WITTENBORG UNIVERSITY OF APPLIED SCIENCES

GROUP ASSIGNMENT
THE CASE OF FAIR TRADE ENTERPRISES IN
TURKEY, IRAN, VIETNAM AND NIGERIA

Group: C
Course name: Project Week #2
Course code: PW41_BL2n6_MBM_APL
Professor name: Dr. Natalia Leal
Word count: 4011
 STATEMENT OF CONTRIBUTION FOR GROUP ASSIGNMENTS

This Statement of Contribution is for the group assignment which is part of the assessment

requirements of the Module: Project Week #2 with the Module code

PW41_BL2n6_MBM_APL

In order to ensure the equal contribution hence a fair assessment on the group project, this

Statement of Contribution was confirmed by the group members who actively participated in

the final submission.

Our group includes:

Full name S-number

Javad Yazdanpanah s1126598

Hossein Parvin s1127985

Hong Ngoc Bui s1129635

Oreoluwa Adedokun s1129945

We hereby declare and confirm that the group report was conducted based on the equal

contribution of all above mentioned individuals. We acknowledge that each member will

receive the same assessment result awarded for the report and for any forthcoming issue we

are in agreement that every member will be held liable.

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Table of Contents
I. Introduction.......................................................................................................................3

II. Challenges and opportunities analysis of establishing a Fair Trade company...........3

1. In Turkey.........................................................................................................................3

1.1. Legal framework......................................................................................................4

1.2. Economic framework...............................................................................................4

1.3. Social framework.....................................................................................................5

2. In Iran..............................................................................................................................6

2.1. Legal framework......................................................................................................6

2.2. Economic framework...............................................................................................7

2.3. Social framework.....................................................................................................8

3. In Vietnam.......................................................................................................................8

3.1. Legal framework......................................................................................................9

3.2. Economic framework.............................................................................................10

3.3. Social framework...................................................................................................10

4. In Nigeria......................................................................................................................11

4.1. Legal framework....................................................................................................11

4.2. Economic framework.............................................................................................12

4.3. Social framework...................................................................................................13

III. Comparison..................................................................................................................14

IV. Recommendations and Conclusion............................................................................15

References...............................................................................................................................17

2
I. Introduction

It is needless to say that there are still many big corporations around the cradle of humankind

which put much effort into increasing their power and domination over people for obtaining

more concessions and benefits and creating wealth for their investors. At the same time, this

phenomenon has risen inequality among the whole society (Sahan, 2019). In this

unfavourable, and to somehow harsh commercial environment, the Fair Trade aims to be

assistance for less powerful, and marginalised producers through establishing a new

relationship between consumers and them and introducing fairer methods for wealth

distribution (Zajaczkowski, 2018). According to international Fair Trade charter (2018, p.4),

seeking justice, equality, and sustainable development for human beings is the primary goal

of the Fair Trade movement, in which individuals and organisation cooperate to 'put people

and planet before financial profit'. Regarding the unique approach of the Fair Trade, which

were introduced in the charter, including creating conditions for its practice, defining

inclusive economic growth, providing decent jobs with equal wages and conditions,

empowering women in the society as well as protecting children from exploitation,

promoting environmental issues, and influencing citizens and public policies, this paper

demonstrated the challenges and opportunities of establishing a Fair-Trade company in

Vietnam, Nigeria, Iran, and Turkey considering their legal, economic and social frameworks.

3
II. Challenges and opportunities analysis of establishing a Fair Trade company

1. In Turkey

There are 13 certified Fair Trade companies in Turkey which most of them are cotton and

textile companies (FLOCERT, 2020). Establishing a Fair Trade company in Turkey

encounter different challenges and opportunities as according to government documents,

Turkey has several plans for sustainable development. However, Fair Trade organisations

such as FLO do not have an office or agent in Turkey.

1.1. Legal framework

sustainable development and Fair Trade have several common concepts. However, Fair Trade

does not have an official active agent in Turkey; the Turkish development policies provide

the right context for establishing a Fair Trade company. In Turkey, sustainable development

policies are incorporated within numerous laws, legislation, regulation, policy documents and

action plans in a variety of policy fields and sectors (Ministry of Development, 2016).

Turkey's National Development Plan as the highest-level national policy document defined

all macro-level policies.

In the last few decades, the 10th development plan has been set out with harmonising the

outcomes of Rio+20 and has a emphasise on sustainable development. A preliminary analysis

indicates that there is a high consistency between the 10th Development Plan and the SDGs

(Ministry of Development, 2016). SDG indicators are integrated into the Official Statistics

Program, covering the years 2017-2021 (strateji ve bütçe başkanliği, 2019).

The SDGs and Fair Trade's work have lots of similarities in goals and vision so that most of

SDGs targets are related to food and farming. Fair Trade has a "direct and indirect" impact on

SDGs, and 8 of 17 of goals are most closely linked to Fair Trade works (Fair Trade

International, 2020). So, from the perspective of legal frameworks, the highest-level national

4
policy document provides an opportunity for establishing a Fair Trade company and working

according to Fair Trade standards.

1.2. Economic framework

Agriculture sector, which plays an essential role in the Fair Trade market, consists of 6.43 per

cent of Turkey GDP in 2019 (Statista, 2020). Turkey is one of the most important producers

of agricultural products, including nuts, cotton, tea, and fruits. For example, cotton and

related products such as textile and apparel consist of one of the essential parts of exports in

Turkey. Despite a robust agricultural production industry in Turkey, many problems affecting

the production negatively are available (Çelimli, Adanacioğlu and Güler, 2017). Reducing the

problems that Turkish farmers and producers are struggling with, as well as achieving a fair

wage, can be two economic opportunities to brand products with Fair Trade

certificate(Gençer and Özüdo, 2017).

Turkey using the advantage of proximity to the European market, it can stand out from

competitors in quality and social compliance requirements in line with production. Social

compliance criteria should not be seen as an obstacle, but as an opportunity in the long term.

Turkish companies will be able to gain a competitive advantage if they move forward in this

regard.

1.3. Social framework

In Turkey, Fair Trade is not a well-known concept yet, and only 35% of Turkish companies

are aware of the this concept (Çelimli, Adanacioğlu and Güler, 2017). The results of a study

show a tendency to increase more amount of Fair Trade products(Çelimli, Adanacioğlu and

Güler, 2017). According to this research, all managers of the textile companies surveyed

stated that they are continuing to produce certified Fair Trade products in the future.

However, the Fair Trade concept is not well-established in Turkish society that companies

5
generally acquire Fair Trade certification to get a better price for their products. (Çelimli,

Adanacioğlu and Güler, 2017).

In addition to companies, the Fair Trade label is not known to consumers. Therefore,

companies do not produce their products to adhere to the principles of Fair Trade; instead,

they make products with the Fair Trade label, which has more customers.

2. In Iran

2.1. Legal framework

The main strategic plan of the country has been a model of 'Five-Year Development Plan' for

some decades. After completion of five plans, obviously with some successes and defeats, the

6th one has become operational since 2017 (Leila, 2020). A report by UNESCO Tehran

Cluster Office in 2017 stated that the plan was formulated whilst considering Sustainable

Development Goals (SDGs), after a proper two-way relationship had been established

between the government and the United Nations Development Assistance Framework

(UNDAF). The report also mentioned that a good assessment and evaluation mechanism was

defined for the process, so the progresses and possible setbacks would be measurable, and

traceable.

Due to the particular advisory and supervisory position of the framework, many principal

elements recommended by SDGs were taken into account in writing the mentioned plan (6th

Five-Year Development Plan), when it was underpinned by comprehensive data collection

(UNESCO Tehran Cluster Office, 2017). Giving some examples from 6th Development Plan

(2017) to substantiate the above statement, under article 27 the government has committed to

Reduce the time for answering inquiries and giving permission for establishing rural

businesses to less than fifteen days. Also, the government has to support rural cooperatives

and family-based companies under article 102.

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Furthermore, another report from knowledge platform of SDGs (n.d.) explained that

enhancing the livelihoods of the farmers and rural settlers, development of complementary

activities, particularly small industries and modern services, and emphasis on the reformation

of the commodity pricing systems are the government's concerns for promotion of Fair Trade'

standards in Iran.

Apparently, the government's desire to employ the advantages of practicing Fair Trade which

have been reflected in the current legal framework of the country along with its close

collaboration with UN's representatives, can be considered as a favourable opportunity for

establishing a Fair Trade company in Iran.

2.2. Economic framework

With respect to Sustainable Development Goals and Fair Trade, the government and

UNESCO has made a coordinated effort to support Small and Medium-sized Enterprises

(SMEs), advocate for business incubators and business start-ups, formulate new policies on

developing entrepreneurship programmes, advocate for people, especially women and

youngsters, to establish home-based businesses and producing handicrafts (UNESCO Tehran

Cluster Office, 2017), therefore the elements of Fair Trade are existed, at least theoretically,

in the Iran's economic structure.

However, taking this structure into careful consideration, these great goals are hard to reach

in the short run. Leila (2020, p.9) introduced some 'structural imbalances', including 'the

spread of major and minor corruption', 'imbalance of public budget structure', and more

importantly' volatility of economic policies', which hinder economic development of the

country in various aspects. Practically, these obstacles are major challenges when an

entrepreneur going to start a Fair Trade business in the country.

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Dadgar and Nazari (2018), demonstrated that Iran's economy has considerable dependence on

public sector, while the lack of good governance standards has resulted in kind of 'rentier

government' in which the country greatly depends on the oil sector. As a result, this

phenomenon has made the private sector weak and vulnerable. With respect to their findings,

we are able to conclude that the opportunity of establishing a sustainable Fair Trade business

is quite limited in the practice, because of two reasons. First, mounting lobby for obtaining

trade concessions are unlikely to achieve in this environment. Second, the economy structure

suffers the lack of interests of big corporations to include Fair Trade into the mainstream

economy, as an important reason for the dynamic development of Fair Trade (Zajaczkowski,

2018), due to their enormous power and domination over the market, and the shortage of

transparency and competition.

2.3. Social framework

Clearly, the positive perception of people on Fair Trade is an important component for its

development in a society. Papa and Petrucciano (2019) stated in their research that caring

about issues such as fairness in contracts, balance between the counterparts, wellness of the

community, and so forth are rooted in the Iranian individuals' belief, because Ja'fari school, as

a doctrine of Islam which the most Iranians advocate it, considers ethics an immanent

concept in the life.

In the other research, Bahaee et al. (2012) focused on undergraduate college students, as

representatives of the educated class in Iran, and found that they have positive attitudes

towards sustainable development and its elements, and they also have good knowledge about

the concept of sustainability.

Considering the mentioned findings, and regarding that ethical consumers play a vital role in

development of Fair Trade (Zajaczkowski, 2018), it is safe to say that the Iran's society is to

8
some extent ready to support Fair Trade, and it can be assumed as an opportunity for opening

a Fair Trade enterprise in Iran, however, it has not been officially tried so far, and various

challenges would be in this way.

3. In Vietnam

There are currently only five sectors that focus on Fair Trade registration: tea, coffee, cocoa,

spices, and handicrafts. In Vietnam, there are two companies certified Fair Trade for tea, 11

companies for coffee, and 5 companies for handicrafts; for cocoa and spices, no company has

achieved Fair Trade (VIRI, 2015).

3.1. Legal framework

Currently, the Vietnamese legal framework does not have specific regulations and laws for

Fair Trade companies or selling Fair Trade products. There are only regulations, laws, and

policies to support businesses in general and commercial activities for the agricultural sector

in Vietnam. Private enterprise involvement in foreign trade was facilitated by the

simplification of import and export licenses (Pham, B.D, 2013). Some laws regulate

investment activities. In parallel to the Investment Law, the Enterprise Law was enacted to

replace the 2005 Law, which specifies the kinds of businesses and the policies for

establishing private enterprises, organizations, and their activities (OECD,2015). The Law on

Tax Administration 2006 stipulates equality between economic entities and foreign and

domestic investors (Nguyen, 2012). In 2014, the Competition Law was enacted. Since 2008,

after Vietnam joined the WTO, the Cooperative and Fair Trade Club model in the agricultural

sector has flourished. There are two Fair Trade organisations in Vietnam: FLO focuses on

product certification, while WFTO focuses on organisations. Since craft products abound,

that's why FLO certifies primarily for agricultural products, while WFTO certifies for

handicraft companies.

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Despite substantial improvement in upgrading the investment legal system, the process is not

fully completed. The legal system still carries aspects of a planned economic strategy (Tran

Cong Thang, 2014). Legal structures are designed to be excessively cumbersome and

complex. As regulations and laws evolve more complicatedly, they become incomprehensible

to those who have to govern as well as very sensitive and challenging to implement evenly

across provinces (UNCTAD, 2008).

3.2. Economic framework

For more than 30 years of innovation, Vietnam's agriculture has always maintained an

average growth rate of about 3.5% per year, a high level in Asia in general and in Southeast

Asia in particular (OECD, 2015). Production structure is more efficient and associated with

market demand. Many high-tech and organic agricultural production models have been

deployed, bringing great value and a friendly environment. From the international level,

Vietnam's agriculture has gradually participated vigorously in the integration and

globalisation process with free trade agreements (FTAs). Therefore, although the rate of

return is not high, the investment is less risky. Moreover, Vietnam's processing rate is still

low; the average for these four industries is less than 10% (VIRI, 2015). In the future, this

rate will increase due to the policy of encouraging the government of Vietnam's processing

industry to create value-added of the production chain.

However, Vietnam's products such as tea, coffee, cocoa, and spices do not have a recognised

brand name in the world market due to the small production scale, low processing capacity,

lack of market development strategies and skills. The practice of Fair Trade in enterprises is

initially primarily financially and technically sponsored by international organisations. It is

not sustainable when businesses no longer receive external funding and face competition in

the domestic market that is not really towards Fair Trade. The ability to supply raw materials

10
is only half of the processing capacity, leading to competition in buying ingredients, reducing

raw materials' quality (Gavin Fridell, 2014).

3.3. Social framework

The government issues a crop development policy through planning and supporting the

transfer of scientific and technical advances to farmers. Promoting support for cocoa growers

is one of the important solutions proposed by industry experts to increase supply and stabilise

the market (Vo Van Phong, et al., 2011). This opens up a great opportunity for a Fair Trade

company in Vietnam to specialise in manufacturing and exporting this product line.

However, in Vietnam, this concept is still relatively new and not well recognised. Fair Trade

is accessed to Vietnam mainly through several foreign NGOs, international organisations,

and domestic NGOs. Besides, the connection and consistency between manufacturers and

traders are inconsistent. While joining Fair Trade requires an amount of international

paperwork and standardisation process, proficiency in foreign languages is a barrier for

human resources in Vietnam. Businesses must carry out English procedures, which requires

enterprises to be knowledgeable about the international trade process and have to pay for

translation and notarisation procedures.

In Vietnam, applying Fair Trade is still difficult because consumers' psychology is to buy the

right products, but the price must be the cheapest. Meanwhile, businesses must commit and

create trust with consumers by ensuring quality, but the selling price is always appropriate for

the market. As a result, businesses have to accept to reduce interest to have the cheapest,

diversified, and diversified products.

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 4. In Nigeria

4.1. Legal framework

A business individual intending to invest in Nigeria should develop a psychology that

corruption is in high marketing possibilities. (Jones and Bayley 2000). For instance, the well-

connected or networking business people tend to benefit from anti-competitive practices that

protect the country from other market sources. Thus, any firm willing to invest in the

Nigerian market irrespective of the market domain, be it in the cosmetic industry, an

individual should be aware of the corruption activities that happen in the market.

Another disturbing challenge is the crowding of products at the major ports of Nigeria.

Through the congestion of goods at the docks, it means that there is slow delivery of services,

which is not able to meet the market demands (Nigeria-Market Challenges 2019). Moreover,

Nigeria tends to experience this type of challenge because of poor management and national

policy that most of the developing nations face globally; hence, new investors find it difficult

to enter the market with such type of situation. Therefore, overcrowding of goods at the ports

affects the fair-trade approach in a negative notion where there is a high demand for products

in the market. Thus, through the adoption of Fair Trade, the producers can have access to the

global society where the business is conducted with limited interruptions from intermediaries

and controlled government institutions.

4.2. Economic framework

Despite the overwhelming challenges of Fair Trade in Nigeria, there is still a large gap in

market opportunities, such as the poor farmer's management. n (Borsky and Spata 2018).

Besides, through the acquisition of fair-trade policies, the investors can fill this gap and

prevent the economy from experiencing negative economic impacts associated with imports

and exports. Through Fair Trade, the producers can enjoy the fair share of their products that

comes along with the added advantage of premiums such as bonuses when the end price of

12
their commodities rises. global society where the business is conducted with limited

interruptions from intermediaries and controlled government institution.

Lack of increase in knowledge exchange is another critical challenge that Fair Trade strives

to fill in the market environment of Nigeria. Most business individuals lack access to

knowledge, which makes the big frim continue driving smaller markets out of business by

using supply chain activities (Schenk 2019). For instance, Nigeria has a high degree of social

capital, but lack of proper access or connection to the international world makes the supply

chain process more complicated Despite the overwhelming challenges of Fair Trade in

Nigeria, there is still a large gap in market opportunities, such as the poor farmer's

management. Most of the producers in Nigeria tend to experience unfair wages during the

inflation season (Borsky and Spata 2018).

4.3. Social framework

In the context of coffee trade farmers in Nigeria, the sector is not given any priority to

enhance their development through the interaction of coffee value stakeholders (Schenk

2019). Farmers have always pushed every member from consumers, agriculturalists, and the

government to promote the coffee industry but failed because no financial institution and

sponsors support the idea. Under normal circumstances in Nigeria, big institutions would

sponsor such dialogues.

However, the farmers ever had to opt to depend on small and medium-sized enterprises to

make the event happen. Still, they are not reliable to facilitate the trade to reach international

consumers who are the main business target (Borsky and Spata 2018). Besides, the farmer's

credibility with the Nigerians is in a good situation because of their experience, which makes

the citizens understand the effectiveness of their contribution to the discussion.

13
In conclusion, Fair Trade is associated with both challenges and opportunities in any market

across the globe and not only in Nigeria. Moreover, the challenges are one of the main

reasons that many developing countries are adopting Fair Trade to eliminate the traditional

kind of business currently practiced. For instance, investors need to be aware of corruption

levels that the Nigerian market face and weigh various market options of Fair Trade, whether

it is worth risking. Therefore, through the above report, an individual can consider multiple

opportunities and challenges then decide whether to enter the Nigerian market or concentrate

on other needs in the developing countries.

III. Comparison

In general, the legal systems in the four countries mentioned above do not have different

regulations and laws for a Fair Trade company. The current law includes only the terms that

support and are related to the establishment of a trade company. Therefore, this is also a

challenge for establishing a Fair Trade enterprise when it is difficult to do right and enough

according to the government regulations in each country. It is also difficult for companies to

protect their products and companies when they get caught up in a legal issue that arises

during their operations.

Regarding to economic framework, in Vietnam and Turkey, lack of specialisation and

productivity constraints is a huge obstacle to Fair Trade product sales. On the other hand, in

Iran and Nigeria, the government has a considerable dependence on oil. With the main export

products being oil and relying on oil, policies and technology will not be focused much on

handicraft and agricultural products. The specialisation and focus on oil will weaken their

positions in the world commodity market. Thereby, the trade of handicrafts and agricultural

products from these two countries will face difficulties when competing with other countries

with high specialisation in the same industry. Besides, the political situation also dominates

many business activities in Iran and Turkey. Especially in Iran, the influence of big

14
corporations will dominate business and fairness in trade. It directly impacts the operation

and production of Fair Trade products, which qualify for the Fair Trade label.

In terms of social framework, the concept of Fair Trade is still new in four countries.

Although the definition of Fair Trade is homogeneous around the world, in each nation, the

perception and application of Fair Trade differ depending on the countries' culture and

traditions. While in Turkey, Fair Trade gives producers a view of profit rather than fairness, it

is supported by the ethos of religion and belief in Iran, where it is believed that people

deserve to be treated fairly. Whereas, Fair Trade in Vietnam is widely known for its

promotion activities by the government and NGOs. On the other hand, in Nigeria and

Vietnam, Fair Trade is also a challenge for human resources education and foreign language

in these two countries.

IV. Recommendations and Conclusion

Although there are still many challenges, Vietnam is considered a suitable country to

establish a Fair Trade company comparing to Turkey, Iran, and Nigeria. Vietnam is not only

a country specialising in agricultural products but also famous for handicraft products. It will

help expand product lines but also create competition against products from other countries.

With investment and improvement in technology, farmers and artisans in Vietnam are

becoming more and more specialised. Besides, with the government's supportive policies and

NGOs' activities, the production and trading of Fair Trade products will be carried out more

smoothly. In addition, the successful signing of the EU-Vietnam Free Trade Agreement

(EVFTA) agreement between Vietnam and the EU has opened up great tariff reduction

opportunities on some Vietnam export products. It is a massive opportunity to export Fair

Trade products such as coffee and tea to the European market.

15
On the corporate side, the company needs to improve production chain value actively. When

a company increases the value chain for its production process, it will reduce the cost of Fair

Trade price management, leading to increased cash and income benefits for producers. To

achieve this, the company needs to self-define the value-added segment and execute it. In

addition, strengthening links and information exchange among production units will help

share information so that organisations and individuals can access more details and better

Fair Trade practices by learning from each other. Information disclosure and transparency are

also one of the principles of Fair Trade. If the company performs this criterion well, they

comply with the Fair Trade principle and benefit from it. The company also needs to

continually improve to meet the criteria, proactively improve products, participate in capacity

building training, market promotion, and design improvement to complete Fair Trade criteria'

sustainable application.

However, there is no national system or network to link Fair Trade enterprises in Vietnam.

Therefore, it is necessary to set up a Fair Trade network in Vietnam to connect the companies

that have obtained the Fair Trade certification. This, on the one hand, helps Fair Trade

organisations to seek opportunities to expand the scope of Fair Trade operations, on the other

hand, to find new customers to join and increase sales to existing customers. In the case of

five industries in Vietnam, it is necessary to have a full market forecast to identify the future

Fair Trade market demand as a basis for decision-making and build business plans for Fair

Trade enterprises. The collection, synthesis, analysis, and prediction of the Fair Trade product

market should be under the management of the state management agency on trade promotion

with the coordination of associations.

16
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