in 2007, Vietnamese rice was exported to more than 70 countries and
territories, in 2008, this figure increased by 128 countries and territories. In 2008, the export
5. Brazil 1,29 5. EU-27 1,47
6. Cambodia 0,86 6. Philippines 1,20
7. Uruguay 0,84 7. Malaysia 1,07
8. Myanmar 0,77 8. Saudi Arabia 1,05
9. Argentina 0,73 9. Iraq 1,03
10. China 0,48 10. Ivory Coast 0,93
7
totaled 4,424 thousand tons in quantity and 2,758 million USD in value. In the top of 10
markets with largest export turnover in 2008 (accounting for 71.4 % of total export turnover
of rice) of Vietnam: Philippines (reaching 1,086 million USD and 1,475 thousand tons,
accounting for 39.4 % in value and 33.3 % in quantity) ; Cuba (reaching 410.6 million USD
and 489 thousand tons, making up 15 % in value and 11.1 % in quantity) ; Malaysia (reaching
263 million USD and 460 thousand tons, accounting for 9.6 % in value and 10.4 % in
quantity) ; Angola (reaching 119.3 million USD and 205 thousand tons, making up 4.3 % in
value and 4.6 % in quantity); Senegal (reaching 90.5 million USD and 204 thousand tons,
accounting for 3.3 % in quantity and 4.6 % in value).
Figure 2.1 Top 10 largest rice import markets from Vietnam in 2008
(Source: http://www.isgmard.org.vn/ )
* In 2009: Thanks to proactive in domestic supply and favorable opportunities from
the world market, Vietnam's rice exports in 2009 gained remarkable achievements that
Vietnam was the second largest rice exporter after Thailand on the table of overall ranking
rice exporters in the world. According to the Vietnam Food Import and Export Association
(VFA), the rice exports in 2009 reached 5,859 million tons, a record ever. Compared to 2008,
the rice exports increased by 26.23% in quantity, equal to 1.23 million tons.
8
Figure 2.2 Top 10 largest rice import markets from Vietnam in 2009
( Source: http://www.vinanet.com.vn )
* In 2010:The rice exports reached 6.88 million tons in quantity and 3.23 billion USD
in value; generally, Vietnam's rice export market in 2010 did not change much compared to
2009, but there is a change in positions among markets. Philippines was still the largest
market for rice exports of our country with 1.475 thousand tons in quantity, worth nearly 947
million USD, reducing 13.59% in quantity and increasing by 3.29% in turnover compared to
the same period last year. The following was Singapore with 539,298 tons in quantity,
turnover reached nearly 227 million USD; Taiwan was with 353,143 tons in quantity and
reached the turnover of over 142 million USD.
9
Figure 2.3 Top 10 largest rice import markets from Vietnam in 2010
( Source: http://www.vinanet.com.vn/)
* In 2011:The rice exports reached 7.2 million tons in quantity and 3.7 billion USD in
value. Compared to 2010, the rice exports increased by 4.4% in quantity and 14% in value. In
2011, Vietnam was ranked the second after Thailand and beyond the 3rd country, India.
Reasons were: firstly, the Thai government increase domestic purchase price of rice that led
the country's rice export prices to be pushed, so Vietnam's rice exports benefited; secondly,
the flood situation in the last five months in Southeast Asian countries led to short-term
supply to also have a little shortage and thirdly, prices of other cereals (corn, wheat) also
increased.
The rice export market also changed, overcoming the Philippines, Indonesia to
become the leading rice consumption market (accounting for 26.8% of share of the rice export
value and 4 times as much in quantity and in value as 2010), Senegal and China were also two
markets having tremendous growth over the same period last year, approximately 3 times as
much as.
10
Figure 2.4 Top 10 largest rice import markets from Vietnam in 2011
( Source: http://vinanet.vn/)
* In 2012:Vietnam's rice exports reached 8.016 million ton, earning 3.67 million USD
(increasing 12.71% in quantity and slightly increasing 0.45% in turnover compared to 2011).
China is the largest consumption market of Vietnamese rice with 2.09 million tons, equivalent
to 898.43 million USD, accounting for 24.46% of total turnover, sharply increasing 574.97%
in quantity and 459.11 % in turnover compared to the previous year. The 2nd largest market is
the Philippines reached 1.11 million tons, worthing 475.26 million USD, accounting for
12.94% of total turnover, increasing 14% in quantity but decreasing 0.22% in turnover;
following, Indonesia reached 929, 905 tons, worthing 458.39 million USD, accounting for
12.48% of total turnover, decreasing 50.62% in volume and 55% in turnover; exported to
Malaysia with 764, 692 tons worthing 403.16 million USD, accounting for 10.98%,
decreasing 44.16% in quantity and increasing 38.02% in turnover.
In 2012, Vietnam was ranked the second after India (even there was a point of time
Vietnam was ranked the 1st). So, from a major food importer, Vietnam has become one of the
world's leading rice exporters.
11
Figure 2.5 Top 10 largest rice import markets from Vietnam in 2012
( Source: http://www.vinanet.com.vn/)
*In 2013:Vietnam exported nearly 6.6 million tons of rice, decreasing by up to 1.4
million tons of rice (i.e. decreasing by 17.76%) compared to 2012, the turnover reached
nearly 2.93 billion USD, decreasing by 20.36%, this is the lowest export level in the last 3
years. With this result, Vietnam was ranked the third after Thailand and India on the table of
the world's rice exporters; Vietnam's decrease in rice exports was due to high competition
pressure and decrease in demand of traditional markets such as Malaysia, the Ivory Coast, the
Philippines and Indonesia.
12
Figure 2.6 Top 10 largest rice import markets from Vietnam in 2013
( Source: http://www.tintucnongnghiep.com/)
The above data on tables show that the rice exports have increased both in quantity
and value, particularly in 2009, despite the increase in
quantity, it decreased in value (3.2%) compared with 2008.
This suggests that Vietnam's outputs and rice export markets
are relatively stable.
In 2013, the rice exports fell in quantity (17.7%) and
decreased in value (20.2%) compared with 2012 because
major rice exporters such as India had a bumper harvest and
increase in exporting, Thailand solved the large inventory (13 million tons of rice). On the
other hand, Vietnam's rice has not had focused contracts to keep price, so we are squeezed by
foreign traders. Furthermore, the familiar markets of Vietnam such as Indonesia, Malaysia
decreased in importing. Vietnam's rice was subjected to fierce competition with Thai rice in
export items such as fragrant rice, white rice. The average price of rice also fell more than
13USD/ton.
Overall, regarding the rice consumption on the world market, Vietnam holds the 2nd
and 3rd positions after Thailand and India. Besides, it also suggests that the executive of
business and rice exports should be more flexible to have solutions to suit the actual
conditions, when is necessary to promote the export, when is necessary to restrict to ensure
the domestic food security.
13
In terms of outputs, turnover and prices
- In terms of export turnover and outputs:
Table 2.3 Quantity and turnover of Vietnam’s rice exports (2008 – 2013 )
Years
2008 2009 2010 2011 2012 2013
Quantity
(thousand tons) 4,424 5,859 5,878 7,187 8,016 6,681
Turnover
(million USD ) 2,758 2,664 3,229 3,703 3,673 2,930
(Source: data gathered from VINANET)
- In terms of rice exports:
Table 2.4 Prices of Vietnam’s rice exports in the period of 2008 - 2013
Unit: USD/ ton
Targets
2008 2009 2010 2011 2012 2013
Rice with 5% broken 450 460 470 500 428 410
Rice with 10% broken 440 450 - 495 - -
Rice with 15% broken 410 430 460 485 410 383
Rice with 25% broken 390 400 450 470 380 375
Total average 422,5 435 460 487.5 406 389,2
(Source: data gathered from the Vietnam Food Association)
- The structure of Vietnam's rice exports in 2013is expressed as follows:
+ Types of exported rice:High-grade rice(Rice with 5-10% broken) was 2.293
million tons, accounting for 34.32%. Middle-grade rice (Rice with 15-25% broken) was 1.357
million tons, accounting for 20.31%. Lower-grade rice (Rice with 25-50% broken) was
1.151% million tons, accounting for 17.23%. Types of fragrant rice were 990 thousand tons,
accounting for 14.82%. Sticky rice was 434 thousand tons, accounting for 6.50%. Broken rice
was 305 thousand tons, accounting for 4.57%. Parboiling rice was 108 thousand tons,
accounting for 1.62% and other types of rice accounted for 0.64%.
14
Figure 2.7 Types of exported rice in 2013
(Source: Final Report of rice exports in 2013 and export orientation in 2014 of the
Vietnam Food Association dated Jan 09, 2014)
+ Markets of rice exports:he export focused on areas such as Asia with 4.019 million
tons, accounting for 60.15%, Africa with 1.872 million tons, accounting for 28.02%, America
with 458 thousand tons, accounting for 6.85%, Europe with 217 thousand tons, accounting for
3.25%, Mideast 65 with thousand tons, accounting for 0.98% and Australia with 50 thousand
tons, accounting for 0.75% of the total export volume.
Main markets included China, Africa, the Philippines, Malaysia, Indonesia, Singapore,
Hong Kong, and Cuba.
Figure 2.8 Markets of rice exports in 2013
(Source: Final Report of rice exports in 2013 and export orientation in 2014 of the
Vietnam Food Association dated Jan 09, 2014)
15
The two tables above show that Vietnam mainly export lower-grade rice, its major
markets are Asia and Africa, markets in Europe and the U.S. are still limited, i.e. rice with 15
-25% broken is mainly. In terms of high-grade rice and markets in America and Europe, high-
grade rice is still limited, in particular, this type of rice is mainly consumed in developed
countries, the added value is brought sharply and Vietnam's rice has not confirmed its place
yet.
Currently, Vietnam has 145 traders issued Certificate of eligible to export rice by the
Ministry of Industry and Trade (up to December 20, 2011). This means they can be involved
in directly exporting rice to foreign countries, including Vinh Long Export-Import Joint Stock
Company. In particular, making up the highest share of rice exports are Northern Food
Corporation and Southern Food Corporation (61%). (Source: Vietnam Food Association)
2.3 Analysis of the competitiveness of Vietnam's rice exports
Thailand, Vietnam, India and Pakistan are usually ranked at the top positions in the
world's important rice exporters. However, in terms of exporting value, up to now, Vietnam
has been nearly ranked the last in this group. For example, according to FAO's data, in 2009,
in terms of the quantity of exported rice, Vietnam was ranked after Thailand, following by
Pakistan and India. However, regarding value, Vietnam was ranked the last when compared
under 1 ton of rice in 2009 as follows: India with 1,083 USD, followed by Pakistan with 704
USD, the third, Thailand with 626 USD and the last, Vietnam with 475 USD for 1 ton of
exported rice. Obviously, value is coupled with the quality, so Vietnam's quality of exported
rice was also the worst among 4 countries. According to some other recent data, the prices of
rice in 2012, according to USDA (U.S. Department of Agriculture), excluding prices of
fragrant rice and types of rice, only white rice with different rates of broken rice, the main
exported product of Vietnam, has prices as follows:
Table 2.5 Price comparison of rice exports among countries
Types of rice Export Price ( USD/ton)
Thailand Vietnam India
Rice with 5% broken 555 428 445
Rice with 10% broken (Thailand)
Rice with 15% broken (Vietnam) 555 410
Rice with 20-25% broken 555 380 385
( Source:http://sokhcn.soctrang.gov.vn )
16
According to the quote above, long, white qualified types of rice of Vietnam are only
sold at the lowest prices compared to the same types of Thailand and India.
In 2013, Vietnam's rice exports were ranked the third after India and Thailand.
Regarding prices, Vietnam’s rice was located in market segment of low-grade rice; thus,
prices are always lower than prices of Thai rice. Regarding export market, Vietnam is under
new competitive pressure from emerging countries Asia and Africa remain two market's
major rice exporters of Viet Nam. Thailand is the country's leading rice exporter in the world
- especially in the segment of premium rice. In fact, many rice exporters in Vietnam are
focused on investment in exporting parboiled rice and fragrant rice. China, HongKong,
Taiwan and Singapore are main customers of these types of rice. In this segment, Vietnam
faces strong competitor, Thailand. Thailand owns strengths of high-grade types of rice and
countries can hardly compete with its fragrant rice. In average, the world's consumption of
fragrant rice is about 2-3 million tons per year, in which, Thailand has exported
approximately 1.5-1.8 million tons. So, Vietnam's enterprises are difficult to squeeze into this
narrow door. Regarding low- grade rice, Vietnam is dominant and the greatest rice exporter in
the world.
However, currently, VN is subject to intense competition in this market segment due
to the strong rising from India, Myanmar, and even Cambodia. If selling with high prices, we
cannot compete with Thailand; on the other hand, if competing with low prices, we face India;
Vietnam's rice is really struggling before the participation of India, this country's rice quality
is not really good but it has price advantage. Regarding prices, India will prevail over
Vietnam.
In recent years, Vietnam's rice exports have gained some notable achievements such
as: continuously increasing volume and export turnover ( in 2012, volume reached 7.72
million tons and turnover reached 3.5 billion USD), continuing to hold the second position in
the world in rice exports, after India. The main export markets of Vietnam in the crop year of
2011/2012 were Asian countries, accounting for 77.7 % of total rice export volume of the
country (equivalent to 6 million tons). Indonesia, Philippines and Malaysia are still the three
traditional import markets. Potential of rice consumption of these markets is still quite large;
however, according to the USDA, in the next few years, rice export volume from Vietnam to
these markets will be narrowed down. Forecast of Vietnam's rice exports to these markets will
continue to grow in the crop year of 2012/13. On the other hand, Vietnam will face the fierce
competition from Thailand, India, Pakistan and Myanmar when exporting rice to China.
17
2003 reached nearly 6.6 million tons, turnover reached nearly 2.93 billion USD,
decreasing by 20.36%, this is the lowest level of exports in the last 3 years. With this result,
Vietnam was ranked the third after India and Thailand on the table of the total rice exporters;
Vietnam's rice exports decreased due to high competitive pressure and decrease in demands of
traditional markets such as Malaysia, Philippines and Indonesia. Poor rice quality and low
export value led the export turnover to be low and certainly, incomes of participants were also
low, especially, farmers producing rice for export. Reasons leading the quality and value of
Vietnam's rice to be low are as follows:
Firstly, Vietnam still has not exported varieties of qualified, delicious, fragrant and
famous like Dao Market's Fragrant Rice, Fragrant Nhen, Tai Nguyen, Red Dust, and Dragon
Blood and so on. In addition, there are also varieties of fragrant / scented rice selected by
scientists to create but have not been exploited for export, for example, OM 3536, OM 4900,
OM 7347, OM 6162, ST 3, ST 5 and MTL 495. Most of our exported fragrant rice is derived
from foreign countries, for examples: Jasmine 85, Khaodak Mali, DS 10 and DS 20, so if
branding, we also face many problems;
Secondly, we have not built brands for white rice and fragrant rice like Thailand,
India, and Pakistan yet. We only have general brand of white, long rice with percentages of
broken rice for both fragrant rice and white rice. So, rice has the poor quality due to mixing
various varieties, including varieties of low quality. Through research, we learned one of the
main reasons for varieties with low quality such as IR 50404 to be still grown with the high
percentage is because traders or plants purchase, mix and mill with varieties of long, white
rice with certain degrees to become rice with 5, 10 ... 25 % broken ( because IR 50404 is
shorter, which is regarded as broken rice). We have not had brand name for each variety like
Thailand, Pakistan and India. Most brand names of rice of these countries are names of
varieties creating special quality for varieties and prices are also decided by the quality of
individual variety;
Thirdly, we have not diversified rice for export, most of which is just middle-grade
white rice, less fragrant rice and little parboiled rice or sticky rice. Meanwhile, Thailand is
diversified in exporting rice with particular brands.
In our opinion, issues are not only to compete to gain the export position, to increase
the value by improving quality and developing export markets for each type of rice with its
own brand of Vietnam is the most important issue to increase the export turnover for our
country, participating businesses and especially to improve farmers' lives, to significantly
18
contribute for our country to overcome the difficult time, to create economic, political and
social stability and to set the premise for the following developments.
2.4 Introduction about Vinh Long Import– Export Joint Stock Company
Full name: VINHLONG IMPORT - EXPORT JOINT STOCK COMPANY
Commercial name: IMEXCUULONG
2.4.1 The development process
The company was formerly known as Mekong Foreign Trade Company established
under Decision No. 439/UBT dated Nov 10, 1976 by the President of People's Committee of
Mekong Province, as the synthetic export & import unit of rice, agricultural products,
handicraft goods, frozen seafood and garments, materials, equipments and machinery and
essential consumables.
Mekong Foreign Trade Company was registered to be re-founded and renamed to
Vinh Long Import and Export Company under Decision No. 540/QD-UBT dated Nov 20,
1992 of the People's Committee of Vinh Long Province.
In 2006, in order to adhere the decision No. 96/2005/QĐ-TTg dated May 06, 2005 by
the Prime Minister on monitoring plans to arrange and reform state-owned companies
belonging to the Vinh Long People’s Committee, Vinh Long Import – Export Company
carried out equitization and was transformed into a joint stock company under the decision
No. 2608/QĐ-UBND dated December 29, 2006 by the Chairman of the Vinh Long People’s
Committee.
On December 01, 2007, Vinh Long Import – Export Joint Stock Company was
officially put into operation under the Certificate of Business Registration No. 1500171478
issued by Business Registration Office – Vinh Long Department of Planning & Investment
2.4.2 Lines of business
-Buying and selling: food, agricultural raw materials,by-products (broken rice,
bran..),replacement parts, and other products, fertilizers, fuel.
-Milling and polishing rice
-As agent, exporting and entrusting for other companies in need
19
2.4.3 Charter capital and shareholder structure in 2013
Objects Number of
shareholders
In amount
(VND)
Number of
shares
Rate
(%)
The State 01 52,816,780,000 5,281,678 53.46
The staff of the Company 33 6,435,080,000 643,508 6.51
External investors 143 39,543,200,000 3,954,320 40.03
Total 177 98,795,060,000 9,879,506 100.00
( Source: Department Finance - Accounting )
2.4.4 Organizational Structure
The company has 124 personnels, including 01 head office, 01 representative office, 05
units of production and processing of all kinds of exported rice.
MEETING OF SHAREHOLDERS
BOARD OF DIRECTORS BOARD OF SUPERVISORS
GENERAL MANAGER
Staff manager
production manager
sales manager
Cai Cam Food
Factory
Tan Quy Tay Food
Factory
Co ChienFood
Factory
Department of
Administration -
Organization
Department of
Planning and
Investment
Department of
Accounting and Finance
HCMC Represen
tative Office
Lap Vo Food
Processing One
Member Co., Ltd
Vinh Trach Food
ProcessingOne
Member Co., Ltd
Direct operation
Inspection and supervision
20
Head office:
- Address: No. 3 – 5, 30/4 Street, Ward 1, Vinh Long City, Vinh Long Province, Vietnam
- Tel: 84.70 3823.618 - Fax: 84.70 3823.822
- Email: [email protected], Website : www.imexcuulong.vn
2.4.5 Company image
Company's logo Company's head office
Slogan: “The trust of customers is the driving force of development for our Company”.
Subordinates:
1. Representative Office
Address: No. 206, Vo Thi Sau, Ward 7, District 3, Ho Chi Minh City
2. Cai Cam Food Factory
Address: No. 171/18A, 1A Highway, Tan Quoi Hung Hamlet, Truong An Commune,
Vinh Long City, Vĩnh Long Province.
3.Co Chien Food Factory
Address: No. 209, September 14th Street, Ward 5, Vinh Long City, Vinh Long
Province, Vietnam
4. Tan Quy TayFood Factory
Address: Tan Lap Hamlet, Tan Quy Tay Commune, Sa Dec Town, Dong
ThapProvince,Vietnam
5. Lap Vo Food Processing One Member Co., Ltd
Address: Binh Hiep B Hamlet, Binh Thanh Trung Commune, Lap Vo District, Dong
Thap Province, Vietnam
6. Vinh Trach Food Processing One Member Co., Ltd
21
Address: Tay Binh Hamlet,Vinh Trach Commune, Thoai Son District, An
GiangProvince, Vietnam
Facilities and operations of the Company
* Warehouses:
- Total storage capacity: 37,500 tons
- Total area of warehouses: 27,270 m2
* Machinery and equipments:
- 08 lines of rice miller and polisher
- The average production capacity: 40.000 – 50.000 tons/year
* Products supplied to market:
- Types of white rice with 5% broken ; 10% broken ; 5% broken ; 25% broken and
100% broken
2.4.6 Achievements
-In 2008:Exported 125,740 tons of types of rice,gained revenues of 1,600 billion
VND, granted by the provincial People's Committee with:
+ Emulation Flag of the People's Committee of Vinh Long Province asthe Provincial
Excellent Emulation Unit in 2008
+ Merit of the People's Committee of Vinh Long Province for building the enterprise
in the typical right and sustainable direction of development in the emulation movement in
highly efficient business and production in 2008
- In 2009:Exported159,330 tons of types of rice, gained revenues of 3,095 billion
VND, ranked the 6th in Top 10 Vietnam’s largest export enterprises by the Vietnam Food
Association and chosen to be ranked the 44th in 500 Vietnam's fastest growing enterprises by
Vietnamnet.
- In 2010:Exported198,150tons of types of rice,gained revenues of 3,042 billion
VND, ranked the 3rd in Top 10 Vietnam’s largest export enterprises by the Vietnam Food
Associationand chosen to be ranked the 2nd in 500 Vietnam's fastest growing enterprises by
Vietnamnet.
22
+ The company has been SGS United Kingdom Ltd UK UKAS assessment and
certification according to ISO 9001:2008 formanufacturing operations
and trading of rice.
Through its operation process, the Company was recognized as
a large, prestige rice exporter and supplier in the Mekong Delta region and enrolled in to the
Gold List of Vietnam's Leading Reputable Exporters; awarded the Third-Class Labor Medal
by the State President.
- In 2011:Exported253,900tons of types of rice, gained revenues of 5,102 billion
VND, awarded the Merit for Typical Enterprise in the Mekong Delta region by the Vietnam
Chamber of Commerce and Industryand ranked the 141st in 500 Vietnam's largest enterprises
in 2012 by Vietnamnet (VNR 500).
- In 2012:Exported 340,645tons of types of rice, gained revenues of 3,620 billion
VND, awarded the Merit for Typical Enterprise in the Mekong Delta region by the Vietnam
Chamber of Commerce and ranked the 141st in 500 Vietnam's largest enterprises in 2012
(VNR 500) by Vietnam Assessment & Report Joint Stock Company and Vietnamnet.
On June 26, 2012, the Minister of Industry and Trade signed the
Decision No. 3588/QĐ-BCT to recognizeIMEX CUULONGwas one of 44
reputable rice exporting enterprises in 2011.
Beside, it was one of 3 food commodities trading and exporting
enterprises of Vinh Long Province achieving this title.
- In 2013: Exported 451,845tons of types of rice, gained revenues of 3,353 billion
VND, chosen to achieve the title “Reputable exporting enterprise” in 2013 by the Ministry of
Industry and Trade
(Source: Final Reports in 2009, 2010, 2011, 2012 and 2013 )
2.5 Analysis of strategies of rice business and exports of Imexcuulong
(2008 - 2013)
2.5.1 Exported rice is mainly
Before increasing demands of rice consumers in the world, in addition to reasonable
prices, rice exporters are trying to improve their quality of products in order to turn it into a
23
powerful competitive advantage. Particularly, in Vietnam, the government has promulgated
TCVN 5644 -1999 standards applied for the export of long, white rice.
For IMEX CUULONG, in addition to sticky rice, fragrant rice, medium rice, long,
white rice is one of exported commodities gaining the most revenues. Of which, there are rice
with 5% broken, rice with 15% broken, rice with 25% broken and rice with 100% broken.
Standards applied to rice adopted by the Company, in accordance with the standards of
Vietnam's rice exports are as follows.
Table 2.6 Standards for Vietnam's exported rice
Targets (max) Rice with
5% broken
Rice with 15%
broken
Rice with 25%
broken
Rice with 100%
broken
Broken rice 5% 15% 25% 100%
Impurities 0.1% 0.2% 0.5% 0.5 %
Pollen grains 5% 7% 8% -
Red & Red Stripe 0.5% 3% 5% -
Golden grains 0.5% 1% 1.5% -
Damaged grains 0.5% 1% 2% -
Immature grains 0.1% 0.2% 0.5% -
Paddy (grains /kg) 15 25 30 -
Moisture 14% 14% 14% 14%
(Source: Vietnam Ministry of Agriculture and Rural Development)
In addition to basic standards prescribed by the Vietnam State, depending on tastes
and habits of each market, there will have seperate regulations on product quality specified in
export contracts signed between two Parties. These conditions and criteria will be assessed by
the independent inspection agency ( the 3rd Party) specified by the Buyer.
2.5.2 Prices of exported rice from 2008 to 2013
Prices of exported rice depend on the outputs of rice exports of the Vietnam Food
Association (VIETFOOD), Northern Food Corporation (Vinafood 1) and Southern Food
Corporation (Vinafood 2), which are 03 Vietnam's representatives for participation in rice
tender in foreign markets and when winning bid, they will redistribute to members of the
Association.
24
Besides, the Company is also allowed to participate in direct rice exports to overseas
customers, but rates are announced by Vietfood at floor price from time to time, exporting
businesses will be based on that basis to count prices of exported rice which are not allowed
to be lower than the floor price to ensure benefits for farmers with interests of 30% or more.
Table 2.7 Prices of exported rice of the Company in the period of 2008- 2013
Unit: USD/ tons
Targets 2008 2009 2010 2011 2012 2013
Rice with 5% broken
425- 450 410-415 416-430 440-450 425-550 388 - 445
Rice with 15% broken
403-425 360-370 395-415 380-385 390-402 367-394
Rice with 25% broken
410 - 420 350-355 392-405 365-380 382-390 353 - 370
Rice with 100% broken
350- 380 290 - 295 339-345 330-350 335-345 340 - 348
(Source: Department of Planning and Investment)
Through Table 2.7, we can find prices of rice from 2008 to 2013 tended to gradually
increase, caused by the world's growing demand for rice entailing inflation, affecting most
economies, making many items simultaneously increase their prices, pushing prices of
exported rice of the Company in particular and of Vietnam in general to increase.
In early 2013, prices of rice fell by 30-50 USD /ton in average (rice with 5 % broken).
This fact made the export turnover insecured because the rice markets are making important
changes in recent years, many countries producing and exporting rice have significant
changes in policy for rice items. Some countries have used a huge budget to buy rice at high
prices from producers such as Thailand, India and China; some countries have taken
advantage of natural conditions, soil, climate, farming conditions and quality of rice, so their
rice has trademarks or taken advantage of the geography to be located near then consumer
markets, low freight to gain competitive advantages in the marketplace. Specifically, India,
the 2nd largest rice producers has turned back the export market meanwhile countries such as
Myanmar, Cambodia and Pakistan are striving to increase the outputs for rice exports. On the
other hand, the importing countries adjust the import policy in the direction to increase food
self-sufficiency, to diversify the supply sources, to sufficiently import, not to increase in
inventory and to observe the markets to seek opportunities for import with the most beneficial
prices.
25
The situation above has increased the global rice supply, inventories in the exporting
countries and changed the relationship of supply - demand in the direction that markets are
belonged to buyers. World's rice prices tend to decrease sharply since late 2012, particularly,
in quarter III/2013 and Vietnam's rice exports is slowing down due to being affected by this
situation, affecting prices of rice exports of the Company. On the other hand, the Company
has to compete with the rice exporting enterprises inside and outside the province, which
made pricesof rice exports in 2013 decrease compared with 2012.
2.5.3 Main rice export markets ofImexcuulong
The Company exports rice to most regions such as Asia, Europe, Africa, America and
Middle East; Asia is considered the traditional market of the Company (accounting for 30-
40%), including Indonesia, Philippines and Malaysia. However, this is a focused market dealt
and negotiated by the Vietnam Food Association, so the Company mainly exports to this
market according to contracts signed between the Governments. Markets in Europe are export
destinations of high-grade rice products. Several new markets are also paid attention to
promote by the Company such as markets in Australia and Middle East. In addition, the
African market is also a potential commercial market that the Company is paying attention to
develop.
Export markets of the Company during the period of 2008 - 2013 have many
fluctuations in quantity of export items in the continents:
Table 2.8 The fluctuation of rice outputs for export to the Company's main markets in the period of 2008 - 2013
* Main rice export markets of the Company in the period of 2008- 2010
Markets 2008 2009 2010
Comparison
2009/2008 2010/2009
Absolute-ness
(tons)
Relative- ness (%)
Absolute-ness
(tons)
Relativen -ess (%)
Asia 57,114 86,080 103,510 28,966 150.72 17,430 120.25
Europe 18,375 24,250 38,220 5,875 131.97 13,970 157.61
Africa 28,291 37,000 39,820 8,709 130.78 2,820 107.62
America 21,790 12,000 16,600 -9,790 55.07 4,600 138.33
Total 125,570 159,330 198,150 33,760 126.89 38,820 124.36
26
* Main rice export markets of the Company in the period of 2011-2013
Markets 2011 2012 2013
Comparison
2012/2011 2013/2012
Absolute-ness (tons)
Relative-ness (%)
Absolute-ness (tons)
Relative-ness (%)
Asia 142,100 184,272 257,578 42,172 129.68 73,306 139.78
Europe 34,400 58,239 85,728 23,839 169.30 27,489 147.20
Africa 64,900 73,070 78,850 8,170 112.59 5,780 107.91
America 12,500 25,064 29,689 12,564 200.51 4,625 118.45
Total 253,900 340,645 451,845 86,745 134.17 111,200 132.64
(Source: Department of Planning and Investment - Yearly export report)
Overall, we find that rice with 5% broken still remains its main role in the structure of
types, this is an item with high quality and high economic efficiency. Types of rice with 15%
broken and 25% broken also fairly account for high proportion in the structure of types, these
are two low-grade products; thus, to increase the scale of outputs of high-grade rice, it
requires the Company to innovate technology, machinery and equipments, to improve skills
of workers. Normally, high-grade types of rice are exported to demanding markets such as
Japan, USA and Europe. Diversification in types of exported rice is a strength helping the
Company meet demands of each market and have competitive strength with domestic and
foreign rivals.
2.5.4 Forms of export of Imexcuulong
Export activity of the Company is implemented through two forms: direct export and
entrusted export
For direct export: customers are foreign traders opening representative offices in
Vietnam or overseas customers through commercial contracts for direct transactions and
purchases from the Company to export to other countries or markets
For entrusted export: are focused contracts signed by the Government with foreign
countries, representative for the Fovernment is the Southern Food Corporation entrusting the
Company to implement or enterprises signing contracts to export or to entrust to export with
large quantities that their current capacities do not ensure to implement enough the number of
contracts.
27
Table 2.9 Outputs of exported rice under forms of export of the Company in the period of 2008 – 2013
* Forms of export of the Company in the period of 2008- 2010
Markets 2008 2009 2010
Differences 2009/2008 2010/2009
Absolute -ness (tons)
Relative-ness (%)
Absolute-ness (tons)
Relative-ness (%)
Direct export 70,040 105,330 141,730 35,290 150.39 36,400 134.56
Entrusted export 55,700 54,000 56,420 -1,700 96,95 2,420 104.48
Total 125,740 159,330 198,150 33,590 126,71 38,820 124.36
* Forms of export of the Company in the period of 2011-2013
Markets 2011 2012 2013
Differences 2012/2011 2013/2012
Absoluteness (tons)
Relative -ness (%)
Absolute-ness (tons)
Relative-ness (%)
Direct export 186,500 262,500 293,000 76,000 140.75 30,500 111.62 Entrusted export
67,400 78,145 158,845 10,745 115.94 80,700 203.27
Total
253,900 340,645 451,845 86,745 134.17 111.200 132.64
(Source: Department of Planning and Investment)
2.5.5 Business situation of the Company in the period of 2008- 2013
Table 2.10 Business results of the Company in the period of 2008- 2010
Targets
2008 2009 2010
Outputs (tons)
Value (1000USD)
Propor
-tion
(%)
Outputs (tons)
Value (1000USD)
Propor
-tion (%)
Outputs (tons)
Value (1000USD)
Rice with 5% broken
77,374 34,413 63.95 82,280 34,146 56.65 97,605 41,482
Rice with 15% broken
15,550 6,531 12.14 22,000 8,140 13.50 25,925 10,629
Rice with 25% broken
21,117 8,657 16.09 33,800 11,830 19.63 45,920 17,908
Rice with 100% broken
11,699 4,211 7.83 21,250 6,162 10.22 28,700 9,901
Total 125,740 53,812 100 159,330 60,278 100 198,150 79,920
(Source:Department of Accounting and Finance)
28
Table 2.11 Product structure and value of exported rice from 2011 to 2013
Targets
2011 2012 2013
Outputs
(tons)
Value
(1000USD)
Propor
-tion
(%)
Outputs
(tons)
Value
(1000USD)
Propor
-tion
(%)
Outputs
(tons)
Value
(1000USD)
Rice with
5% broken
116,890 52,600 51.16 182,561 100.408 62.42 268,794 119,613
Rice with
15% broken
38,160 14,691 14.29 49,725 19.989 16.65 68,925 26,880
Rice with
25% broken
63,700 23,569 22.92 68,659 26.777 8.51 66,045 24,436
Rice with
100%
broken
35,150 11,951 11.62 39,700 13.696 8.51 48,081 16,732
Total 253,900 102,811 100 340,645 160.870 96.09 451,845 187,661
(Source:Department of Accounting and Finance)
Rice with 5% brokenis an export product with the highest proportion in year. This is
the type of rice having the highest quality, exported to demanding consumer markets such as
the Middle East, South Africa, Russia and Malaysia.
Rice with 15% brokenis the middle-grade rice, often exported to Cuba, Indonesia,
Bangladesh...Rice outputs of this product are in the middle, particularly, in 2010, it suddenly
increased, becoming the most exported product of the Company.
Rice with 25% brokenand 100% broken are low-grade types of rice, exported to
populous countries with low per capita income (Philippines, Africa ...)
2.6 Analysis of competitiveness in rice export activities at Imexcuulong
2.6.1 Current status of rice exports in Vinh Long Province
In VinhLongProvince, there are 04 units having export license as follows:
- Vinh Long Import & Export Joint Stock Company (ImexcuuLong)
- Vinh Long Food Company(VinhLongfood)
- Cuu Long Food Company (CuuLongfood)
29
- Hong Trang Trading Joint Stock Company
Figure 2.9 Market share of rice exports in Vinh Long province as of September 2013
( Source: Internal Report as of October 2013)
In which, Vinh Long Import & Export Joint Stock Company makes up the market
share of rice exports 45 % as much as other units (Vinh Long Food Company was newly
established in 2011). In the past October 2013, the Company was ranked the 3rd all over the
country for export outputs, after sau Southern Food Corporation and Northern Food
Corporation by the Vietnam Food Association.
Some high-grade rice products of Imexcuulong
2.6.2 Competitiveness Analysis of Telecommunication companies
Competitors
Competitors are suppliers of similar or alternative goods of businesses to markets.
Jasmine milky fragrant rice Taiwan fragrant rice Jasmine fragrant rice
30
This is the biggest obstacle for businesses to overcome because when the larger market share
of competitor is, the more narrow the business's market share is.
Understanding competitors has significant meaning for businesses. In the field of rice
exports, Vinh Long Import & Export JSC faces domestic and foreign competitors. First of all,
we will learn about a few typical domestic competitors.
Domestic competitors: In the country, there are many businesses engaged in rice
exports. Due to so many businesses, I chose businesses in the same area and having the same
export markets with the Company to analyze.
Vinh Long Food Joint Stock Company
Like IMEXCUULONG, rice products of VINHLONGFOOD
also do not have their own brands. However, VINHLONGFOOD
trademarked for Jasmine Rice, Huong Lai Rice and Tam Thom Rice.
Some rice products of VinhLongFood
In order to enhance the competitiveness in foreign markets, company has applied the
quality management system according to ISO 9001: 2008 in manufacturing and business,
which certified by the UKAS Organization, United Kingdom in 2001.
With a synchronous system of 40 polishing lines with capacity of 100 tons / hour,
color sorter with new generation of South Korea along with standard dryer system and auto
conveyor system, yearly, the Company has the capacity to produce, supply domestic and
exported rice from 400,000-500,000 tons with high quality to meet all requirements of
customers.
Jasmine rice Huong Lai rice Tam Thom rice
31
The color of rice is pure white, without discoloration, damage and insects. Natural
flavor of rice is light, without strange flavor(s), consistent with consumption.
Hong Trang Trading Joint Stock Company: a new company participated in the
export market from 2010 and is branding for rice exports.
Tien Giang Food Company
One of the leading food exporters of Tien Giang province, a
member of the Southern Food Corporation, has actively expanded
relationships, actively promoted trade and created stable sources of
goods for supply-demand under customers' requirements with
reputation, good quality. Currently, the company's rice products
with trademarks such as 9 Golden Dragons, Vietnamese Flavor and
Gao Market’s Jasmine Rice…are very popular in the markets in Asia, Europe, Africa, the
Middle East and America.
Some rice products of Tien Giang Food Company
\
Tra Vinh Food Company ( IMEXTRAVINH )
The company specializes in processing and exporting types
of rice, exporting to major markets such as Asia, Europe and
Africa... However, IMEXTRAVINH is still not branding for
exported rice. Policy of quality of IMEXTRAVINH is as follows:
“Safety - Hygiene - Quality
Satisfied customers- Successful business”
32
General comments:By learning about domestic competitors, in general, the majority
of their rice products still do not have brands, but they have registered trademark for their
products. Thus, domestic competitors do not put pressure on brand. However, regarding
quality, the basis for brand development of rice, they have equivalent or better quality to
exported rice of the Company. In addition, these Companies have reputation in the
marketplace, they can attract more customers and sign more export contracts, i.e. the
Company's market share will drop down. Simultaneously, with the increase in contracting,
these competitors will actively buy more rice, which affects the inputs of the Company.
Therefore, Vinh Long Import & Export Joint Stock Company must constantly
maintain and improve the quality of rice as well as the Company's reputation in order to
enhance the competitiveness.
2.6.3 Foreign competitors
The following are some of the leading rice exporters and regarded as the main
competitors of Vietnam as well as of the Vinh Long Export-Import Joint Stock Company.
Thailand:
Thailand is the country paying much attention to the cultivations of wet and dry rice
with long-term agricultural development policy and efficient support of its farmers. These
conditions have ensured for Thai rice exports to keep the top position since 1967. During 12
years from 1988 to 2000, Thai rice exports ranged from 4-6 million tons / year. Thailand has
traditional, stable and expanding trading partner systems.
Thai export prices are taken as the price of international standards, according to FOB
Bangkok.
Thai rice brands
Thailand built rice brands before us a long time, Thai has good strategy for its Jasmine
Rice on the world market, when it comes to Thailand, customers will think of Jasmine Rice,
Jasmine Rice has a variety of types, but they are not necessarily to be good; on the other hand,
they promote very animatedly, and this is the dominant view of Thai rice over Vietnam's rice.
Prices
Thai rice prices are always higher than Vietnam's because Thailand understands
attitudes, tastes of consumers; the majority of Thai rice have their own brands and have
helped Thai rice enhance the value on the world market.
33
Quality: From a long time, Thailand considered carefully about the quality, they
choose quality first and then production, they care from seeds, most of Thai farmers use
certified rice seeds because good seed will give good grain. Besides, every 5 years, Thailand
opens a strategy with the goal of raising the proportion of high-quality rice up 90% to achieve
the goal under the spirit mentioned above.
+ Synchronization from production - harvesting - processing - preservation.
+ Distribution System: There is synchronous coordination between stages
+ Rice reserves are bought at high prices but cannot be sold out
+ Wrong rice mortgage policy (must buy all rice from farmers to ensure farmers to
have interests) has spent a lot of money; this policy pushes up prices unreasonably high. 80%
of Thai farmers desire to sell rice to the Government because of higher price than the market
price, this has caused a serious shortage of rice on the free markets, the exporters cannot buy
rice to execute contracts with international buyers and cannot offer new contracts; in addition,
theGovernment's intervention program has partly pushed prices to be higher than prices of
competitors on the world markets.
+ Disordered politics affecting the enhancement of farmers' productivity.
+ Thai competitiveness gradually reduced on the markets of white rice.
+ Thai labor cost higher than Vietnam's.
The United States:
After Thailand and Vietnam, the U.S. is also the country having the leading rice
exports, rice export markets of the United States include Asia, Africa and Europe.
Brand: The U.S. has Jazzmen brand, which is also a rice brand famous for
deliciousness nearly equal to Thai Jasmine rice and Latin American rice brands.
Characteristics of rice are without chemicals in the manufacturing process, and rice is a
natural, soft, and odorless.
Quality: American rice quality is graded A due to being ranked the 1st of the world
in science and technology for processing in accordance with the uniform packaging, labelling
and preservation.
34
Prices: American rice prices are high, partly due to high production costs, the rest is
due to strong brands, and American farmers are supported by the Government with 100 USD /
ton.
India:This is the 4th rice producing country in the world
Brand:
Like Thailand, India has branded for a long time, Indian rice brands have been known
by many countries around the world such as Basmati; thanks to strong brands, Indian rice is
exported to 40 countries around the world in Europe and Latin America. Thanks to marketing
and advertising along with mass cultivation of Indian farmers, the grain meets high quality,
low impurities.
Prices:India mainly exports Basmati rice with high quality, so its prices fluctuate
from 1000-1400 USD / ton, much higher than prices of Vietnam's rice, the prices of Vietnam's
exported rice are hovered at about 300-500 USD / ton.
2.6.4 Analysis of strengths and weaknesses of Imexcuulong
2.6.4.1 Major strengths - weaknesses
Major strengths
1 Human resources (qualification, training and development policy)
2 Management capability
3 Reputation of company's brand
4 Applying the quality management system under ISO 9001: 2008
standards
5 Competitive prices
6 Distribution network
7 Diversification policy for export products
Major weaknesses
1 Financial capability
2 Production and processing capabilities (the level of technology,
processing capacity)
3 Rice storage capacity
4 Grain materials purchasing network
35
5 Promotional activities
6 Market research for expansion
7 Weak market information forecast and analysis
8 Own brand of rice
2.6.4.2 Major opportunities - threats
Major opportunities
1 Remanding high demand for rice in the world
2 Vietnam as members of Commercial Organizations
3 Thai rice mortgage policy
4 Paid attention to by the Government
5 Favorable location (located in the Mekong Delta, the rice granary
of the country)
Major threats
1 Policy for restrictive import of food self-sufficiency in some
countries
2 Policy to discharge a large amount of inventories to the markets
(Thailand, India…)
3 Influenced by climate change
4 Fierce competition on price and quality in the world
5 Non-modern rice processing technology in Vietnam
6 Unbranded Vietnam's rice
7 High interest rates
2.7 Forecasting method
2.7.1 The concept
Forecasting is a science and an art of predicting things which will happen in the future,
based on scientific analysis of the data collected.
When forecasting, it should be based on the collection and processing of data in the
past and present to determine the movement trend of phenomenon in the future thanks to a
36
number of mathematical models (Quantification). However, forecasting can also be a
subjective prediction or an intuition about the future (Qualitative) and for the qualitative
forecasting to be more accurate, people try to eliminate the subjectivity of forecastors.
Although definitions differ somewhat, basically, they all agree on forecasting about
the future, talking about the future. First of all, forecasting is an indispensable attribute of
human thinking, people always think of the future, towards the future. In the era of
information technology and globalization, forecasting plays a more important role as higher
demands for market information, development situation at any point of time in the future.
Forecasting is used in many different areas; each area has a particular requirement for
forecasting, so forecasting methods are used differently.
2.7.2 Characteristics of forecasting
- There is no way to certainly determine what the future is (inaccuracy of forecasting).
Whatever the method we use, there always exists uncertain factor until the reality takes place.
- There is always a blind spot in forecasting. We cannot forecast exactly what will
absolutely happen in the future. In other words, not everything can be forecasted if we are
lack of knowledge about the issue needing forecasting.
-Forecasting provide input results for policy planners in proposals for economic and
social development policies. The new policy will affect the future; thus, it will also affect the
accuracy of forecasting.
2.7.3 Forecasting methods
Computational forecasting methods are to forecast macroeconomic and microeconomic
indicators. However,to apply these methods, we need to understand clearly theoretical
principles of each method to apply appropriately for each specific case and to be able to
improve the forecasting results to facilitate more during the decision-making of policy
makers.
Forecasting methods, including:
2.7.3.1 Qualitative forecasting method
From a long time, quantitative models are often successful in short-term forecasts,
limited forecasting ranges. Qualitative forecast can be regarded as being affected by
professionals; they depend on market specialists or markets in general to give a grounded
37
consensus. The qualitative models can be useful when forecasting short-term success of
companies, products and services, but they are is restricted due to depending on the evaluation
of the measured data. The qualitative models, including:
a) Gathering comments from the Board Executive
This method had widely used in businesses. While conducting forecasting, they will
get opinions of senior executives, the people in charge ofthe work,the important parts of the
businessand use statistical data for general indicator such as turnover, costs and profits... In
addition, it is necessary to get more opinions of experts in marketing, finance, production and
engineering.
The advantage of this method is gathering many experiences from many different
professionals.
The biggest disadvantage of this method is the subjective opinions of members and the
common opinion of most people with high position dominant opinions of others
b) Consulting sellers.
The advantage of this method is that sellers who have frequent contact with clients, so
they understand demand tastes of consumers. They can forecast the amount of consumed
products in theirin-charge areas.
By gathering opinions of sellers in many different areas, we have a synthesized
forecasting amount of demands for the product under consideration.
c) Delphi method
This method collects opinions of experts inside or outside enterprises according to
available forms of questions and implemented as follows:
- Each expert is given a written request to answer some questions serving the
forecasting.
- The forecasting staff gathers answered questions, sorts, select and summarize
opinions of experts.
- Based on this summary, the forecasting staff continues to raise other questions for
experts to answer.
- Gathering new opinions of experts. If unsatisfied, continue the above process until
reaching forecasting requirements.
38
The advantage of this method are avoiding personal contacts, without collision
between experts and they are not affected by comments of someone having advantage in the
number of people consulted,
According to Green, Armstrong and Graefe (2007), Delphi methodattracts managers
because of the ease to understand and forecasting support of experts. Green et al (2007) gave
eight advantages of Delphi method in market forecasting: (1) Wider applying, (2) Easy to
understand, (3) Possible to answer complex questions, (4) Ability to maintain confidentiality,
(5) Avoiding multiple tasks, and (6) Detection of new knowledge, and (7) Few participants.
d)Method of surveying consumers
This method collects information from consumers on current and future demands. The
demand survey is carried out by salesmen or market research staff. They collect customers'
opinions through questionnaires, direct interviews or phones ... This approach helps
businesses not only forecast demands but also improve product designs. This method
takelonger, thepreparation is complex, difficult and expensive and it cannot inexact in
questions answered of consumers.
Advantages: The best way to calculate demand forecast, their preferences through
their purchases; able to survey customers' tastes for product improvement.
Disadvantages: Suitable for industrial products, the accuracy of data.
2.7.3.2 Quantitative forecasting method
The quantitative forecasting model is based on data in the past, these data are assumed
to be related to the future and can be found. All forecasting models by quantification can be
used through the time series and this value is observed, measured over periods under each
series.
Advantages:
- Absolutely objective forecasting results
- Method of accuracy forecasting
- Consuming little time to find out the forecasting results
Disadvantages:
- Only forecasting well in short and medium terms
39
- No method can offer complete external factors affecting outcomes of the forecasting
model.
a) Short-term forecasting:
Short-term forecasting estimates the future in the short term, supplies information for
operational managers to make decisions on issues such as
- How much should be reserved for a particular product next month.
- How to schedule for the production for each product next month?
- How much the number of materials to be ordered to receive next week is?
b) Long-term forecasting
Long- term forecasting is estimating the future for a long time, often more than a year.
Long-term forecasting is essential in production management to support strategic decisions on
product planning, technological process and production methods. For example:
- Designing new products
-Determining how much the necessary production capacity is? Where to place
machinery, equipments needing to be used?
- Scheduling for suppliers under supply contracts to provide long-term materials.
In short
Over the past half century, there have been many methods applied to forecast
macroeconomic and microeconomic indicators, behaviors of small and medium enterprises.
However, each method is applied differently in each specific situation to achieve the best
forecasting results.
2.8 Grey theory
2.8.1 History of Greytheory
Grey theory was first proposed by Deng in 1982 (a famous Chinese mathematician)
and has over 20 years of history. This theory does not rely on statistical methods to deal with
grey quantity, but deals indirectly with original data, and tries to identify its intrinsic
regularity. Accumulated generating operation (AGO) is the main idea of grey theory,
originates from cumulative distribution or ogive in the elementary statistics. AGO aims to
reduce the randomness of raw data to a monotonic increasing series. Grey theory has been
40
widely and successfully applied in various fields, such as prediction electronics industry
production value, traffic, marketing, seismology, agriculture, engineering, tourism and so on.
Mathematically, the conventional grey forecasting model is based on knowledge of the
least square method and the first order linear ordinary differential equation. Notably, the
model obtains satisfactory forecasting results. To improve forecasting precision, some
researchers studied the grey model itself by modifying the background value Z(k) in the
model. Meanwhile, other researchers turned their attention to constructing the hybrid grey
models, for example the grey-Fuzzy, grey-Taguchi, grey-Markov, grey-Fourier, grey-
Deseasonalized Data, and other models. These hybrid models involves increasing complex
mathematics that is difficult to easily understand and apply. This investigation examines the
improved grey model as well as the knowledge of the elementary ordinary nonlinear
differential equation, otherwise known as the nonlinear grey Bernoulli model (NGBM). This
model was preliminarily demonstrated to be effective and efficient compared to the
conventional grey model. ( Source: Chen CI. (2008). Application of the novel nonlinear grey
Bernoulli model for forecasting unemployment rate.Chaos, Solitons & Fractals, 37, 278-287.)
The results could provide the investors as a reference for future investing plan and the
proposed methodology could be also easily used by the investors or researchers to forecast the
future changing trend of the market's rice export not only in company but also in Vietnam
2.8.2 Recent progress of Grey System Theory.
In scientific development history, simplicity, practicality, and efficiency (producing
effects immediately), have been nearly believed by all the scientists. Back in the sixth century
BC, natural philosophers understood the material world in a common desire: reducing the
material world to some simple common elements for purposes of research. Ancient Greek
mathematician and philosopher Pythagoras (Pythagoras) brought forward four elements (soil,
water, fire, gas) theory that the material is constituted by the four elements in about 500 BC.
There are also five elements theory in ancient China that the basic of everything is allied to
five things, namely, metal, wood, water, fire and soil.
Newton’s law of mechanics unified macroeconomic phenomena as a simple form. In
“Natural Philosophies Principle of Mathematics”, Newton said: “The nature don’t do
useless thing, just doing a little is all right, instead doing more is useless; as nature likes
simplification, but doesn’t love boasting itself with other extra reasons.” In the era of
relativity, Einstein proposed two standards of the test theory: “certified external” and “internal
41
completeness” that is “logical simplicity.” He said that, from the view that scientific theories
reflect the harmony and order of the nature, real scientific theory would be simple, practical,
effective.
During the systems research, because of the disturbance from not only inside but olso
outsideand the limitation of cognitive level, the information people get is always uncertain.
With the development of science and technology and the progress of social society, people’s
understanding about the uncertainties of various systems is much more profound than ever
before, and the studying on it is also more in-depth. During the later half of 20th century, in
the field of Systems Science and Engineering, a variety of systems theory and methodology
on uncertainty had been emerging constantly. For instance, Prof. L.A. Zaden had established
fuzzy mathematics in the 1960s, Professor Deng Julong had pioneered a difficult and fruitful
research on grey system theory, Professor Z. Pawlark had initiated Rough Set Theory in the
1980s and Professor Wang Guang-yuan had contributed a great deal in unascertained
mathematics. All those above are significant achievements in researches on unascertained
systems, and they also expound the theories and methodologies on describing and dealing
with numerous unascertained information from different aspects.
More than 100 academic works of grey system have been published by some domestic
and foreign publishing organizations like Science Press, Defense Industry Press, Press of
Huazhong University of Science and Technology, Science and Technology Press of Jangsu,
People’s Press of Shangdong, eferences of Science Technology Press, Quanhua Science and
Technology Books Press of Taiwan, Gaoli Books Limited Company of Taiwan, Technology
Press of Japan, American IIGSS Academic Press, German Springer-Verlag Publish Company,
and son on. A group of boundary subjects have been emerging, such as grey hydrology, grey
geology, grey plant thremmatology, grey regional economy system analysis, grey philosophy.
National, provincial and municipally science foundation sponsor grey system research
positively in china, many research projects about grey system theory and application obtain
kinds of subsidization. Statistics have indicated that there are more than 20 research findings
of grey system obtaining reward from national or provincial authorities. In 2002, a grey
system scholar from China won prize of World Organization on Systems and Cybernetics.
More than twenty years have passed since grey system theory was pioneered by Prof.
Deng Julong in 1982. The young people who join in theoretical research of grey system in the
1980’s have been graying at two temples now. In the long history of scientific development,
the 20 years pass in a flash. Many scientific theories require the unremitting efforts of several
42
generations of people and have gone through hundreds of years before reaching maturity and
perfect. Grey system theory is over 20 years old, it is still in the growth period, and it is
unavoidable that there exist immature and imperfect parts in grey system theory. People
engaged in grey system theoretical research should welcome and take serious in all criticisms.
And then problems and the flaws can be overcame unceasingly, the new growing point be
excavated unceasingly, exploring unceasingly, innovating unceasingly, thus making the grey
system theory, originated by Chinese scholars, go forward unceasingly. ( Source: Liu S.,
(2007). The Current Developing Status on Grey System Theory. The Journal of Grey System
2, 111-123 )
Today Grey system theory is constantly evolving consistent with the trend of systems
science and systems theory uncertainty, are widely used in the world, applied research in
many areas of life, economic, social, security and defense, etc…
2.9 Current research in forecasting of rice exports
In Vietnam, the forecasting of the rice export industry is based on the method of
econometric analysis to forecast the amount of outputs, prices as well as export turnover of
Vietnam's rice in the coming years. Econometric analysis is implemented according to the
following steps (the Chart).
Chart: Method of econometric analysis
Step 1: Give out the theories or hypothesis the relationship between economic
variables. For example, prices will depend on the productivity of rice variable.
Mentioned assumptions
Forecast
Decision-making
Setting up the model
Estimating the parameters
Analysis of results
43
Step 2: Setting the model toán education for the description moi quan between the
system variables this window,
Y= 1 + 2X + U
There in : Y: value of rice exports
X: the output of rice production
β1: block coefficient
β2: the slope
U: random element
The existence of random elements derived from the relationship between economic
variables are generally not accurate.
Step 3: Estimating the model parameters in order to get a measure of the impact of the
changes to the existing data. These estimates are the empirical testing of economic theory.
Step 4: Analysis of Results: Based on the results received, consideration is consistent
with economic theory or not, testing statistical hypotheses about getting in estimating model.
Y= 1 + 2X + U
if β2 is positive and less than 1 is economically logical if not, they must find a proper
model.
Step 5: Forecast: If a suitable model for the economy, the model can be used to predict
the value to find.
In addition, I also use trend extrapolation methods, which means the study of the
history of moving objects and the prediction rule found in the past, present to future
relationship based on inheritance relationship. Three elements past, present and future
transition and continuity for each form rule development, therefore, to discover the law of
development should be analyzed both qualitatively and quantitatively. Qualitative analysis is
based on the concepts, categories and laws of economics through scientific abstraction to
clarify the nature of the subject economic forecasts categories and quantitative analysis is
apply statistical methods and probability to describe the form of the mathematical model.
44
Chapter 3 RESEARCH METHODOLOGY
3.1 Grey Forecasting Model
The grey model GM (1, 1) is a time series model. The original observation data vary
with time, as do the randomness characteristics. Such a grey system is modeled by adopting a
simulated exponential function, which is also the nature of the general solution of a first order
ordinary differential equation. The method used to produce such an exponential like function
from raw data are termed accumulated generating operation (AGO) in grey system theory.
Grey modeling is constructed based on these processed data. The forecasted value is then
derived from inverse accumulate generated operation (IAGO). The mathematical expression
for general form of grey dynamic model of ( β, λ), abbreviated to GM (β, λ) model, can be
expressed as
,......dd )()(
33)(
221)(
111
)(1
1
1
)(1
XbXbXbbXadt
Xa
dt
X
(
3.1)
where ξ is the number of the AGO transformation, β is the order of the differential
equation, and λ is the number of types of the observation data. The parameters of the GM (β,
λ) model are determined using the least-square method based on the discrete form of equation.
(1). The GM (1,1) and GM(1, λ ) models are widely applied to numerous research fields. In
this research, we use grey forecasting model as research tool to predicting rice export market
in Vietnam. The following calculation procedures are for the traditional grey model GM (1, 1)
and the novel nonlinear grey Bernoulli equation NGBM (1, 1).
3.1.1 Traditional grey model GM (1,1)
This section reviews the operation of traditional grey forecasting in detail.
Step 1: Assume that the original series of data with m entries is:
,)(),...,(),...,2(),1( )0()0()0()0()0( mxkxxxX (3.2)
where raw matrix X(0) stands for the non-negative original historical time series
data.
Step 2: Construct )1(X by one time accumulated generating operation (1-AGO),
which is
45
,)(),...,(),...,2(),1( )1()1()1()1()1( mxkxxxX (3.3)
Where
mkixkxk
i
...2,1),()(1
)0()1(
(3.4 )
Step 3: The result of 1-AGO is monotonic increase sequence which is similar to the
solution curve of first order linear ordinary differential equation (by setting b = 1,k =1).
Therefore, the solution curve of following differential equation represents the approximation
of 1-AGO data.
bXadt
Xd
)1(^
)1(^
(3.5 )
where ^ represents Grey forecast value. The a and b are model parameters. ^
x{1)(1) =
x{0)(1) is the corresponding initial condition.
Step 4: The model parameters a and b can be determined by discrete form of Eq.
(3.5)
t
tXttX
dt
Xdt
)()(lim
1^1^
0
1^
( 3.6 )
let 1 t , and the forecast value is approximated by 1-AGO,
then
,...3,2,1),1()()1(xX
011
1^
kkXkxkdt
d
( 3.7 )
and )()1(^
tX is defined as
,...3,2,1),1()1()1()()( )1()1()1()1(^
kkzkxPkPxtX (3.8)
where z(1) is termed background value, P is in the range of 0-1, which traditionally
equals to 0.5. The source model then can be obtained as
bkazkx )()( )1()0( ,...4,2,1k (3.9)
From Eq. (3.9), by least square method, the model parameters a and b are
46
,
1
NTT YBBB
b
a
( 3.10 )
Where B and NY are defined as follows
,
)(
)2(
)2(
,
1)(
1)3(
1)2(
)0(
)0(
)0(
)1(
)1(
)1(
mx
x
x
Y
mz
z
z
B N ( 3.11 )
or, a and b can be expressed in the following form
m
k
m
k
m
k
m
k
m
k
kzkzm
kzkxmkxkza
2
2
2
)1(2)1(
2 2
)1()0()0(
2
)1(
)()()1(
)()()1()()( (3.12)
2
2
)1(
2
)2()1(
2 2 2
)1()1()0(
2
2)1()0(
)()()1(
)()()()()(
m
k
m
k
m
k
m
k
m
k
m
k
kzkzm
kzkzkxkzkxb
(3.13)
Step 5: Solve Eq. (3.5) together with initial condition, and the particular solution is
a
be
a
bXkX ak ))1(()1(ˆ )0()1(
,......,3,2,1k (3.14)
Hence, the desired forecasting output at k step can be estimated by inverse
accumulated generating operation (IAGO) which is defined as
,...3,2,1),()1()1(^)1(^)0(^
kkxkxkx (3.15)
,...3,2,1,))1()(1()1(, )0()0(^
kea
bxekxor aka (3.16)
Based on the above description, the grey predictor composed of AGO, IAGO, and
GM(1,1) can be constructed by
(0)^
)0( X.AGO(1,1).GM.IAGOX ( 3.17 )
47
3.1.2 Novel nonlinear grey Bernoulli model NGBM (1,1)
The procedures for deducing NGBM (1,1) are as follow. The step 1 and 2 are as
same as traditional grey model. Step 3: Eq. (3.5) is a linear differential equation and the
only adjustable variable is P. Based on the elementary course in elementary differential
equation, Bernoulli equationis introduced to replace the traditional grey differential
equation. The Bernoulli equation has the following form
,X1^)1(^
)1(^ n
bXadt
Xd
(3.18)
where n belongs to real number. In this research, this novel grey differential
equation is named as nonlinear grey Bernoulli equation (NGBM). Observing the above
equation, when n = 0, the solution reduces to Eq. (3.14), when n = 2, the solution reduces
to grey-Verhulst equation.
Step 4: discrete form of Eq. (3.18)
,...4,3,2)]([)()( )1()1()0( kkzbkazkx n (3.19)
where NGBM parameters a and b are calculated by the following matrix
manipulation,
,1)( N
TT YBBBb
a
(3.20)
,
)(
)2(
)2(
,
)()(
)3()3(
)2()2(
)0(
)0(
)0(
)1()1(
)1()1(
)1()1(
mx
x
x
Y
mzmz
zz
zz
B N
n
n
n
(3.21)
alternative form of parameters a and b are shown below
m
k
m
k
m
k
nn
m
k
m
k
m
k
nnm
k
n
kzkzkz
kzkxkzkzkxkza
2 2 2
21)1(2)1(2)1(
2 2 2
)1()0(2)1()1()0(
2
1)1(
))]([()]([)]([
)()([)]([})]()[({)]([(3.22)
m
k
m
k
m
k
nn
m
k
m
k
m
k
nm
k
n
kzkzkz
kzkzkxkzkzkxb
2 2
2
2
1)1(2)1(2)1(
2 2 2
)1()1()1()0(2)1(
2
)1()0(
)]([)]([)]([
)]([)}()({)]([})()({ (3.23)
48
Step 5: The corresponding particular solution of Eq. (18) together with initial
condition
isxx )1()1(ˆ )0()1(
,....3,2,1,1,)1()1()1/(1
)1()1()0(^
)1(
kn
b
ae
b
axkX
n
knan
(3.24)
The solution curve of traditional GM, Eq. (3.14), is dominated by the parameters a and
b which are related to the raw data sequence )},(),...,(),...,2(),1({ )0()0()0()0()0( mXkXXXX
and P value. X(0) is the result of observation data, so the only controllable parameter is P.
Chang et al. [4] demonstrated by choosing optimal P values can improve the model precision.
For NGBM, P is set to be 0.5 as traditional grey model; the power n serves as the adjustable
parameter. The numerical examples in this research will show it is efficient in improving the
model precision.
3.2 Error analysis
To examine the precision of the proposed model, further tests are required to
determine the error between the forecast value and actual value. This study adopts two error
analysis methods, relative percentage error (RPE) analysis and topological rolling error
analysis, to assess the model precision.
3.3 Relative percentage error analysis
Relative percentage error (RPE) compares the real and forecast values to evaluate the
precision at specific time k. RPE is defined as
%100)(
)(ˆ)()(
)0(
)0()0(
kx
kxkxkRPE , k=2,3,4,…,m (3.25)
where x(0)(k) is the actual value and x{0) (k) is the forecasted value by Eq. (24). The
total model precision can be defined by average relative percentage error (ARPE) as follows
,)(
1
1)(
2
m
k
km
avgARPE
k=2,3,4,…,m. (3.26)
49
3.4 Topological rolling error analysis
The meaning of the GM (1, 1) topological rolling model is firstly based on the first
four data, generally {x(0)(1),x(0)(2),x(0)(3),x(0)(4)}, to build the GM(1,1), and forecast the value
of the next point (x(0)(5)). The procedure is repeated once the result is obtained. The new
sequence {x(0)(1),x(0)(2),x(0)(3),x(0)(4),x(0)(5)} is then used to forecast the value of this next
point (x(0)(6)). This procedure is repeatedly until the end of the sequence. The analysis steps
are described as
Assume the original sequence is
X(0)={x{0) (1) , x{0) (2), … , x{0) (k), … , x{0) (m)}, m≥ 4. (3. 27)
take the partial of original sequence, which is called topological subsequence
X(0) (1; k) ={x{0) (1), x{0) (2), x{0) (3),… , x(0) (k)}, k ≥ 4.
if k = 4, X{0) (1; 4) = {x{0) (1), x{0) (2), x{0) (3 ), x{0) (4)}, ( 3.28 )
k = 5, X{0) (1; 5) = {x{0) (1), x{0) (2), x{0) (3 ), x{0) (4), x{0) (5)}
Eq (3.28)is employed to build the GM(1,1) model, and the forecast value )1()0(^
kx
is obtained. The modeling process can be summarized as
)(X.AGO).1,1(GMIAGO.)1( )0(^
)0( kkX (3.29)
The topological rolling error is defined as
%,100)1(
)1(ˆ)1()1,tp(
)0(
)0()0(
kx
kxkxk (3.30)
and average topological rolling error is
1
4
)1,(4
1),(
m
k
ktpm
avetp
(3.31 )
where tp represents topology.
3.5 Numerical Examples
A numbers of rice export from 2008 to 2013 are employed as original data, and we
use the GM(1,1) to forecast the numbers of rice export from 2014 to 2020.
50
Table 3.1 Rice exports from 2008 – 2013
(Source: Department of Accounting and Finance)
3.5.1 GM(1,1) with 4 data and 5 data
3.5.1.1 GM(1,1) with 4 data
(a) Take the data from year 2009 to 2012 as raw data and form an original sequence:
340,645253,900;198,150; 159,330;
)4(),3(),2(),1( )0()0()0()0()0(
xxxxX
(b) Use one time AGO to operate the original sequence to form the AGO sequence:
952025 611,380; 357,480; 159,330;
)4(),3(),2(),1( )1()1()1()1()1(
xxxxX
where .4,3,2,1),()(1
)0()1(
kixkxk
i
(c) Solve for (a) and (b) by least square method:
1)4()3(2
1
1)3()2(2
1
1)2()1(2
1
1)4(
1)3(
1)2(
)1()1(
)1()1(
)1()1(
)1(
)1(
)1(
xx
xx
xx
z
z
z
B
1781703
1484430
1258405
340645
253900
198150
)3(
)3(
)2(
)0(
)0(
)0(
x
x
x
YN
Year 2008 2009 2010 2011 2012 2013
Rice export 125,740 159,330 198,150 253,900 340,645 451,845
51
57.125345
273301.0;)( 1
NTT YBBB
b
a
(d) By using grey prediction equation (3.12) to find the predictor:
a
be
a
bxkX ak
)1()1( )0(
^)1(
)60.458635(60.617965
273301.0
57.125345
)273301.0(
57.345,125159,330
273301.0
)273301.0(
k
k
e
e
Where k=2,3,4.
(e) Calculate the inverse of above AGO predictor and the real predicted equation
would be as follow:
aka ea
bxe
kXkXkX
)1()1(
)()1()1(
)0(
^)1(
^)1(
^)0(
k
k
e
ee
273301.0
)273301.0()273301.0(
98.147777
))273301.0(
57.125345 159330()1(
where k=1,2,3,4.
(f) The forecasting result is shown in the table 3.2.
Table 3.2 Forecasting results and errors by using GM(1,1) with 4 data
Year 2009 2010 2011 2012 2013 2014 2015
Actual rice exports 159,330 198,150 253,900 340,645
Forecast value
by using GM(1,1)
159,330 194,224 255,268 335,498 440,944 579,531 761,675
Relative Percentage
Error(%)
0 1.98% -0.54% 1.51%
Average Relative
Percentage Error(%)
1.34%
52
3.5.1.2 GM(1,1) with 5 data
In this subsection the original data is the numbers of actual rice exports from 2009 to
2013. We use GM(1,1) with these five data in order to predict the numbers of rice exports
from 2014 to 2018. Model results and errors are shown in the following:
(a) Take the data from year 2009 to 2013 as raw data and form an original sequence:
451845 340645,253900, 198150, 159330,
)5(),...,4(),3(),2(),1( )0()0()0()0()0()0(
xxxxxX
(b) The rest steps are the same as 4 data GM(1,1) and the predictor could be solved as:
)(ˆ)1(ˆ)1(ˆ )1()1()0( kXkXkX
akea
bxe
)1()1( )0(
k
k
e
ee
2781368.0
)2781368.0()2781368.0(
408.146254
))2781368.0(
88.219,123330,159()1(
Where k=1,2,3,4,5.
(c)The forecasting result is shown in the table 3.3.
Table 3.3 Forecasting results and errors by using GM(1,1) with 5 data
Year 2009 2010 2011 2012 2013 2014 2015 2016
Actual rice exports
159,330 198,150 253,900 340,645 451,845
Forecast value by using GM(1,1)
159,330 193,153 255,091 336,891 444,920 587,591 776,012 1,024,854
Relative Percentage Error(%)
0 2.52% -0.47% 1.10% 1.53%
Average Relative Percentage Error(%)
1.41%
3.5.2 NGBM with 4 data
(a) Take the data from year 2009 to 2012 as raw data and form an original sequence:
340,645253,900; 198,150;159,330;
)4(),3(),2(),1( )0()0()0()0()0(
xxxxX
53
(b) Use one time AGO to operate the original sequence to form the AGO sequence:
952,025611,380;357,480;159,330;
)4(),3(),2(),1( )1()1()1()1()1(
xxxxX
where ,
k
i
ixkx1
)0()1( )()( k=1,2,3,4.
(c). Solve for (a) and (b) by least square method:
)]()1([2
1
)]4()3([2
1
)]()1([2
1
)]3()2([2
1
)]2()1([2
1)]2()1([
2
1
)1()1(
)1()1(
)1()1(
)1()1(
)1()1()1()1(
nXnX
XX
nXnX
XX
XXXX
B
=
781703781703
484430484430
258405258405
340645
253900
198150
)4(
)3(
)2(
)0(
)0(
)0(
x
x
x
YN
NTT YBBB
b
a 1)(
The parameters a and b could be solved only if optimun power indexγis determined
by MATLAB software.
(d) By using grey prediction equation (3.24) to find the NGBM predictor:
ykyay
a
be
a
bXkX
1
1
)1()1()0()1( )1()1(ˆ
)1
1(
)1()-(1 )a
b-159330(
a
be a
54
(e) The forecasting result is shown in the table 3.4, we use NGBM with optimal n =-
2.6 to forecast the numbers of rice exports from 2013 to 2015. Obtained results are as follows
Table 3.4 Error analysis of forecasting and rice exports from 2013 to 2016 by NGBM with 4 data (optimun n = -0.26)
Year 2009 2010 2011 2012 2013 2014 2015
Actual rice exports
159,330 198,150 253,900 340,645
Forecast value by using GM(1,1)
159,330 198,074 253,221 337,380 457,277 625,305 859,431
Relative Percentage Error(%)
0 0.04% 0.27% 0.96%
Average Relative Percentage Error(%)
0.42%
3.5.3 Rolling NGBM with 4 data
NGBM is suitable for nonlinear raw data. The nonlinear raw data means the change
between each number is magnificent or simply you could not use a linear equation to fit these
data well. In previous case, GM(1,1) and NGBM are used to fit the growth of rice
exportsfrom 2009 to 2012. As GM(1,1) is a linear model, its forecasting error is 1.34%.
NGBM is a nonlinear model of which forecasting error is 0.42%. This means the growth of
rice exportsis nonlinear.and we should use the GM (1,1) to forecast the growth in the export
of rice at IMEXCUULONG in the period 2009-2012.
55
Chapter 4 PRACTICAL CASE AND ANALYSIS
4.1 Data collecting
The data analyzed in this article were taken from data collected rice Vinh Long Import
- Export Joint Stock Company in 2008-2013 in the rice export market in the world. We use
model GM (1,1) to forecast rice export output from 2014 to 2020 and show it in following
tables:
Table 4.1 Forecasting demands for rice exports
Year Actual rice exports
( tons )
Growth speed
( % )
2009 159,330 26.71
2010 198,150 24.36
2011 253,900 28.14
2012 340,645 34.17
2013 451,845 32.64
We see that the export output of the company increases with the years. And the rate of
production of rice in the markets of Asia, Africa and America in 2009 - 2013 is very stable, in
the range of 24.36% - 34.17%.
4.2 Results of forecast and analysis
4.2.1 GM (1,1) with 5 data
We used data in 2008-2013 given in Table 4.1 and NGBM with n suitable for output
rice export forecast from 2014 to 2020, using GM (1,1) with 5 data n= 0. forecast results as
follows:
56
Table 4.2 Forecasting demands for rice exports and the average error in GM(1,1)
Year Actual rice exports
( tons )
Forecast value
by using GM(1,1) ( Tons )
Relative Percentage Error(%)
Average Relative
Percentage Error(%)
Growth speed ( % )
2009 159,330 159,330 0.00%
1.41%
26.71
2010 198,150 193,153 2.52% 21.23
2011 253,900 255,091 -0.47% 32.07
2012 340,645 336,891 1.10% 32.07
2013 451,845 444,920 1.53% 32.07
2014 587,591 32.07
2015 776,012 32.07
2016 1,024,854 32.07
2017 1,353,490 32.07
2018 1,787,510 32.07
2019 2,360,705 32.07
2020 3,117,704 32.07
According to results of forecasting, the total rice export volume in 2020 would be
3,117,704tons increasing by 1,856.76% over 2009. The growth rates from 2011 to 2020 are
the same and equal to 32.07%. This figure shows us that the rice export outputs in years
increase under linear. The average rate of errors of this forecast from 2009 to 2013 was
1.41%, relatively low. This finding demonstrates that the rice export power company was
developing and displayed through the following chart forecasts:
57
Figure 4.1 Forecasting demands for rice exports and the average error in GM(1,1)
4.2.2 NGBM with 5 data
Table 4.3 Forecasting demands for rice exports and the average error. Errors in NGBM (optimun n = -0,18)
Year Actual rice exports
( tons )
Forecast value
by using GM(1,1) ( Tons )
Relative Percentage Error(%)
Average Relative
Percentage Error(%)
Growth speed ( % )
2009 159,330 159,330 0.00%
0.64%
26.71
2010 198,150 198,110 0.02% 24.34
2011 253,.900 253,920 -0.01% 28.17
2012 340,645 335,065 1.64% 31.96
2013 451,845 447,718 0.91% 33.62
2014 602,264 34.52
2015 813,369 35.05
2016 1,101,197 35.39
58
2017 1,493,279 35.61
2018 2,027,124 35.75
2019 2,753,798 35.85
2020 3,742,798 35.91
According to results of forecasting, the total export volume in 2020 would be
3,742,798 tons, increasing 2,249.09% compared to 2009. The annual growth rates from 2014
to 2020 are relative, its errors are not major, reduction is gradually reducing, which proves the
world's rice consumption is relatively stable, food security is concerned about by countries.
Some countries most importing Vietnam's rice before as Philippine have also decreased in
importing Vietnam's rice recenty due to their stable and growing domestic rice production, or
previously, Indian was the rice importer, currently, it is the largest rice exporter in the world
(ranked in the top 3 largest rice exporters in the world, including Thailand, Vietnam and
India). We can see the highest growth in 2020 is 35.91 %. The growth rate decreases yearly.
The average error rate of this forecast in 2009-2013 compared to the actual is 0.64 %
relatively low.According to Error Analysis Modeling, Models with small values are
Considered as optimal candidate models. The results show that the average error remains of
GM(1,1) is under 10%. This model reveals a high degree of prediction validity, presenting a
clearly viable means of forecasting rice export for the years 2010-2012 were 1,401,378 tons;
1,741,391 tons and 2,158,408 tons. In order to meet demand, we need to have plans to
expand and build grain storage, upgrading equipment investment, new technologies have high
productivity in the future.
59
Figure 4.2 Forecasting demands for rice exports and the average error. Errors in NGBM
The result was found on GM (1,1) has the ability to effectively deal with incomplete
information and uncertainty when using only a few data points. According to the Error
Analysis Modeling, the Models with small ( )avg values are considered as optimal candidate
models. Results show that the average error remains of GM (1,1) is less than 10%. This model
shows a high degree of predictive value, this is a proven effective means of clear rice
production forecast for the year 2018-2020. In order to meet demand, we need to have plans
to expand and build grain storage, upgrading equipment investment, new technologies have
high productivity in the future.
60
Chapter 5 CONCLUSION AND RECOMMENDATIONS
5.1 Conclusions
The GM (1,1) model has the ability to effectively handle incomplete and uncertain
information when only using few data points. The results show the average error rate in GM
rice export forecasting is 1.41%, meanwhile this rate in NGBM is 2.63%. The average errors
of GM (1,1) is less than 10%. This model shows a high degree of predictive value, proves that
this is an effective clear mean for forecasting the rice export outputs of the Company
Based on results of forecasting, we can see the outputs of rice exports in 2020 is
2,158,408 tons, increasing 1,254.52% over 2009. Therefore, rice export potential in the future
is still great and growing. The chart shows the forecasting figures tend to upward and in the
future, it is increasing rapidly .
This thesis only uses 5 input data for forecasting. This model is extremely efficient for
cases lacking of input information to forecast, especially, for nonlinear input data.
Based on the analysis:
(1) GM (1,1) is used to forecast the development of the Company's rice export
industry in particular and of Vietnam in general.
(2) Relative error: The average value of exported rice outputs of models is 1.41% and
2.63%, showing that the forecasting models are reliable. For diversified process with good
uptrend, we have a relatively good accuracy with GM (1,1).
(3) GM (1,1) is implemented as an effective forecasting method, it has been widely
applied in all sectors, meanwhile, for a growth forecast for Vietnam's rice industry, by
introduction of GM (1, 1), the forecasting gives very good results
We used NGBM to forecast features affecting the growth of the rice export market in
Vietnam in 2014-2020 and received satisfactory results. We can see that in a short time and
with n adjustable parameters, obtained results are quite accurate.
5.2 Suggestions
Overall, Vinh Long Import Export Joint Stock Company, after the equitization, has
had very positive movements, partly because the Company is concerned about and directed by
the province, provincial People's Committee, partly because the Company has the staff which
61
is dynamic, close-knit, and determined to overcome difficulties and survive together to
improve manufacturing operations of the Company.
Mostly, rice export value of the following yeat is higher than the previous year.
Especially, rice is the main export commodity of the whole province, annually contributing
billions to the local budgets. The increased capital of the Company makes the financial ratio
of the company increasingly grow.
The Company has implemented well the expansion of its rice export markets, at the
time of establishment, the Company only exported rice to countries mainly in Asia with low
quantities. Up to now, the Company's products are present in many markets in Asia, Africa
and Europe with increasing quantities. Simultaneously, the Company has entered the
American market; this potential market facilitates to open a great opportunity for consumption
and improvement of dependence on a market.
Rice processing capacity of enterprises is increasingly improved, namely opening
warehouses, investment in rice polishing machine... The Company has exported more new
types of rice, rice supply to meet demands of export markets of the Company and the
Company owns more processing technologies.
However, the Company still has ineffective implementation aspects such as the
undiversified market structure, which is mainly with markets in Asia and Africa, so the
customers seeking still has many limitations. Actually, the Company is lack of officials
specialized in marketing management, so the Marketing work of the Company has just been
based on experiences, agility of the staff so far. Marketing activities of the Company are not
synchronized and spontaneous in nature because there is no formal marketing department,
meanwhile, in today's market mechanism, if businesses want to stand firmly, they must search
for markets, understand markets and expand markets. Rice export activities of the Company
have achieved relative results, but compared to its potential, the Company has not fully
exploited and achieved the maximum efficiency yet. The Company is capable of striving to
reach a higher level of rice exports if knowing to grasp and manipulate market opportunities.
These are challenges as well as motivations for the Company to strive more, especially in the
process of brand development, investment in machinery and equipments, synchronous
development between stages to be able to produce high-quality rice at competitive prices,
thanks to these, the Company can stand firmly on the markets and sustainably develop.
62
RECOMMENDATIONS TO THE COMPANY
To constantly expand domestic and foreign agricultural goods consumption
markets; to invest in and innovate technology; to improve product quality; to enhance
commercial promotion and market expansion.
To diversify circulation channels and cargo traffic levels.
To improve the procurement of raw materials to create stability and quality
assurance
To focus on market research, penetration into new markets such as the EU, North
America, Middle East, Eastern Europe, especially African markets ... and to strengthen the
current markets
To train and re-train to raise the skill levels for workers - employees
To build and consolidate warehouses, especially in the current period, it is coming
in the rainy season, goods are perishable.
63
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