9 24 14-REDP-North FINAL - EN

Cục Kinh tế Liên
bang Thụy Sỹ
REGIONAL EXPORT DEVELOPMENT PLAN- NORTHERN REGION
PREFACE
The new SECO-financed, VIETRADE-executed, technical cooperation
programme aims at increasing the contribution of SMEs in key export sectors in
three selected regions (Northern, Central and Southern 1) through the strengthening
of trade support services being offered to potential or current SME exporters. This
will be done by upgrading the technical capacity of selected Provincial TPOs, TSIs
and Product Associations in their role as trade support institutions to exporting
SMEs, within the framework of three Regional Networks.
In the inception period of 15 months, it has been agreed for the
conceptualisation and detailed design of project intervention with research for
Export Potential Assessment (EPA), Institutional Assessment (IA) and initiation of
Regional Export Development Plan (REDP). The main goal for this report is to
consolidate the findings from EPA and IA for the northern region (with 14 cities
and provinces) for a situation analysis, gaps assessment and propose Export
Development Plan for the region. Then together with the Institutional Assessment
implications, the report recommends action plan to build up competency for the
whole trade support network as well as for each product sector with the aim to
Strengthen the International Competitiveness of SMEs, thus effectively contribute
to regional export development.
The report preparation team include Dr. Tran Cong Thang - Head of
Strategy and Policy research subject - Institute of Policy and Strategy for
Agriculture and Rural Development (IPSARD), MA. Nguyen Thi Xuan Thuy -
Institute of Policy and Strategy for Industry, Dr. Nguyen Bao Thoa, Director of
VIRI, Dr. Associate Professor Trinh Thi Thu Huong, Foreign Trade University
who developed the plan for product and service sectors. The consolidation team
include MA. Nguyen Thi Thu Hang, MA. Tran Van Long and MA. Tran Nhu
Trang. The authors sincerely thank experts from enterprises, product associations,
ministries and agencies for all assistance to accomplish the study.
We also would like to express sincere thanks to Mr. Alain Chervalier, the
senior technical consultant of the Program for all valuable mentoring and guidance
from the preparation to the completion of the assignment. Finally, our gratitude
come to the prompt and effective coordination of Mr. Do Kim Lang, Deputy
Director of Vietnam Trade Promotion Agency, Country Director of the Program;
Ms. Nguyen Minh Thuy, Deputy Country Director of the Program and all their
team members.
1
The Northern region for the Program limits to only 14 provinces, the Central and South has 13 provinces and cities
as listed in the cover of the Report.
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The study is prepared in a short period from May to Aug 2014, so

shortcomings are unavoidable. Any shortcomings and errors in the Report as well
as all recommendations are of the authors and not yet have any binding on the
responsibilities of the Vietnam Trade Promotion Agency or SECO.
The authors are looking forward to receiving any comments or feedback for
further improvement of the Plan to the contacts of MA. Nguyễn Thị Thu Hằng
thuhangnguyen28@gmail.com and Trần Văn Long, tvlong@crp.org.vn.
1ST DRAFT iii

TABLE OF CONTENT
PREFACE.......................................................................................................................... ii
ABBREVIATION............................................................................................................. ix
EXECUTIVE SUMMARY................................................................................................1
1. Introduction................................................................................................................. 9
1.1 Background Information....................................................................................9
1.2 14 northern provinces under the Program.....................................................10
1.3 Seclection of Products for REDP.....................................................................13
1.4 Structure of the report......................................................................................16
2. Methodology.............................................................................................................16
2.1 Key concepts and tools for analysis.................................................................16
2.2 Limitations and constraints of the analysis.....................................................19
3. Sector-specific Export Development Plans...............................................................19
3.1 Lychee................................................................................................................ 19
3.1.1 World market prospects.............................................................................................19
3.1.2 Viet Nam Lychee production and export...................................................................26
3.1.3 Vision, objectives and EDP.......................................................................................38
3.2 Green Tea..........................................................................................................47
3.2.1 Current status and prospect of tea world market.......................................................47
3.2.2 Current situation of green tea in the North................................................................53
3.2.3 Vision, strategy and plan for development of green tea export in the North of
Vietnam..................................................................................................................................63
3.3 Garment and footwear industries....................................................................72
3.3.1 World market outlook................................................................................................72
3.3.2 Current situation of production and export of garments and footwear exports in the
North of Vietnam...................................................................................................................80
3.3.3 Export development plan for Textile and Footwear..................................................94
3.4 Handicrafts- Bamboo, rattan.........................................................................102
3.4.1 Prospects of rattan bamboo product market and factors related to business
environment.........................................................................................................................102
3.4.2 Current situation of rattan bamboo product export in the north of Vietnam...........108
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3.4.3 Vision, targets and plans for craft development in the northern region...................117
3.5 Logistics sector................................................................................................127
3.5.1 Logistics access........................................................................................................127
3.5.2 Current status of logistic sector in the northern region............................................128
3.5.3 Vision and targets for the sector..............................................................................134
3.5.4 Logistic sector strategies and development plans to support implementation of
export development plans of selected sector in the northern region....................................134
3.6 Tourism...........................................................................................................137
3.6.1 Roles of Tourism and sustainable trade promotion.................................................137
3.6.2 Tourism development status and trend in general...................................................138
3.6.3 Vietnam’s current tourism development status........................................................140
3.6.4 Vision and objectives...............................................................................................145
4. Consolidate plan for the Region..............................................................................152
4.1 Summary of results from IA report and proposed approach for action....152
4.1.1 Current Trade Support Network in the region.........................................................152
4.1.2 Proposed approach...................................................................................................155
4.2 Plan for Regional Export Development.........................................................156
4.2.1 Activities for General Trade Promotion Capacity Building (Component A)..........156
4.2.2 Activities under Sector-specific Export Development Plan (Component B)..........161
4.2.3 Partnership enhancement (Component C)...............................................................162
5. Implementation and Management...........................................................................165
5.1 Implementation and coordination mechanism.............................................165
5.2 Monitoring and Evaluation of Results..........................................................166
ANNEX.......................................................................................................................... 169
Annex 1. References......................................................................................................169
Annex 2. List of People met...........................................................................................171
Annex 3. Other tables and figures..................................................................................172
LIST OF BOXES
Box 1. Successfull experience of upgrading in value chain of Mexican garment.............17
Box 2. Madagasca’s experience in overcoming GlobalGAP’s barriers for exporting fresh
lychee to EU market.........................................................................................................23
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Box 3. Enterprises’ expectations on coming free trade agreements.................................74

Box 4. Reverse trade fair to promote material market and support industries.................95
Box 5. Lychee for export is given priority in customs clearance....................................130
Box 6. Logistics of Vietfreight.......................................................................................131
Box 7. Logistics for fresh fruit of Hoang Ha Company..................................................131
Box 8. Logistics for fresh lychee export enterprises in Bac Giang.................................132
Box 9. Project ‘Enhancement of sustainable tourism, clean production and export
capacity” in Laos, 2011 - 2014.......................................................................................137
LIST OF TABLES
Table 1. Summary of export potential assessment of sectors in the Northern region of
Vietnam............................................................................................................................ 14
Table 2. Products of lychee, requirements of quality, packaging and features of
distribution channel and transaction in some markets in the world..................................21
Table 3. Reference of lychee price in some markets........................................................24
Table 4. Export to main market during the period of 2008-2014.....................................28
Table 5. Comparison of Viet Nam lychee export quote price with other countries’.........31
Table 6. International cooperation programs of support for the sector.............................35
Table 7. SWOT analysis for lychee sector.......................................................................37
Table 8. Strategic choices for lychee sector from the results of the SWOT analysis........40
Table 9: Consumers’ prices on several market for reference............................................50
Table 10. Comparison of revenue and profit between local and export supply chain of
green tea........................................................................................................................... 54
Table 11. International cooperation in supporting green tea industry...............................60
Table 12. SWOT analysis for green tea industry and strategy choice..............................62
Table 13. Strategic options for green tea industry............................................................64
Table 14. Summary of action plan for green tea industry.................................................69
Table 15: Number of textile and footwear companies in several Northern provinces/cities
Số doanh nghiệp dệt may và da giầy tại một số tỉnh miền Bắc........................................82
Table 16: Cooperation programs for trade promotion support Các chương trình hợp tác
hỗ trợ xúc tiến thương mại...............................................................................................89
Table 17: SWOT analysis of textile and garment industry...............................................92
Table 18: SWOT analysis of footwear industry...............................................................93
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Table 19: Action plan for textile exports of the North......................................................96

Table 20: Action plan for footwear exports of the North.................................................99
Table 21. Craft cooperation and support programs which have been deployed..............115
Table 22. SWOT of rattan bamboo sector in the north of Vietnam................................116
Table 23. Summary of action plans for craft sector in the northern region.....................124
Table 24. SWOT of logistics in the northern region.......................................................133
Table 25. Number of tourists to Vietnam by countries..............................................141
Table 26. Summary of proposed activities for Export Development Plan by sectors in
Northern region..............................................................................................................163
Table 27. Indicators for Monitoring, responsibility and frequency of collection............166
Table 28. Result/impact indicators for annual report......................................................167
Table 29. Sản xuất vải quả của Việt Nam so với các nước trên thế giới.........................172
Table 30. Bảng phân bổ mùa vụ vải quả giữa các nước trên thế giới.............................172
Table 31. Chuỗi chè xanh xuất khẩu..............................................................................173
Table 32. Chuỗi chè xanh nội địa...................................................................................173
LIST OF FIGURES
Figure 1. Thailand’s fresh and processed products of lychee for export..........................20
Figure 2. Lychee export value, 2008-2014 (Million USA)...............................................26
Figure 3. The current value chain of Vietnamese lychee..................................................38
Figure 4. The value chain in the future of Viet Nam’s lychee (to 2020)..........................39
Figure 5. World import turnover of black tea and green tea, 2009-2013..........................48
Figure 6. World tea leading exporters in 2013.................................................................49
Figure 7. Current position of Vietnam in world supply market........................................55
Figure 8. Local value chain for green tea.........................................................................56
Figure 9. Vietnam’s position in the world tea supply chain in the future.........................64
Figure 10. Export of Vietnam canvas shoes in 2012, according to 6-figure HS code.......73
Figure 11: Value chain of textile industry........................................................................83
Figure 12: The value chain of footwear industry..............................................................85
Figure 13: Difficulties and obstacles for export expansion and added value increase......86
Figure 14. Main factors of a macro logistics system......................................................127
Figure 15. Forecast of international tourism growth rate in the world to 2030...............138
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Figure 16. Vietnam ranks the 80th in the world tourism map.......................................143
Figure 17. Current trade support network.......................................................................152
Figure 18. Average number of permanent staff and average budget of TPOs................153
Figure 19. Competencies of Provincial TPOs staff........................................................154
Figure 20. Four types of TPOs across the country.........................................................155
Figure 21. Organisation chart for Sector-specific Export Development Component.....165
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ABBREVIATIONS
TPO
TSI
EPA
IA
AFTA
ASEAN
SECO
SPS
SWOT
TBT
GSO
TPP
UBND
UNCTAD
VASEP
VCCI
VFA
VietGAP
Vinacas
VITIC
WB
WTO
WWF
1ST DRAFT ix
EXECUTIVE SUMMARY
The last step for the detailed design of new SECO-financed, VIETRADE-executed,
technical cooperation programme “Decentralized Trade Support Services for
Strengthening the International Competitiveness of Vietnamese Small and Medium-sized
Enterprises” (the Program) in 2014 is to formulate Export Development Plans, at
Regional level (REDPs) for three selected regions (Northern, Central and Southwest).
The plan will set the ground for the Program to implement in the period 2015-2017 and
for Vietrade strategy formulation beyond that time.
The REDP relies largely on the first two completed steps- Export Potential
Assessment (EPA) and Institutional Assessment (IA). The EPA adapted the methodology
for export potential assessment of ITC in 2005 and identified the ones with potential for
export from each region upon the consideration of recent and current export performance,
domestic supply conditions and world market competition. Those product sectors will set
the foundation for SMEs assistance of the Program in their correspondent region. In a
similar manner, the Institutional Assessment applied the modification of benchmarking
tool set from ITC to analyse the gaps of existing services of TSIs from the needs of SMEs
and benchmark those against good international practices of trade promotion. The
assessment proposed an agenda with concrete action to strengthen the services of TPOs
and associations as well as coordination for more effective TSI network.
This report presents the analysis and rationale for export development plans for
selected potential product sector in 14 provinces in the North. In normal administrative
geographication, Northern region of Vietnam consists of two sub-regions: the Red River
Delta2 and the Northern mountainous midland3 region. However, the agreement from
Vietrade and SECO has limited the coverage of the Program so accordingly, this REDP
report to only 14 cities and provinces: Hải Phòng, Quảng Ninh, Thái Bình, Nam Định,
Hải Dương, Hưng Yên, Ninh Bình, Hà Nội, Lạng Sơn, Vĩnh Phúc, Lào Cai, Thái
Nguyên, Yên Bái, Bắc Giang in these sub-regions
The report has five sections with the first two sections introducing about the
Program, work performed for the inception phase and the approach and methodology for
this REDP. The third section provides sector specific information for provincial
leaders and TPOs staff which details all the analysis and action plan for production
development, furthering the participation of SMEs in the global supply/export
chain. The fourth section summarizes findings from IA report, then consolidates all the
proposed activities for building up the capacity of trade support network through general
trade promotion competency improvement and selected sector-specific expertises
development in particular. Hence, section four is the section which provincial leaders,
Vietrade and SECO can obtain a comprehensive view on the proposed activities.
2
Including 10 provinces: Bac Ninh, Ha Nam, Hanoi, Hai Duong, Hai Phong, Hung Yen, Nam Dinh, Ninh Binh, Thai
Binh, Vinh Phuc
3
Include the provinces: Ha Giang, Cao Bang, Bac Can, Tuyen Quang, Lao Cai, Yen Bai, Thai Nguyen, Lang Son,
Quang Ninh, Bac Giang, Phu Tho, Dien Bien, Lai Chau, Son La and Hoa Binh
1ST DRAFT 1
Implementation scheme, indicators for monitoring and evaluation are the key content of
the last section of the Report.
The highlight in this REDP’s approach is the expansion from the traditional
terminology of trade promotion or export promotion which focuses on searching for
prevailing markets and bringing up existing products to the buyers in those markets.
Rather than that norm, this Plan applies Export Development approach with a larger
focus: to generate new demands by improving and creatation of new products for each
product sector as well as expansion to new markets, facilitating fundamental export
change in both quantity and quality aspects.
EPA report adapted ITC's export potential evaluation method with the calculation of
3 indices: (i) Current export performance, (ii) Domestic supply capability; and (iii) World
markets. Besides the other cross cutting issues which have been considered in EPA, in the
process of preparing this REDP, the experts have added other selection criteria of:
o Role of SMEs in the sector, particularly in the export supply chain;
o The feasibility for implementation and effective accomplishment after 3
years;
o The possibility to create new added value;
o Contribution to job generation, rural development, gender equality and
environment protection;
o Possible linkage and support to other secors; and
o Potential for national impacts.
Based on those criteria, the product sectors which have been selected for the
preparation of export development plan include lychee, green tea, garment, footwear
(canvas shoes), handicraft (bamboo, rattan), logistics and tourism.
IA report recommended a holistic approach to build-up capacity of all key players,
e.g. TPOs, associations at provincial and national levels, etc. to support SMEs using
„Coaching“ principles. Key targets are SMEs, TPOs and association staff who will
receive training and guidance to execute promotion activities, so as „learning by doing“.
International and national sector experts will carry out training with introductory courses,
method of implementation and then, all participants will be doing their job under
supervision and distant coaching.
The findings of product sector situation analysis and suggestion from this REDP
reaffirms the applicability of coaching approach for sustainable results of the whole
program. From financial and management point of view, the approach optimizes the
resources while ensuring the ownership and commitment of the participating
stakeholders. In the context of provinces’ diversity in terms of SMEs concentration for
different product sectors, the key beneficiaries should be staff of selected SMEs, TPOs
and associations who will further the equipped knowledge and skills. To ensure the
coverage of the program, the provinces with selected products should be maximized but
activities and requirements must ensure in-depth knowledge and skills transferred.
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Accordingly, by product sector, in each province there should be well-selected three

to five SMEs to build up models, then combination with information sharing schemes for
early disseminations and replication (learning and application of other SMEs, TPOs).
Such requirements induce the need to have in place a close M&E information system.
Parts of that will be suggested in Section 5 of this report.
Based on the in-depth analysis of each sector and with an understanding of
Institutional capacity, this REDP for Northern region can be consolidated to have three
components of:
(i) General Trade Promotion Capacity Building (Component A): start from
beginning of 2015;
(ii) Sectoral Export Development Support (Component B) with preparation
in Quarter 4, 2014 and Quarter 1, 2015 for full swing from Quarter 2,
2015;
(iii) Component C: partnership development- for all years from 2015 to 2017.
Component A is a series of activities which will be implemented subject to the interest

and committment from TPOs and associations:
A1. Awareness raising workshops for Leaders of provinces, TPOs, associations
in the region to share good regional and international practices (the Philippines,
Thailand…), roles of trade promotion in overall socio-economic development,
the need to have adequate resources for trade promotion; overview of different
organisational models/modalities, pros and cons
A2. Indicators for evaluation and (pilot) evaluation of 2011-2015 Trade
Promotion: activities include Development of Indicators for Evaluation,
consultation with TPOs, associations; carrying out Independent evaluation of
2011- 2015 Trade Promotion Plan: applying the indicators to have lesson learnt
for the new program of 2016-2020, for aligning the Vietrade-SECO; providing
(Distance) assistance for 2-3 provinces to apply the indicators and execute the
evaluation by themselves
A3. Support for development of 5 year 2016-2020 provincial Trade Promotion
Program: Select 2-3 provinces to apply the indicators set and EPA
methodology to select product sector with potential for exports, then develop
strategy, goals, targets and action plan for 2016-2020
A4. Manual and training of 5-6 basic Trade promotion expertises and Customer
Relation Management
A5. Support for selected internal management of TPOs: staffing, HRM, financial
management;
A6. Capacity building in working skills, private sector consultation: Develope and
training for usage of survey questionnaires, business consultation;
A7. Product and service development and diversification;
A8. Utilization of benchmarking for TPOs self-evaluation.
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Component B: further the activities under A4 so that TPOs staff, associations staff and
SMEs staff can select a group of SMEs in each province and provide them with full-
package support:
B1. Market Information;
B2. Sector e-bulletin;
B3. Market research;
B4. Product development;.
B5. B2B trade fairs;.
B6. Market study trip, market prospection;
B7. Buyer mission;
B8. Communication, branding;
B9. Training.
It should be noted that base on market and supply, export conditions analysis, each
sector has its own critical factors as summarized in Table 26. Summary of proposed
activities for Export Development Plan by sectors in Northern region.
Component C: There are not any activities explicity designed for partnership component
but the approach and methodology proposed for component B will facilitate a „new“
environment in which Vietrade, TPOs, product associations and other related agencies
work together to serve SMEs in market information provision, provision of required trade
promotion services.
The coverage of proposed activities by product sectors will include the
following provinces. Logistics and tourisms will be subject to further consideration upon
the needs and application.
Cities/Province
Lychee Green tea Garmen Canvas Handicraft- Logistics Tourism
t shoes Bamboo,
rattan
Hà Nội x x
Hải Phòng x x
Bắc Giang x
Hải Dương x x
Hưng Yên x
Lạng Sơn
Lào Cai Subject to product
x
sector and needs
Nam Định x x proposal
Ninh Bình x x
Quảng Ninh
Thái Bình x x
Thái Nguyên x
Vĩnh Phúc x
Yên Bái x
1ST DRAFT 4
The objectives for each product sector are:
Current situation Targets

No. of Regional/ VN/world Average No. of Regional/ VN/world Average export
SMEs national export export SMEs national export growth 2014-
capable of export (2012) growth capable of export (2016) 2016
export (est.- (2012) 2008-2012 export (2016)
2012) (est.- 2016)
Lychee
12-15 100% 6% 220% 20 95-99% 6,5% 50%

(There are (joining of (market
only a few companies expansion to
processing from other higher-end
companies regions markets which
so processed for accept high
lychee is processing prices, reduction
now only and of export to
15% of total export) China)
export)
Green tea
270 90% 7,2% 13,3% 250(*) 90% 7,5% 15%
Garment
3,8% 18%
knitted knitted >150 (by
130/202 37,4 labour >40% 4-6% 18-20%
4,8% 18% size)
woven woven
Footwear
> 20 (by
15/37 16,0 9,2 14% labour 16-20% 9-10% 14-16%
size)
Handicraft- Bamboo, rattan
95 19.08% 3.73% 2.27%/ 120 25% 5% 2.8%
(*) among the activities, one is screening and limiting the unqualified SMEs
Lychee
Fresh lychee export is a high potential market with still limited competition.
Lychee production activities take place mostly in the northern hemisphere and partly in
the southern hemisphere of some Asian and African countries. Precise data on lychee
harvest is not available but for countries with large lychee like China and India, the
harvest is mainly consumed domestically. Viet Nam ranked number 3 on the list of
production with 156,000 tons, accounting for 6% of the total yield (2013). Lychee
presents mainly in Luc Ngan District in Bac Giang Province and Thanh Ha District in
1ST DRAFT 5
Hai Duong Province with harvest concentration from June to July each year. Viet Nam
lychee is perceived with high quality but 60% is consumed domestically, 40% for export
but 90% of that export is to China through border trading.
The export of fresh lychee is showing some positive signs with orders from
higher-end markets such as Japan, EU and some neighbouring countries though the value
is still quite modest. In the context of political issues across borders, particularly with the
fact of low price, the analysis of this report reveals much more attractive price in EU
market with 12-13 times or much much higher price in Japan thanks to post harvest
storage technology. Accordingly, the action plan for export development of lychee
emphasizes on trade promotion expertise for market penetration, logistics improvement
for fresh lychee export to potential countries (experience of Madagasca).
Green tea
Tea world import has been witnessing quite low growth rate, at only 2% per year
for quantity during the period of 2008-2013. However, it is noticeable that import
turnover grew at nearly 7% per year, with a dip in 2013. The size of global market for tea
products is remarkable at an estimation of 15.4 billion USD for 2013 in terms of
production value. While the segment of black tea is growing at a modest rate (at around
3.7% per year on average), green tea export is increasing rapidly at 11% per year during
2008-2012 and remarkably at 26% in 2013. In addition, herbal tea is multiplying its
market size at over 15% per year.
Vietnamese farmers have a long tradition of tea planting, largely in midland area
of northern region. This area accounts for about 75% of the total tea area of the country
(MARD figures as of 2012). In 2013, the total area of tea in Viet Nam is 128,000
hectares, in which 114,100 hectares are on harvest for the volume of 921,000 tons of
fresh tea. The total production of tea in 2013 reached 184,500 tons, in which 50% is of
black tea, 47% is of green tea (with 90% of those are from the north) and the rest 3% are
of other types of tea.
However, the key feature is that, most, around 85%, of tea farming households are
planting on small area; companies are with small capacity and consequently the majority
of export tea is with low quality and packed in 50 kg bags as inputs for processing in
other countries. In order to move up more in the value chain, there should be
communications for the benefits of green tea to expand usage and for branding
Vietnamese tea. The message to be put through includes Vietnamese tea has fresh clean
taste with sweet residuals, clear yellow and natural sense and it is particularly good for
mouth cleaning, teeth and eyes protection as well as other health benefits. Farming and
production of tea are other areas of intervention or partnership for co-makership for
entering potential markets such as Germany, Russia or Morocco…
Garment and Footwear
Garments and footwear are regular consumption goods, with seasonal changes and
fashion tendency following. However, the consumption expenditure for these goods does
not account for a considerable percentage in the total expenditure of each individual. For
example, the average expenditure for clothes and footwear only accounts for 4%-7% of
1ST DRAFT 6
the total expenditure of each person in the EU. Thus, these industries are not substantially
affected by world economic fluctuations. The world market trend in the coming time
reveals that the US, EU and Japan will remain as attractive markets with full of
potentials. In 2012, the world imported 191.7 billion USD of knitting garments and 189.9
billion USD of woven garments. World import turnover of footwear reached 117 billion
USD in 2012, growing at the average rate of 7% over 2008-2012.
Garments and footwear are two traditional export industries of Vietnam which
helped to name Viet Nam on the map of world exporters and top 10 exporters of those
products. However, those achievements are only the surface of the ice. In addition to
existing efforts of the government and businesses, there are still a lot of problems and
challenges for sustainable exports.
According to the analysis in the EPA for the Northern Vietnam, two industries of
textile and footwear are quite similar in all 3 criteria. Therefore, while developing the
Plan for export development for the region, the consultant team chose the analysis
method to propose plans for both industries in one section to facilitate comparison and
experience sharing from these two key industries in Northern provinces.
Despite being in the top 5 biggest world exporters of textile and footwear,
Vietnamese companies make only a partial contribution to this achievement. Over 60%
of textite turnover and over 70% of footwear turnover are gained by FDI sector. The role
of local companies, especially SMEs in export is posing some diminishing signs.
The enterprises in the northern region are not the major producers with the weight
in the whole country’s garment and footware export turnover of just 37% of garment and
16% of footwear. The share of northern SMEs in export is also insignificant with 16.4%
in garment and 8.1% in footwear by labour size and 25.4% and 20.2% respectively by
capital size.
Nevertheless, their key role for development is job generation, particularly
women. Besides, their current concentration in a few provinces is one faciliating ground
for further expansion in terms of labour attraction and particularly in the light of final
negotiation of TPP and EU-FTA. With the possibility of import tax reduction to 0% for
the US market (TPP) as well as EU market (EU-FTA) but strict origin regulation, the
region is becoming a magnetic for FDI for materials and accessories
The two sectors share the same challenges on the upgrading in the value chain
with higher value added products and to be eligible for coming TPP and FTAs. Within
trade promotion aspect, this report recommends fundamental actions on market
information, client database, capacity building for export support service and most
notably is the initiation of material and accessories market through reverse trade fairs
(buyer trade fairs) in addition to other on-going traditional trade promotion activities.
Handicraft- Bamboo, rattan
With inceasing demand for natural material based products, export market share of
Vietnamese rattan bamboo products in global key rattan bamboo product import markets
was about 4.6% in 2010 and 5.7% in 2012. Purchasing power of these markets increases
by 7.2% /year. This is a very good opportunity to expand export market share of
Vietnamese rattan bamboo products.
1ST DRAFT 7
A remarkable feature of decoration and household appliances in the world is a rapid

development of fashion, style, color, etc... that makes product cycle shortened. Ten years
ago, products could be in stock for years, but now their cycle lasts about 6 months only.
This requires producers to regularly develop new products and designs.
Based on the analysis and assessment, the key recommendation from REDP for
the northern region joined the recommendations for central and southwest region to set
up and operate a Center for Development of Bamboo, Rattan Handicraft, piloting in 10
provinces in 3 regions: 4 provinces in the northern region, 3 provinces in the central
region and 3 provinces in south west region. This Center will become the focal point to
build up export promotion capacity for TPOs and SMEs in the handicraft sector which
includes market information, market trends, product development assistance and
compliance fulfillment. Such accomplishment will create models of product associations
working with TPOs and SMEs for a joint branding of Viet Nam Bamboo and Rattan, then
Viet Nam Handicraft as a whole.
Logistics and Tourism

These two service sectors are selected thanks to their considerable roles for export
promotion and regional development.
Both EPA and IA reports depict a big gap in logistics as a direct export support
service- most players are now large enterprises and foreign ones locates in cities. And
even the large domestic ones still do not have clear strategy of logistics to service special
sectors though they account for a large share of export expenses.
The key proposed actions for logistics sector are (i) rejoining logistics company
with export companies to carry out joint market analysis for clients’ demand regarding
transportation and delivery so as to work out optimal transportation methods for each
sector, (ii) providing training courses for stakeholders (selected product SMEs, TPOs
staff, selected LSP, product associations) on the roles of logistics and supply chain for
each product sector; (iii) to implement the designed product-specific-logistics method,
and (iv) develop an indicator set to measure logistics capacity to finalise the product-
specific- logistics strategy.
For tourism, the suggestions include several models to promote selected products
and their producers through the development of tourism products to lychee, green tea and
handicraft areas. However, the actual activities will be a step behind, after the selection
and capacity building for qualified product SMEs.
1ST DRAFT 8
1. Introduction
1.1 Background Information

The contribution of SMEs to Vietnam’s economic growth is increasing rapidly over
the last years. The annual SMEs report of VCCI in cooperation with GSO for 2013
showed the figures of 347,693 enterprises through out the country with SMEs accounting
for 95% upon categorisation by capital size and 97.75% with grouping by size of
employees4. The report also depicts that the current portion of labour force in SME sector
is 48%, showing an increase from 40.5% in 2007. Regarding the contribution to national
economy, Ministry of Finance estimates the figure of 40% of GDP and the tax and charge
paid by SMEs has raised 18.4 times after just 10 years 5. However, their contribution to
exports remains limited. Vietnamese product exports are now dominated by those of
large private (including equitized) enterprises and foreign-invested (FDI, Foreign Direct
Investment) firms.
One of the key gap for bridging over in order to enhance the competiveness of
SMEs in global economy is the must to be able to participate and/or to upgrade in global
value chain. That can only be achieved by production and marketing of products at
international quality and standards and at the same time, enhancement of international
trade promotion capacity. On this road, TPOs and other TSIs play a critical role to assist
the SMEs for international competition.
The new SECO-financed, VIETRADE-executed, technical cooperation
programme “Decentralized Trade Support Services for Strengthening the International
Competitiveness of Vietnamese Small and Medium-sized Enterprises” (the Program) aims
at increasing the contribution of SMEs in key export sectors in three selected regions
(Northern, Central and Southwest6) through the strengthening of trade support services
being offered to potential or current SME exporters. This will be done by upgrading the
technical capacity of selected Provincial TPOs, TSIs and Product Associations in their
role as trade support institutions to exporting SMEs, within the framework of three
Regional Networks.
The first two steps in the detailed preparation for the project in 2014 have been the
implementation of Export Potential Assessment (EPA) and Institutional Assessment (IA).
The EPA adapted the methodology for export potential assessment of ITC in 2005 and
identified the ones with potential for export from each region upon the consideration of
recent and current export performance, domestic supply conditions and world market.
Those product sectors will set the foundation for SMEs assistance of the Program in their
4
Specifically, by capital, 232,149 micro enterprises (66,77%); 100.878 small (29%), 6.831 medium size (1,96%)
and 7.835 large enterprises (2,25%). By labour, there are 269.590 small (77,54%), 60.473 medium size (17,39%)
and 17.630 large enterprises (5,07%).
5
Website of MOF, accessed on 28/8/2014
http://www.moj.gov.vn/tcdcpl/tintuc/Lists/PhapLuatKinhTe/View_detail.aspx?ItemID=390
6
The Northern region for the Program limits to only 14 provinces, the Central and South has 13 provinces and cities
as listed in the cover of the Report.
1ST DRAFT 9
correspondent region. In a similar manner, the Institutional Assessment applied the

modification of benchmarking tool set from ITC to analyse the gaps of existing services
of TSIs from the needs of SMEs and benchmark those against good international
practices of trade promotion. The assessment proposed an agenda with concrete action to
strengthen the services of TPOs and associations as well as coordination for more
effective TSI network.
The next step is to formulate Export Development Plans, at Regional level (REDPs)
for the Program to implement in the period 2015-2017 and for Vietrade strategy
formulation beyond that time. This report presents the analysis and sets the rationale for
the Export Development Plan for selected potential product sectors in 14 cities and
provinces in northern region.
1.2 14 northern provinces under the Program

The Northern region of Vietnam consists of two sub-regions: the Red River Delta
and the Northern mountainous midland region. However the agreement from Vietrade
and SECO has limited the coverage of the Program, and accordingly, this REDP report to
only 14 cities and provinces7 of Hải Phòng, Quảng Ninh, Thái Bình, Nam Định, Hải
Dương, Hưng Yên, Ninh Bình, Hà Nội, Lạng Sơn, Vĩnh Phúc, Lào Cai, Thái Nguyên,
Yên Bái, Bắc Giang in these sub-regions.
With different geographical characteristics, these two sub-regions of the Northern
region have different advantages in terms of exports. The Northern mountainous midland
region is advantaged from the border line with China and Laos with many international
border gates convenient for trading development with China. This region is also rich in
minerals, has high potential of water power, industrial crops and timbers, which are the
base for hydro power development, agricultural and forestry products (paper, cassava,
tea, wood, etc.) processing, minerals (iron ore, apatite, coal, copper, etc.) exploitation and
processing, construction materials production.
The Red River Delta has the advantage of being the national cultural, political
center of the country, the focal point of major domestic and international trade zone and
the place concentrated with most important industrial and service facilities of the
Northern region. The Red River Delta is one of the two regions having long culture and
tradition of the whole country, which is considered as the cradle of intensive rice water
cultivation and developed crafts such as weaving, embroidery, copper casting,
silversmithing, carpentry, ceramic, textile, etc. The vicinity of Hanoi, the provinces of
Vinh Phuc, Bac Ninh and some other provinces in the region have obtained industrial
concentration in the field of mechanical fabrication (automobile, motorcycle, electric-
electronic areas, etc.)
In general, the entire Northern region of Vietnam has terrains between delta and
high mountains including several majestic mountain ranges, many waterfalls and rapids,
caves, rivers and streams altogether creating an imposing, wide natural landscapes such
as Thac Ba Lake, Sapa at the height of 1,500m above sea level; along with primeval old-
growth forests such as Tam Dao, Cuc Phuong National Park (Ninh Binh), Ha Long Bay
7
Including the provinces: Hai Phong, Quang Ninh, Thai Binh, Nam Dinh, Hai Duong, Hung Yen, Ninh Binh, Hanoi,
Lang Son, Vinh Phuc, Lao Cai, Thai Nguyen, Yen Bai, Bac Giang.
1ST DRAFT 10
(Quang Ninh), etc. Besides, there are more than ten thousand historical and cultural relics
including 900 relics recognized by the Ministry of Culture, Sports and Tourism. Besides,
the Northern region is the home of 32 ethnic groups with timeless culture and tradition
and long-year history. Each ethnic group has its own typical cultural characteristics
associated with high art traditional crafts such as: fine arts on brocade of Thai, Tay ethnic
groups; the art of embroidery, pattern drawing of Mong, Xa Pho, Yao ethnic groups; the
region now remains historical, cultural relics of many periods of the history of the cause
of national construction and defense such as Hoang Van, Pac Bo historical relics; Hung
King’s temple, Tran Hung Dao historical relic, Uncle Ho relic area, Dien Bien Phu
historical relic, etc. These are rather ideal conditions for developing the regional tourism.
For the infrastructure, the Red River Delta has synchronous and convenient traffic
infrastructure with several railway routes through different places in the region, Noi Bai
international airport and Hai Phong port are important points connected to the
international markets. The Red River Delta also has two important river ports namely
Ninh Phuc port and Nam Dinh port. Although there are all traffic types (railway, water
way, road and airway), due to complicated terrain and poor technical infrastructure, the
Northern mountainous midland region is facing difficulties in transport and economic,
cultural and social, and scientific and technological exchange with other provinces and
cities nationwide and worldwide. In 2012, there were about 32 million of people living in
the Northern region, accounting for 35.64% of Vietnam’s population. The number of
labor force aged over 15 in the Northern region was 19 million, accounting for 36.17% of
total laborers of the country. In 2011, in Northern provinces and cities, there were
117,563 enterprises, creating jobs for more than 4 million laborers.
The following section is a more specific presentation about restrictions, difficulties

as well as development orientation of these two regions.
The Red River Delta
The population of the region is nearly 20 million people, in which the number of rural
laborers is about 7 million, having higher educational and cultural level than other
regions. Therefore, the industrial production enterprises of the Northern region are
located the most in this region, including electronic, garments, leather shoes, motorcycle
enterprises, etc. Moreover, this region is the home of long-year traditional craft villages.
It also supplies some kinds of speciality fruits such as lychee. Besides, this region has the
advantage of commercial intercourse with China.
On the other hand, the region has some restrictions and difficulties such as i) Crowded
population, high population density (1,225 people/km2 – 4.8 times as high as the average
population density of Vietnam) putting pressure on natural resources: water, forest, etc.;
ii) Volatile weather and regular natural disasters.
Development orientation: According to the Decision No. 795/QD-TTg dated May 23rd,
2013 of The Prime Minister approving the "Master plan on socio-economic development
of the Red River Delta by 2020", the Red River Delta development orientation is to
become the national economic motive force, playing an important role in the national
cause of industrialization and modernization.
1ST DRAFT 11
For exports, the whole region strives to achieve the growth of export turnover of 16-
18%/year, and gradually reaching export-import balance and stepping towards export
surplus. These activities include focusing on producing clean, environmentally friendly
agro-products with its export potential; developing industries having competitive
advantages to intensively participate into global value chain such as electronic,
information technology, leather shoes, garment industries, etc. Especially, the two
industries of leather shoes, and textiles and garments are focusing on developing towards
export; additionally, enhancing the development of supporting industries such as fiber,
thread, textile, design industries in order to shift from processing to product localization.
For the service sector, the key one is tourism. Key tourism areas will be invested to
attract domestic and international tourists. The goal is to increase the number of
international tourists from 3.2-3.5 million in 2015 to 4.5-5.0 million in 2020. Besides, the
warehouse system will be developed under international standards in order to promote
international trade.
The region will also focus on traffic infrastructure development. The infrastructure of
railway, road, water way as well as air ports and sea ports will be expanded, connected
and modernized. Noi Bai Passenger Terminal 1 will be upgraded, and a new Terminal 2
will be built, increasing capacity to 25 million passengers and 50 million passengers in
2015 and 2020 respectively. Cat Bi and Gia Lam airports will be also improved.
The Northern mountainous midland region (including the Northwest and the
Northeast)
Strengths and advantages: Thanks to the terrain and geographic conditions appropriate
for developing industrial plants, the Northern mountainous midland region basically
focuses on advantageous key plants such as rice, corn, cassava and tea. Among these, tea
is strongly developed in the Northern mountainous midland region, accounting for more
than 51% of total tea area of the country. The region also provides wood and rattan for
production of arts and crafts products in the Red River Delta. Especially, the region has
the border with China which is favorable to the exports to this large market. This is an
outstanding advantage compared to other areas.
Restrictions and difficulties: Although the region has made much progress in the past 10
years, difficulties remain in the economy of the Northern mountainous midland region.
Apart from some agro-forestry products such as tea – which is the advantageous product
contributing to 65% of tea output of the whole country, other products considered as key
ones in the region include rice only accounting for nearly 10%; core and cassava
accounting for 36% and 15% respectively. This is one of the reasons for the highest
percentage of poor households of the region in Vietnam. Literacy rate of the people and
accessibility to scientific advances as well as markets are all limited compared to other
regions.
Development orientation: According to the Decision 1064/QD-TTg dated July 8th, 2013
of the Prime Minister approving the master plan on socio-economic development of the
Northern mountainous midland region by 2020, the regional development orientation is
towards agriculture, tourism, border gate economy. Export turnover target is 16-
17%/year. The region is targeted to focus on developing border gate trading services in
order to promote trade with China and Laos, develop sustainable agriculture production
1ST DRAFT 12
associated with forest and ecological environment protection, develop agriculture,

forestry and aquaculture with an average growth rate of 4-4.5%/year and 3.5-4%/year in
the periods of 2011-2015 and 2016-2020 respectively, focus on developing concentrated
specialized cultivation areas with appropriate scale for tea, rubber, coffee, fruit trees,
pharmaceuticals, subsidiary crops, etc., speed up highways construction, railway upgrade,
small airports improvement, reinforcement in order to improve the linkage of the region
and developed centers of the Red River Delta. Tourism is developed towards nature
association and cultural and historical relics in the region.
1.3 Seclection of Products for REDP

EPA report adapted ITC's export potential evaluation method, which was used to
evaluate the export potential of Vietnam in 2005. Product sectors were first screened
using Harmonized System (HS) of 2 digits and then, analysed further using HS of 6 digits
for the calculation of 3 indices of:
Current export performance
Domestic supply capability
World markets
EPA report for the region presents in details the description and calculation of
indicators. ITC trademap data are the key source for data to ensure compatibility across
sectors. The EPA research team also collected qualitative assessment following a fixed
indicator set for composing the index. Basically they include 3 indices. The first- the
current export performance- is evaluated based on the following indicators of (1a) -
export values in 2012, (1b) Vietnam's market share in the world exports in 2013, (1c)
trade balance and (1d) Vietnam's export value growth from 2008 to 2012. Domestic
supply capacity will be evaluated through the indicators of (2a) Product quality and
efficiency of production processes considered based on: Productivity compared to major
exporting countries in the world and the region; labor cost compared to major exporting
countries in the world and the region; current conditions of the production technology;
cost for manufacturing exported products; and (2b) the importance of vertical and cross
connection and effectiveness of auxiliary sectors. The world market will be evaluated
through indicators of (3a) import value of the world; (3b) growth in global volume and
value of import in the period of 2008-2012; and (3c) the indicator of advantage or
disadvantage in tariff and non-tariff barrier related to market access of Vietnam.
Products or sectors with export potential concluded from EPA are not only those
already well exported but also those are not exported yet or exported with limited
quantity but they have necessary conditions for stronger exports in coming time.
The screening of 5 sectors - industry, agriculture, fishery, arts and crafts and
services of EPA brought up the following summary table:
Table 1. Summary of export potential assessment of sectors in the Northern region
of Vietnam
Low Average High
Important export Cassava and cassava products (1)
sector Catering service (5)
Rice (1) Leather shoes (2) Short-term accommodation
1ST DRAFT 13
Air transportation (5)

Garment products (2)
Fabric shoes (2)
Laptop (2), Printer (2) Mobile phone
(2), Electronic circuits (2), Electric
cable (2)
Products with Tea (1) Ceramic products (3)
average exports Plastic material (2) Frozen fish (4) Bamboo, rattan, and leaves wares (3)
Rubber, plastic Plastic film (2) Travel service
shoes (2) Automobile components Road transportation (5)
(2) Water transportation (5)
Motorcycle components Packaging, office plastic (2)
(2)
Motorcycle (2)
Wooden carving and
wooden wares (3)
Products with low Litchi (1) Frozen shrimp (4)

exports Sugar cane (1) Sushi (4) Frozen octopus (4)
(Under $ 100 Surimi (4) Mollusc (clam) (4)
million) Household plastic (2) Snout otter clam, garrupa (4)
Logistics services (5)
Remarks: (1) Agriculture; (2) Industry; (3) Arts and crafts; (4) Fishery; (5) Services.
Based on the list of product and service sectors with potential ranked on the top by
the calculation of results and assessment of the EPA study team, and upon the
consideration of the timeline of the Program with 3 years, the CTA and national team
leader has introduced other criteria for selection of products for REDP. The criteria
include:
o Role of SMEs in the sector, particularly in the export supply chain;
o The feasibility for implementation and effective accomplishment after 3
years;
o The possibility to create new added value;
o Contribution to job generation, rural development, gender equality and
environment protection;
o Possible linkage and support to other secors; and
o Potential for national impacts.
Based on those criteria, the following product sectors have been selected for the
preparation of export development plan:
o Lychee: this is a special product with only harvest in the North of Viet
Nam, and Viet Nam is also among very few country with such production.
The majority of the cultivation is by farmers with not too complicated
farming technique though it requires strict chemical residuals supervision.
The area with VietGAP qualification has been considerable (6,000 hectare)
but the majority of export is only through border trading with China for low
value addition. The key identified problem is the lack of export promotion
mechanism, particularly fresh export due to the short harvest, then the
1ST DRAFT 14
difficulty for fresh storage and transportation. Post-harvest technology and

logistics to long-distance market are other critical areas for intervention;
o Green tea: is another speciality of the northern region which contributes
70% of the total country export. Similar to lychee, the sector plays
significant role for rural development as all farming are with small farmers
in midland areas. Most enterprises for processing and trading of tea are
SMEs and cooperatives who grew themselves from farmers. However, the
challenges for export include low quality of products, small sized and
scattered production, poor diversity of the products which all translate in
low price for export. In comparison with black tea, green tea is still not up
to that level of market penetration due to strong the competition of Sri
Lanka and India. The potential for market expansion lies in the raising
awareness for health benefits from green tea.
o Garment (knitted) and footwear (canvas shoes): These two sectors are the
pioneers for Viet Nam export, bringing Viet Nam to the top of 10 exporters
of the world. The enterprises in the northern region are not the majority
producers with the concentration of 37% of export revenue of garment and
16% of footwear of the country. The key role for development is job
generation, particularly for women. The concentration is also one faciliating
ground for further expansion in the context of final negotiation of TPP and
EU-FTA. With the possibility of import tax reduction to 0% for US market
(TPP) as well as EU market (EU-FTA) but strict origin regulation, the
region is becoming a magnetic for FDI for materials and accessories.
o Handicraft- bamboo, rattan: The northern region is home of skillful
artisians with various craft villages. The development of bamboo, rattan
handicraft products will create off-farm jobs, specially for women in rural
areas. The bamboo and rattan handicraft of the region has reached many
markets with still modest quality and design. The material base is mostly in
the Central but still an significant import is required. The development of
handicraft from bamboo, rattan will further regional linkages and for a
national image;
o Logistics: has a considerable role for export, especially for sectors such as
fresh fruits. Both EPA and IA reports depict a big gap in this export support
service- most players are now large enterprises and foreign ones locates in
cities. There need to be certain assistance to further the roles of business
counselling, such as marketing, packaging, shipping options, for SMEs of
logistics and TPOs from the provinces in the whole region;
o Tourism: although this is not under trade and industry line, tourism sector
is revealing a new trend of wellness tourism which is showing their larger
role as a development locomotive and a facilitator for other sector
expansion, e.g. handicraft, argriculture. Besides the contribution to cross-
cutting issues of job creation, gender, rural development, tourism
promotion expertise has many commonalities for furthering trade
promotion and marketing places expertises.
1ST DRAFT 15
1.4 Structure of the report

The report has five sections with the first section introducing about the Program, work
performed for the inception phase and justification on product selected for this REDP.
The second section presents the approach and methodology and the third section details
all the analysis and action plan for production development, furthering the participation
of SMEs in the global supply/export chain. The fourth section consolidates all the
activities for building up the capacity of trade support network through general trade
promotion competency improvement and selected- sector-specific expertises
development in particular. Last but not least, implementation scheme, indicators for
monitoring and evaluation are the key contents of the last section of the Report.
2. Methodology
2.1 Key concepts and tools for analysis

The highlight in this REDP’s approach is the expansion from the traditional
terminology of trade promotion or export promotion which focuses on searching for
prevailing markets and bringing up existing products to the buyers in those markets.
Rather than that norm, this Plan applies Export Development approach with a larger
focus: to generate new demand by improving and creatation of new products for each
product sector as well as expand to new markets.
From development perspective, this process will facilitate fundamental change in
both quantity and quality aspects for exports. The efforts shall include the increase in
product quality with new product range, new design, new packaging... (product
development) and export sales expansion in terms of both volume, value and export
structure... Accordingly, the analysis of all product sector will study available product
groups of Viet Nam and existing ones in the import markets. Box 1 below shows a case
of success from Mexican garment with such export development approach in the early
1990s.
Box 1. Success experience of upgrading in value chain of Mexican garment
1ST DRAFT 16
The above figure portrayed the moving of blue jeans sector of Torreon area, Mexico from
1990 to 2000. Upon the finalisation of NAFTA and the downturn of the country
economy, many inhabitants raised the question “Whether the Agreement will bring any
benefit? Who will be the beneficiaries?”. Garment and apparel sector of Torreon, an
industrial cluster of 4-hour-drive from the border with the US has proved the way to take
the opportunity of NAFTA and overcome economic slowdown in those years of early
1990s.
With 12,000 employment in garment sector, the participation in NAFTA (full effects
from 1st January 1994) which linked with demand of full-package production from
producers enduced Torreon’ businessmen to change their strategy. In 1993, most
workshops are contractors for 4 bigs names from USA (Farah, Sun Apparel, Wrangler,
and Levi Strauss & Co) using materials imported from Asia. The picture in 2000
portrayed more than 20 names of that big sizes, including high-end image such as Nike,
Tommy Hilfiger as well as large retail chain having competitive edge on design,
marketing and advertising. The later put emphasis on full-package production for
compliance with NAFTA for price competitiveness.
Such pressure changed the porfolio of producers in the region. Out of top 10 firms in
Torreon according to their production volume, four of these 10 firms are “full-package”
manufacturers, meaning that they receive an order from a client and deliver a finished
product. Four more are what may be termed as “half-package” producers, meaning that
they carry out all the production activities (cut, sew, and launder), but do not buy the
fabric.
Besides, through the production for the U.S. clients and having earned the trust of foreign
buyers, Mexican firms are now developing direct links to export markets. These full-
package firms are upgrading by eliminating middlemen like brokers or trading
companies, which allows them to enjoy the higher profits full-package production offers
as compared to outsourced orders. By 2000, the number of employment had grown to
75,000. It is equally important to note that activities associated with the deepening of the
supply chain—such as textile production, laundering, and cutting—are bringing new
types of jobs to the region to complement the growing number of sewing workers.
Source: World Bank (2013), Bair and Gereffi (2001)
Following the approach in Box 1, in order to prepare the plan for export
development, the study in each sector looked in the value /supply chain and SWOT for a
comprehensive situation examination. This method furthered the analysis of EPA,
exposing the sector to the context of international competition and global supply chain.
The value/supply chain covers all the steps from the production of a
product/service to the final consumers. For a complete value chain, each step must be
made visible with clear involvement of stakeholders (raw material suppliers, collectors,
producers, input suppliers, processors, intermediaries (including shipping and
forwarding), exporters, importers, retailers...) and value added in each step. However, for
this report, the absolute value added at each step is not the priority for inspection but only
the relative value of usage for final consumers is the target for analysis to bring up the
implications of Vietnamese’s export positioning in each product sector against other
competitors. Challenges to maintain the position as well as to upgrade in the value/supply
1ST DRAFT 17
chains are the implications for visioning of each product sector with the project’s
interventions. The value chain analysis also indicates the critical factors for
improvements and suggests areas for suitable actions.
The analysis largely bases on qualitative study with optimal use of data from EPA.
In several product/service sector, the team carried out additional interviews of experts
and SMEs to enrich the recommendations and proposed actions.
The utilization of the export development approach with value chain analysis on the
ground translates the presentation for each product/service sector in this report in three
key contents of:
 Market outlook and prospection with forecast of world demand, competition
investigation, technical requirements;
 Situation analysis for the production and export of the sector. This section
sharpens the supply conditions analysis of EPA through the lense of value chain,
brings up clearer picture with trade indicators, SWOT, sector position. The current
role and support of TPOs, TSIs are revisited in the light of each product/sector
performance for more specific possible enhancement as well as more suitable
coordinating mechanism of the Program to assist the sector. Relevant past and on-
going international cooperation programs in the region is another subject of study
for synergy and lesson learnt.
 Based on market outlook and sector performance, each sector is proposed with a
vision and strategy for improvement, clear targets for 2015-2017 with the Program
assistance. This third content is also the core of the export development plan with
the concrete proposed actions, timing, implementation methods and all related
details to achieve the set targets and vision.
1ST DRAFT 18
2.2 Limitations and constraints of the analysis

- This report only focuses on the analysis in the selected products from EPA for the
region and the criteria listed in section 1.3. The size and scope of activities cannot
be too broad to ensure effective implementation and accomplishment with limited
resources;
- The supply conditions analysis does not list out all elements but the critical factors
which need improvement, particularly in light of market prospection, technical
requirements and international competition examination;
- Due to time and resource constraints, the value chain analysis does not
comprehend the added value in every step. They are performing the fundamental
role as the base for positioning analysis and upgrading solution.
3. Sector-specific Export Development Plans
3.1 Lychee
3.1.1 World market prospects
3.1.1.1 Lychee production and import in the world
The total yield of lychee in the whole world is estimatedly 2.3-2.6 million tons per year
and it is forecasted that this will increase mostly thanks to the production activities of
countries of China, India, Viet Nam and Thailand. In 2014, the world’s lychee yield
reaches 2.6 million tons, in which Asian countries account for 95% the total yield, China
and India accounts for 57% and 24% relatively on quantity and Viet Nam accounts for
6% which is on the third position of yield (Bảng 29). However, while lychee procuded in
China and India is mainly consumed domestically, Viet Nam exports up to 40% of the
whole yield of the country and mostly through auxiliary border gates and borderline
entrances so the country has not occured in the map as a big lychee exporter. Therefore, 3
countries of Viet Nam, along with China and India are not the head of export but the
position is possessed by other countries such as Madagasca (which exports around 25%
of its yield, accounting for 70% market share in EU as well as the world’s lychee export
volume), South Africa (exports up to 90% of total yield) or Israel (exports over 70% of
total yield ) (GHD, 2013). The total export volume of the world just accounts for a tiny
proportion-around 2% of the total production yield. According to the data in 2008, it is
estimated as 32,000 tons.
Lychee production activities take place mostly in the northern hemisphere and
partly in the southern hemisphere (including Australia, Madagasca, South Africa and
several countries). In the future, it is forecasted that Brazil will possibily export lychee to
USA when the providing sources for its domestic market surplus. Due to the difference
among crops in the year, lychee in the northern hemisphere is harvested mainly in
summer (from May to July) while lychee in the southern hemisphere is harvested from
November to February (Bảng 30 in the Annex)
1ST DRAFT 19
Therefore, on production scale and harvesting time, main potential opponents of

Viet Nam are China, India, Taiwan and Thailand. Most of these countries, especially
Thailand, have exported lychee to demanding markets such as EU, Canada and the USA.
Thailand is one of five countries producing most lychee in the world and experienced in
fruits processing and export promotion.
Enterprises in Thailand are very active in improving their products’s quality and
packaging as well as in organising trade promotion activities in their targeted markets.
Thailand has developed concrete partnerships with large wholesale supermarkets and
distributors in EU for ensuring the stability of lychee export to this market. Thailand also
pays special attention to product design and packaging. Fresh lychee is packaged in eye-
catching colourful boxes with labels of full instruction information. Lychee exported to
the USA is preserved for keeping the product fresh longer thus most lychee exported
from Thailand to consuming markets can keep its natural colour and with high uniformity
(Figure 1).
Figure 1. Thailand’s fresh and processed products of lychee for export
According to the forecast of Australian lychee importers, the demand of lychee

consumption in the world will continue a trend of increasing in the coming time. Fresh
lychee will still be favoured but the trend of lychee products diversification will also be
strong. Products such as sweets, jam, powder and juice will occur more in the segment of
wholesale rather than there were just fresh products which governed this segment for the
past time. In addition, consumers will be more demanding in choosing lychee products
for although they have more options coming from different countries in the world, there
is still a clear trend that safe products which can reserve natural taste are more prioritized.
Table 2 collects a number of lychee products available in the markets.
1ST DRAFT 20
Table 2. Products of lychee, requirements of quality, packaging and features of

distribution channel and transaction in some markets in the world
Product’s Image Description of distribution/transaction forms

name
Fresh lychee Packaging, preserving and transporting:

Fresh lychee from countries is preserved,
packaged, labeled and exported by air or by land
(among countries sharing borderlines)
Distribution:
Fresh lychee are then sold at supermarkets,
shops or home delivered by professional
distributors to ordered consumers (for example
in Florida-USA, clients order 1 or 2 day(s) in
advance and then the distributing shops will
choose the products by orders and finally deliver
it to clients’ addresses.
Retail price: 29-32 USD/kg
Order 1-2 day(s) in advance upon air services
Requirement: Uniformity (for example the
market of Florida, the USA requires a uniformity
of 1.5 inch each lychee, naturally fresh colour,
processed with radiation/temperature to prevent
from diseases
Canned Canned lychee products are of great diversity,

lychee upon the taste of each market. Accordingly,
sweetness, weight, number of lychees in each
can differ from markets. For example, in Florida,
the USA, consumers prefer cans with 20 lychees
each which are peeled, seedless and packaged in
1.5 cups of sugar syrup.
Retail price: 5-25 USD/can by markets (for
example in China, the price is only 5-10 USD
for a 20-lychee can but in EU, the price for the
same type is 25 USD)
1ST DRAFT 21

name
Lychee Lychee puree is used for mixed drinks, sorbets,

Puree smoothies or cream
Distribution: Mosly sold at supermarkets and
home delivery upon request.
Price: 25 USD/0.5 kg bag
Requirement: Smoothness and sweetness meet
the standards of the consuming markets
Lychee Dried lychees, Lychee gummys, Lychee in

sweets, dried honey, Lychee gel cup...
lychee Mostly sold at supermarkets
Lychee jam Lychee jam is greatly favoured in the USA and

EU, especially when the fresh lychee season
ends. Lychee jam is served with bread in
breakfast
Distribution: Popularly sold in supermarkets
Lychee Lychee syrup is processed with specific recipe

syrup of different producers, in combination with some
other ingredients for meeting the requirements of
nutrition, taste and some special demand of
health (for example it can be used as supplement
diatery. Lychee is very good for high blood
pressured people as it contains very little natri
but much kali per serving.
Lychee juice Lychee juice is very popular at supermarkets in

the world. In the USA, lychee juice from South
Africa, Taiwan and Malaysia has reached a good
position in large stores/supermarkets, while Viet
Nam has not still entered this market.
Transportation: By air or by sea
Lychee tea China and Taiwan have produced lychee

flavoured black tea or natural lychee tea that
have been exported to the USA and EU
Transportation: By air or by sea
1ST DRAFT 22

name
Lychee Skin Lychee skin care products are processed for

Care ensuring the natural smell and usage of lychee to
skin and the natural feature of fresh lychee with
attractive colour of slight red.
At present, Thai producers have succeeded in
exporting this product to the USA market
Source: Collected from websites of large stores/supermarketsin the USA and EU

In EU market, the CBI’s analysis in 2013 shows that Madagasca is currently the main
source of provision with an increase of imported volume from 18 million Euros to 72
million Euros within only 4 years from 2008 to 2012, meeting 70% of the demand of the
market but the providing time just mainly dropped in Christmas time. Therefore, other
importers can provide lychee in off-season time with ensured quality and thus, market
opportunity for this is significant. Madagasca’s experience in entering EU market is
presented below in Box 2.
Box 2. Madagasca’s experience in overcoming GlobalGAP’s barriers for exporting
fresh lychee to EU market
An analysis by Bignebat, C.; Vagneron, I. (2011) shows that though Madagasca only
started exporting lychee to EU since 1990s, the GlobalGAP occurring in 2007 set
significant challenges to this exporting activity. However, there reveals an interesting
point from this research that GlobalGAP is in fact a danger for small-scaled production
models with the added cost for certification but a starting enzym that created
opportunities for market cooperation and transparency. In the long run, if the through-out
and sustainable relationship among importers, enterprises and producer farmers has been
well established, GlobalGAP will not really necessary anymore. Madagasca’s experience
was closely analised and revealed that it is not GlobalGAP but the marketing capacity
and the ability of cooperation among logistics services of importers and exporters that
play the most important role.
The range of price for lychee varies significantly among markets, from 300,000 VND/kg
to 600,000-700,000 VND/kg, which can be referred from the Table 3 below.
1ST DRAFT 23
Table 3. Reference of lychee price in some markets
Product Market Distributor Retail price
Fresh lychee The UK8 mysupermarket.co.uk 12 lychee (200g) can: £ 1.69

£ 8.45/kg (abt 300,000
VND/kg)
Fresh lychee Germany9 www.freshplaza.com Week 48,49 (2012): EUR

9.9/kg (abt 270,000 VND/kg)
Week 50 (2012): EUR 6.90-
7.00/kg (abt 200,000 VND-
240,000 VND/kg)
Fresh lychee (of California LocalHarvest 5 pound can: USD 79

brands such as (USA) (equivalent to USD 31.6/kg)
Sweetheart, 10 pound can: USD 149 (abt
Mauritius, and 600,000 VND/kg)
Brewster)
Fresh lychee Domestic Retail shops 200,000- 300,000 VND/kg

China (USD 10-15 /kg)
Fresh lychee Amazon.com USD 30.99 /2 pound (USD 32

/kg)
Fresh lychee BuyExoticFruits.com, USD 29.99 /kg (discount 10%

for clients with coupon)
Fresh lychee Japan Retail stores USD 16 /set of 5-6 lychees

(about 100 gram)
Source: Internet, searched by consultant
3.1.1.2 Required standards in the world

At present, there are many high demands of exporting fresh fruits to the USA, EU, Japan
and China in terms of quality and food hygiene and safety. There are also different
requirements among these markets for their imported fresh fruits. Below is the summary
of the requirements of some main markets.
8
http://www.mysupermarket.co.uk/Shopping/FindProducts.aspx?Query=lychee%20juice
9
http://www.freshplaza.com/article/104341/Madagascar-will-export-more-lychees-to-Europe-in-2012-2013
1ST DRAFT 24
+ EU market: Requirements are divided into three main groups of “must”, “common”
and “niche”. “Must” requirements are conditions that must be met by the exporting
enterprises before being allowed to enter EU market. Requirements of “common” group
are requirements normally met by exporting enterprises when entering EU market, not
compulsary but should be met for better competitiveness. “Niche” requirements are the
ones which are applied for some specific market segments such as organic vegetables.
“Must”requirements include: requirements on pesticides, food management, seeds,
marketing standards, regulations on hazardous chemicals and labels. Among these, the
most important requirement is the regulations on pesticides or Maxium Residue Limit
(MRL) in food. EU market regulates the maximum quantity of pesticide residue for
around 450 types on fresh fruits. The allowed limits mainly range from 0.01 to 0.05
mg/kg.
“Common” requirements include the size of lychee and packaging specification. For
example, according to the CODEX STANDARD (CODEX STAN 196-1995), the
minimum diameter of lychee should be 22 mm and for reaching extra standards, it should
not be lower than 33 mm. Lychees can be packaged seperately (it is compulsary for extra
group) or by bunch (minimum 3 lychees/bunch) and the whole bough length should not
exceed 15 cm, etc.
Another requirement that has gradually become important is quality certification,
especially GlobalGAP for EU’s imported products. This is a kind of certificate for food
security in the whole production process from the stage of preparation before planting to
the stage before processing. GlobalGAP’s standard criteria are divided into 9 subb-groups
which are called CB. Each group includes one or many control points classified as Major
must, Minor must and Recommendation. For getting GlobalGAP’s certification, products
must comply 100% of Major must and 95% of Minor must. Major must criteria normally
relate to the possibility of origin tracking, genetically-modified seeds, chemical and
organic fertilizers, irrigation and pesticides. With this system, product buyers can trace
the origin where the product is from and then can get to know what irrigation methods its
producers applied or whether the surface as well as the ground water was protected.
Besides, some countries in EU require other certificates such as BRC (British Retail
Consortium) and IFS (International Food Standards) in continental countries. BRC was
published by the union of British supermarket chains, the BRC. It requires documented
approval to ensure food quality and safety. The IFS is a quality and safety standard
published by the union of German supermarket chains- HDE (Hauptverband des
Deutschen Einzelhandels). It has been adopted by the French equivalent, the FCD
(Fédération des entreprises du Commerce et de la Distribution).
+ The USA market: According to the USA’s Ministry of Agriculture, hazardous insects
in fruits is one of the big dangers. Therefore, imported fruits must be examined of pests
and diseases and if there is any doubt about this, the owner or the representative of the
owner of the product lot will be required to take procedures of minimizing risks;
otherwise, the lot will be transferred to another country, returned to where it was exported
from or destroyed. There are normally four methods of treatment which include
mechanics, temperature, smoking and radiation. Mechanical treatment is done by shaking
1ST DRAFT 25
and cleaning the fruits and passing fruits through chemicals or hot water. Fruits can also
be treated with temperature (hot/cold) or with gas (mainly methyl bromide). Radiation
treatment is the use of radiation ray at some certain level to prevent the growing process
of pests and diseases.
+ Korea and Japan market requires Vapour Heat Treatment (VHT) to imported fruits.
Although the cost for this treatment is less than that for radiation one, the price of
imported fruits is still high. Dragon fruit, for example, with the price of four times higher,
become a product of weak competitiveness in Korea. Similarly, though the requirement
of VHT is also applied by China, for the still rather high cost of this treatment, China
allows alternative treatments to imported products from some countries such as the
Philippines. The most used alternative treatment is Extended Hot Water Dip (EHWD) 10.
3.1.2 Viet Nam Lychee production and export

3.1.2.1 Export of lychee from nothern region to the world market
The average growth of Viet Nam’s lychee export in the period of 2008-2012
reached 220%/year. In 2013, lychee export turnover achieved 19 million USD, increasing
by 26.6% compared to that of 2012. Due to the less advantages in lychee export to China
in 2014 season, the export turnover is about 17 million USD, 10% lower than the
previous season.
Thanks to the extension of VietGAP application, the quality of Viet Nam’s lychee
has been gradually improved with more attractive appearance and better uniformity so it
is more favoured by Chinese consumers. However, its export turnover and price are not
stable and completely depend on importing countries.
Figure 2. Lychee export value, 2008-2014 (Million USA)
Source: The General Department of Viet Nam Customs

Lychee price
Farm gate price
10
https://iae.uplb.edu.ph/index.php/sub-programs/faculty-based-projects
1ST DRAFT 26
In common practice, there is a big difference of lychee price among levels of

quality. By quality, lychee can be classified as class 1, class 2 and class 3 and the price of
class 1 (good, fresh, with nice appearance and uniformity lychee) is the highest and is 2
two times higher than the average price in the same period. Besides, lychee price varies
from different planting regions when lychee from Luc Ngan District in Bac Giang
Province and Thanh Ha District in Hai Duong Province are bought with much higher and
more stable price than lychee from other locations. This is a easy-to-understand fact for
two reasons of (1) the quality and appearance of lychee from these favoured regions are
better than lychee from other areas and (2) these regions are well-known for lychee with
recognised brand names so they are better noticed by traders. Besides, harvesting time is
the third factor that affects lychee price. Early lychee is harvested from 25 May to 20
June and late lychee is harvested from 15 June to 15 July every year. Lychee price is
normally high at the beginning and the end of the season and deeply low at the middle of
the harvesting season. The average lychee price across the whole Bac Giang Province
was 14,300 VND/kg and in the season of 2013 and 11,400 VND/kg in the season of 2014
with the highest price recorded as 25,000 VND/kg. The total value of lychee production
in Bac Giang Province is estimated of 104 million USD.
Export price
In 2013, the price of lychee by contract between Vietnamese enterprises with Chinese
buyers was 20,000-27,000 VND per kilogram while the selling price applied to the
people at the borderlines who bring products for exchanging was just from 10,000 to
20,000 VND per kilogram. It’s noticeable that the price of Luc Ngan’s exported lychee in
2013 reached an average of 22,000 to 30,000 VND/kg but in 2014, it’s only 18,000 to
20,000 VND/kg. The price of fresh lychee exported to China (FOB Lao Cai) in the
season of 2014 ranged from 5 to 10 CNY/kg (equivalent to 20,000-35,000 VND/kg) and
thus the average price was 6 CNY/kg (about 21,000 VND/kg). Dried lychee was sold
with the price of 50,000 VND/kg.
Another source of information for reference is that the export price of VietGAP lychee to
Korea market in 2013 was 1,157 USD/ton and in 2014 can reach to 1,300 USD/ton-
equivalent to 26,000 VND/kg (FOB Hai Phong).
The comparison of these prices with the retail ones shows that retail prices are 12 to 30
times higher than FOB prices of the region.
3.1.2.2 Currently produced and exported products

The current structure of lychee products for export mainly consists of fresh lychee,
dried lychee and canned lychee. Exported fresh lychee is packaged in styrofoam boxes
with cold preservation. With the extension of lychee production areas that meets
VietGAP standards, there are presently a large number of Vietnamese lychee having
good quality with proper packaging, full certificates of product origin and phytosanitary.
Processing products from lychee such as lychee juice, dried lychee, canned frozen
lychee with high added value are maily exported to Japan, Korea, the USA and EU,
accounting for 15% of the total export volume. Besides, lychee puree is also another
potential product. According to the estimation of Dong Giao Export Food Stuff Company
in Ninh Binh Province, five tons of fresh lychee can make one ton of lychee puree. With
1ST DRAFT 27
the improved production line (from the previous production of pineapples), the company
changed to producing lychee puree for exporting to Switzerland market. However, due to
the incomplete technology line which causes work force and time consuming production,
the company can still not meet large orders in a short time. For example, the stage of
lychee peeling is totally by hand so it takes two days to peel enough lychee for only 40
minutes of crushing. Last year, the company had to deny an order from the USA for
having not enough time of production. This is a pitiful case because it is not easy to get
such an order of processed lychee products from a developed market that is willing for
high price like the USA.
3.1.2.3 Current markets and types of export

The major export market of Vietnamese lychee is currently China. Besides, a small
amount of lychee are exported to some developed markets such as the UK, Japan, Korea,
Australia, Singapore. According to the information gathered from enterprises, the number
of orders from markets of Korea, Japan, Taiwan, Laos, Cambodia and even Russia in the
lychee season of 2014 is larger than those of the previous seasons. Second to China,
Japan market has ordered 3,000 tons of fresh lychee in this year’s season.
Table 4. Export to main market during the period of 2008-2014
Unit: USD
No. Country 2008 2009 2010 2011 2012 2013 2014 (*)
1 China 386,288 1,024,048 324,349 3,843,312 14,620,374 18,564,683 17,000,000

2 UAE 63,450 82,800 82,800 120,450 145,200 172,500
3 Korea 38,146 35,938 17,600 20,488 100,230 319,850
The
4 Netherlands 88,400 79,350 66,096 175,667
5 France 120,314 111,120 19,610 98,235 3,250
6 The UK 47,626 46,800 69,228 55,000
7 Canada 141,990
8 Laos 6,200 47,442 11,560 2,820 3,384
9 Singapore 8,820 16,800 25,761
Source: The Viet Nam General Department of Customs
Figures of 2014 is estimated by Bac Giang Province’s Department of Industry and Trade
+ China market: Vietnam’s lychee export to China used to account for 95% of the total
export volume and has been developing strongly for the past many years. In 2014, due to
some political issues, the volume of lychee exported to China decreased by 10% to the
previous year of 2013 and accounted for 52% of the total lychee yields (according to the
estimation of Bac Giang Province’s Department of Industry and Trade). However,
lychee exported to China is mainly through auxiliary border gates or borderline entrances
so Viet Nam has not been recognised in the world’s map of lychee exporters though
having a third position in lychee yield.
1ST DRAFT 28
Besides China market, lychee is also exported to other countries though with very small
amount.
Korea: Lychee export turnover to Korea has been increasing for the past several
years. Korea is a demanding market which has high requirements of quality and food
safety. Therefore, it is a good sign for Viet Nam lychee sector when Vietnamese lychee
has entered this market with increasing export turnover.
Japan: According to Viet Nam National Vegetables, Fruits and Agricultural
Products Corporation (VEGETEXCO), in 2014, there have been 11 delegations from
Japan visisting Viet Nam to make an order of bringing 3,000 tons of Vietnamese lychee
to this demanding market. It is estimated that in 2014, the volume of lychee exported to
Japan and Korea increases by 10%.
Lychee growers in Hong Giang Commune, Luc Ngan District, Bac Giang
Province has cooperated with Ministry of Science and Technology’s Institute of Regional
Research and Development in piloting lychee export to Japan with the compliance of
CAS procedures (Japanese technology of quich freezing, used for seafoods, agricultural
products and foods preservation). On 20 June 2014, 20 tons of Luc Ngan lychee
preserved with CAS technology have been exported to Japan.
3.1.2.4 Business players and exporters

According to the statistics of Lao Cai Department of Customs, in 2013, there were
12 enterprises registering for export entry opening for lychee export through Lao Cai
International Border Gate such as Duc Huy Hieu Company, Dung Anh Private Business,
Thuy Linh Company, Tam Duc Thang Company... In the last two years’ seasons, there’s
been a new point of the close cooperation between enterprises from Lao Cai and
businesses from Bac Ninh, Bac Giang, Hai Duong Provinces and Ha Noi. For example,
Tien Dat Company in Hoang Son Industrial Park in Tien Du District, Bac Ninh Province
specialized in styrofoam production has become a transaction partner of Dung Anh
Private Business in Lao Cai City that is one of the businesses purchasing lychee with
large amounts. Since 2005, Dung Anh Business has made contract of purchase with
lychee growers in Bac Giang, Bac Ninh and each year, 20,000 to 30,000 tons of lychee
are purchased from these locations. Purchased lychee is packed in plastic bags and placed
in styrofoam boxes with ice for preservation.
Furthermore, according to VEGETEXCO, since the beginning of lychee season in
2014, there has been about 16 processing manufacturers getting ready and starting their
purchasing activities because the current lychee price and quality can meet the
requirements of clients from Korea and Japan.
However, it can be overally seen that the role of SMEs in lychee processing and
export sector is still limited. In Bac Giang Province-the largest lychee material area of the
country, there are even only 3 lychee processing enterprises. When asked about
difficulties in exporting lychee to further markets, some enterprises even showed their
concern and unreadiness for challenges facing.
As analised above, the biggest barriers for export are the capacity of meeting the
importers’ high demanding requirements of quality and delivery time. In the experience
of Thien Hai Long Business that is specialized in exporting lychee to China, there easily
1ST DRAFT 29
occur unexpected costs caused by risks of lychee spoil or failure in delivery on time 11.
Madagascar’s success in Box 2 can prove the applicability of the experience to lychee
sector in the north of Viet Nam.
3.1.2.5 Critical factors for success

It can be integrated from the above anlysis that critical factors for success in export
include:
+ Product quality, packaging, design and innovation: Size, flavour and safety are the
most important factors that need special attention, especialy to fresh lychee which is
presently the main supply source as the majority in the product structure just include
fresh and dried lychee. Other products such as juice, canned lychee...only occupy a small
proportion in the sector structure and are produced upon orders. In the coming time,
processing enterprises can explore the extension to new products such as lychee juice,
dried lychee pulp, lychee jam, lychee powder, canned lychee with different labels design
as summarized in Table 2.
+ The capacity of meeting importers’ taste and standards:
The requirements of packaging, origin tracking, pesticide residues...are the factors that
need attention from lychee businesses and growers in the coming time for the deeper
penetration into modern and high-class distribution channels in China and higher ranking
markets of EU, Japan, Russia, the USA or UAE. To these high-ranking markets,
standards are even the top priorities with requirements such as lychee uniformity, high
safety, favoured natural flavour and especially as analised above, product safety is
normally striclty examined. With a large area meeting VietGAP’s standards (80 ha in Hai
Duong, 9,000 ha in Bac Giang), Vietnamese lychee has a premise of the gradual
extension to markets of the USA, Japan, Korea where the requirements of quality have
not been as tough as GlobalGAP standards. Specific requirements of each market are
presented in the part of Requirements of standards in the world-3.1.1.2)
+ Preservation capacity
In previous years, post-harvest technology applied by lychee growers is mainly
traditional but at the pressure of increasing competition in the international market as
well as the higher and higher demands from the consumers in lychee quality and safety,
the preservation capacity should be improved. In addition, for the fact that lychee
harvesting season only lasts about one month thus price depression takes place every year
when the lychee harvesting season is on its peak, lychee growers and local authorities
expect lengthened season, though for just a fortnight to one month more, to prevent from
the deep price depression12.
Lychee preservation technologies have existed in the world and also in Viet Nam. In
Japan, many agricultural products are sold at very high prices for being preserved with
cell technology and thus keeping nice flavour and appearance with high level of safety.
This is the reason for the fact that the lychee price in Japan is 16 USD/5 lychees while in
11
Comments from the Director of Thien Hai Long Company at the Conference of lychee consumption promotion for
the season of 2014, organised in Luc Ngan District, Bac Giang Province on 3 June 2014
12
Khảo sát thực tế của tác giả tại Lục Ngạn, Bắc Giang, vụ vải quả 2014
1ST DRAFT 30
Viet Nam the lychee price at the peak of the harvesting season is just 0.5 USD/kg. Hai
Duong Province has contacted Huong Ha Company about the application of the
preservation technology that allows the preserving time of 2 years. Bac Giang Province is
also in a research of applying Japan’s quick freezing technology for seafood, agricultural
products and food with the time of preservation of about one year.
It is therefore an urgent mission for lychee sector in Viet Nam that suitable technologies
should be researched and replicated for the prevention of lychee price depression.
Enterprises investing in preservation technology are the objects that need prioritized
supports for extending export markets to high-ranking segment.
+ Price competitiveness
At present, the price of Viet Nam’s fresh lychee is much lower than that of many other
markets so there is a high price competitiveness for Viet Nam as summarized below in
Table 5.
Table 5. Comparison of Viet Nam lychee export quote price with other countries’
Country Export quote price Description
Viet Nam 1-3USD/kg A-class fresh lychee, 3cm of size
Packed in plastic bags and carton boxes: 5-10
kg/box
Delivery: 15 days after order
Thailand 8-10USD/kg A-class fresh lychee, ThaiGAP and GlobalGAP
certification
5cm of size
India 2-3USD/kg A-class fresh lychee, from West Benga
Delivery: 5 days after order (in May and June)
South Africa 10-25USD/kg Big size, small seed, no pest and disease, 3cm, 24-
26g of seeds/500g of lychee
Packed in plastic bags and carton boxes of 10
kg/box, 2126 ctns per 40RH container
Direct selection from farms to ensure low price
China 8-10USD/kg 4 cm
GlobalGAP certification
3-3.5USD/kg 3.5 cm
ChinaGAP certification
Source: Alibaba.com and Amazon.com

However, export to markets outside China requires additional costs of preservation,
transportation, packaging, trade...; therefore, there should be effective cost management
solutions for ensuring the competitiveness of price for Viet Nam’s lychee.
To EU market, athough the potential is high, price is also a factor that need close
consideration for, as can be seen from Table 5, EU market has for a long time imported
1ST DRAFT 31
lychee from Madagasca where there are favourable conditions of geography and customs
duty free and thus the price is much lower than others’.
+ Trademark and brand name
Trademark and brandname are important factors to any goods and especially to export
products. Even Chinese businesspersons when coming to Viet Nam for purchasing lychee
actively place the label of “Vietnamese speciality of lychee” on the outside of the
styrofoam boxes as Chinese consumers prefer Vietnamese lychee to others’. Some
experts also assess that Vietnamese lychee has better and fresher sweetness than Thailand
and Madagascar’s though this assessment needs more specific proves. In practice, lychee
with brand names are better consumed with higher price of 10% to 20% and higher
production effectiveness in an area unit of 5% to 10%. In the coming time, there should
be better attention to the development of Viet Nam’s lychee brand names through
communications and advertising activities, domestic trade fairs, combination with
tourism and in some trade fairs with good prestige such as the Germany Fruit Logistica
Trade fair in Berlin.
+ Harvesting, transportation and distribution
Lychee is presently harvested and distributed through three main channels of:
Firstly: Fresh lychee from grower households to agents/traders purchasing lychee for
export and then export to China through auxiliary border gates and borderline entrances
or through official trade. This channel presently accounts for 40% of lychee annual yield.
Secondly: Fresh lychee from grower households to agents of purchasing lychee for export
then to lychee export enterprises or export businesses directly contracting and purchasing
from growers to export fresh lychee to some open markets for processing to dried or
canned lychee or lychee puree for later official export. This is an important export
channel that needs to be invested for further development in the coming time for only this
channel can show the potential of attention to investment for sustainable development.
Thirdly: Fresh lychee from grower households to agents and then to wholesale or retail
markets or to supermarkets for domestic consumption. This channel accounts for 55% to
60% of the lychee annual yield.
Distribution through traditional channels (export through auxiliary border gates and
borderline entrances or consumption at domestic whole sale and retail markets) can only
bring low income for lychee growers due to the frequent price depression by
traders/dealers and the limited conditions of lychee preservation and improvement of
appearance and quality.
Meanwhile, through modern distribution channel (the second one) where fresh lychee are
brought to export enterprises for processing and exporting by official trade (or to
supermarkets and safe food stores..), lychee is not only better consumed domestically but
also having better opportunity for reaching to many other countries in the world.
In the long run, traditional distribution channels (the first and the third ones) should be
replaced by the modern channel (the second one) for a two-fold benefit of improving the
added value of the whole chain of lychee and decreasing the dependence to China market
as well as limiting market risks towards lychee products.
1ST DRAFT 32
The experience from Madagasca’s case or from other producers shows that there
should be supports for channel 2 in approaching to importers who are responsible
for most of the stages of marketing, transportation and delivery to retailers (normally
supermarkets) in the arrival markets.
+ Financial accessibility: Demands for finance for high-quality lychee processing and
export projects are very high and require the improvement of the enterprises’ financial
accessibility through the completion of profile and organisational structure as well as
suitable orientation for having capacity of meeting credit conditions even in the case of
receiving credit supports from the state.
+Work force and lychee growers’ knowledge and skills of safe cultivation
The increasing demands from consumers of lychee quality and appearance require the
improved skills of lychee growers in applying GAP as well as post harvest preservation.
Transparent information about markets’ demands and standards should be provided and
there should be linkages among producers to assist export enterprises in ensuring stable
quality supply which helps in the development of trademark and marketing for the
products.
Besides, the industry of lychee processing also requires stable and skillful workforce for
improving the productivity and ensuring the products’ quality as well as the ability of
meeting large orders, especially export ones.
+ Access to advanced cultivation techniques:
According to Bac Giang Province’s Department of Agriculture and Rural Development,
by 2014, there have been over 9,000 ha of VietGAP lychee, increasing by 1,500 ha to
2013 with the majority in Luc Ngan and Tan Yen and by 2015 there will be 10,000 ha of
VietGAP lychee. Currently, Luc Ngan District is cooperating with functional agencies in
completing the procedure of registration for Luc Ngan lychee trademark protection in 5
countries of Japan, Korea, Laos, China and Cambodia.
In Thanh Ha District, the lychee growing area of Hai Duong Province, after 3 years
implementing the project of “Building and developing the model of Thanh Ha lychee
growing ensuring hygiene and safety by following VietGAP process”, in 3 communes of
Thanh Son, Thanh Khe and Thanh Thuy, the district has implemented the model in an
area of 100 ha with the participation from 530 households. Besides these households,
during the 3 year implementation of the project, many other lychee growing households
in the communes and neighbouring locations in the area have applied VietGAP process in
their lychee growing with an area of over 1,000 ha for high quality lychee products that
ensure food hygiene and safety.The average productivity of lychee grown in the area
reaches 10 tons/ha with better quality and less pests and diseases. The district has set a
target that by 2015, VietGAP lychee growing area will increase by 30% to 50% and
lychee growing households will receive guidance on the application of VietGAP for
better lychee quality.
The above discussed plans of the two provinces with largest production of lychee in Viet
Nam show that by 2015, the area of VietGAP lychee growing will account for only 40%
of the total area of the whole country. This sets a requirement that the application of
1ST DRAFT 33
VietGAP and other GAPs should be further strengthened in lychee production in Viet
Nam.
3.1.2.6 Government policy and regulations

Planning: According to the Master plan of production development of agriculture to 2020
and a vision toward 2030 at the Prime Minister’s Decision 124/QĐ-TTg dated 2 February
2012, lychee is classified in the group of major fruits. With an area of 140,000 ha, lychee
accounts for 17% out of 810,000 ha of major fruit trees of the whole country. Production
of fruit trees must be directed towards expanding of the application of good agricultural
production practice (VietGAP), ensuring hygiene and food safety. The Government of
Viet Nam also has an orientation to increase capacity and efficiency of the existing
processing plants (currently only reached 30% of the entire industry design). The main
processed products include the fruits frozen, canned, fried, natural juices, juice
concentrated, frozen; focusing on the types of products frozen, fruit juice concentrated
(pineapples, lychees, passionfruits, mango concentrated).
Policy supporting for quality improvement: On 30 July 2008, the Prime Minister signed
the Decision No. 107 QĐ-TTg approving supports for the development of production,
processing, distribution of safe vegetable, fruit and tea to the year 2015. It’s targeted in
the Decision that 100% of vegetables, fruit trees and tea in concentrated production areas
will meet the requirement of safety and 100% of the total vegetable, fruit and tea
consumed domestically and being material for processing for export will be awarded
VietGAP certification.
Policies creating favourable conditions for the development of lychee export: By an
identification that lychee export is a majority in consumption, right in the middle of June
2014, The Minisstry of Industry and Trade issued a document requiring the Ministry of
Transport, the Ministry of Agriculture and Rural Development and the People’s
Committees of six provinces sharing the borderlines with China, Laos and Cambodia to
simultaneously implement all the solutions for speeding up the time of doing customs
clearance procedures for goods and timely regulate transport vehicles to prevent the
situation of traffic jams on the routes leading to export border gate areas. At the same
time, for the extension and diversification of export markets to Vietnamese speciality of
vegetables and fruits in general and of lychee in particular, the MOIT has directed trade
commissions and their branches in other countries and territories in strengthening contact
with local enterprises and functional agencies for seeking opportunities for export
transactions of Viet Nam’s vegetables and fruits, enhancing the introduction and
communication about Viet Nam’s specialities on special occasions and at international
events to promote the image and products of Viet Nam’s further entering into the world
market.
3.1.2.7 Trade Support Network for the sector

Table 6. International cooperation programs of support for the sector
1ST DRAFT 34
Name of program Donor and Implementin Activities, scope Lessons

and sector implementer g time and specially the learnt
possibility of
combination with
the new project
of Vietrade
The project MOIT, in Project under Cooperation in Not yet
“Organisation of cooperation with Bac drafting research of
logistics services and Giang Provincial logistics and
distribution system People’s Committee distribution
for agricultural, system
forestry and sea organisation forms
products from for creating
production areas to advantages for
border gates and Viet Nam’s
export to China” enterprises in
lychee transport
and export
Event series “Week MOIT June 2014 Contact with the Organisation
of agricultural Trade Commission in event organisers to for
products” including Singapore collect introduction
Vietnamese lychee in information about of fresh
Singapore the guests for later lychee and
access to potential processed
clients and products from
distributors for lychee at the
Vietnamese lychee event
export to
Singapore
Negotiation program Department of Plant 2014 Research Technical
on technical Protection (MARD) combination or barriers are
“barriers” to lychee success of other more and
exported to some countries’ more tough so
markets such as technical barriers Vietnamese
Australia, the USA and finding lychee must
to seek for solutions for be ensured of
opportunities of supporting lychee safety and
export extension to growers and quality from
these market in 2015 lychee processing the stage of
enterprises in growing to
production processing
innovation and and exporting
meeting the stage
market’s demands
3.1.2.8
1ST DRAFT 35
3.1.2.9 SWOT analysis for lychee sector

Table 7. SWOT analysis for lychee sector
Strengths Weaknesses
To lychee in general To lychee in general:

-Favourable natural conditions for lychee - Lychee is highly seasonal with larger yield and short
growing harvesting time, non-uniformity of quality which causes
To fresh lychee: difficulties in preservation, especially in the condition of
limited infrastructure and technique.
- Good flavour and improved appearance
- Infrastructural and technical system for lychee export
- Low cost of growing
is still limited. Transport, though has recently been
- Abundant rural labour resources upgraded, has not still been able to meet the demand of
- Lychee growing areas pay more attention goods transportation, especially in peak season when
to the enhancement of extensive cultivation there are frequently traffic jams in the area of weight
for better productivity and quality, at the station and lychee gathering and purchasing sites.
same time actively create conditions for - There has not been specific strategy and logistic
expanding lychee products consumption, professionals for lychee sector so many logistics
contributing to the more stable income for enterprises still face a lot of difficulties in supporting the
lychee growers lychee consumption in far markets.
To processed lychee: To fresh lychee:
There starts to be some processed products - Due to the still primitive preservation technologies, the
such as dried lychee, lychee juice proportion of spoiled lychee is normally high for lychee
is harvested in summer. The primary natural flavour of
lychee therefore can not remain.
- Products packaging and labeling are non uniformity
with primitive preservative packaging, causing the weak
competitiveness and thus price depressing by China
dealers.
- Consumption markets are not stable and depend too
much on dealers. Traders have not been able to find
partners for stable an large contracts but are trading
spontaneously, passively and mainly for instant benefits
- Though the volume of lychee exported through official
trade has been increasing recently, there remain a huge
amount of lychee exported through auxiliary border
gates and borderline entrances which leads to
passiveness and high risks.
- Pesticide residue used on lychee and post harvest
preservation have not still been closely controlled and
there are still some producing household using colour
making liquid for polishing lychee.
- The ability of catching and exploring information
about the market is still weak.
Opportunities Threats
1ST DRAFT 36
To fresh lychee: To lychee in general:

Market demand is high - Unstable changes of lychee price in the market.
Big producing countries’ consumption is - The risk of degeneration of lychee farms
mainly domestic To fresh lychee:
To processed lychee products: - Export market of fresh lychee is still narrow with
There is a trend of lychee product much dependence on China market which brings high
diversification (juice, canned or dried trade risks (when China can apply border blocking
lychee). measure at any time and Chinese dealers have more and
The orientation by the planning for more tricks in price depressing to Vietnamese lychee)
agriculture sector to 2020: improving the - The pressure of competition from other lychee
productivity and effectiveness of lychee suppliers in the world such as Madagascar (for fresh
processing factories (which accounts for lychee to EU), Thailand, Taiwan…
only 30% of the total design of the sector) - The risks from the increase of technical barriers such
Processed products are mainly frozen, as SPS, origin tracking…
canned, dried or fried lychee, natural lychee To processed lychee products:
juice, condensed lychee juice which are
- The pressure of competition of quality from long-time
identified as concentrated products
processed lychee suppliers such as Taiwan and Thailand
- The higher and higher technical barriers
3.1.3 Vision, objectives and EDP

3.1.3.1 Vision for the future of lychee sector
Lychee sector in Viet Nam is still at a low position in the value chain with the main
supply of raw products with low added value and mainly exported through auxiliary
border gates and borderline entrances to China market. This causes the low income and
benefits of lychee growers and agents.
Figure 3. The current value chain of Vietnamese lychee
Lychee Official
55- Agents 25% 1 Impo Retai Foreig
export export
60% purchasing enterprise rters lers n
Lych % lychee for s consu
ee export 75% mers
grow 15%
ers Export 85% Unofficia

40-
Domestic traders
45% consumpti l export
on
Source: IPSARD. Results of the discussion with Luc Ngan District’s authority and traders in Bac
Giang Province in August 2012 with updates and reassessment in June 2014
In 5 years’ time, export lychee sector needs a breakthrough for improving its position in
the global supply chain. By this, around 65%, instead of the present 40%, of produced
lychee will be exported thanks to the better yield with the application of solutions for
production improving and harvesting loss reducing while export markets will be more
expanded outside China. Lychee for export after being gathered by agents will be
1ST DRAFT 37
transferred to enterprises for heat or radiation treatment for meeting the requirements of
food safety of the import countries, then packaged, labeled for export.
It should be noticed that though there is a variety of investment activities for lychee
processing for export, fresh lychee will still occupy at least 60% of export volume
because a large proportion of consumers still prefer fresh lychee. Processed products will
be exported to farther markets which require less pressure of time and preservation
conditions. The diversification of processed lychee products will help in increasing the
added value of export lychee and the possibility of more integration into different market
segments.
The majority of lychee will be officially and directly exported to markets such as China,
Japan, Korea, Singapore and EU through sustainable and direct distribution channels for
Viet Nam’s lychee specifically (even in China market) for having more of the adđe value
of the whole supply chain. However, there will be a small amount of lychee exported
unofficially to China, Laos and Cambodia in at least 5 years’ time so this will be still a
familiar export channel for a part of lychee traders.
Figure 4. The value chain in the future of Viet Nam’s lychee (to 2020)
65 75 Enterprises
% Agents % responsible Official and
purchasing for direct export
Lychee lychee for preservatio (with Foreig
growin export n treatment, 15% sustainable Impo Ret n
25 packaging distribution rters aile consu
g % and export channels in rs mers
househ 35 Domestic of fresh
China, Japan,
olds % consumptio lychee
Korea, UAE,
n (mainly (60%)
the USA, EU)
through Processing
modern and export
distribution enterprises 10%
channels of Unofficial
such as processed export to
supermarke lychee China, Laos
t, safe food (40%) and
shops… Cambodia
Export
traders
By 2020, about 35% of lychee will be domestically consumed while the rest of 65% will be for
export, in which the volume of export to China will account for around 35%, to Japan, Korea
will account for 10%, to EU will account for 5% and the rest of 20% is the export volume to
other markets.
1ST DRAFT 38
Table 8. Strategic choices for lychee sector from the results of the SWOT analysis
- Favourable natural - Limited preservation ability,
conditions low added value
- Low production cost - Low food safety, chemicals
are still overused in some
- Consumers prefer
lychee farms
Vietnamese lychee to
Chinese and even Thai - Too much dependence on
China market
- Not yet sustainable and direct
distribution channels
Opportunities - Bringing into effect the - Applying new preservation
The increasing demand production advantages technologies
(natural conditions)
of consumption in the - Extending GAPs’ growing areas
world - Enhancing communication - Diversifying export markets
and trade promotion to let
The wave of - Attracting investment from
investment from Japan many other markets know domestic and foreign enterprises
to Viet Nam’s about the strong points of in processing lychee
Vietnamese lychee
agriculture
The occurrence of - Supporting growers, export
modern preservation enterprises in signing direct
export contracts with
technologies
supermarkets in China, Japan,
Korea or importers in the
USA and EU
1ST DRAFT 39
Threats - Maintaining reasonable - Capacity building for enterprises

production cost for ensuring on both production and trade for
- High competitiveness
the improvement of improving competitiveness
- Technologies competitiveness - Market diversifying for reducing
innovation
the dependence on China market
- China’s decreased
import
3.1.3.2 Strategy and Export Development Plan

Objective
+ Bringing Viet Nam into the official list of lychee export countries with a
turnover of 20 million USD/year, in which the export proportion to China market
reduces from the current 90% of the total export volume down to 60%-70% in
2017 and about 40%-50% in 2020. The Phillipines’s experience and success in
shifting banana export to other markets due to the sea disputes with China in 2-3
years previously thanks to its efforts in trade promotion is a good case study for
Viet Nam’s lychee sector13.
+ Improving the quality of material areas: Increasing GAPs applied areas to 60%
in 2017 and 80%-90% to 2020 with an orientation of the total lychee growing
areas applying GAPs.
+ Reaching a proportion of pocessing of 25% in 2017 and 40% in 2020.
+ Improving management and business skills: Increasing the amount of processing
and consuming enterprises in the area to 20-25 enterprises in 2020. The increased
enterprises will be mainly SMEs which previously focused on supplying for
domestic consumption and then upgraded of technologies and business skills for
having capacity in export or capable enterprises trading in agricultural products
and foods but without export and then encouraged and given conditions for lychee
processing or export. These enterprises will not be limited within lychee growing
areas in Hai Duong and Bac Giang but expanded to other northern provinces or
even capable and experienced enterprises in the southern region (for there is a fact
that most of the large fruits export enterprises are presently in the south and most
of the radiation bases are also in this region)
+ Enhancing export supporting services for improving their effectiveness: forming
of special strategies of logistics and marketing for lychee sector towards core
markets
+ Enhancing the closer cooperation among enterprises, areas and sectors
Oriented activities for implementation:
 Improving the quality of lychee suppying sources:
+ Reducing small and low quality processing bases
13
Even after the decisions of reduction of limitations from China in the end of 2012, the Phillipines’ enterprises
belonging to the Association of Banana Growers and Exporters, with supports from functional agencies , still
implemented the organisation of trade promotion delegations to the Middle East, Russia and EU.
1ST DRAFT 40
+ Selecting and providing supports for small businesses with potential of

processing and export
+ Studying the foeign product designs for lychee for creating innovative and
attractive designs for Viet Nam’s lychee products
+ Investing in post harvest preservation technology and lychee processing
technology
+ Investing in labeling, design development and packaging technologies
 Trade promotion:
+ Forming systems of information about price, market scale for enterprises’ and
lychee growers’ updating
+ Implementing activities of strategy development and identification of special
logistics procedures for lychee sector
+ Organising/participating in trade promotion activities of domestic products
introduction and good-prestige trade fairs in the world (with new product designs)
and in the country, with special attention to fruits import enterprises having bases
in Viet Nam
+ Cooperating with Vietnam’s embassies in other countries in organising trade
promotion activities and developing direct distribution channels for Viet Nam;s
lychee to findways for lychee in entering supermarkets in foreign countries like
the recently organised event in Singapore
+ Implementing communication activities in combination with tourism to develop
the image of Viet Nam’s trademark of lychee
Implementing methods
Within the framework of the project, in each core area of Bac Giang and Hai Duong
Province, 3 to 5 enterprises will be selected with a number of criteria (scale, activeness
and readiness to innovation, material area...) for market analysis, identification off
potential marrkets, development of plans for product quality’s improvement, market
demand-based product diversification and implementation off trade promotion activities
for market approach.
There will also be supports for the selected SMEs' trade promotion activities through
consultation and trainings, from the stage of research and selection of markets or market
segments, long-term partners for developing high quality products for the future. Besides,
there will be a cooperation among the project, enterprises, related central and local trade
promotion organisations in providing information for lychee growers, lychee processing,
transportation and logistics enterprises in implementing the general plan for the northern
region’s lychee export development.
The estimated budget will be 300,000 EUR, in which 150,000 EUR will be for the
support to the capacity building of preservation, processing and business of the selected
enterprises, 50,000 EUR will be for the activity of Viet Nam’s lychee trademark
development and the rest 100,000 will be for market research, trade promotion and
development of direct export channels.
1ST DRAFT 41
Indicators for outputs and results assessment

+ The percentage of lychee yield with GAPs application
+ The number of processing and export enterprises meeting the criteria of scale,
export turnover and capacity for innovation
+ The growth of export and market share
+ The market structure (with the reduction of weight on China market)
+ The percentage of lychee directly exported to markets (without going through
foreign middlemen)
3.1.3.3 Key proposed action plan

Targeted China (farther in-land distribution channels), Korea, Japan, Singapore, Brunei,
markets EU, UAE and Russia
The current Very limited (in terms of both quantity, scale and turnover)
role of SMEs
in the sector
Criteria for Baseline/2012: There are about 15 enterprises of lychee processing or export
effectiveness Viet Nam lychee yield is on the world’s third position which accounts for 6%
reflection of the total. 60% of Viet Nam’s lychee is for export but this has not been
(increase of recognised because the main export activities (with 95% of exported lychee)
amount of are through auxiliary border gates and borderline entrances to China, while the
enterprises, rest to several markets such as Korea, Japan, Singapore..is just with very small
export growth) turnover
Target for 2016-2017: Increasing the amount of enterprises having capacity of
exporting fresh and proccessed lychee to 15-20
Current  Small scaled production, difficulties in large scaled production for
limitations export
 Low quality (in both stages of processing and growing)
 Small amount of processing and export enterprises (for lychee products

are seasonal), with limited capacity of information accessing and
marketing in international lychee market
 Enterprises’ limitations of technology and management, seeking and

negotiation (with international partners) skills
Action plan
Action Description (amount, Implementer 2015 2016 2017
(example) province, contents...)
Capacity Bac Giang, Hai Duong PMU, X x x
building on MARD, local
Production capacity:
production and authorities,
Supports in exploring and
doing business Viet Nam’s
applying preservation and
for enterprises Organic
processing technologies
1ST DRAFT 42
(fund + technical expert) Association

for meeting the market
demand
Doing business: Training
courses on doing business,
foreign trade profession
Trading: Introduction of
foreign clients,
consultation/support in
large orders’ signing and
implementation (upon the
request of enterprises)
Capacity Bac Giang, Hai Duong, MOIT’s x Early of Early of
building on Lao Cai Information the year the year
market Center
Information includes:
information
provision for + Price (international, TPOs
information domestic, whole-sale, Enterprises
providing retail, export and the price
agencies and on in the import markets)
the capacity of + Supply-demand trend in
using market the world’s market
information for
enterprises’ + Requirements of import
production and markets about packaging,
operation labels, quality,
quarantine...
+ Purchasing partners,
transportation partners and
intermediates
Organising National Lychee Festival PMU x x x
trade promotion in Bac Giang, Mekong TPOs
and trademark Delta’s Fruits Festival
building Association of
Time: Annual in end of Fruits
programs, such May when lychee’s
as trade fairs harvesting season is on its Enterprises
peak
Participants: National
lychee businessmen and
representatives of
importers, especially from
Japan, Korea, EU, UAE
Selection of enterprises
for supports in
participating international
prestige trade fairs such as
1ST DRAFT 43
Fruit Logistica …
Consolidating Bac Giang, Hai Duong PMU x x
services of and some neighbouring MARD,
provision of provinces MOIT and
packages, ice, Logistics: Research and local
logistics developing a logistics authorities
strategy for lychee sector
for timely access to
targeted markets in
cooperation with
transporters
Training courses for
enterprises, TPOs and
transporters
Packaging by the
importers’ requirements
with special attention to
eco packaging (for the
environment protection
when export to Japan and
EU countries)
1ST DRAFT 44
3.1.3.4 Propose specific plans for some potential markets

Market Specific Current Strategy Specific action plan
features limitations for export
and
rationale
for
selection
China Large and High demand of Developing a cross- Success in developing
traditional consumption but border value chain and a cross-border value
consumptio lack of distribution channels to chain by 2020
n market for information farther in-land China Success in developing
Vietnamese about market Enhancing the signing Vietnamese lychee’s
lychee scale, segments of official contracts trademark
and distribution with partners
channels Success in developing
special distribution
channels for
Vietnamese lychee in
China
Korea Potential High technical Market research, By 2020, 10% of Viet
and markets for barriers so cooperation with Korea Nam’s exported
Japan fresh and Vietnamese and Japan’s fruits/food lychee is exported
processed lychee has not importers in step by (fresh) or processed
lychee yet been step bringing lychee (for export) to Japan
products exported to these products into the and Korea
that are markets markets
ensured of Improving the
food products’ quality and
hygiene and capacity of meeting the
safety requirements of food
hygiene and safety for
overcoming technical
barriers
Taking advantages of
TPP
EU Potential High technical Developing processed By 2020: 5% of Viet
market for barriers lychee (canned lychee Nam’s exported
processed juice, dried lychee, lychee is exported to
Geographical
lychee that lychee jam, lychee EU countries
distance
products or sweets…) for export to
causes Success in
lychee difficulties in EU in autumn when the identification and
undergone preservation and lychee season ends and establishment of 1 to
treatment high export cost the weather in EU turns 2 lychee sustainable
(of radiation cool which is suitable consumption
1ST DRAFT 45
Market Specific Current Strategy Specific action plan

features limitations for export
and
rationale
for
selection
for Price for lychee consuming. channels-can take the
example) competition with Export of fresh lychee advantages from
Madagascar importers from
to this market can also
Madagascar for
be expanded during the
helping them in
period from July to
Madagascan lychee
November before
off-season market
Madagascar’s lychee
expanding
season is in place, when
preservation
technologies and
logistics are developed
Taking advantages of
TPP and EFTA
Other Taking Geographical Export of fresh lychee Success in developing
countries advantages distance with preservation limit direct distribution
such as of the from several months to channels for lychee to
UAE, markets that one year UAE, Russia
Russia are not too Export of some
demanding processed products
and with the
people’s
increasing
income
Besides, there should also be considerations of exploring potentials from some neighbouring
markets with average good income and suitable geographical conditions, such as Singapore.
3.2 Green Tea

3.2.1 Current status and prospect of tea world market
3.2.1.1 Market prospect
Tea world import has been witnessing quite low growth rate, at only 2% per year for
quantity during the period of 2008-2013. However, it is noticeable that import turnover
grew at nearly 7% per year, with a dip in 2013.
The size of global market for tea products is remarkable at an estimation of 15.4 billion
USD for 2013 in terms of production value. While the segment of black tea is growing at
a modest rate (at around 3.7% per year on average), green tea export is increasing rapidly
1ST DRAFT 46
at 11% per year during 2008-2012 and remarkably at 26% in 2013. In addition, herbal tea
is multiplying its market size at over 15% per year.
Figure 5. World import turnover of black tea and green tea, 2009-2013
7000
6000
million USD
5000
4000
3000
2000
1000
0
2009 2010 2011 2012 2013
Green tea, packages > 3 kg Green tea, packages < 3 kg

Black tea, packages > 3 kg Black tea, packages < 3 kg
Source: ITC Trademap

Tea is mostly consumed as a kind of refreshment with limited consumption demand due
to cultural factors. Therefore, it has to compete with many substitutes such as coffee.
During the 50s of the 19th century, green tea accounted for 80% of tea world market.
However, since late 19th century to late 20th century, black tea took over the dominant
position with market share of around 72-75%. In the last years of 20 th century, especially
the last two decades, the market share of green tea is increasing gradually thanks to
researches on health benefits of tea such as cooling effects, cancer prevention and cure,
aging deterrence, obesity prevention, reduction of blood cholesterol, prevention of artery
and cardiovascular congestion, and decrease of injury from radiation. Encouragement
from international organizations, like WHO, on tea consumption is also a contributing
factor.
Higher living standard and the industrial lifestyle, especially in developed countries, is
boosting demand for finished beverage products, fast drinks, ready-to-drink, safe food
and food meeting industrial safety requirement. Tea products falling into those categories
are packaged tea, tea bags, ready-to-drink tea, bottled or canned tea, organic tea, clean tea
and standard-satisfying tea, etc.
One of the main motivators for increase in tea demand is consumers’ awareness that
several types of tea, especially green tea, can prevent and treat different diseases. Aging
population in Japan, Europe and the US is increasing their demand for green tea for its
aging prevention characteristic.
Tea import and consumption largely depends on consumption habit. In Asia and North
Africa, tea is the main daily beverage. Especially in Islamic nations, tea is consumed
regularly and as the alternative for drinking water, as alcohol and fermented beverage are
prohibited. However, tea is not common for South America and South Sahara (of Africa).
Nevertheless, tea is under competition from coffee as consumers are favoring towards for
its variety, strong taste and modern life style.
1ST DRAFT 47
3.2.1.2 Regional and world market landscape

Among 10 world top producers and exporters, China, Vietnam and Japan are leaders in
green tea export. Germany is also one of the world’s biggest exporters of green tea
despite having no tea planting area.
Figure 6. World tea leading exporters in 2013
Source: ITC Trademap

+ In terms of export, China owns a critical position in the world tea supply chain as the
export leader with 56% of total world turnover. At the same time, green tea is an
important segment for the country’s tea industry with 77% of national export turnover.
Green tea with HS code of 090210, of over 3 kg package is the main product for export,
accounting for 35.5%, as importers purchase for further processing.
+ Germany is a big tea exporter despite having no tea planting area due to its climate and
conditions nhưng do điều kiện và khí hậu. Material input for tea processing industry fully
depends on imports, mainly from India (23.3%), China (22.3%), Sri Lanka (17.3%) and
others (around 0.1-4.6%). In the world’s tea supply chain, Germany plays the role of deep
processing step in mixing and packaging finished tea products under reliable labels.
Thanks to its capacity and experience in tea processing, Germany’s tea processing
industry holds a quite strong position in the world’s tea market. This is a remarkable
point to take into consideration as there is a possibility of cooperation in increasing
exports into Germany to re-export into the European market.
+ Japan holds a long tradition of Chanoyu (tea ceremony). Green tea is not only a
favourite drink for its health benefit but also an indispensable contributor to the unique
1ST DRAFT 48
art of Japan’s Chanoyu. Although black tea has become more popular in recent decades,
green tea maintains the major role in consumption. Japan export turnover of green tea
remains considerably high, accounting for over 90% of total tea turnover. In 2012, the
figure was 98.3%. During the period of 2001-2012, the growth rate was quite high at
around 19.2% per year.
3.2.1.3 Influencing factors on business environment

Two main tea segments for world consumption are black tea and green tea, of which the
former holds a larger market share but falling growth rate relatively to the latter. Green
tea is mostly consumed by Asian and Western North African countries while black tea is
quite favoured in Europe, America and the Middle East.
As a drink of long history and world popularity, local tea consumption by main producers
accounts for a large proportion in annual production. This figure is estimated for India at
around 80% and 70% for China.
The distribution supply for green tea finished products has different channels with “end
points” at supermarkets, medical and natural product stores, functional food shops, large
retailers and tea rooms. New products and labels appear weekly and are supported by
large channels for distribution and commercial promotion. Tea materials are purchased
from producing countries, then deep processed by large companies, afterwards packaged
or shipped to multi-national companies such as Unilever or Nestlé for packaging and
labeling with their own label for worldwide distribution. With many years of experience
on tea world market, multi-national companies have established a direct distribution
channel to end users through supermarkets or their own agents.
The end user prices varies according to quality and labels as in Table 9 below:
Table 9: Consumers’ prices on several market for reference
Tea product Description Market/Distributor Retail price
Green tea box Box of 100g Online purchase at 1.26- 2.5 GBP/100g
(different online supermarkets (1.9-4.25 USD/ 100g)
labels) (UK)
http://www.mysuper
market.co.uk/
Distributor: TESCO
Fruit-flavor Box of 10 filtering bags TESCO (UK) 1.25 GBP-3.5
green tea GBP/box of 10 bags
(different (of which green tea
labels) with nutrition for
children is normally
sold at higher prices)
Pure green tea Box of 10 bags Morrison (UK) 1.9-2.5 GBP/box of
10 bags (3.2USD/10
bags)
Fruit green tea Box of 10 bags Morrisons (UK) 1.25-3.5 GBP/ 10
(strawberry, bags
pomegranate,
etc.)
1ST DRAFT 49
Tea product Description Market/Distributor Retail price

Lipton green Pure, simple and Online web retailer 17.9 USD/box (net
tea bags produced from the best http://www.amazon.c weight of 34g)
(Lipton Green tea leaves from all over om/ (US)
tea) the world (total of 120
bags)
Each tea bag of 150mg
for one serving.
Green tea LIPTON®
100% natural, no
preservatives or
colorings, good taste,
delicate flavor and
beautiful light green
color.
Freight included – Free
packaging cost.
Pure green tea Pure green tea of mint UEA (Dubai) AED40.00/ 100g
flavor (100g) Distributor: Tealand (10.8 USD/100g)
Packaged in 3 closed Trading LLC.
layers of bags
Source: Shopping websites of the Europe, the US and the UAE
3.2.1.4 World market standards

According to ITC, there are around 46 popular standards for tea on the world market.
In addition to standards for product quality, there are countries’ standards for food safety,
especially regulations on maximum pesticide residue (Maximum residue level-MRLs).
Generally, GAP or HACCP process must be applied during planting and processing to be
able to control the pesticide residue level.
1ST DRAFT 50
For quality requirement and control of plant production product residue, Vietnam has
been mainly exporting to more easy-going markets. For example, Pakistan has not
applied requirement on quality control and pesticide residue; Taiwan has certain
requirements but yet to follow EU standards; meanwhile Indonesia and Malaysia have yet
to set their specific requirements.
Nevertheless, a number of large markets such as Poland, Russia, EU and Japan have
applied control or control plans on quality and MRLs for imported tea in adherence to
current EU regulations.
In addition to VietGAP (Vietnam’s standard), UTZ is the main standard applied by
Vietnamese companies to consider application. These two standards focus on control on
planting and processing.
According to statistics by the Department of Processing and Trade for Agro-forestry-
Fisheries Products and Salt Production (MARD) for 2013, all companies have become to
aware of application of ISO and HACCP but the ratio of certification has been quite low
at around 30% of all companies with international certificates on safe and sustainable
production such as VietGAP, UTZ and RFA, etc. There are two Vietnamese companies
awarded RFA certifications, namely Phu Ben Tea Company in Phu Tho Province with
area of 300 ha and My Lam Tea Company in Tuyen Quang Province with 200 ha).
1ST DRAFT 51
3.2.2 Current situation of green tea in the North

3.2.2.1 Current situation of export and limitations
Over many past years to 2012 (as ITC Trademap has not published official data for
2013), Vietnam ranks as the world’s second biggest exporter of green tea (HS code
090220, package of over 3 kg). Vietnam’s export turnover of green tea grew considerably
during 2001-2012 at 28.2% per year, of which HS code 090210 product (package of
under 3 kg) grew at 59.1% per year while the growth rate for HS code 090220 tea (over 3
kg package) was 13,5% per year. Other products accounted for an insignificant
proportion and grew at modest rate. Despite a lower growth rate, green tea of HS code
090220 holds the position of main export product for Vietnam with over 90% proportion
in total export turnover. Main export destination for Vietnam green tea products are
Pakistan, Afganistan, Taiwan, Iran and China. However, it should be noticed that
Vietnam has been almost absent from the list of 30 exporting countries of HS code
090210 product (package of under 3 kg).
With good export potential and the increase in local and global consumption, Vietnam
green tea industry (specifically the North’s) has big advantages for growth. Moreover, tea
is considered as the plant for hunger eradication and poverty reduction for the Northern
midlands and mountainous areas; therefore, the central and local governments have
implemented different incentives to develop the industry over many years. However, the
green tea industry is facing with several significant obstacles which hinder exports.
Firstly, Vietnamese green tea has been mainly exported as input materials for foreign
processors who mix with remains of other tea types or to extract. In practice, products for
exports of tea in general and green in particular are mainly raw products. Processed
products are available in limited variety and designs.
Vietnamese farmers have a long tradition of tea planting. However, most, around 85%, of
tea households are planting on small area of under 0.5 ha. Red River Delta has the
smallest average of household planting area while the Highland has the largest. Small
scale poses difficulties for access to new technical equipments and safe certification. In
addition, household’s production technique remains quite outdated. Tea is harvested in
long branches, cut with sickles or renovated aperture increasing cutter. These harvesting
practices affect post-processed tea as well as deeply deplete and badly affect the long
term growth of the plants. This outdated planting level and practice which is hard to
change due to the geographical characteristic of remote areas leads to uncertain input
material quality. Abuse of fertilizers and pesticides is widely known and farmers are
unwilling to apply good agricultural production practice due to their fear of high cost.
This is one reason for the fact that quality of material area does not satisfy requirements
for processing for exports.
For the processing, the proportion of tea that farmers process by themselves and sell to
wholesalers is very high, around 20% for working households with planting area and
52% for individual farmer households. Small scaled and scattered production makes
control of these farmers very difficult. Competitiveness for material is harsh due to the
large number of processors so despite of having high capacity, most of big processing
1ST DRAFT 52
factories are under capacity for material shortage. In general, fragmented production is
one of the reasons that hinder promoting large scale production for export.
High local consumption for green tea and loose quality requirement also create obstacles
to transiting to production and processing for exports which have more technical
requirements, especially in the context of large number of small processors. It can be seen
from the comparison between the two main green tea supply chains’ (local and export)
revenue and profit that the figures made by the former were 1.93 times and 2.04 times
respectively higher than those made by the latter. This situation is mainly due to the fact
that Vietnam mostly exports raw materials while tea products sold locally are packaged
and thus, priced higher. This is also one of the reasons that lower the attractiveness by the
export chain relatively to the local one. In addition, despite higher cost resulting from
many intermediate agents, local chain of green tea has been an income source for many
people, not only direct farmers but also a proportion of the labor force who do not have
sufficient skill and educational background to find a job, thus have no other choice but
becoming small traders.
Table 10. Comparison of revenue and profit between local and export supply chain
of green tea
Revenue Profit
(VND/kg) (VND/kg)
Local chain 380,828 68,400
Export chain 191,697 33,505
Local chain/Export chain 1.93 times 2.04 times
Source: IPSARD (2012, 2013)
3.2.2.2 Vietnam and Northern Vietnam positions in the world current supply and value
chains
As 90% of total Vietnam’s tea quantity for exports are raw materials in over 3 kg
package, the country is holding the position of material supplier and pre-processor in the
world chain value. Green tea is then deep processed, packaged by foreign companies or
joint ventures, labeled under their brands, afterwards exported to consumer markets, or
even to supermarket and store networks in Vietnam under the brands of Unilever and
Nestle. These foreign companies surpass Vietnamese counterparts in capacities in
distribution and international trade; therefore it is easy for them to control a more
significant market share on both local and for export markets, especially in the context
that Vietnam is integrating further and deeper globally.
A consequence of low quality and shallow participation in the supply chain is average
export price of Vietnam’s tea (in 2012) reached only 1.5 thousand USD/ton, around 43%
of world average export price and around 50% of that of other large tea suppliers such as
China, India, and Kenya. These figures once again show inefficiencies in exports of
Vietnam tea industry.
Figure 7. Current position of Vietnam in world supply market
1ST DRAFT 53
Vietnam tea companies (pre-process and export raw

materials)
Foreign tea companies (deep process)
Retails on VN market Export
Consumers
Source: IPSARD
With the aim to gradually improve Vietnam’s weak position in the international market,
MARD is promoting the public-private partnership (PPP) model in tea industry. The
model is expected to be an effective solution for integration in the value chain,
investment promotion, technological application and added value increase for Vietnam
tea in general and green tea in particular. In that model, to raise Vietnam’s tea quality for
exports, PPP has integrated processing and farming technical guides into the production
chain of the industry. Farmers and small-scaled processing facility owners are trained in
sustainable agricultural farming to achieve international certifications. Multinational
firms in the industry has invested 400,000 EUR in training and integrating production
models with over 23,000 farmers in Phu Tho, Tuyen Quang, Lam Dong, Yen Bai, Vinh
Phuc and Nghe An. Each year, Unilever is buying internationally certified 30,000-35,000
tons of tea from farmers for export. However, this has only helped to increase income and
tea quantity for export, while Vietnam’s tea is exported under Unilever and other firms’
brands instead of Vietnam’s own names.
3.2.2.3 Role of SMEs

Tea companies are divided into 4 categories of processing, local trade, exports, and
imports, in that order for popularity. With regards to food safety, testing of material
quality is hardly done and most of the companies do not have laboratories for this activity
despite awareness of Food Safety Law raised through many information sources, mainly
public media.
According to estimates by Vietnam Tea Association (VITAS), 60% of Vietnam’s tea
processors are in the North with the number of 270 companies. In the region, there are
many provinces with large tea planting such as Thai Nguyen, Yen Bai, Phu Tho with a
large number of small processors which is difficult to be accounted for all but can be
estimated as up to thousands of,. For instance, Phu Tho, one of Vietnam’s leading
1ST DRAFT 54
provinces for area, productivity and yield of fresh tea, has around 75 large processing
capacity processors, and around 750 small, manually operated ones. Set aside small scale,
the number of processors fails to meet standard requirements for processing facilities is
also high. As reported by MARD in 2012, only around 14% of processors have modern
facilities which satisfy food safety requirements.
In practice, the presence of SMEs in the industry holds an important role in job creation,
and income generation for people, thus, contributing to poverty reduction in remote areas
(as depicted in Figure 8 on local value/supply chain for green tea). However, despite the
mentioned positive contribution, these companies are also creating limitations to the
industry, mainly i) large number leading to unhealthy competition for material source,
thus, worsening the shortage of input material for processing for exports, ii) outdated
technology resulting in low quality of output material.
Figure 8. Local value chain for green tea
25%
45%
Worker 15% Processor
household of green Large Export
planting tea 100%
exporter
tea
100%
Processor 35%
3% for exports 10%
2%
40% Collector
Farmer of dried 45% 10% Whole-
tea saler 100%
household 55%
43% Retails
planting
52%
tea
20%
Fresh product Green tea product
khô
Source: IPSARD
3.2.2.4 Key drivers for successful exports

+ Quality and reliability of supply: Previously, Vietnam has 10% of tea planting area
which applied safety standard VietGAP, but the figure has now fallen to 5%. The reason
is that low tea price in recent years has discouraged farmers from applying a model of
higher cost than the normal model. Apart from VietGAP, there are a number of other
certifications, mostly for exports, such as RFA, UTZ.
+ Product portfolio, design and innovation: Despite a large number of processors,
competitiveness for innovation remains low, due to i) low quality requirement by local
consumers; ii) exports are mainly raw materials packaged in over 50 kg bags. Poor
product range is a big disadvantage to limit the export potential of tea industry.
1ST DRAFT 55
As mentioned in the section on import market, with higher living standard and industrial
lifestyle, especially in developed countries, demand is increasing for finished products,
fast drinks, ready- to-drink beverage, products satisfying food safety and industry safety.
Correspondingly, tea market is continuously witnessing the appearance of new products
in different forms such as bagged, ready-to-drink, filtered, bottled, canned, organic,
clean, standard qualified tea, etc.
+ Ability to satisfy taste and standards of importers
In practice, for the main exported product is raw material packaged in 50kg bags, there
have been very few Vietnam’s exporters paying attention to the taste of the importers.
With the habit of being the raw material suppliers, Vietnam exporters focus mainly on
cooperation with existing importers, who are deep processors overseas.
The section on market analysis reveals that standard systems in importing markets are
posing Vietnam to many challenges in tea exports when Vietnam’s control on quality and
pesticide residue is not yet strict. Despite noticeable efforts in quality improvements,
according to VITAS, many tea samples sent abroad for quality testing failed to meet
quality and food safety standards. For Vietnam exporters to better meet consumers’
demand, it is essential to strengthen the control throughout the production process from
planting, tendering, harvesting, processing to storing and to enforce sufficient measures
on suppliers whose samples failed requirements (for example, suspension of purchase for
at least one year, financial penalty, etc.) to enhance disciplines in tea value chain.
+ Trademark and brand
Currently, Vietnam has invested in developing a number of trademarks and brands such
as CHEVIET, Vietnam’s national brand created and built since 2004. In the coming time,
it is recommended that further investment in trade promotion, advertisement, especially
communication on benefits of green tea to create new demand.
+ Marketing and management skills
Capacity strengthening in management is one of the conditions to encourage promotion
of green tea exports. Especially, it is necessary to arrive at comprehensive measures for
consistent management of the tea industry throughout the stages of planting, harvesting,
processing and exporting.
Among production skills, the most important one is the organization and management of
production from material to processing as the tea production and processing in Vietnam
has always been in an uncontrollable situation in using pesticide and other chemicals. The
role of farmers’ associations, cooperatives and cooperation groups is essential in this
phase.
Enterprises should add expertise and skills in export, including the skill of searching for
and getting access to information for full understanding of market taste and demand; skill
of seeking for import partners for direct export, skipping intermediate or multinational
companies.
It is also necessary for the labour force to be trained to improve their skills, consequently,
improve productivity.
+ Storage, distribution and transportation
1ST DRAFT 56
Vietnam’s means of transport for tea are not as good as those of other countries. For a
specific example, in Kenya, producers supply specialized vehicles as means of
transportation for tea. Tea is packed in jute or hemp bags of around 10 kg each. Tea bags
are hung on hooks on steel polls on trucks with cover to protect from rain and sunlight.
Each truck can carry around 2 tons. This arrangement protects tea from crushing and
turning bad.
However, in Vietnam, according to an inspection by the Department of Processing and
Trade for Agro-forestry-Fisheries Products and Salt Production in 2012, 77 out of 151 (or
51%) inspected facilities failed requirements for quality standard declaration, 72% failed
requirement for good source tracing, 73% did not have quality monitoring equipments
and ensured food safety during processing; 43% failed requirement for factory design;
54% did not satisfy standards for air circulation and dust vacuum; 81% did not meet
requirements for tools to prevent and protect from harmful insects, etc.
+ Access to raw materials: material shortage has been incurring regularly not only due to
poor material quality but also harsh competition for input materials resulting from a huge
number of small scattered producers.
+ Low production cost is one of the advantages for export chain, however, the real reason
of low cost is due to the fact that Vietnam mostly produces raw materials and the capacity
for deep processing is still low.
+ Price competitiveness: Vietnam green tea (considering the main product for export, HS
code 090220 green tea) is exported at 1,591 USD/ton on average during 2008-2012, 1.2
to 2.7 times lower than prices of other export sources, 1.2 times lower than China’s tea
price, 2.4 times lower than India’s, 2,7 times lower than Sri Lanka’s, 2.6 times lower than
Kenya’s. The reasons are low quality of Vietnam’s products as well as being raw
materials.
+) Ability to access funding sources
There has been no complete statistics on the ability to access funding sources by tea
enterprises. However, under the recent condition of instable macro economy, it is
conjectured that it is quite difficult for tea companies to access financing sources,
especially for SMEs with rather poor ability of business guarantee.
+) Ability to deliver and cater large orders
With current potentials, Vietnam absolutely can cater for large export orders. However,
due to internal competition for materials, under capacity production is popular, thus
failure to meet delivery schedule is possible. In addition, complicated customs procedures
also cause delays in shipment. For example, according to VITAS (2014), current customs
regulations stipulate that companies may face penalty if goods inspection discovers that
the products do not carry label showing Vietnam origin. However, according to Decree
No. 89/2006/NĐ – CP dated 30/8/2006 (Point b, Clause 2, Article 5) on good labeling,
goods that do not require labels are fuel, materials (agricultural, aquatic, mineral, etc).
Vietnam’s tea products are packaged in PP, PE or paper bags of 25-60 kg per bag, and
shipped in containers, mainly material tea for importers to mix and re-package in under-3
kg packages or deep process afterwards. Therefore, exported tea does not fall under the
category of goods required labels. In addition, the Letter No. 1776/BTC – TCHQ issued
1ST DRAFT 57
by the Vietnam General Department of Customs on 11/2/2014 regulated that companies

must gather their goods at specified points, according to estimated schedule for loading
into containers and loading onto vehicles. Following this regulation, tea exporters have to
transport their goods from factories to gathering points and loading under the monitoring
by the customs. This bureaucracy creates further costs such as transportation and labour.
3.2.2.5 Governmental, regional and provincial policies and directions for the industry
As tea is one of Vietnam’s important agricultural products, the Government has issued a
number of policies to promote the industry growth over the recent years.
In the Decision no. 824/QĐ-BNN-TT dated 16/04/2012, the Prime Minister has approved
MARD’s proposal to develop the planting industry to 2020, with vision to 2030.
For production support, the Government has enacted a number of support policies and
mechanism such as 1) the Prime Minister’s Decision No. 142/2009/QĐ-TTg dated
31/12/2009 on the mechanism and policy to subsidize seedlings, breeds and aquatic
breeding for production recovery in regions destroyed by natural disasters and diseases.
2) the Government’s Decree No. 48/NQ-CP of 23/9/2009 on the mechanism and policies
for post harvest loss reduction for agricultural and fishery products, 3) the Decision No.
162/2008/QĐ-TTg of 04/12/2008 issued by the Prime Minister on agricultural and
fishery extension policy in remote areas and communes, 4) the Decision No.
01/2012/QĐ-TTg of 09/01/2012 of the Prime Minister on a number of support policies
for application of good practice in agriculture, forestry and fishery.
For direction for technology and science development, the Prime Minister’s Decision No.
1895/QĐ-TTg of 17/12/2012 on approving the programme for development of high
technology agriculture within the national program to develop high technology to the
year 2020.
For investment encouragement, the Decree No. 210/2013/NĐ-CP of 19/12/2013 of the
government on encouraging businesses to invest in agriculture and rural areas.
For fee and tax incentives, the Circular No. 95/2004/TT-BTC of 11/10/2004 issued by the
Ministry of Finance on guidance’s on a number of policies for financial supports and tax
incentives on development of material areas and the agricultural, forestry, fisher and salt
processing industries.
On credit incentives, 1) the Decree No. 75/2011/NĐ-CP of 30/8/2011 issued by the
Government on credit for investment and exports, 2) Decree no. 41/2010/NĐ-CP of
12/4/2010 of the government on credit policy for rural and agricultural development.
On trade promotion, the Decision No. 23/QĐ-TTg of 06/01/2010 signed by the Prime
Minister on approval of the proposal “Development of rural trade during 2010-2015 with
orientation to 2020” regulating the organization of business network as per product lines.
3.2.2.6 Trade promotion network for the industry and current coordination
Achievements of tea export activities during the recent years thanks to the active
contributions of VITAS, businesses, agricultural and commercial organisations of all
levels through market researches and marketing activities. From the mere number of
around 10 export destinations in the ‘90s, Vietnam is currently exporting to over 100
1ST DRAFT 58
countries and nations. Especially, being an official member of the WTO has helped boost
tea export.
Table 11. International cooperation in supporting green tea industry
Project, industry Sponsor, Implementatio Description (activities, scope,

implementer n duration especially opportunities for
cooperation with the
Programme)
Research on Vietnam Institute for 2007 Inherit researches on marketing

marketing market Trade activities for tea export, to
for tea export support the development of
marketing activities for tea
within the project framework
Study the scientific IPSARD 2011 - 2012 Inherit research results on

basis and propose added value of Vietnam tea
solutions for Study the possibilities to
increasing added deploy several solutions
value for proposed by the proposal
Vietnam’s tea
products
Capacity building Tea Project - BWTO 2012 Inherit researches and solutions
for VITAS to help for capacity strengthening for
member businesses VITAS
to maximize profit
from integration
process
Project for NOMAFSI 2001-2005 Study the possibility to plant

development of high quality tea species on a
2006-2010
high quality tea larger scale to improve quality
species for export
Project: Funded by 2012-2016 Create connection between

Development of HELVETAS Swiss enterprises who had
high quality tea Inter-cooperation participated in the Programme
chain for poverty Vietnam with provincial trade promotion
reduction among center to boost trade promotion
Six processing
ethnic minority in tea export
enterprises operating
group in Northern in 3 provinces of Ha
mountainous area Giang, Lao Cai, Lai
Chau are self
organised in
1ST DRAFT 59
Project, industry Sponsor, Implementatio Description (activities, scope,

implementer n duration especially opportunities for
cooperation with the
Programme)
implementation
Project: PPP project between 2012-Present
Sustainable MARD and Unilever,
development of tea submitted by Unilever
in Vietnam to the Government of
Vietnam in the
position of a member
of the PPP working
group in industrial
sustainable
development in
Vietnam
Fair trade for EU Mutrap 2014-2016 Certification of fair trade for
industries of VIRI (Euro 500,000) enterprises in the industries of
handicraft, tea, handicraft, tea, coffee and
coffee and spices spices
of Vietnam Possibilities for cooperation:
Coordinate with trade
promotion activities for
enterprises who supported by
VIRI to implement and achieve
certificate of fair trade
Cooperatives DGRV- Cooperative 2011- present Cooperation to strengthen

development Alliance of Germany capacity of cooperative groups,
in Vietnam Cooperatives of tea producers,
connect markets with German’s
Cooperative alliance
tea processor
in provinces of Thai
Nguyen and Phu Tho
Table 12. SWOT analysis for green tea industry and strategy choice
Strengh Weakness
1ST DRAFT 60
Northern Vietnam, especially the mountainous Small scale of tea planting households creates
midlands of the North has the favorable natural obstacles for large scale production with high
conditions for tea planting; tea species are varied due degree of specialisation.
to natural condition variety. Input material (fresh tea leaves) quality is
Successful development of tea species with unique inconsistent among different producers.
flavor which is highly valued by consumers. Limitations on planting geographic conditions
Abudant rural labor force, the agricultural workforce (mountainous and remote areas) result in high
in the mountainous midlands of the North has investment in the industry.
worked for years with tea industry, and has rich A large proportion of the labor force lacks required
experience in the industry. skills and educational knowledge, as a consequent,
Tea is the crop for hunger eradication and poverty planting technique and knowledge are outdated,
reduction, especially in the rural areas in the fertilizer and pesticide are abused. Trained labor
mountainous midlands of the North, thus, receives force in the Northern mountainous midlands
favorable conditions from the central and local accounted for 14.6%, far below the country’s
governments. average figure14
Promotion of safe tea production has been receiving Integrating degree within the value chain is low.
attention and supports from different levels of Large number of industry participants and lack of
governments. internal cooperation result in unhealthy competition
The output products of Northern tea industry are in price meanwhile product quality is ignored.
black and green tea with large contribution to the Therefore, tea price is unstable and producers are
national production of 80% and 90%, respectively. under price pressure from foreign importers.
Big local market, consuming 74% of total green tea Quality control is weak.
produce. Market research and analysis is insubstantial.
The material area in the North is mainly used for Product design variety is poor. Vietnam tea brand
green tea production, accounting for around 70-80% has not yet been recognised in a good position in the
of material quantity of fresh tea leaves. world market.
Traditional manual processing method brings Quantity of green tea for export is small and with
characterized flavor for tea products. low export value.
Processing facilities for green tea have been recently Uncertain input material quality in addition to quite
improved thanks to joint ventures with Japan and outdated processing technology lead to low prices
Taiwan. A number of factories have developed for processed green tea products.
quality management system accordint to ISO 9000 to
Low prices results in i) replacement of tea by other
increase product quality.
crops amount households for higher economic
return, ii) household farmers failed to cover their
cost to comply with safe standard for tea planting,
and return to tradition planting methods, which do
not meet food safety requirements.
Renovation of technology and machines for the
industry requires high investment while capital
shortage, as a consequent of the economic crisis,
prevents many enterprises from doing so.
Opportunity Threat
Large market size and the rising trend of tea Unstable export market.
consumption (not only for drink but also for Competition on regional and world markets.
medical and cosmetic purposes). Rising requirements on certification for product
Programmes for hunger eradication and poverty quality and planting area.
reduction. Technical barriers (SPS and origin tracking for
14
Stastic book 2012, General Statistic Office
1ST DRAFT 61
The tendency of forming and developing PPP processed tea products)

model (remarkably Unilever). Improvement of process for greent tea
Many recent scientific researches have proved processing at SMEs in the North of Vietnam
health benefits of tea and consequently, world face with many difficulties for i) investment
consumption has been rising. capital; ii) traditional processing pracice; iii)
Strong consumption in China, a neighboring Green tea processing is the main income source
country to Vietnam, means higher market for many households/small producer facilities
penetration potential for Northern Vietnam tea if in the midlands and the mountainous area.
quality and brand position are improved. Therefore, it is difficult to ensure product
quality and attention and support from
government of different levels on many aspects
are important.
It is easier for small producers to get access to
local supply chain of green tea than the export
chain, thus, the latter has received little
attention.
3.2.3 Vision, strategy and plan for development of green tea export in the North
of Vietnam
Target for the position of the industry in the value/supply chain:
+) Current: As to the year 2012, Vietnam green tea export accounts for merely 7.2% of the total
world export turnover. As 90% of exported tea is in the form of raw materials in over 50 kg
package, Vietnam holds the modest position of material supplier and pre processor in the world
green tea value chain. After importing raw materials, tea companies will process, mix and
package into final products. Foreign tea companies normally gain the highest value in the chain
through the processes of mixing and packaging, although they are not directly tea suppliers.
Being raw material suppliers, developing countries like Vietnam lose the opportunity of higher
export turnover gaining from deep processing. As estimated by Sustainable Trade Initiative (the
Netherlands), tea products labelled under the brands of well-known firms can add 6-time value
over raw products. The labelled products are distributed to consumers through 2 main channels
of i) distributed to local consumers through retailing networks of stores and supermarkets, etc.
and food supplying system to organisations, companies and vending machines, etc. and ii) deep
processed products exported toFarmers
other markets. These products may be even imported back to
material supplying countries under well-known brands and at higher prices.
In general, in the world supply chain of green tea, Vietnam is holding the position as a mere
Collectors
material supplier and pre processing. Products are mainly in the raw forms and therefore, profit
is low.
+) In the future: it is targeted that Vietnam becomes a supplier of end user products of high
Vietnam tea companies (deep processing & export)
quality, with uniqueness, own brand, dedicate design and having widespread distribution
network in consumption markets overseas. This is to gain higher profit and to benefit all
stakeholders in the value chain of the industry.
Figure 9. Vietnam’s position in the world tea importers
Foreign supply chain in the future
Retailers
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Consumers
Source: IPSARD.
Table 13. Strategic options for green tea industry

Strength Weakness:
- Favorable natural - Failure to establish Vietnam
conditions tea brands and stable direct
- Strong taste and health export channels
benefits - Limited processing capacity
- Failure to supply high
quality tea, organic tea to
serve large orders by
material areas
Opportunity - Position Vietnam tea in- Enhance investment in material
Rising world international market through area (both for quality and
consumption trade promotion and quantity), and processing
Technological and establishment of Vietnam tea capacity to cater for large orders
financial investments brands on the basis of- Strengthen cooperation between
by foreign companies uniqueness. Vietnam green tea farmers’ households and
into Vietnam is completely natural, clean, companies to jointly organize
Opportunities from with residual sweetness, of marketing and product
PPP clear yellow color, and with promotion.
natural flavor without- Boost investment in technology
chemical additives. The target and competitiveness for
is at the segment of health companies in the industry to be
protection, especially oral able to compete in the world
protection, optical market.
improvement, anti-aging for-
the elderly in aging national
such as EU and Japan.
- Brand development
- Investment in product
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improvements
Challenges
- High competition
- Technology
improvements
To develop green tea industry, the primary strategic option for the industry is to utilize
advantages in natural conditions to map out effective strategies to be able to compete
with established, well positioned green products in the region and in the world market. It
is necessary to take into consideration the following points during the cause of strategy
establishment:
i) The cumbersomeness and disorganization of green tea collection and
processing result in different negative consequences such as input material
shortage and poor quality of output products. Therefore, it is critical to have
coordination with competent organisations in review and re-organisation of
small and miniature processing facilities/households.
ii) As 75% of total Vietnam green tea product is consumed locally, it is difficult
to call for intensive investment by companies for exports. Therefore, to
encourage investment, the Government should offer specific and clear
incentive policies for development of green tea for exports. On other hand,
local government should stabilize the supply and guarantee supplied quantity
for companies through farmers’ organisations.
iii) It is necessary to have careful analysis on the market and competitors’ products
with supports from different organisations. In addition, trade promotion and
image advertising for CHE VIET should receive active and attentive
participation of different organisations, embassies and consuls.
According to initial assessment by the research team on development orientation for
green tea for exports, it is very difficult for the industry due to the harsh competition from
other countries well known for green tea. To surpass these competitors, it is necessary to
strengthen the communication activity for Vietnam green tea to promote benefits and
image for a green tea brand for health. It is recommended that industry players should
seek partners to improve design, package and to invest further in marketing in foreign
markets. Targeted customers should be medium-income earners who buy tea for regular
consumption of themselves and their families. Selling price for this segment is lower than
that for the segment of high-income earners but this segment is more suitable for the long
term development of green tea as in the current context of capital shortage, it is difficult
for Vietnamese companies to make large investments in immediate improvements in
products.
Moreover, Vietnam should not invest in developing green tea product as fast drink to
avoid strong competition with soft drinks or coffee offered by fast food companies as
well as the big competitors of fast drink tea from Taiwan.
According to VITAS, a very important market for Vietnam green tea is the Middle East
(Pakistan and Afghanistan) where people mainly consume orthodox tea (i.e tea
manufactured with a roller that twists the leaves). This custom of serving is quite similar
1ST DRAFT 64
to Vietnam’s but the production technology is a bit different. These countries may import
up to 20,000 tons per year. There are a number of other potential markets including
Morocco with the culture of adding sugar to tea or Germany as a high class transit
channel to penetrate other European markets.
The most important orientation for the Northern green tea industry in the coming time is
to achieve comprehensive supports to boost exports by SMEs by assisting them to
strengthen their market access ability and simultaneously, to enhance the capacity for and
activities of the trade promotion networks of the industry as a whole.
+ Long term targets: Vietnam is to maintain the position in the top 5 biggest green tea
exporters of the world (of both types), to establish direct export channel for Vietnam
branded tea and start to have presence in new markets. The North is to remain as the main
green tea supplying and exporting region of the country with a strong force of SMEs
operating as tea processors and exporters.
+ Target market:
For upclass markets such as the EU, Japan: it is important to identify suitable market
segments and arrays as tea for people who have seperate health needs such as needs for
anti-aging tea by the elderly in the aging markets or functional tea for kids. The
possibility to enter these markets depends on the ability to find partners for harvesting,
exporting, processing and distributing. The channel via Germany is to be exploited.
In addition, it is necessary to expand public communication activities, seek export
opportunities for pure green tea or sugar, flower, fruit flavored tea in a number of large
markets like Morroco or markets with rising income and not too picky such as Turkey,
Russia and the UAE.
+ Short term target
Proportion of the Proportion of the Vietnam export
region’s Vietnam growth rate (2014-
export/Vietnam export/World 2016)
(2016) (2016)
90% 7.5% 15%
3.2.3.1 General solutions

General solutions
- Re-organise small scattered processing units
+ Reduce the number of low quality small scattered processing units
+ Maintain the operation of large companies with ability to export; support and
encourage those with financial capacity to invest for export
+ Encourage tea areas to raise awareness on clean tea, moving towards organic
tea; encourage teaming up and grouping up among tea planters to strengthen the
monitoring mechanism in the community
- Quality control
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+ The core is quality and food safety. Currently, Vietnam is considered to be in an

alarming situation for using plant protection products. Therefore, it is difficult to
export to the Europe and Taiwan is considering increase of export control. Thus,
quality improvement activity should receive higher attention. Especially, to be
able to produce organic tea, the minimum duration of land and environment to
recover is 3 years. In the long term, organic tea market is very potential but
Vietnam should start preparation now to be able to seize the opportunity.
+ Investment in processing technology: The reality has showed that despite having
good fresh tea leaves, the North’s green tea fails to compete with Chinese and
Taiwanese tea due to poor processing and storage.
+ Investment in packaging and labelling technology:
Most markets require vacumn packages of food safe materials, with clear label of
trademark and other information on products (origin, ingredients, net weight, etc)
Markets such as the EU and Japan lean towards environment-friendly packages.
- Trade promotion
+ Form an information system on price, market size to update companies in the
industry and tea farmers.
+ Organize/participate in trade promotion and production introduction activities
(with new packages and designs) in Vietnam, especially aiming at green tea
importers with offices in Vietnam
+ Coordinate with Vietnam embassies abroad to organise trade promotion
activities to introduce products (with new packages and designs). Special attention
should be paid to modern trade promotion activities through public media such as
public medical programs, e.g beverage/food for eye, teeth protection, direct
contact with importers, processors and distributors in those countries, e.g large
supermarkets, shopping websites such as www.mysupermarket.co.uk, and
amazon.com, etc.
Implementation approach
In the long term, it is necessary to re-organise industry players to eliminate weak ones
who do not have growth potentials and renovation thinking. This is to increase quality
consistency for Vietnam tea market. Within the project framework, the project will select
3-5 enterprises in each key province (such as in Thai Nguyen, Phu Tho, Yen Bai and
other provinces which have tea processing companies though having small planting area
such as Vinh Phuc and Lao Cai). Criteria for selection are scale, degree of dynamics and
willingness for renovation, social responsibility and committment to material area, etc).
The selected companies will be supported to find funding sources to upgrade product
quality, to diversify product range and to seek new markets.
It should be noted that trade promotion activity should be implemented strongly since the
steps of research, selection of the markets or market segments, long term partners to form
high quality product lines for the future.
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It is critical to gradually reduce the dependence on the Government’s budget and trade
promotion programs, to increase the ability to organise effectively trade promotion
activities at the level of associations and companies.
Proposed budget: 300,000 EUR, of which:
i) 60,000 EUR to support VITAS and Department for Crops and Planting in
review and re-organising processing units and enterprises in the industry in the
direction of transforming from “quantity” to “quality”
ii) 80,000 EUR to support connection establishment among stakeholders in
stablization of material areas, increase of quality and safety of fresh leaves.
Priority is given to those enterprises who currently hold advantages in green
tea exports. This task is very important, not only for green tea but also for the
long term development of Vietnam tea industry.
(i) 30,000 EUR to support a number of selected enterprises to study processing and
storage technologies, and access to funding/support sources for technological
application. Although the project PMU will hold the initiating role, enterprises
should be proactive in researching, understading technologies and select the best
application for themselves. Plans to raise processing capacity should receive
special feedback and contributions from reputable tea experts/companies from
overseas, especially from Japan, the country with worldwide reputation for green
tea production and export.
(ii) 80,000 EUR for brand establishment of green tea for health through clips, short
movies, doodles according to standards set by importing markets.
(iii) 50,000 EUR for trade promotion, establishment of direct export channels by
inviting potential partners to tea festivals, study tours of qualified tea zones,
selection of a number of enterprises and cooperatives with provincial Trade
promotion center staff to take part in 2-3 international fairs in coordination with
National trade promotion program.
Evaluating criteria for outputs and results
- Reorganisation of small processing units

By 2015, reduction by around 20% of the number of small processing units,
maintenance of operation by large companies with export capacity
By 2017, further reduction by 40% of the number of small processing units,
maintenance of operation by large companies with export capacity
- Investment in products (towards increase of added value, quality and product
diversification)
- Renovation of current product design, research and creation of 5 new and unique
designs and products
- Promotion:
By 2017:
Organise 3-5 large scaled fairs/promotion to introduce products in Vietnam
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Participate in 3-5 large scaled fairs/promotion to introduce products abroad.

The project will support market analysis, customer contact and fair booth decoration.
Trade exchange and negotiation at company level will be organised. Company
training will be strengthened.
Table 14. Summary of action plan for green tea industry
Target market Current: Pakistan, Afganistan, Taiwan, Iran and China

Future: Japan, Taiwan, EU (Germany), the US, Russia
Current role of SMEs in Critical in job creation, income increase for workers and
the industry contribution to improvement of poverty and hunger conditions in
mountainous and remote provinces
Evaluating criteria Beginning/2012: 270 companies
(increase in company Target for 2016-2017: Reduce to around 250 companies with
number, provincial capacity to purchase and process high quality tea, of which 100
export growth) companies with high export potential
Several criteria:
- Success in developing export chain to the EU and the US
- Success in developing Vietnam green tea brand
- 50% of input material produced in application of VietGAP
- Export growth: 15%/year (2014-2016)
Current shortcomings  Mainly exports of raw materials
 Small and scattered production scale, resulting in difficulties for

centralized large scale production for exports
 Poor quality (in processing and planting)
 Unestablished product brands
 Poor capacities of tea industry players in technology,

management skill, searching and international negotiation skills
Action plan Long term target

Success in positioning Vietnam tea in international market as clean,
with health benefit, with residual sweetness, of clear yellow color,
and with natural flavor without chemical addititives, especially
suitable for oral protection, and optical improvement.
Vietnam is to maintain the position in the top 5 biggest green tea
exporters of the world (of both types), to establish direct export
channel for Vietnam branded tea and start to have presence in new
markets. The North is to remain as the main green tea supplying and
exporting region of the country with a strong force of SMEs
operating as tea processors and exporters.
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Short term targets

Organise the system of enterprises with operation in tea processing
and export. Only maintain and support those with genuine capacity
and potential for export to increase quality, reputation, and access to
large order
Invest in product design and package; deversify product range
Conduct trade promtion activities and cooperate in processing
technology transfer
Activity Description Implementer In 2015 In 2016 In 2017

Review and gradually x x X
eliminate low quality
small processing units;
encourage mergers or
alliances to become
sufficiently strong
companies
Select in key provinces Provincial x

(for e.g Thai Nguyen, Phu TPOs
Tho, Yen Bai, Vinh Phuc,
Lao Cai) 3-5 enterprises
each according to certain
criteria to support
investment for product
quality upgrade, product
diversification, and new
markets seeking.
May expand the coverage
to Lam Dong Province for
activities of training,
market reserach and
information supply
Supply of market x x X
information.
Provide training on X
market research, guidance
and selection of target
markets for each
enterprise
Research for product x x
design suitable for import
market tastes, create
unique and creative
1ST DRAFT 69
designs, to attract
consumers for Vietnam
green tea
Invest in processing x x
technology
Invest in labeling and x x
packaging technology
Publish in media x x x
communication, and
promote benefits of tea,
integrate Che Viet image
Organize/join trade X x
promotion, product (with e-marketing Thai
new design) introduction Nguyen
activities locally, with Dubai
tea
special attention to green international
festival
tea importers with office fair
in Vietnam
Coordinate with Vietnam X x
embassies overseas to e-marketing
organize trade promotion
in those countries to E-
introduce products (with conference
new design)
3.3 Garment and footwear industries

According to analysis in the EPA for the Northern Vietnam, two industries of textile and
Footwear are quite similar in all 3 criteria. Therefore, while developing Plan for export
development for the region, the consultant team chose the analysis method to propose
plans for both industries in one section to facilitate comparison and experience sharing
from these two key industries in Northern provinces. However, the sections of Action
plan will be separate to reflect particularities of each industry, thus, consultancies for
each industry in the future can exploit further and develop into export development plans
for each province and each enterprise.
3.3.1 World market outlook
3.3.1.1 World market trend
Garments and footwear are regular consumption goods, with seasonal changes and
following fashion tendency. However, consumption expenditure for these goods do not
account for a considerable percentage in total expenditure of each individual. For
example, average expenditure for clothes and footwear accounts for 4-7% of total
expenditure of each person in the EU. Thus, these industries are not substantially affected
by world economic fluctuations. During the last 10 years, world import turnover of
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garments and footwear has been on the rise. After the global economic crisis in 2008,
exports of several other industries stagnated and have not recovered to the level of 2008,
export turnover of garments and footwear fell in 2009 and then picked up to above 2008-
level since 2010. The world market trend in the coming time reveals that the US, EU and
Japan will remain as attractive markets with full of potentials. While the US customers
require large orders in mass production of simple designs, the EU and Japan order small
quantities for delicate and high quality products at higher costs. In addition, technical
barrier, requirement for social responsibility, labor and environment are becoming higher.
In 2012, the world imported 191.7 billion USD worth of knitting garments and 189.9
billion USD worth of woven garments. The US, German, Japan, UK, France, Italia and
Hongkong are biggest importers. Japan shows the highest growth rates of 8% and 9% for
knitting and woven garments respectively during 2008-2012, the corresponding figures
for the whole world market are 5% and 3%. Most traded knitting products are men’s
cotton T-shirts, cotton pullovers, synthetic pullovers and men’s shirts. Most traded woven
products are men’s cotton trousers, women’s cotton trousers, men’s cotton shirts,
women’s bras, men’s cotton jacket.
World import turnover of footwear reached 117 billion USD in 2012, growing at the
average rate of 7% over 2008-2012. Biggest importers are the US, the EU, Japan,
Russia, Canada and Korea, etc. Leather shoes topped the turnover list with 53 billion
USD, followed by leather-capped or plastic-capped shoes with 30 billion USD. Canvas
shoes earned around 20 billion USD.
For leather shoes (HS code 6403), trade data for 2008-2012 reveals a near saturation on
world market for other leather shoe products (HS640399) in recent years with the average
growth rate of 0% during the period while above ankle leather boots grows at high rate of
12%.
Figure 10. Export of Vietnam canvas shoes in 2012, according to 6-figure HS code
1,600,000
1,400,000
1,200,000
1,000,000
640411
800,000
640419
600,000 640420
400,000
200,000
-
2008 2009 2010 2011 2012
Source: UNComtrade.
For canvas shoes (HS6404), trade data as shown in Figure 10 demonstrates high world
demand. All three products of this group are growing positively with sport shoes and
other canvas shoes (HS640419) growing at above average rate. These are also Vietnam’s
major products for exports. Footwear enterprises in the North have advantages in canvas
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shoes, specifically other canvas shoes (HS640419) and sport shoes (HS640411). Potential
markets for these products are identified on the basis of trade balance and import market
shares of countries in the world. It is calculated from UNComtrade data that potential
market for these two products are as below:
For canvas shoes of other type, 36 markets are identified as potential markets for their
trade deficit and above-world-average import shares. Of these markets, the US, Russia
and Neitherlands with high growth rates and large market size are most potential markets
for Vietnamese exporters. In addition, despite lower growth rates than the top group,
Japan, UK, German and France are also promising markets for their quite large world
market shares of above average for all potential markets.
For sport shoes, 28 countries are currently in trade deficit situatioin and have above-
world average market shares. Thus, these countries are identified as potential markets; of
which the US, German, the UK and Korea are the leaders with high growth rate and
above average market share. In addition, despite lower growth rates than the top group,
Japan, Neitherlands, France and Spain are also promising markets for their quite large
world market shares of above average for all potential markets.
The opportunity to expand the market for Vietnam textile and footwear product is
expected to be much higher upon signing of the free trade agreements that Vietnam have
been negotiating. Among TTP countries, there are two critical markets for both
industries, namely the US and Japan. The US accounts for 43% and 30.9% of total textile
and footwear export turnovers, respectively. The corresponding figures for Japan are 11%
and 4.52%. TPP members contribute nearly 60% of total textile turnover. European
countries account for 42.27% and 15% of total footwear and textile turnovers,
respectively.
Box 3. Enterprises’ expectations on coming free trade agreements
TPP is expected to reduce the current export tariff to the US of 17-18% to 0%. Thus, it
will bring an advantage to Vietnam over current competitors such as China, Bangladesh
and Indonesia, etc. FTA between the EU and Vietnam is expected to bring the tariff to
enter the EU down to 0% from 11.7% after signing. The reduction is hoped to help
textile export turnover to the market to grow at 6% per year on average.
In addition, export to Japan is forecast with positive outlook thanks to Vietnam-Japan
FTA and China’s cutting export to Japan. Consequently, Vietnam’s export turnover is
projected to reach 2.8-3 billion USD, increasing by 20%-30% year-on-year15.
Russia is also one of Vietnam’s big customers for textile, after only the US, EU, Japan
and Korea. However, Russia is currently impose 10% of import tariff on Vietnam
textile products. Viet Nam-Customs Union of Russia, Belarus, and Kazakhstan FTA
will open the opportunities for higher export turnover of Vietnam textile.
Source: Annual report of GMC company 2013 and researches by research team
15
Annual report of GMC company (2013)
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3.3.1.2 Particularities of textile and footwear supply chain

As introduced in the section of methodology and Torreon’s example of textile industry
(Box 1), the value chains of textile and footwear industries are quite similar in main
production stages, from production of materials, design, processing, distribution,
marketing and retailing.
For textile, sewing is labor-intensive and low added value creating, thus considered as a
downstream stage. Woving/knitting, design and distribution are upstream stages which
require financial and human resource capacities. Similarly, the value chain of footwear
industry also comprises of downstream, low added value, labor-intensive; and upstream
stages, technology intensive, capital intensive and high risk of environment pollution,
especially tanning process.
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3.3.1.3 World market entry standards for Vietnam textile and footwear products
Textile:
According to ITC standard map, for higher participation in the world market,
Vietnam will need certifications on environmental, labor and social standards as below:
(1) Fair wear foundation
Fair Wear Foundation (FWF) is an independent, non profit organisation working
with companies and factories to improve working conditions for workers in industries of
garment and textile. Member companies become FWF affiliate or FWF ambassador.
FWF publishes reports on companies’ progress on FWF Code of Labour Practices.
which The Code of Labour Practices is based on the conventions of the International
Labour Organisation (ILO) and the UN.
(2) Worldwide Responsible Accredited Production (WRAP)
WRAP is an independent, non-profit organisaton dedicated to promoting safe, lawful,
humane and ethical manufacturing around the world through certification and education.
WRAP certification is based on 12 principles focusing on generally accepted
international workplace standards, local laws and workplace regulations which
encompass human resources management, health and safety, environmental practices,
and legal compliance including import/export and customs compliance and security
standards. WRAP is also a certification organisation of IRCA - International Register of
Certified Auditors, providing training courses of certified auditors and relevant
conferences worldwide.
(3) OEKO-TEX®
The International Oeko-Tex association was founded in 1992 by 15 European and
Japanese research and cerfification institutes. The association has 50 representative
offices worldwide. Oeko Tex standards with different textile products ensures that
chemical substances used in production processes pose no risks or harm to human health.
Textile products, including raw materials, semi products or finished products are certified
to contain potentially harmful substances – RSL within an acceptable limit.
Oeko-TEX® certificate are issued and audited by Oeko-TEX® Association on the basis
of transparent criteria and approaches to ensure sustainable development, environmental
and social responsibilities (production site and logistics). Certification aims to reduce
risks throughout textile production process from spinning to wovening for sustainability,
quality and efficiency for producers.
(4) Global Organic Textile Standard (GOTS)
Global Organic Textile Standard (GOTS) was developed through collaboration by
leading standard setters with the aim of defining requirements that are recognised world-
wide and that ensure the organic status of textiles.
(5) Bluesign
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Bluesign ag is an independent, for profit company. Bluesign® system is developed from

an project innitiative in 1997 and in 2000, bluesign technologies ag was founded with
headquarter in Switzerland.
The current Bluesign system is developed as an innitiative between businesses, and
businesses with consumers in coordination with different partners in the garment and
textile industry, including chemical suppliers, transformers, brands and retailers. The
system is a holistic approach with focus on maximization of environmental resources
including waste, emission and water management, etc.
(6) Workplace Conditions Assessment (WCA)
WCA standard is set up as a part of the Global Social Compliance Programme
(GSCP) recognised by many retail associtions worldwide. Main assessments of WCA
include labor standards (child labor, wages and social welfare, etc), labor safety (general
work facility, machine safety, safety hazards, etc) and management Systems
(documentation and records, worker feedback and corrective action process, etc)
(7) Naturland
Naturland is an independent, non government, non-profit organisation for
promoting and developing holistic organic agricultural approach with social reponsibility
and appropriate partnership at regional, national and global levels. Naturland is an
association of organic farmers who pursuit grassroot democratic principles. Naturland
standards and certification pioneers the establishment of new standards outside organic
agriculture, for example, social responsibility, organic aquaculture, organic forestry,
North-South equal partnership or sustainable fishing.
(8) ETI
ETI base code is an internationally recognised code of labour practice. Many companies,
retailers and brands have applied this code and committed to ensure their suppliers’
complete compliance. It is optional to comply fully to the Code or to embed the clauses
into their own regulations. ETI base code comprises of 9 principles: i) employment is
freely chosen, ii) Freedom of association and the right to collective bargaining are
respected, iii) Working conditions are safe and hygienic, iv) Child labour shall not be
used, v) Living wages are paid, vi) Working hours are not excessive, vii) No
discrimination is practiced, viii) Regular employment is provided and ix) No harsh or
inhumane treatment is allowed.
ETI base code especially care for workers’ rights, and do not mention issues of
chemicals, environment, food safety or other similar issues.
(9) Thương mại công bằng quốc tế (Fairtrade international)
Fairtrade international is an independent, non government and non profit
organisation for promoting sustainable development, poverty reduction and establishment
of Fairtrade standards. 19 national organisations, including Fairtrade Marks initiatives
offer Fairtrade products to 24 markets in the Europe, North American, Australia and New
Zealand. FLO-CERT is responsiple for auditing and certification of compliance to
Fairtrade standards.
(10) FLA
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Fair Labor Association (FLA) is a collaborative effort of socially responsible

companies, colleges and universities, and civil society organizations to improve working
labor in factories worldwide. FLA has developed the Workplace Code of Conduct upon
core conventions of ILO and established monitoring mechanism of practice, corrective
actions and verification process to meet the standards of the code.
(11) ILO labor standards
Since 1919, International Labor Organisation, the specialized agency of the United
Nations, has maintained and developed international labor standards to promotes free,
equal working opportunities for workers with assurance for safety and dignity.
International labor standards are legal tools crafted by representatives from ILO member
countries, including governments, employers and workers from 185 member countries.
The standards present workplace principles and rights in the forms of conventions or
recommendations.
(12) UN Global compact
UN Global compact is a call for companies to voluntarily organize their operations
and strategies to align with with ten universally accepted principles in the areas of human
rights, labour, environment and anti-corruption. By doing so, they are the drivers to
realize UN objectives, including Millenium development objectives. Endorsed by chief
executives, the Global Compact is a practical framework for the development,
implementation, and disclosure of sustainability policies and practices.
(13) SMETA
SMETA, representing Sedex, the Supplier Ethical Data Exchange. This is the best
practice material on assessment skills of business ethics. It is mainly used by experienced
auditors to implement high quality auditing in auditing business ethics. SMETA is
suitable for all scales, and business types, including engineering, agriculture or service
providers.
(14) World fair trade organisation (WFTO)
The World fair trade organisation is the global representative body of over 400
members in the Fair trade supply chain. WFTO is considered as the common house for
fair traders: producers, market makers, exporters, importers, wholesellers, and retailers
committing to 100% fair trade. The goal of the WFTO is to enable small producers to
improve their livelihoods and communities through sustainable Fair Trade. It does this by
delivering market access through policy, advocacy, campaigning, marketing and
monitoring. The WFTO is the authentic voice of Fair Trade and a guardian of Fair Trade
values.
(15) SA8000
Social Accountability International is a SAI is a non-governmental, non profit
organization dedicated to improving workers’ human rights through implementation of
voluntary standards. In 1997, SAI convened Consultant Committee including
stakeholders to develop SA8000 standards. SA8000 is based on ILO conventions, UN
conventions on children’s rights and Universal Declaration of Human rights.
(16) BSCI
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The Business Social Compliance Initiative The Business Social Compliance

Initiative is a leading business-driven initiative for companies committed to improving
working conditions in factories and farms worldwide. BSCI provides businesses,
multinational and SMEs, a common code of conducts and supports them in their efforts
towards building an ethical supply chain by providing them with a development-oriented
system, applicable to all sectors and all sourcing countries.
Footwear16
According to ITC standard map, for higher participation in the world market,
especially to big markets such as the US, EU, and Japan, Vietnam footwear industry will
need certifications on environmental, labor and social standards as below:
Theo bản đồ tiêu chuẩn (standard map) của ITC, để có lợi thế xuất khẩu sang các
nước trên thế giới, đặc biệt là các thị trường lớn như Hoa Kỳ, EU, Nhật Bản, các mặt
hàng giầy dép xuất khẩu từ Việt Nam cần có những chứng chỉ về tiêu chuẩn môi trường,
điều kiện làm việc, lao động, xã hội… cụ thể gồm các tiêu chuẩn sau.
(1) Workplace Conditions Assessment (WCA)
WCA standard is set up as a part of the Global Social Compliance Programme
(GSCP) recognised by many retail associtions worldwide. Main assessments of WCA
include labor standards (child labor, wages and social welfare, etc), labor safety (general
work facility, machine safety, safety hazards, etc) and management Systems
(documentation and records, worker feedback and corrective action process, etc)
(2) ETI
ETI base code is an internationally recognised code of labour practice. Many
companies, retailers and brands have applied this code and committed to ensure their
suppliers’ complete compliance. It is optional to comply fully to the Code or to embed
the clauses into their own regulations. ETI base code comprises of 9 principles: i)
employment is freely chosen, ii) Freedom of association and the right to collective
bargaining are respected, iii) Working conditions are safe and hygienic, iv) Child labour
shall not be used, v) Living wages are paid, vi) Working hours are not excessive, vii) No
discrimination is practiced, viii) Regular employment is provided and ix) No harsh or
inhumane treatment is allowed.
ETI base code especially care for workers’ rights, and do not mention issues of
chemicals, environment, food safety or other similar issues.
(3) FLA
Fair Labor Association (FLA) is a collaborative effort of socially responsible
companies, colleges and universities, and civil society organizations to improve working
labor in factories worldwide. FLA has developed the Workplace Code of Conduct upon
core conventions of ILO and established monitoring mechanism of practice, corrective
actions and verification process to meet the standards of the code.
16
A number of standards for the footwear industry is similar to textile but the research team repeated the contents
for convenience in following individual industry.
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(4) ILO labor standards

Since 1919, International Labor Organisation, the specialized agency of the United
Nations, has maintained and developed international labor standards to promotes free,
equal working opportunities for workers with assurance for safety and dignity.
International labor standards are legal tools crafted by representatives from ILO member
countries, including governments, employers and workers from 185 member countries.
The standards present workplace principles and rights in the forms of conventions or
recommendations.
(5) UN Global compact
UN Global compact is a call for companies to voluntarily organize their operations
and strategies to align with with ten universally accepted principles in the areas of human
rights, labour, environment and anti-corruption. By doing so, they are the drivers to
realize UN objectives, including Millenium development objectives. Endorsed by chief
executives, the Global Compact is a practical framework for the development,
implementation, and disclosure of sustainability policies and practices.
(6) SMETA
SMETA, representing Sedex, the Supplier Ethical Data Exchange. This is the best
practice material on assessment skills of business ethics. It is mainly used by experienced
auditors to implement high quality auditing in auditing business ethics. SMETA is
suitable for all scales, and business types, including engineering, agriculture or service
providers.
(7) World fair trade organisation (WFTO)
The World fair trade organisation is the global representative body of over 400
members in the Fair trade supply chain. WFTO is considered as the common house for
fair traders: producers, market makers, exporters, importers, wholesellers, and retailers
committing to 100% fair trade. The goal of the WFTO is to enable small producers to
improve their livelihoods and communities through sustainable Fair Trade. It does this by
delivering market access through policy, advocacy, campaigning, marketing and
monitoring. The WFTO is the authentic voice of Fair Trade and a guardian of Fair Trade
values.
(8) SA8000
Social Accountability International is a SAI is a non-governmental, non profit
organization dedicated to improving workers’ human rights through implementation of
voluntary standards. In 1997, SAI convened Consultant Committee including
stakeholders to develop SA8000 standards. SA8000 is based on ILO conventions, UN
conventions on children’s rights and Universal Declaration of Human rights.
(9) BSCI
The Business Social Compliance Initiative The Business Social Compliance
Initiative is a leading business-driven initiative for companies committed to improving
working conditions in factories and farms worldwide. BSCI provides businesses,
multinational and SMEs, a common code of conducts and supports them in their efforts
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towards building an ethical supply chain by providing them with a development-oriented

system, applicable to all sectors and all sourcing countries.
3.3.2 Current situation of production and export of garments and footwear
exports in the North of Vietnam
Garments and footwear are two traditional export industries of Vietnam, After the
Renovation, both industries received many incentives to encourage exports. However,
after Vietnam’s participation in the WTO, all incentives were removed as required.
Despite that, export turnovers of both industry maintain good growth rate thanks to
advantages in labor, land and foreign investment.
In the textile industry, according to GSO statistics, the country have 4,654 garment
companies in 2012, employing more than 960,000 workers, mostly unskilled, of which
80% are women. In over 4000 companies, 85% are SMEs for employment scale. 30%
companies are based in the North, cluttering in provinces around Hanoi such as Hai
Duong, Hung Yen, Nam Dinh, Ninh Binh and Thai Binh.
In the footwear industry, according to Vietnam Leather, Footwear and Handbag
Association (Lefaso), Vietnam currently has over 800 companies and businesses
producing and exporting footwear products of different types. Total capacity is of nearly
1 billion pairs each year. The industry employs over 800,000 workers, of which 80% are
women. Over 70% of industry players are non state businesses, over 20% are foreign and
nearly 2% are state-owned. While foreign companies are big busineses of over 2,000
employees on average, non-state companies are SMEs with over 200 workers on average.
Footwear companies are mainly located in the South of Vietnam, only 19% is based in
the North, mainly in Hanoi, Hai Phong and Hai Duong.
3.3.2.1 Current export situation of textile and footwear industries and limitations
Textile
UNComtrade data shows that in 2013, Vietnam ranks 4th in the world for textile exports,
after China, Bangladesh and Turkey for knitting products and after China, Bangladesh
and Italia for woven. Total export turnover exceeded 18 billion Usd in 2013, making
textile Vietnam’s biggest industry for export, second only to electronics. Export turnover
grows at 18% on average onver 2009-2012. Vietnam accounts for quite considerable
share on the world market, 4,8% for woven products and 3.8% for knitting. Northern
businesses contribute around 37% to total turnover.
Garment products for exports are varied for product range and designs with two main
categories of woven (HS620) and knitting (HS61). The export trend of garment products
since 2001 reveals that Vietnam has advantages in knitting tights and pullovers; and
woven women’s and men’s pyjamas. In recent 5 years, other products are picking up such
as knitting T-shirts, men’s knitting and woven shirts and women’s overcoats. According
to industry experts, businesses used to give priority to large orders of casual garments but
the tendency has changed recently. Fast changes in design and production requirements
due to changing fashion cycle, together with strict delivery schedules have created
pressure on administration, production, organisation and transportation of Vietnamese
companies. Therefore, companies are moving towards reasonable orders with high
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quality demand, more flexible schedule and higher processing price. Among 6-digit
products, three top knitting export products with considerably large turnovers are
Pullovers, cardigans and similar articles of cotton, knitted (HS611020), Pullovers,
cardigans and similar articles of man-made fibres, knitted (HS611030), and T-shirts,
singlets and other vests, of cotton, knitted (HS610910). There are insignificant difference
among woven products, with 4 top leaders being Mens/boys anoraks and similar
articles,of man-made fibres,not knitted (HS620193), Womens/girls trousers and shorts, of
cotton, not knitted (HS620462), Mens/boys trousers and shorts, of synthetic fibres, not
knitted (HS620343) and Mens/boys trousers and shorts, of cotton, not knitted
(HS620342).
Footwear
Vietnam ranks 3rd in the world market for footwear export, after China and Italia, with
turnover of over 11 billion USD. Footwear is the 4th export leader for Vietnam, after
electronics, textiles and machinery. The industry enjoys average growth rate of 14% per
year over 2009-2013, and a share of 9.2% on the world market. As the number of
footwear companies is not big (less than 20%), contribution by Northern companies
accounts for only 16% of Vietnam export turnover.
UNComtrade data shows that Vietnam’s main products for exports are rubber and plastic
footwear; leather footwear and canvas footwear. All three product lines are in trade
surplus. Leather footwear leads the list with 4 billion USD; 5% growth rate on average
for value and -2% growth rate for quantity over 2008-2012 and market share of 8.8%.
Rubber or plastic footwear brought 2.7 billion USD at average growth rate of 9% and
with market share of 9.2%. Corresponding figures for canvas footwear are 2.6 billion
turnover, a whooping growth rate of 20% and 14.4% market share. In recently year,
demand for leather shoes has been on a declining trend with 3% growth rate over 2008-
2013. In the contrary, canvas shoe segment grows strongly at 17% over the same period.
Main export markets for Vietnam textile and footwear are the US, EU, Japan, Korea and
China, etc. The US is the biggest customer, importing 26.5% of Vietnam footwear export,
35.4% of woven products and 57.8% of kniting exports. Aggregrately, EU (15) nations
make the leading market for Vietnam footwear but remain second to the US for textile.
Japan ranks 3rd among textile importers but has not been a major footwear customer for
Vietnam with a mere 4% share. Being the 6th largest footwear importer on the world
market, Japan has abundance of potentials for Vietnam footwear industry.
3.3.2.2 Participation by provinces and companies in textile and footwear exports

Despite being in the top 5 biggest world exporters of textile and footwear, Vietnamese
companies make only a partial contribution to this achievement. Over 60% of textite
turnover and over 70% of footwear turnover are gained by FDI sector. Local companies,
especially SMEs mostly export according to the consignment processing(CMT ; Cutting,
Making, Trimming) method with mostly labor-based low added value.
Statistics from provincial Department of Statistics (2012) shows that among 14
researched companies in the North, textile accounts for over 50% of total provincial
export turnovers for Hai Duong, Hung Yen, Thai Binh, Nam Dinh and Ninh Binh and
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footwear makes considerable contribution for Ha Noi, Hai Duong, and Hai Phong. Table
15 summarizes the number of textile and footwear companies in these provinces/cities:
Table 15: Number of textile and footwear companies in several Northern
provinces/cities Số doanh nghiệp dệt may và da giầy tại một số tỉnh miền Bắc
Province Total number SMEs With exports SMEs for exports

of companies
Labor Capital Labor Capital
(i) Textile
Hai Duong 150 113 131 38 8 22
Hung Yen 129 96 108 64 34 53
Thai Binh 232 200 208 96 66 82
Nam Dinh 214 188 197 35 14 27
Ninh Binh 69 56 65 20 8 18
Total 794 653 709 253 130 202
% 82.2 89.2 31.9 16.4 25.4
(ii) Footwear
Ha Noi 82 76 80 12 6 10
Hai Duong 24 15 19 12 4 8
Hai Phong 77 51 69 28 5 19
Total 183 142 168 52 15 37
% 77.6 91.8 28.4 8.1 20.2
Source: Company survey 2012, GSO
3.3.2.3 Participation in the global value chain by companies in the North in textile and
footwear exports
Textile
Despite beinging in the top 5 of biggest textile exporters of the world, the industry does
not create high added value as participant mainly in labor intensive, thus low added
value, stages. A survey on the state of Vietnam textile value chain conducted by Mutrap
project come to an estimation that locally added value totals only 3-10% throughout all
stages. Unfavorable soil and climate conditions prevent Vietnam from achieving self
sufficience for input materials. Vietnam has to import most of cotton demand for
spinning. Weaving capacity is far below national demand for both quantity and quality,
therefore, 90% of fabrics are imported. Input material is in the same situation as the
number of local suppliers is insignificant. In addition, as a result of lack of information,
poor capacities for negotiation and material procurement, most Vietnamese companies
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are exporting in the consignment processing (CMT: Cutting, Making, Trimming) method,
in which materials and accessories are completely supplied by importers. Vietnamese
companies proceed with making stage locally and deliver to importers at designated
ports.
Currently, a number of companies have made the efforts to shift from CMT to FOB
which requires proactiveness in production planning, material and accessories
procurement for export orders. However, not many companies have the capacities to
conduct FOB contracts. In order to increase added value, Vietnam should improve
capacities for local companies to have more producers with sufficient capacities for FOB
contracts.
Figure 11: Value chain of textile industry
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Source: Author summarises and draws based on Summary of policy research on Vietnam
Textile value chain by Fullbright Program..
The above figure depicts the value chain of the textile industry in general. Horizontally,
the production chain is from the designing ideas to finished product production and
consumption (locally or overseas), of which the stage of garment production (sewing)
creates lowest added value. Added value increases towards two ends of the production
chain. Vietnam mostly takes part in the garment production (sewing), which creates the
lowest added value. Locally produced fabrics meet 10-30% total needs, 90% of input
materials and accessories (cotton, garment accessories) are imported. Only a few big
companies have distribution and marketing activities of garments with local distribution
system, but have not reached foreign markets. On the other hand, within garment
production, different methods create different levels of added value. Vertically, garment
production is depicted with increasing degree of complexity, of which CMT method
earns lowest added value, then FOB, ODM and OBM. Currently, over 60% of Vietnam
garment companies are producing in CMT method, only 30% are capable of FOB and a
mere 2% are doing under ODM (own design manufacturing).
As most activities in the value chain are related to export-imports, support services such
as transportation, logistics, banking and customs, etc play an important role in
implementation. Moreover, trade promotion is also critical to help local companies to
seek export market, increase export turnover and added value.
Footwear
Similarly to textile industry, Vietnam footwear industry mainly uses the consignment
processing method, thus, production and supplies of materials and accessories are largely
dependent on foreign partners and customers. Consequently, the industry does not create
high added value. Materials for production of footwear and leather products for exports
are mainly imported from China, Taiwan and Korea as designated by partners. Locally
produced materials and accessories are supplied to customers on contract basis, not
through a separate supply system. Local tannery and materials can meet less than 20% of
production. Currently, most all machines, equipments and parts for production are
imported. Therefore, added values created by support industries for footwear are nominal.
Even for FDIcompanies, designs are made overseas and sent to Vietnam. Local
companies merely follow existing designs. Designing capacity is weak; industry
participants have yet equipped with sufficient medium and knowledge for modulize
technology.
Shoe and leather products follow foreign designs at a level of modification, far below the
level of design to create products that present identity and culture of the users’
communities. As consignment processing is the main method, and degree of dependence
on imported materials is high, similar to textile, footwear industry need to improve
locally added value, footwear industry is considerably dependent on support services
such as transportation, logistics, banking, customs and trade promotion.
Figure 12: The value chain of footwear industry
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Source: Lefaso
Replacement of leather as material with canvas in the above figure reveals a more
profitable value chain of the national value chain in general and the Northern value chain
in particular. Canvas for shoes does not requires strict quality as for garments, thus,
localization degree of canvas for shoe upper has reached over 70%. However, Vietnam
textile industry has yet paid attention to producing fabrics for footwear industry. High
quality and specialized canvas are still imported. Canvas shoes are produced with rubber
sole. Vietnam is only able to produce soles for sport shoes and outsoles for women’s
shoes (heels and seamless soles, etc). Material of natural rubber for soles can be bought
locally, but synthetic rubber is completely imported. High class heels and soles are
imported. Localization degree of heels and soles reached over 60%..
With more export opportunities coming with soon to be signed FTA, footwear industry of
the North needs to seize these opportunities with its labor advantages over other regions
(more abundant, lower cost and more skilled workers coming back from the South).
Footwear companies of the North are expecting support industry for footwear to have
opportunities for development to meet criteria of origin, especially textile industry can
meet both demand of the garment and footwear industries.
3.3.2.4 Challenges and limitations for increasing exports of garments and footwear
Textile and leather shoe are labor-intensive in downstream stages (sewing and shoe
making), capital- and technology-intensive in upstream stages (fabric dyeing, tanning,
support industries, etc). In Vietnam, downstream stages are developing strongly, and
attracting many big investors while upstreams have little opportunities due to the lack of
connection with downstreams, failure to compete with imported sources and insufficient
capital and technology capacities. Although vietnam textile and footwear industries have
opportunities to expand markets and increase exports in the future, there are certain
challenges that the two industries have to deal with. There are two ways to increase added
value for an industry/products, shifting to stages of higher added value (downstream or
upstream) or renovating within the current stages. Each way presents different
difficulties. To improve value of current production stages, Vietnamese companies are
facing with i) shortage of workers with management skills, ii) not many companies
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willing to move from CMT to FOB, and iii) stricter criteria on rules of origins,
environment standards, social responsiblity and labor, etc.
In moving upstreams, obstacles are i) poor designing capacity, ii) undeveloped support
industries, high dependence on imported materials and accessories, iii) labor shortage for
spinning, dyeing and v) environmental pollution, especially waste water from dyeing and
tanning, etc. In moving downstreams, challenges are i) market information, ii) capacities
for marketing and trade promotion and iii) underdeveloped distribution system.
Figure 13: Difficulties and obstacles for export expansion and added value increase
Source: Industry consultant

For textile and garment industry, textile is the upstream of garments along the value
chain. Therefore, provinces and cities should selectively accept instead of rejecting
investment offers and conduct supervision and monitoring effectively to attract investors
into upstream stages for higher added value. Moreover, if TPP and Vietnam-EU FTA are
approved, rules on origins require Vietnam’s self sufficiency in materials and accessories,
reduced dependence on non-TPP member resources.
Similarly, footwear comprises of low added value and labor intensive downstream stages
and high technology, capital intensive and high environmental risk (especially tanning)
upstreams. Requirements of upstream stages deter provinces and cities from receiving
investment. One of the solutions is establishing industrial clusters for textile and footwear
for centralized solving of common environment and support industry issues. Locations
should be in regions/provinces already have abundant presence of these industries. This
solution is to increase investment efficiency, promote connection among companies and
upgrade the value chain in the two industries for Vietnam.
3.3.2.5 Competition landscapte in the regional and world markets

Previously, all stages from cotton planting, spinning, weaving/knitting and garment
making (textile industry) or tanning, closing and shoe operation (footwear) were
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conducted within one country/region. With economic integration and trade exchange,
these stages are divided according to comparative advantages of each country. Land
intensive and labor intensive stages are shifting to developing countries. After Vietnam’s
accession to WTO, Southern provincies such as HCMC, Binh Duong and Dong Nai have
been receiving a large number of investors into textile and footwear for exports,
consequently attracting local workers as well as migrant labor force from neighbor, even
Central and Northern provinces. FTAs with commitments of tariff reductions are
incentives for export-oriented investments, especially in labor intensive industries such as
garments, footwear and assembly. With pending FTAs, opportunities to expand markets
for the two industries are huge. While the South hasa been limited by land bank resource
and manual labor force, the North sees abundant chances for development.
In fact, this trend has been shaping itself when a number of large investment projects in
textile are deploying in the Northern provinces such as Hoa Binh, Thai Binh, etc. Beside
market opportunities, cost competition will be a key driver for exports. Vietnam’s labor
cost in textile and footwear industries are incompetitive relatively to some countries such
as Cambodia, Myanmar or Bangladesh but is still advantageous over some others such as
China, Thailand and Indonesia, etc. Moreover, according to CBI experts, compared to
more labor cost competitive countries, Vietnam garments are better at meeting
environmental, CSR and child labor standards. This helps Vietnam to receive more order
from overseas. In addition, stable quality and high productivity as results of high labor
skills and good management skills are factors for consideration when importers place
orders. Vietnam are behind for these factors, thus, mainly conducts mass consignment
processing. Vietnamese companies have been able to cater for orders with high quality
requirements and short lead time such as samples for large fashion shows or upclass
orders for well know fashion designers.
In 2009, Vietnam was the 8th biggest garment exporters of the world and among top 20
footwear exporters, including 6 other Asian nations of China (1st), Bangladesh (5th),
India (6th), Turkey (9th) and Indonesia (13rd) of the world. In 2013, Vietnam moved up
in export rankings to 4th position for woven products and 5th for knitting. Asian
competitors also showed remarkable improvements, Bangladesh at 3rd position for
wovening and 2nd for knitting, Turkey 3rd for knitting and remaining at 9th for
wovening. India and Indonesia maintain their rankings after 5 years. In 2013, Asia has 4
more members in the top 20 biggest garment exporters of the world, namely Cambodia
(8th rank for knitting and 18th for wovening), Sri Lanka (16th for knitting and 20th for
wovening), Pakistan and Thailand (18th and 19th respectively for knitting).
For footwear, in 2009, Vietnam was the top 4th biggest exporter. Amoung 20 biggest
footwear exporters of the world, there are only 5 Asian countries, including China (1st
position), Vietnam, Indonesia (11th), India (12th) and Thailand (19th), others are mostly
Southern European and Latin American countries. In 2013, Asia still has 5 members in
the list but Thailand falls out while Cambodia joins at 17th rank, India moves up to 10th,
Indonesia up to 6th and Vietnam rises to 3rd position. European countries mostly export
high class products of high quality and strict delivery schedule, Asian products are
mainly mass produced. Vietnam is facing with increasing competition from regional
countries, especially Indonesia and Cambodia whose products are quite similar to
Vietnam’s.
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According to industry experts, current labor cost or average wage of Vietnam cannot
compete with emerging competitors in the region. Therefore, instead of competing on
price, Vietnam garment and footwear companies should shift competition strategy
towards quality focus and non-tariff barriers (CSR, working condition, environment, etc)
set by developed countries and timely delivery. Vietnamese companies should gradually
improve capacities to supply for FOB orders, increase management capacity, especially
mid level management to expand upstream capacity. Market information access, fast
information absorbtion, most updated trend of the market and customer access capacity
are the decisive factors of companies’ competitivenssor key drivers for Vietnam’s ability
for export increase.
3.3.2.6 Current trade promotion network of the industry and coordination

Regional trade promotion organisations and agencies
Local trade promotion network include trade promotion organisations and agencies at
central and provincial levels.
At the central level, apart from the Department of Trade Promotion at the MoIT, there are
Vietnam Chamber of Commerical and Industry, industry associations (Vietnam Textile
Association – VITAS and Vietnam leather, Footwear and Handbag Association –
LEFASO), and Center for commercial and industrial information of MoIT. VCCI has a
wide member network, therefore, has significant influence on companies. In addition to
several departments dedicated to supporting SMEs, VCCI also has SME support center
which has the functions of providing market development services, training on
management and techniques, and information (including market and banking
information); and advising companies (mainly on business development). However, in
reality, the main income source of the Center is from projects, not from advising service
or service provision.
Sector associations all have the functions of support and promote trade transactions for
member companies. However, the number of regular staff, especially those directly
involve in trade promotion is not sufficient. Therefore, despite efforts by associations to
implement trade promotion activities, such as market researches, study tours, incoming
visits, trade connecting, trade fairs, etc, coverage of the activities and associations’
supports to SMEs is still limited.
MOIT Information center for Industry and Trade has the main function of providing
information for govermental management of the Ministry and supplying information to
companies. Besides, the Center also conducts a number of trade promotion such as
surveys of craft village support, specialised surveys, etc with funding from the Ministry’s
trade promotion budget, which is mainly for macro management than direct support to
companies.
At provincial levels, in addition to provincial trade promotion centers, most provincies
have institutions providing export support services; these includes provincial business
association, SMEs association, young enterprise association, women enterpreneurs’
association, cooperative alliance, etc. Moreover, several provinces also have training
institutions, research institutes with activities relatively relating to export support and
promotion.
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Survey results of the Institutional Assessment report show a high degree of participation
by different organisations in provincial trade support system, of which Trade promotion
center has the most active role, followed by Cooperative alliances and industry
associations. Each organisation has its own strengths but is exposed to the common
shortcoming of staff capacity. Business and industry associations are well aware of
companies’ needes but do not have sufficient human and financial resources to deploy
necessary trade promotion activities for companies. Despite having funding from the state
budget, support activities organised by provincial governmental organisations and
administrative units do not really originate from companies’ needs. Moreover, it can be
observed that there is lack of strong coordination between organisations and institutions
in orgainising trade promotion activities though they all have trade promotion function.
3.3.2.7 Cooperation programs in trade promotion support

Beside local trade promotion organisations and institutions, a number of international
organisations also sponsor trade promotion, support project and programs for Vietnamese
companies. A number of recent supports to textile and footwear industries are
summarized in the table below:
Table 16: Cooperation programs for trade promotion support for the two sectors
Sponsor, Description (Operation, scope and Lessons learnt
Project/Industry implementer especially the ability to collaborate
and duration with new project of the Department)
Project: Program Sponsor: CBI - Target: connect Vietnam textile - Commitment
Export Vietnam the Netherlands companies with EU customers by SMEs as
garments to the Implementer: - Beneficiary: textile SMEs premise for
EU CBI Vietnam - Main activities: i) help Vietnamese success of the
Industry: Textile 2012 - 2017 companies to move from CMT up to project
FOB, ii) prepare the code of conduct, - Vietnamese
iii) purchase locally, and iv) textile companies
restructure the industry should not
- Opportunities for coordination: i) compete on price
take advantage of the list of the but should shift
companies who already participated in to compete on
the project, ii) implement trade product quality
promotion activities that the project - Training in
had not done or expand the scale of the classroom is not
activities that the project had as effective as
implemented successfully; iii) in case on-the-job
of organising reverse trade fair training
(purchasing fair), may invite for - The biggest
participation (CBI can cooperate for challenge is to
organisation) form trust among
companies in the
project
Project: Sponsor: EU- Target: support Vietnamese SMEs to (yet to start)

Enhancing the Mutrap improve the capacity to comply with
technical Implementer: the technical requirements of the EU
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competitiveness Lefaso, market
Industry: Leather and - Beneficiary: Vietnamese footwear
Footwear shoe research SMEs, Lefaso, LEASHORESIN.
institute - Main activities: i) Upgrade
2014-2016 laboratories, ii) training consulting on
Technical Barriers to Trade (TBT), iii)
training for 30-40 companies
nationwide to comply with technical,
environmental and social
requirements.
- Opportunities for coordination: i)
list of SMEs exporting footwear, ii)
support companies on TBT
compliance for more better market
access, iii) use TBT consultants to
share and train Trade promotion center
staff, and integrate into trade
promotion activities
Project: Better Sponsor: - Target: improve working conditions - Provide,
work Việt Nam ILO/IFC at and competitiveness of export disseminate
Industry: Export Implementer: companies information on
industries Better work - Beneficiary: export companies the project to
(Footwear, textile, Vietnam, - Main activities: i) assess and export
etc) MOLISA measure compliance, ii) consulting on companies so
Phase 1: 2009- improvements of working efficiency they can get
2014 (HCMC based on assessment results, iii) aware and
and training to increase standard voluntarily
neighboring compliance capacity of companies, iv) register to
provinces) strengthen capacity for partners of participate in
Phase 2: 2014 Vietnam the project
– 2019 (Hanoi - Opportunities for coordination: - Build
& neighboring i) list of participating companies in the companies’
provinces) project, ii) supports for trade trust in project
promotion for companies which are
proactive in improving capacity for
complying technical standards
Project: Develop Sponsor: Target: support the establishment and - Strengthen

SMEs clusters in UNIDO development of SMEs clusters in promotion and
Vietnam Implementer: Vietnam provide
Industry: Textile, ASMED Beneficiary: Associations and information on
footwear and 2009-2012 companies in the 3 selected industries project to each
processed wood Main activities: i) prepare a map of company
potential industry clusters in Vietnam, - Build trust
ii) strengthen capacities for between project
associations and SMEs in 3 industrial and companies to
clusters in Vietnam comparable to increase pro-
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those in Italia. activeness and
- Opportunities for coordination: i) commitment of
use the map of potential industry participating
clusters in Vietnam to orient trade companies
promotion for industries, ii) utilize the
alliance network in Italy for trade
promotion
Source: Research team synthesize from interviews with experts (CBI project), website
(Better work project) and project documents (other projects)
3.3.2.8 SWOT analysis

Export-import strategy for 2011-2020 aims at increasing export turnover, improve
nationally created added value, developing support industries and reducing dependence
on imported materials and accessories for processing and engineering industrial products,
including textile and footwear. There are two ways to increase added value for an
industry/product, shifting to higher added value stages (downstream or upstream) or
implementing improvements within current stages to raise added value. No matter which
way to follow, before making the decision, it is necessary to recognize the position of an
industry within the global value chain and to know what to do to raise added value. The
SWOT analysis below reveals the current situation of each industry and provides several
suggestions for solutions and policies to realize the above aim.
Table 17: SWOT analysis of textile and garment industry
Strength Weakness
Resource: Resource:
- Lower labor cost than some countries in - Dependence on imported materials and
the region (China, Thailand, Indonesia) accessories
- Skilled labor - Lack of skilled support human resources
- Tendency of labor moving from the (managers, office staff, etc)
South to the North - Shortage of labor for weaving and dyeing
- Gradual formation of local material Products:
supply to take advantage of negotiating - Absence of product bands on world market
FTA Production:
Production: - Low productivity
- Low set-up cost for CMT production, - Low added value in CMT processing, low
good quality of CMT processing percentage of technology transfer
- High production capacity, being within 5 - Failure to raise production capacity and thus,
world biggest textile exporters remaining at processing by many companies
Company: - Low degree of integration into global supply
- Ability to cater for large orders, flexible chain, especially production chains of large
production quantity fashion firms
- Interest in and ability to meet social - Underdeveloped fashion activities and R&D
standards by many companies Local condition:
- Poor infrastructure, investment environment
1ST DRAFT 90
and material supply compared to Southern

region.
Opportunity Threat
Resource: World market:
- Vietnam is in the period of golden - Competition pressure from emerging
population thus, labor supply is ensured. competitors in the region (Cambodia,
World market Myanmar)
- Traditional markets (the US, the EU, - Increasingly stricter trade barriers
Japan and Korea) has been growing stably. (environmental, social, quality)
- Negotiating FTAs are opening many - Strict requirements on rule of origin of new
opportunities for textile and garments FTAs.
companies to export and for attracting
investments in support industries
Table 18: SWOT analysis of footwear industry

Strength Weakness
Resource: Production:
- Abundant labor force, lower labor cost - Incomprehensive production methods,
than some countries in the region mostly consignment processing
- Tendency of labor moving from the - Low profit from consignment processing, as
South to the North participation in the processing stage of low
- Available of existing weaving factories added value, mostly based on low cost of
and additional establishing ones to provide manual labor.
materials for footwear - Shortage of capacities for design, material
supply, auditing, marketing, distribution and
Production: logistics
- High production capacity, being in the Resources:
top 5 biggest world footwear producers - Shortage of human resources with high skills
- Developed textile industry in the North of management and technique.
providing materials for canvas shoes. - Diminishing advantage of low labor cost
Marketing: - Increasing negative issues in industrial parks
- Presence on the map of world biggest with large number of manual labors
footwear exporters Marketing/Management:
- Small number of product bands on world
market
Không có nhiều thương hiệu giầy dép quốc tế
Support industries:
- Dependence on imported materials, machines
and equipments,
- Underdeveloped R&D
- Underdeveloped support services
(certification on standards, CSR, and quality
audit, etc)
Opportunity Threat
World market: Foreign markets:
- Negotiating TPP and Vietnam-EU FTA - Future falling trend of demand for low cost
are opening opportunities for Vietnam product segments in developing countries
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exporters expand US and EU markets - Consumption trend with focus on fashion

- GSP incentives as per new EU design, high quality, health benefit and
regulations in effect since 1/1/2014 comfortability.
- Increasing demand for short life cycle - Increasing requirements on technique,
fashion footwear. environmental standards, labelling, and CSR.
Production:
- Increasing FDI into Vietnam leading to
higher competition pressure on local
companies.
Thus, for both products selected from Export potential assessment report, Woven product
and Canvas shoe, a remarkably advantageous aspect for the North is market trend and
opportunity for material and accessory development.
According to VITAS, the industry has mapped out a number of centralized industrial
parks to attract investment in weaving and dyeing in the North such as Pho Noi B IP
(Phase II), Bao Minh IP (Nam Dinh), and on textile IP in Hai Phong. Vinatex also
cooperates with Petrolimex to build a complex of spinning, weaving, dyeing and sewing
in Dinh Vu, Hai Phong. The wave of investment into garments and textile to be ready for
FTAs is clearly creating new developing opportunities for Vietnam and Northern textile
industry for exports.
For canvas shoes, beside the high export potential thanks to strongly growing market,
FTAs to be signed soon, low labor cost and human resource advantages, Northern localities
are exploiting export advantages of existing material source from textile industry,
abundant labor force and lower labor cost compared to the South.
However, this is also the very bottleneck as Vietnam has not established a material
market of stability, wide range of products and capacity to supply large quantity. This
presents difficulties for producers and designers when producing models designed
overseas or in designing. Import of materials and accessories increases additional costs
such as transportation, customs and insurance, etc, which increases production cost, thus,
unit cost. Delay in imported material hand-over is a permanent risk for meeting delivery
schedule. In addition, rising material prices and fluctuating exchange rates place
companies in a negative position in operation management.
3.3.3 Export development plan for Textile and Footwear

3.3.3.1 Vision and objectives
Textile
Vision: Increase added value of garment production stage (sewing), develop support
industries for maximum exploitation of market opportunities brought by new FTAs;
strengthen trade promotion activities to expand export opportunities to cover SMEs in the
industry.
Objectives: By 2016, textile industry of the North improves the position in the global
value chain (increase added value of sewing stage, participate deeper in upstream and
downstream stages); maintains export growth rate at the current average of 18%; improve
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management skills and capacities; develop export support service; diversify trade
promotion activities; have more SMEs participating in exports and create more jobs
within the industry.
Footwear
Vision: Increase added value of footwear production stage, develop support industries for
maximum exploitation of market opportunities brought by new FTAs; strengthen trade
promotion activities to expand export opportunities to cover SMEs in the industry.
Objectives: By 2016, canvas shoe industry of the North improves the position in the
global value chain (increase added value of footwear production stage, participate deeper
in upstream and downstream stages); maintains export growth rate at the current average
of 14%; improve management skills and capacities; develop export support service;
diversify trade promotion activities; have more SMEs participating in exports and create
more jobs within the industry.
3.3.3.2 Strategy and plan for export development for Textile and footwear industries
On the basis of SWOT analyses and identified objectives as above, this Report proposes
the below specific actions to support increase of added value and promotion of export for
SMEs in the two industries; simultenously, strengthen activities of trade promotion
network.
Action plan 1: Strengthen export support services (with focus on SMEs)
Activity 1.1: Analyze and provide market information
Activity 1.2: Training on trade promotion skill for company
Activity 1.3: Provide export support service (custom declaration, import-export
procedures, and accounting system, etc)
Action plan 2: Strengthen capacity for export support organisations
Activity 2.1: Prepare and periodically update business directory of companies in textile
and footwear industries (improve and add information to content of directories of Vitas,
Lefaso and business directory of provincial trade promotion centers)
Activity 2.2: Prepare the manual book on several main activities and professional
functions for trade promotion organisations.
Action plan 3: Strengthen trade promotion activities
Activity 3.1: Technical assistance for periodic organisation of wholesale trade fairs
Activity 3.2: Technical and financial assistance for pilot reverse trade fairs
Box 4. Reverse trade fair to promote material market and support industries
In Vietnam, the model of “reverse” trade fair stemmed from the idea of The Japan
External Trade Organization (JETRO) of organising in ASEAN countries to connect
Japanese assembly companies, who are investing in the ASEAN, with local
suppliers/companies, with the opposite nature to the traditional trade fairs. Reverse trade
1ST DRAFT 93
fairs help buyers to find sellers. In Vietnam, the first event organised by JETRO was the
support industry supply-demand trade fair (20 Dec 2004) with 20 Japanese companies
investing in Vietnam “waiting for” 100 Vietnamese businesses and FDI companies
investing in Vietnam to come to require about the latters’ supplies of materials and
supplies for electricity, electronics, motobike and automobile, precise engineering,
handbags and packaging, etc.
Although purchase agreements are not to be signed immediately, this is an opportunity to
help companies with demand for materials to negotiate, to see product samples and
supply capacity by Vietnamese companies.
On the other hand, suppliers can directly observe the “market” to know their own real
market, potential of rising products as wel as demand scale. Potential customers become
real and closer.
Deployment plans for actions plans and specific activities for each industry are
summarized in Table 19 and Table 20 below:
Deployment method
Selection of 3-5 companies in each province to implement under the proposed model.
Training activities can be expanded but specialized support activities will be concentrated
in a number of models.
Selection criteria:
- Awareness and commitment to quality-oriented development
- Willingness to invest to increase value in the supply chain
- Maximum coordination with existing projects – selection of companies which had,
are or will participate in existing projects to create comprehensive effect
For efficiency, coordinate with the Government’s trade promotion programs to select
companies which have successfully completed activities for supports to participate in
other trade promotion events.
For textitle industry, it is possible to coordinate with the Western South of Vietnam
region.
Table 19: Action plan for garment/textile exports of the North
Target market The US, EU, Japan, Custom Union (Russia, Belarus) and Korea,
etc
Hoa Kỳ, EU, Nhật Bản, các nước liên minh thuế quan (Nga,
Belarus), Hàn Quốc…
Current role of SMEs in SMEs account for over 90% but only 25% companies export
the industry DNNVV chiếm gần 90%, nhưng chỉ có 25% DNNVV tham gia xuất
Vai trò hiện tại của khẩu
DNNVV trong ngành
hàng
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Efficiency criteria Number of companies:

(increase in number of - Beginning of 2012: 130 (labor term), 202 (capital term)
companies, provincial
export growth, etc) - Target for 2016-2017: 20 additional companies (labor term) export
their products
Export growth:
Chỉ tiêu phản ánh hiệu
quả (tăng số DN, tăng - Beginning 2012: 18%
trưởng xuất khẩu của - Target for 2016-2017: 18-20%
tỉnh, …)
Contribution of the North
- Beginning 2012: 37%
- Target for 2016-2017: over 40%
Current limitations  SMEs:
o Lack of market information
o Lack of fair participation skill
o Lack of export-import skill and capacity
 Trade promotion centers
o Incomplete company database
o Lack of trade promotion professional skill
 Trade promotion activities:
o Poor range of activities
o Modest trust of companies’ (especially SMEs)
Action plan 1 Strengthen export support services (with focus on SMEs)
Activity Where Who Time How Note
Provide market Hai Duong, - Vitas - Monthly - E-
information for the Hung Yen, (quarterly newsletters
-
industry Thai Binh, Information
Nam Dinh, center
Ninh Binh (MoIT)
- Research
institute
(Trade,
IPSI)
- Provincial
trade
promotion
centers
Support selected Hai Duong, - Vitas 2015
companies to analyze and Hung Yen, - Provincial
select target markets to Thai Binh, trade
expand into Nam Dinh, promotion
Ninh Binh centers
Conduct training courses -as above- - Vietrade Biannual - Training Can cover
on trade promotion skills courses participants
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specialized for the - trade - Ad hoc - OJT from SMEs

industry for SMEs and promotion of other
staff of selected Centers, centers industries
Associations and
companies
Provide export support -as above- - Trade - Regular
services (customs, export- promotion
import procedures, centers
accounting etc.)
Other notes  Market information
 Select training experts of high skill and rich experience in
trade promotion
Action plan 2 Strengthen capacity for export support organisations
Update province’s and -as above- - Vitas - Annually - Directory
associations’ directories of
- Provincial
of companies (including associations
trade
suppliers of materials and promotion - company
garment makers) in the centers database of
industry trade
promotion
centers
Prepare practice manuals -as above- - - 2015
on main activities of trade consultants
promotion centers
General training for -as above- - - 2015
Centers and associations consultants
Other notes  Business directories and databases must be complete with
necessary and useful information of business connection
activities, statistics and researches (not limit to basic
information such as name, address, tel number as currently)
 Can refer to ITC resources for manual book.
Action plan 3 Strengthen trade promotion activities
Organize periodic B2B - - - Annually
trade fair Alternatively consultants
Hanoi and - Vitas
HCMC,
overseas
Organize periodic reverse - - Vietrade - Annually -
trade fair Alternatively Companies
Hanoi and display
HCMC materials
and
1ST DRAFT 96
accessories
that they
want to
procure
locally for
local
suppliers to
find and
make offers
Prepare the manual to - Vietrade - 2015 - Manual
guide participants to -
exhibitions and fairs Consultant
Other notes  Learn from experience in reverse fair organisation of JETRO
(Japan) in Hanoi and HCM City for engineering and
machinery industries.
 Refer to ITC resources for manuals
 Select companies for reverse fairs- exhibitors (purchasers)
should be programme participants, companies of other
projects which have been identified as being of good quality
such as CBI, UNIDO.
 Prepare the directory of potential suppliers for invitation
Table 20: Action plan for footwear exports of the North
Target market The US, EU, Japan, Custom Union (Russia, Belarus) and Korea,
etc
Current role of SMEs in SMEs account for over 90% but only 20% companies export
the industry
Efficiency criteria Number of companies:
(increase in number of - Beginning of 2012: 15 (labor term), 37 (capital term)
companies, provincial
export growth, etc) - Target for 2016-2017: 5-10 additional companies (labor term)
export their products
Export growth:
- Target for 2016-2017: 14-16%
Contribution of the North
- Target for 2016-2017: over 16-20%
Current limitations  SMEs:
o Lack of market information
o Lack of fair participation skill
o Lack of export-import skill and capacity
 Trade promotion centers
1ST DRAFT 97
o Incomplete company database

o Lack of trade promotion professional skill
 Trade promotion activities:
o Poor range of activities
o Modest trust of SMEs
Action plan 1 Strengthen export support services (with focus on SMEs)
Provide market Ha Noi, Hai - Lefaso - Monthly - E-
information for the Duong, Hai (quarterly newsletters
-
industry Phong Information
center
(MoIT)
- Research
institute
(Trade,
IPSI)
- Provincial
trade
promotion
centers
Lefaso
Support selected Ha Noi, Hai - Lefaso 2015
companies to analyze and Duong, Hai - Provincial
select target markets to Phong trade
expand into promotion
centers
Conduct training courses -as above- - Vietrade - - Training Can cover
on trade promotion skills Biannual courses participants
- Promotion
specialized for the from SMEs
centers - Ad hoc - OJT
industry for SMEs and of other
staff of selected Centers, industries
Associations and
companies
Provide export support -as above- - Trade - Regular
services (customs, export- promotion
import procedures, centers
accounting etc.)
Other notes  Select training experts of high skill and rich experience in
trade promotion
Action plan 2 Strengthen capacity for export support organisations

Update province’s and -as above- - Lefaso - Annually - Directory
1ST DRAFT 98
associations’ directories - provincial of

of companies in the trade associations
industry promotion - company
centers database of
trade
promotion
centers
Prepare practice manuals -as above- - - 2015 manual
on main activities of trade consultants book
promotion centers
Other notes  Business directories and databases must be complete with
necessary and useful information of business connection
activities, statistics and researches (not limit to basic
information such as name, address, tel number as currently)
 Can refer to Mori, J (2010), Designing and managing
support industry databases , Vietnam Development Forum
(2010) Building support industries in Vietnam, and JETRO
annual publications Vietnam’s prominent suppliers for
database contents.
 Can refer to ITC resources for manual book.
Action plan 3 Strengthen trade promotion activities
Organize periodic - - Vietrade - Annually
wholesales’ fair Alternatively
Hanoi and
HCMC
Organize periodic reverse - - - Vietrade - Annually Footwear
trade fair Alternatively companies
Hanoi and display
HCMC materials
and
accessories
that they
want to
procure
locally for
local
suppliers to
find and
make offers
Prepare the manual to - Vietrade - 2015 - Manual
guide participants to - Consultant
exhibitions and fairs
Other notes  Learn from experience in reverse fair organisation of JETRO
(Japan) in Hanoi and HCM City for engineering and
machinery industries.
1ST DRAFT 99
 Refer to ITC resources for manuals

 Select companies for reverse fairs- exhibitors (purchasers)
should be programme participants, companies of other
projects which have been identified as being of good quality
such as UNIDO, MUTRAP/Lefaso Leashoresin.
 Prepare the directory of potential suppliers for invitation
3.4 Handicrafts- Bamboo, rattan

3.4.1 Prospects of rattan bamboo product market and factors related to business
environment
3.4.1.1 Global context
With inceasing demand for natural material based products, export market share of
Vietnamese rattan bamboo products in global key rattan bamboo product import markets
was about 4.6% in 2010 and 5.7% in 2012. Purchasing power of these markets increases
by 7.2% /year. This is a very good opportunity to expand export market share of
Vietnamese rattan bamboo products.
The biggest import country is the USA with a turnover of 1,281,855,000 USD,
accounting for 26.8% of the global market. Import turnover for rattan bamboo products in
the USA is in an upward trend year by year, e.g. increases by 8.5% compared with import
value in 2011 and by 9.1%/year on average in the period of 2010 - 2012. Japan is the
second largest rattan bamboo product consumption market in the world and in 2012 this
country imported 447,212,000 USD from the world market, which was equivalentto 9.4%
of the world demand. In 2010 – 2012, the import value of rattan bamboo products of
Japan increased by 19.3%/ year on average with specific increasing rates of 30.2% in
2011 compared with its import turnover of 2010 and 8.3% in 2012 compared with that in
2011. The third largest import market in the world is Germany with 186,795,000 USD of
import value in 2012, accounting for 3.9% of the total import value of the world and
decreased by 14% compared with that of 2011. In recent years, some countries of UAE
have showed a relatively sharp increasind demand for rattan bamboo products,. Even
though their import value in 2012 accounted only for 1.7% of the world value, the import
growth speed is fairly high with 66.1% and 29% respectively in 2011 and 2012, 47.5% on
average in 2010 - 2012 and continues to increase in the future. This reflects that they are
potential markets for rattan bamboo products of export countries in the world.
Kim ngạch nhâ ̣p khẩu mây tre lá của Mỹ có xu hướng tăng dần qua các năm, cụ thể tăng
8,5% so với giá trị nhâ ̣p khẩu năm 2011 và bình quân tăng 9,1%/năm trong giai đoạn
2010 – 2012
Mô ̣t số nước trong các Tiểu vương quốc Ả Rập, những năm gần đây có nhu cầu về mây
tre lá tăng khá mạnh. Mặc dù giá trị nhâ ̣p khẩu năm 2012 của các nước này chỉ chiếm
1,7% giá trị thế giới nhưng tốc đô ̣ tăng trưởng nhâ ̣p khẩu là tương đối cao: năm 2011
tăng 66,1%, năm 2012 tăng 29%, bình quân tăng 47,5%/năm trong giai đoạn 2010 - 2012
và có thể còn tiếp tục tăng trong tương lai. Điều này cho thấy rằng đây là thị trường tiềm
năng mă ̣t hàng mây tre lá cho các nước xuất khẩu trên thế giới.
1ST DRAFT 100

3.4.1.2 Forecast of world market trend to 2015

 Rapid change in market trend
A remarkable feature of decoration and household appliances in the world is a rapid
development of fashion, style, color, etc... that makes product cycle shortened. Ten years
ago, products could be in stock for years, but now their cycle lasts about 6 months only.
This requires producers to regularly develop new products and designs.
Rapid change in product cycle restricts the power of intellectual property right or
copyright protection. Maintenance of copyright of products with such short cycle is not
cost efficient, and it is not easy in case products are changed slightly compared with their
copyrights. Immitation or diversity of household decorative products is very common,
therefore the most competitive policy is to continously launch new designs to adapt to the
rapid change of the market.
It is forecasted by experts that market changes in household decoration products in
general and rattan bamboo products in particular will be faster and faster due to fierce
competition among wholesalers and retailers. In 5 – 10 years’ time, product cycle will be
shortened to 3 months. It imposes heavy pressure on producers since they need to
develop design and deliver products quicker. For developing countries, this market trend
puts increasing pressure on producers as they must access market information faster and
meet customers’ requirements better.
 Trend of more simple and contemporaryproducts
At least in several years’ time, market will be less enthusiastic with traditional products
or regional culture, but will be in a trend of accepting contemporary ones. Market leaders
in the USA, e.g. Pottery Barn, Crate & Barrel has directed American consumers toward
contemporary style that has created a movement of uncomplicated style products that
even Pier 1 Imports, a company specialized in regionally cultural products, had to follow.
Retailers in Europe commonly deal with simple design products with fine lines and
neutral color, and such trend exists in Europe one year before expanding to America.
Increasing demands for contemporary products do not mean that traditional products will
disappear, instead they will exist and specially products combining between regionally
cultural feature and contemporary design will generate new product pipelines that create
new market opportunities. Those products will belong to high-class market, combining
crafts with contemporary and fine style that bring in higher benefits.
 Low-class market segment (cheap price is preferable) and high-class market
segment (high quality is preferable) are expanding
While there is nearly no opportunity for middle-class market (quality and medium price
products), competition in low-class market will be very fierce that requires producers to
invest in machinery and equipment for mass production meanwhile competition in high-
classe market focuses on differences in design, high quality, less quantity and more
reasonable price.
 Shortening distributing channel
Retailers are in trend of direct buying from global suppliers. In almost all market
segments, big retailers ignore buying from domestic importers or wholesalers but they
1ST DRAFT 101

search directly from suppliers in producing countries. Instead of buying through

importers, retailers use their local vendors to search for supplying sources, control
production, examine products, gather input sources and complete export procedures.
These vendors regularly contact with retailers, and retailers feel comfortable when their
vendors are normally professional and have enough experiences in monitoring and
collecting goods. Thanks to their vendors’ professionality, retailers are able to order
smaller and more diversified purchase orders. By collecting individual orders in
containers, they can significantly reduce shipping cost. Even though retailers are in trend
of direct purchase from suppliers, it is impossible to precisely access the impacts of this
trend on the whole markets. There is still a large portion of retailers in the USA
continuing to purchase through domestic importers.
 Increase in online sales
Online sales for almost all products, including household decorative products is
increasing; however, with the feature of crafts, pictures cannot replace direct seeing and
feeling sophysical sales still plays an important role. For most of large products such as
household products and decorative lights, online sales for them is of less proportion than
that for small household products with lower value.
 Competition in goods supply in the future is still in Asia
Craft producers all are aware of competition from China. China continues to grow and is
one of suppliers that can regulate market via price and production technology. In the
future, China will enhance their competition through improving propduct design but now
China is just strong in mass production on sector scale. For finer products and crafts,
China stands behind developing countries. Those fine crafts belong to high-class market
whichreserves for countries such as Vietnam, India, etc... Even though we can see fiere
competition from China due to many of their advantages, many experts believe that
China cannot overwhelm competition. Importers tend to buy crafts from developing
countries other than China with many reasons such as diversity of products, smaller
quantity and quicker purchase order turnover, or simply because of being bored with
products made in China.
 Roles of fairs are maintained and strengthened
With theevelopment of internet and informatic technology, many people believe that they
can find goods via internet and buy directly from producers without fairs. Some believe
that because there are too many fairs in a short period of time, both sellers and buyers
cannot take part in all fairs and therefore they need to make careful decision of their
participation and vist to the fairs. Most of fair participators only appear in some high
quality fairs in a year, and the most attracting time is beggining of a year. They normally
participate in well-known fairs such as New York International Gift Fair, America’s Mart
in Atlanta, Ambiente in Frankfurt. However, many surveys show that fair participation is
still very important. Through fairs, buyers and salles can see, feel and compare different
products in a certain period of time in a certain location. They not only participate in fairs
to buy goods but more importantly they can also find out new market trends, and assess
competitors as well …
 Increasing interest in social-environmental responsibility
1ST DRAFT 102

In recent years, importers tend to pay more interests in worker welfare, health care,
working condition, labor living environment and sustainable development and production
policies for manufactures in Asia. Those interests will increase and be a remarkable trend
in the coming decade. Importers and consumers in Europe, USA, Canada and Japan will
increasingly be interested in the origin of products and the compliance with social –
environmental responsibility. This requires big efforts from manufacturers when they
upgrade manufacturing environment and put more focus on labors and working
conditions.
 Development of designing services in some countries for enhancing competition
capacity
In Vietnam, designers are not well developed even though there are some vocational
schools for designing. There has been no specific statistics but many views say that more
than 80% of designed products in the group of Vietnamese rattan bamboo crafts are
provided by customers. Vietnamese enterprises merely process, sell materials and labor
but has not created real added value. Due to the lack of design, enterprises and craft
villages often copy designs from one another which cause negative competition within
the group and reduce the value chain of the whole group.
 Fair trade development
Fair trade has been strongly developed in the world. However, fair trade in Vietnam has
not been developed. Concept of fair trade is still new, with very few participants,
specially the participation from minor ethnic groups. In the whole Vietnam’s territory,
there are only 6 fair trade enterprises17 and one fair trade supporting organization18
belonging to the World Fair Trade Organization (WFTO). These enterprises and
organizations have just met a part of requirements and supports for rattan bamboo
development.
Although there is no fair trade promotion policy in Vietnam, fair trade contributes to set
up ground for social responsibility for conventional trade such as the conventions of no
use of children labor, no harmful impact on environment, etc…which are the principles
that have been applied by many companies and groups in the world. The supreme
objective of fair trade is to improve living quality of labors through business partners of
manufacturers, retailers and consumers. Fair trade looks forward to ‘paying labors as
much as possible’ instead of ‘as less as possible’. Given increasing awareness of
international clients and development towards social responsibility, encouragement of
participation from poor women and minor ethnic people, fair trade will develop more
strongly in Vietnam in the coming time.
3.4.1.3 World market standards

Non-tariff barrier
At present, importers of Vietnamese rattan bamboo products require more on standards.
Standards can be divided into 4 groups: (1) Social responsibility; (2) Quality/technique;
(3) Fire safety and (4) Security.
17
Asia Song Production Ltd, Au Lac designs, Craft Link, Craftbeauty Workshop, Hold the Future, Mai
Vietnamese Handicraft.
18
The Vietnam Rural Industries Research and Development Institute (VIRI).
1ST DRAFT 103

In terms of social responsibility, there are main standards as follows:

- BSCI (Business Social Compliance Initiative): a social responsibility
requirement for small and medium European importers who are not big enough
to make their own standards like IKEA with IWAY.
- SEDEX/ETI (Supplier Ethical Data Exchange/Ethical Trading Initiative): a
social responsibility requirement for UK market which is widely published and
compulsory for assessing supermarkets such as Tesco, Waitrose, Dunelm, The
Bodyshop, Marc and Spencer ...
- ES: a social responsibility requirement for USA market.
In terms of quality/technique: there are main standards as follows:
- Technical audits: applied for big supermarkets in Europe and UK such as
Tesco or Conforama. It ensures product quality, which 80% bases on ISO
9001:2008.
- FCCA/FE: quality assessment system for USA supermarkets, applicable for
Walmart/Target, JCP, similarly related to ISO 9001:2008.
In terms of fire safety:
- Fire safety – is applicable for USA supermarket system. This requirement is
increasingly focused. Supermarkets as Walmart and JC Penny are applying this
standard.
In terms of security:
- C-TPAT (Customs - Trade Partnership Against Terrorism) is applied by almost
all supermarkets in the USA. In particular, Walmart uses SCS. Security
assessment is compulsory for all goods directly imported from manufactures to
supermarkets (DI). If goods go through importers’ warehouses, this
requirement is compulsory.
In addition, export market of Vietnamese rattan bamboo products set different standards,
such as FAQ (Fair Acceptable Quality), ASTA (American Standard Trade Association),
19
CSR (Corporate Social Responsibility), 20BSCI (Business Social Compliance Initiative),
21
Consumer Product Safety Improvment Act - CPSIA, 22FLEGT (Forest Law
Enforcement Governance and Trade), 23VPA (Voluntary Partnership Agreement), Fair
19
CSR (Corporate Social Responsibility) is an uninterrupted commitment of an enterprise through its
business to treat morally and contribute in economic development while improving living standards of
labors and their families and local communities and social in general.
20
BSCI (Business Social Compliance Initiative) – Set of standards on evaluating social responsibility
compliance in business proposed by Foreign Trade Association (FTA) in order to establish a common
forum for behavior rules and monitoring system in Europe in corporate social responsibility.
21
Consumer Product Safety Improvement Act - CPSIA has been effective since 2010. Accordingly, items
imported in the US must meet sufficient strict safety standards including types of high standard in quality
and safety
22
FLEGT (Forest Law Enforcement Governance and Trade) eliminates products containing illegally
exploited flora.
23
VPA (Voluntary Partnership Agreement) is a bilateral agreement to eliminate products from a type of
specific flora.
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trade … Of the mentioned standards, Vietnam is exporting to countries with standards

lower than or equal to FAQ, meanwhile ASTA accounts for only 25% of the total export
volume. Markets require higher product quality and design, thus request producers to
deliver more appropriate solutions. Within the said standards, fair trade standard is not
very difficult and mainly focuses on social and internal audit requirements, thus
enterprise rewarded with fair trade certification will have an advantage.
Tariff barrier
Main export market of Vietnam is developed countries where crafts no longer develop
and there is a lack of material therefore import tax in those markets is very low or even
zero. Import tax applicable for Vietnam ranges from 0% to 5%. For example, USA
imposes tax rate of 4.8%, while Germany, France, UK, Spain and Poland impose tax rate
of 0.2% and especially Australia and China impose zero tax rate …
Another division is Legislative Requirements and Non-Legislative Requirements. The
latter is set by enterprises themselves to ensure their responsibility and control by internal
audits (shop checking).
3.4.2 Current situation of rattan bamboo product export in the north of
Vietnam
3.4.2.1 Overview
Arts and crafts made of bamboo, rattan, and leaves are traditional products of Vietnam
and Vietnam has advantages in craft material and skills. Rattan bamboo products spread
all over the country, in which the northern and central regions concentrate many rattan
bamboo and segde products while southern region focuses more on water hyacinth
crafts... Rattan bamboo not only contributes to export values but also creates jobs for
participants in the value chain, poor women and minor ethnic people in particular.
In the North, arts and crafts made of bamboo, rattan, and leaves have the biggest
advantage in the country. The number of bamboo, rattan, and leaves craft villages in the
North is the highest with 200 bamboo and rattan craft villages, 69 sedge and water
hyacinth craft villages that have been recognized and 192 bamboo, rattan craft villages,
43 sedge and water hyacinth craft villages not recognized. The provinces with the highest
number of bamboo, rattan, and leaves craft villages in the North are Hanoi, Ninh Binh,
Nam Dinh and Thai Binh.
Bamboo, rattan and leaves products are diversified, from small ones such as baskets,
bags, bowls, plates, flower pots, spoons, lamps, etc. to bigger ones such as mats, carpets,
lattice and furniture. The weaving skills of workers in these Northern villages are
sophisticated that have been recognized by international customers. Bamboo, rattan and
leaves craft products of the North are exported to many countries, in particular to the US,
Europe and Japan.
The North also has very favorable conditions in material supplies for developing bamboo,
rattan, and leaves products. There are many kinds of bamboo, and high reserves of
neohouzeaua in the Northwestern and Northeastern provinces such as Lai Chau, Son La,
Hoa Binh, Ha Giang, Lao Cai, etc. Rattan raw material is much available in the provinces
1ST DRAFT 105

of Ha Giang, Tuyen Quang and Phu Tho. Sedge material is grown and abundant in the
provinces of the Red River Delta such as Thai Binh, Ninh Binh and Nam Dinh.
Although there are many bamboo and rattan production units and exporters in the
North,24 Northern export market share is not high due to the fact that almost all
enterprises are on small scale which export small products such as baskets, bowls,
plates… while in southern region, enterprises export much interior and exterior furniture.
According to statistics of the General Department of Vietnam Customs, exports of
bamboo and rattan products (rattan, bamboo, sedge) of the North reached 43,765,000
USD in 2013, accounting for 19.08% of local market share and 0.74% of the world
market share.
3.4.2.2 Current situation of rattan bamboo export in the north of Vietnam

Current export situation
- Export turnover: According to the General Statistic Office, in 2012, the total export
value of rattan bamboo products of the country is 231,719,155 USD (231.7 mil USD),
accounting for 16.33% of the total craft export turnover of the country. Rattan
bamboo is one of the strong traditional export products of Vietnam and has been
confirming its leading position in the export turnover of the whole country.
- Export growth rate: Export growth rate of rattan bamboo recently (2008 – 2012) is
2.27%/year.
- Export weight of Vietnam in the world: Vietnamese rattan bamboo accounts for
about 3.73% (in 2012) of world market share.
- Products for export:
Rattan bamboo products are divided in four main groups: (1) Knitting: baskets, trays,
boxes, bags; (2) Bamboo screen and lining products; (3) Interior furniture: tables,
chairs, wardrobes, etc...; (4) Bamboo wrapping.
Of which, bamboo wrapping is typical of Vietnam that is not produced by any other
country. Main export groups are HS 460129; HS 460194; HS 460211; HS 460212;
HS 460219; HS 460290; HS 940151; HS 940381; HS 940389.
- Current key export market: Rattan bamboo products are exported mainly to Japan,
Taiwan (China), South Korea, EU and the USA, in which market share in the USA
shows rapid increase with participation of big retail groups importing from Vietnam,
such as Wal-mart, Peer I Imports, Tesco, William Soloma ... Taiwan (China) and
South Korea are large markets of Vietnamese rattan bamboo products that do not
requires too high quality. In the meantime in EU, IKEA of Sweden with the biggest
purchasing power in Vienam at the presentis expanding its market to Vietnamese
rattan bamboo. Previously, after the closing of Eastern Europe trading, Germany was
the biggest rattan bamboo import market in EU to contribute to Eastern and Western
Europe. However, now many customers from Spain, UK and France, etc...are getting
familiar with Vietnamese rattan bamboo products.
24
According to General Department of Vietnam Customs, there are 115 enterprises currently exporting bamboo and
rattan arts and crafts.
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- Export enterprises and related parties: At the present, there are about 254 enterprises
involving in rattan bamboo products and only 63% of them export directly.
3.4.2.3 Restrictions of export increase

Even though some rattan bamboo products of Vietnam in general and of the northern
region in particular are recognized by international markers thanks to skillful technique,
the development of these products in the north of Vietnam is facing with difficulties and
challenges in short and long term as follows:
- Poor design: Enterprises mainly produce upon orders and do not invest in design.
This causes low price, mass material consuming and dependence on design of
customers.
- Weak market access and foreign language capacity: Many enterprises are originated
from co-operatives and producing households in craft villages that lack skills and
neccessary knowledge to access markets andwith very weak capacity in using foreign
language..
- Few enterprises satisfying international standards: Market requirements are
increasingly high, however there are few enterprises meet these requirements.
- Weak regional and inter-enterprise linkage: Vietnamese enterprises cannot meet
requirements of big orders, partly because of craft feature, partly because of small
scaled production and lack of linkage between enterprises in the sector.
- Unstable material sources: Even though Vietnam has advantages of materials, ,
Vietnamese rattan bamboo products have been facing with unstable materials due to
weak management and unsustainable exploitation. This situation has been gradually
improved by the proractive support of the Ministry of Agriculture and Rural
Development in material region planning and development.
- Labors in craft villages, specially skillful labors become more scarce.
- Limited trade promotion capacity in provinces. Trade promotion organizations are in
charge of concurrent mandates and are not sector expertise, thus their contributions to
enterprises are limited.
3.4.2.4 SMEs roles, number of enterprises and export capacity

The number of rattan bamboo SMEs in the country is 254 (in 2012, VIETCRAFT), in
which 150 are located in the north with 77 SMEs in Hanoi, 6 SMEs in Thai Binh, 5
SMEs in Nam Dinh.... Out of 150 rattan bamboo SMEs, 95 SMEs are capable of direct
export andthey are leading SMEs in all 3 regions of Vietnam.
According to surveys, the majority of SMEs in the northern region are running with 55%
of their productivity while this figure in in the southern region SMEs is 65%. SMEs are
completely able to expand their production scale by recruiting more labors and increasing
working time. Some enterprises are ready to invest more in production equipments.
The development of rattan bamboo products for domestic market is limited. Out of the
surveyed craft businesses, about 26% of revenue comes from domestic sales, mainly are
fruit baskets, flower pots, fishing equipments, tables and chairs for interior decoration,
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etc...a small part is supplied to souvenir shops in Hanoi, stop points and showrooms in
tourist centers...
SMEs play an important role in supply chain. According to VIETCRAFT, more than
90% of enterprises involving in rattan bamboo products are SMEs. They have full-time
labors in their shops and a close connection to the labors in craft villages, mainly of them
are poor women and ethnic people.
3.4.2.5 Position of Vietnam in rattan bamboo value and supply chain in the world
Vietnam is the fourth largest rattan bamboo product export country in the world, after
China, Indonesia and Italy (Trademap, 2012)in which China and Indonesia are direct
producing countries while Italy is an intermediary importer who sell products in EU.
Despite being listed in leading rattan bamboo product exporting countries, Vietnamese
rattan bamboo products are mainly labelled by foreign companies.
In 2012, rattan bamboo product export value of Vietnam was 240,879,000 USD,
increasing by 1.93% compared with that of 2011. the market share of Vietnamese rattan
bamboo products in the world is small which onlyaccounts for 3.73% of the world export
value. HS 460219 product (baskets and other products made directly from vegetation) is
product of Vietnam with largest export revenue, increasing by 68.1% compared with that
in 2011.
Export of Vietnamese rattan bamboo products has been developed in an orientation of
high concentration with more than 50% of the export volume to only 5 big countries of
the USA (accounting for nearly 1/4), Germany, Japan, France and the UK. Growing
markets are Spain, Australia and Canada with import value of Vietnamese rattan bamboo
products increased gradually in the period of 2008 - 2012.
Conditions to market penetration for Vietnamese rattan bamboo products are not difficult
in general. Vietnam is almost free in market penetration and given similar conditions as
for competitors. For 460219 products (baskets and other products made directly from
vegetation)- the product with highest export revenue, Vietnam is free to export with a tax
rate of 0%, to Germany, Australia, UK, Frence, Japan, Spain, etc... and specially 4.8%. in
the USA . Meanwhile, for the similar products, China, the direct competitor of Vietnam,
is imposed with higher tax rate of for example 3%, to Germany, UK, France and Spain ,
2.9% to Japan and 4.8% to the USA..
Even though the export potential for Vietnamese rattan bamboo products is assessed as
high, the export revenue is only assessed as medium. It shows that there are many other
markets in the world for Vietnamese rattan bamboo products to access and futher develop
in the future.
3.4.2.6 Essential factors for export success

Essential factors for export success and addressing challenges of export increase include:
generation of sustainable material sources, improvement of labor quality and number,
strong investment in design to generate added value for export products and better
promotion in localities.
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- Quality improvement through application of technical advances in production

and product design improvement: Rattan bamboo craft products are mainly
used for household decoration and souvenir, therefore product design and
model are very important. There are many enterprises in Vietnam facing
troubles with copyright when copying design and model of foreign companies.
When reaching high quality and unique design, enterprises easily sell their
product with higher prices and earn higher revenue.
- Market and information access improvement through special training courses
and workshops: In the context of globalization and internet popularization,
enterprises need to be trained to easily access to international buyers through
searching tools, B2B websites, online advertising activities such as SEO,
Google Adwords, social networks by training of communication and
negotiation skills to deal with buyers in different markets. Trade promotion
agencies and sectorial associations need to support enterprises during
transformation process because as mentioned above, foreign language is a big
limitation of many big enterprises;
- Expansion of trade promotion: International sectorial fairs play essentially
important role in seeking and expanding customers. However, participation is
too costly for craft enterprises. Thus, northern provinces should reserve budget
to support enterprises to participate in sectorial fairs to promote their products.
Openning of showrooms and product promotion in large markets should be
improved.
- Improvement of inputs: sustainable development of material sources through
selection of high productivity variety, application of advanced farming and
exploitation technique, and material region planning and expansion. These are
urgent activities to ensure sustainable and stable material sources because
natural rattan bamboo areas are narrowed down.
- Investment in technology and machinery: Use of modern technology and
machinery not only help increase productivity and quality and decrease product
cost but also solve problems of environment polution that are in alarming level
at craft villages.
- Enhancement of linkage between enterprises and sectors: almost all craft
enterprises are in small size, thus it is necessary to associate to meet
requirements of big orders. Rattan bamboo sector needs a close cooperation
with related sectors such as agriculture and tourism to ensure material sources
and strengthen on-site export.
- Strengthening roles of sectorial associations such as VIETCRAFT, Vietnam
Association of Craft Villages, Vietfores, etc... and local trade promotion
centers. They are key contact points to supply sector information on essential
skills for members that help them strengthen export. Also, they are
representatives for members to submit proposals and recommendations to state
agencies.
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3.4.2.7 Competitition in sectors on regional and international scale

At present, the majority of enterprises in the North of Vietnam are running at 55% of
their productivity. They are definitely capable to expand production scale by recruiting
more labors, increase working hours and some enterprises are ready to invest in more
production equipments.
Rattan bamboo product expansion in local markets is limited. In villages under survey,
there are about 26% of revenue coming from domestic sales, mainly are fruit baskets,
flower pots, fishing equipments, tables and chairs for interior decoration, etc...A small
part is supplied to souvenir shops in Hanoi, stop points and showrooms in tourist
centers...
Market share of Vietnamese rattan bamboo product export in the world is 4.6% in 2010
and 5.7% in 2012. Purchasing power in those market increases by 7.2%/year on average.
The biggest competitor of Vietnam in bamboo sector is China and in rattan are Indonesia
and the Philippines. Indonesia is the biggest rattan producing country in the world. It has
developed many rattan producing clusters, concentrating in Kalimantan Island and
Cerebon. Besides, experienced foreign countries invest in construction of big factories in
the said countries. However, many bamboo products of Vietnam are typical and unique in
terms of skills and technique that other countries in region cannot produce, e.g. bamboo
wrapping, that make Vietnam attractive to foreign importers.
3.4.2.8 Governmental, regional and provincial policies and regulations for rattan and
bamboo sector
The Government pays interest in development of rattan bamboo craft products of
Vietnam. The Government considers craft development as an effective policy solution to
transform economic and labor structure, develop agricultural economy, create jobs,
increase income for rural labors, reduce poverty in remote areas and solve social evil
issues, etc...
In addition, rattan bamboo craft sector helps socio – economic development for ethnic
minority people, therefore there are many policies giving priorities and supports for the
sector’s development.
Policies at national level
At national level, the Government has issued many policies to encourage crafts in general
and rattan bamboo crafts in particular. Those policies can be divided by contents or
effected parties as financial policies (loan, interest, and preferable investment), technical
policies, environmental policies, infrastructure policies, material policies, labor policies,
employment policies and training policies, etc… These policies have been
institutionalized through legal documents as follows:
- Decision No. 569/QD-TCLN-KHTC dated 07 November, 2013 on planning on

development of non-timber forest products mainly in the northern region in period
2010 – 2020 issued by Vietnam Administration of Forestry. According to that,
95,000 ha of fibre producing trees (bamboo, rattan,) has been included in the
planning with reed forestation projects in Cao Bang, Hoa Binh and Bac Giang,
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Rattan (Calamus tetradactylus) forest– in Phu Tho and Bac Giang, Bamboo
(Dendrocalamus Latiflorusi) forest - Lai Chau province.
- Decision No. 1258/QD-BNN-KHCN of the Ministry of Agriculture and Rural
Development dated 04 June, 2013 approving key central agricultural extension
activities for the period of 2013 – 2020 giving priority to technical advances
application and transfer for intensive cultivation of non-timber forest products
being materials, e.g. bamboo, rattan and reed. Traditional craft villages and rattan
bamboo products are given priority for applying equipment and machinery to
improve productivity and collect waste for environment protection.
- Decision No. 11/2011/QD-TTg dated 18 February 2011 of the Prime Minister on
policy to encourage rattan bamboo sector. This decision regulates planning,
policies and solutions for encouraging rattan bamboo sector, including generation
of material regions, material exploitation, rattan bamboo product processing and
consuming. In particular, rattan bamboo product processing units will enjoy a tax
rate of 0% for importing special machinery and equipment for local rattan bamboo
product processing.
Policies at provincial level
Being aware of the importance of rattan bamboo sector, some provinces participating in
the said programs/projects have set up policies to support craft sector development
through rural sector development planning at provincial level and documents directing
implementation of decisions encouraging rattan bamboo products of the Government.
For example, in Hanoi, there are programs supporting enterprises with product design,
hotel support for importers and in Nghe An, there are programs to support 50% material
varieties for craft sector, etc...
3.4.2.9 Trade promotion network for craft sector and coorperation

Trade promotion network for craft sector mainly focuses on Vietrade, VIETCRAFT
(and some other organizations which are putting focus on sectors such asVCCI, local
trade promotion centers and sectorial associations in localities).
VIETCRAFT is the biggest contact point of craft sector and is an NGO of Vietnam’s
craft enterprises that was established in 2007. In VIETCRAFT, there are more than 600
members being craft exporters all over the country. VIETCRAFT owns highly qualified
human sources including Vietnamese and foreign experts with rich experiences in the
sector, specially designers from Europe and the Philippines recruited by VIETCRAFT
who enable VIETCRAFT to provide high quality services for members. VIETCRAFT
regularly organizes training activities, information disclosure and trade promotion
programs locally and internationally, and deploys international cooperation projects.
VIETCRAFT is also an organizer of international fair for crafts, timber products and gifts
(LifeStyle Vietnam) with about 1,000 showcases – being the largest sector fair in
Vietnam with vision of the most professional fair in ASEAN to 2015.
Local craft associations: in recent years, in the context of rapid growth of number of
enterprises, some craft associations have been developed in some provinces such as Ho
Chi Minh City, Hanoi, Bac Ninh and Quang Nam. Besides, associations at village and
district level have been developed, e.g. Silk Association in Van Phuc, Interior Furniture
1ST DRAFT 111

Association in Van Diem, Hanoi (former Ha Tay Province), Pottery Association in Bat
Trang, Hanoi, etc… One of the main tasks of the said associations is to support and assist
members to develop business and promote export. However, the capacity of associations
is still weak, especially the human and financial resources are not capable to fulfill their
missions.
3.4.2.10 Current sectorial cooperation and support programs available for integrating
with other programs to improve impacts
At present, in the northern region in particular and in the country in general, there are
some international cooperation and development programs for the sector as follows:
Table 21. Craft cooperation and support programs which have been deployed
Project name, Donor and Brief of activities, scope and Lessons learnt/
goods group duration ability to integrate with new integration ability
projects
Fair trade EU Mutrap Fair trade certification for Capacity of enterprises
development for VIRI (500,000 Euro) enterprises running business with fair trade
crafts, tea, coffee, 2014 -2016 in crafts, tea, coffee, cocoa certificates is
cocoa and spices and spices sector. strengthened, they are
Integration ability: cooperate creative and able to
with trade promotion through adapt to market socio –
fair trade certification. environment
requirements and sell
goods with higher
prices.
 The program can be
integrated with
enterprises selection –
Mutrap project supports
fair trade certification,
the program can choose
to support trade
promotion and market
access capacity
enhancement
Rattan bamboo SDC/ OHK Development of material Focus on local market.
value chain VIRI (1.4 mio USD)
regions, sustainable Integrate cultural factor
development in 2013 -2016 exploitation, expansion with product value
Nghe An market for rattan and bambusa adding.
sp (lung) in Nghe An.
Integration ability:
development of sustainable
material regions for rattan
bamboo products in the
northern and central Vietnam.
Export capacity ECP Home Décor & Improvement of export Rate of enterprises
training Home Textile/ CBI capacity for SMEs. leaving the program is
(1 mil EUR) Development of brand name high because of its poor
2012 – 2015 for Lifestyle Vietnam. adaptation capacity.
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Project name, Donor and Brief of activities, scope and Lessons learnt/
goods group duration ability to integrate with new integration ability
projects
Support for sustainable design
development.
Combination possibility:
Project basically completes in
2014, related documents and
lessons learnt can be applied.
Chain support VCCI (has competed Improvement of business  The program can
program for some detailed plans which environment and support the cooperate in enterprise
agricultural has been approved sector in the whole chain, selection VCCI project
products by the Government from material region supports enterprises to
according to development planning to trade develop material region
Decision No. promotion and trademark and field visits. the
644/QD-TTg on development program can choose to
May 5, 2014 support trade promotion
and market access
capacity enhancement
Table 22. SWOT of rattan bamboo sector in the north of Vietnam
- Long-standing - Poor design and model.
production experience - Lack of auxiliaries for rattan
- Highly skilled labour bamboo products that results in
- Availability and unsatisfactory product quality
regeneration capacity of - Limited number of enterprises
materials meeting standards.
- Enterprises gain rich - Enterprises have no clear
experiences in export trademark development strategy,
markets group trademake is not promoted.
- Market information and trade
promotion is limited.
- Number of labors leaving jobs
increases due to income
reduction.
- Poor sectorial linkage.
- .
Opportunities Support enterprises to Develop a sectorial development

- The State creates favourable meet international center at national level to reach
conditions for the sector to standards (socio better export volume (value
develop responsibility, quality, adding, less material consuming,
- Demands for natural/ fire safety, security). higher quality and price).
environment friendly rattan
bamboo products continously
1ST DRAFT 113

increase.
- Many importers leave China
market which creates big
opportunities for rattan bamboo
product export enterprises in
Vietnam.
- TPP to be signed will soon
generate opportunities for
Pacific - Asian market
development.
Threats Make uses of Develop sustainable material
- Rapid increase in material international standards regions for rattan bamboo products
price. and design orientations to (in combination with other
- Heavily rely on some expand to new markets projects).
customers with mass orders and and strengthen positions
cheap prices. in existing markets.
- Fierce competition from
neibouring countries for the
same products.
3.4.3 Vision, targets and plans for craft development in the northern region
Vision: Vietnamese rattan bamboo products develop in a sustainable manner in the
region.
Common targets for rattan bamboo products in the northern region:
- Strengthen natural rattan bamboo product export capacity (rattan, bamboo and
bambusa materials, seagrass, waterhycinth…) in particular and crafts in general by
focusing on increasing product values in export volume.
- Standardize production organization (strengthen standardization), enhance
application of sustainable business and production technologies to meet
inreasingly strict requirements of traditionsl markets (the USA, EU, Japan) and
potential markets.
- Develop pilot cooperation mechanism in trade promotion in some localities in
some provinces/cities in the countries.
- Develop trademark for Vietnamese rattan bamboo products in particular and crafts
in general.
Targets for the short period of 2015 - 2016:
- At least 30 export enterprises focuse on productionof high value added products
by developing product design and reach an increase of income by at least 15%.
- At least 30 enterprises commit to meet standards of core and potential markets.
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- At least 20 new customers in traditional and potential markets expand business

with Vietnamese exporters.
- At least 70 trade promotion staff and provincial staff of the sector have good
understanding of rattan bamboo sector value chain and trade promotion
technology to set up ground for supporting policies in localities.
Targets for the long period of 2015 - 2020:
- 80% export enterprises focus on production of high value added products by
developing product design and reach an increase of income by at least 50%.
- 30% enterprises meet standards of core and potential markets.
- Trade promotion network for craft sector is established from Central to provincial
level with clear long-term action plans.
Rattan bamboo product supply chain in the northern region in the future
Supply chain in the future focuses on 4 factors, mainly are SMEs participating in the
chain: (1) craft producing households, (2) Enterprises and business units in craft villages,
(3) Exporters (outside craft villages), (4) Local retailers.
The focus on increase of product values, standardization of production organization and
enhancement of sustainable business and production technology application helps rattan
bamboo products in being located in medium and high class segments in the market.
Enhancement of enterprises‘ capacity, specially the capacity of design and meeting
standards in core markets helps enterprises access to new markets and maintain existing
markets in a sustainable manner.
3.4.3.1 Export development plans for crafts in the northern region

Based on the SWOT analysis in part 1, recommendations and strategies plans for rattan
bamboo sector in the northern region include: (1) Development of National rattan
bamboo product development center in Hanoi, (2) Support rattan bamboo product export
1ST DRAFT 115

enterprises in meeting international standards, (3) Development of sustainable material

regions, (4) Strengthening trade promotion for rattan bamboo products with high
design/value added for export enterprises.
Thus, export development plans are recognized in a comprehensive manner from
sustainable materials, adding values through design, international standards meeting and
market access.
However, to make the best uses of resources and impacts of recommendations, export
development plans will focus on a key recommendation of building up a National rattan
bamboo product development center in Hanoi and strengthening trade promotion for
rattan bamboo products with high design/value added for export enterprises. These can be
done through an integrationwith other strategic plans such as supporting enterprises in
meeting standards, developing trade promotion capacity for local trade promotion
network for rattan bamboo sector, developing cooperation mechanism with local trade
promotion network to do pilot direct trade promotion for enterprises.
National rattan bamboo product development center not only serves enterprises in the
northern region but also plays an important role in increasing product values for 3 regions
of the project, creating close linkages among enterprises in the sectors and developing
trade promotion model in a deep manner. In particular, export planning with regional
linkage helps optimize investment cost because many activities can be linked effectively,
for example by inviting a foreign designer group, enterprises in 3 regions can be trained
and supported simultanousely. Initial investments can be given by existing units of
VIETCRAFT to minimize promise hiring, staging and labor cost, etc. and ensure
sustainability after project completes.
In particular, recommendation of “Sustainable material region development” is not
mentioned within project framework because provinces have started with material
planning under directions of MARD.
Recommendation of development of national rattan bamboo product development
center
Main objectives:
- Strengthen natural rattan bamboo product export capacity (rattan, bamboo and
bambusa materials, Dicranopteris dichotoma – seagrass, waterhycinth, areca of
banana, Corypheae - …) in particular and crafts in general by focusing on
increasing product values in export volume.
- Develop pilot cooperation mechanism in trade promotion in some localities in
some provinces/cities in the country.
- Develop trademark for Vietnamese rattan bamboo products in particular and
crafts in general.
Cooperating with existing resources:
- Designing center in Hanoi of VIETCRAFT: contribute with premises and a
part of human resources (including Vietnam’s and foreign designs).
- Trade promotion budget of local trade promotion centers.
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- Contribution from enterprises.

- The Vietnam Rural Industries Research and Development Institute (VIRI).
Estimated budget:
Total estimated budget: 650,000 USD, in which proposed budget: 270,000 USD (year 1:
180,000 USD, next 6 months: 70,000 USD).
Location: Hanoi
Implementing agency:
Key implementers: VIETCRAFT
Local coordinators/implementers:
- Local trade promotion centers (piloting in 10 provinces in 3 regions: 4
provinces in the northern region, 3 provinces in the central region and 3
provinces in south west region)25
- Local and foreign designing schools.
- Local and foreign designers and market experts.
- The Vietnam Rural Industries Research and Development Institute (VIRI).
Duration: 18 months
Main activities:
1. Development of Center for Bamboo, Rattan Development
- Develop market information system for rattan bamboo products (cooperating
with the Information Center of Ministry of Industry and Trade, VIETCRAFT
and pilot provinces)- collect information, publish regular news-bulletin for
enterprises26
- Develop a library for rattan bamboo material data of Vietnam.
- Develop a library for rattan bamboo material data of the world (cooperating
with Materia in the Netherlands, Matertial Connexion in the USA and Center
for product designing and development/experts in the Philippines)27.
25
Selection of 10 provinces in assessment of enterprises’ demand is based on the criteria of (1) number of rattan
bamboo rated SMEs in provinces, (2) enterprises’ demand for trade promotion support ad capacity building, and (3)
orientations giving priorities for rattan bamboo sector of local trade promotion centers
26
Development of market information system will be cooperated with provincial trade promotion centers to update
and run quality information system that is considered as a tool to make provincial trade promotion centers support
enterprises in the sector. Market information system will be updated on a certain website for rattan bamboo sector,
which is linkage and updated with local information system (websites, local trade promotion pages, etc…). Vietcraft
and experts will instruct every province to treat information by themselves and publish regular news-bulletin for
enterprises in such province
27
The Philippines is an Asian country with significant advances in designs recently. It has a similar starting point to
Vietnam. At present, investment in design helps the Philippines in being recognized in craft and interior decoration
in the world market.
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- Develop a library for rattan bamboo knitting methods of Vietnam (about 1,000
methods).
- Develop a rattan bamboo design document for training of export enterprises
(cooperating with Bamboo Training Centre in Oita (Japan).
2. Capacity building for trade promotion enterprises and staff in rattan bamboo sector
- Build capacity for information use and analysis, identification of market and
sector trend, update of product trend for product development (through new
designs).
- Build marketing and trade promotion capacity (output channels, fairs, customer
receipt) and sector management capacity, e.g. factory audits, certification,
etc… Experts will work together with staff of VIETCRAFT, VIRI and trade
promotion centers to provide training for enterprises to understand deeply
about the sector. Within this context, multi – sector trade promotion will be
deployed at provincial level: develop trade promotion plans for the sector and
support deployment of trade promotion plans of provinces, including fairs in
the country and in foreign countries, etc…
- Build capacity of designing for rattan bamboo product export enterprises
through direct designing support and training programs (cooperating with
designing schools/experts in foreign countries and Philippines) with directions
of meeting international standards.
- Build capacity of designing rattan bamboo products for designing students
(cooperating with designing schools/experts in foreign countries and the
Philippines) with directions of meeting international standards.
3. Strengthening trade promotion for highly value added rattan bamboo products
- Learn from the model of One village One product (OVOP) for rattan bamboo
products in Thailand and Thai Designing and Vreation Center.
- Run showrooms for high quality rattan bamboo products at provinces
(cooperating with provincial trade promotion centers, supported and consulted
with foreign designing schools/experts).
- Develop marketing materials.
- Cooperate to organize trade promotion programs for rattan bamboo products of
Vietnam in the leading international sector fairs in the world in 2015 and 2016,
such as Maison et Objet (France), Ambiente (Germany) and Atlanta Gift Show
the (USA). Budget for the program is partly from project budget and partly
from local trade promotion sources.
Implementation methods:
- Selection of qualified enterprises (with staff with basic skills, having
commitments and daring to invest in such costs as marketing and fair
participating, etc…). Selection process is also a learning process for
VIETCRAFT staff and provincial trade promotion centers to learn from
experts about the sector and enterprise audits. Enterprises which have
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registered of participation in other projects or have effectively participated in

other projects (excluding trade promotion) can be selected to make the
cooperation more effective, e.g. projects of Mutrap and VCCI, etc… as stated
in Table 21.
- Trade promotion in a wide direction: National rattan bamboo product
development center will work with local trade promotion centers to integrate
recommendations into trade promotion programs and vice versa to create wider
impacts on 10 pilot provinces as suggested.
- Trade promotion in a deep direction: In addition to cooperation with local trade
promotion centers, the national rattan bamboo product development center will
work directly with enterprises based on assessment of enterprises demand.
These activities ensure that at least 30 enterprises in 3 regions will have in-
depth benefits increase of product value, design, standardization, marketing,
etc…Foreign designers after training enterprises will provide them on-job
training to ensure quality and outputs as suggested.
- Trade promotion linking closely with real needs of enterprises: deep and wide
development is implemented after the assessment of rattan bamboo enterprise
needs in 3 regions as well as of local trade promotion centers to make sure that
activities links closely with real needs of beneficiaries.
- The said cooperation methods gradually turn to be the ground for establishing
working force for rattan bamboo product sector of Vietnam.
Indicators/ number of beneficiaries:
- At least 50 enterprises in 3 regions focus on productions of high value added
products by development of product design, at least 50% of the enterprises
increase income by at least 15%.
- At least 30 enterprises commit to meet standards of core and potential markets,
in which 10 enterprises meet international standards.
- At least 20 new customers in traditional and potential markets expand business
with Vietnamese exporters.
- At least 70 trade promotion staff and provincial staff of the sector have good
understanding of rattan bamboo sector value chain and trade promotion
technology to set up ground for supporting policies in localities.
- At least 1,000 labours indirectly benefit from the programs, in which at least
70% of them are poor and ethnic minority people.
Some notes to ensure sustainability:

- Associate with local and national programs: product development by
increasing value and strengthening standardized products is in line with
policies and directions of the Government. Therefore, it is projected that the
national rattan bamboo product development center will continue to associate
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and cooperate with annual trade promotion programs at local level, even when
projects have ended.
- Consider fee collection mechanism after projects end: after completion of
projects, VIETCRAFT considers to promote fee collection for enterprises
participating in activities of the national rattan bamboo product development
center to ensure income for the center and confirm the quality of services
provided to enterprises.
Effectiveness:
Building up a ‘motive force” for rattan bamboo sector by developing a national rattan
bamboo product development center is more effective than making specific
recommendations on certain trade promotion activities and capacity building for a certain
province. The center takes 10 provinces in 3 regions in pilot, including essential fields in
trade promotion such as (1) increase product value and design (2) support enterprises to
meet standards, (3) enhance cooperation and trade promotion by linking between local
trade promotion activities and designing centers.
By building up a strong ‘motive force”, trade promotion activities will be in-depth,
effective, better linked and specially cost saving. A province to deploy 3 activities needs
a budget of 60- 80,000 USD to meet output requirements, e.g. foreign expert hiring,
premises hiring, consults with standards, training, etc…Thus, piloting in 3 regions will
cost 500 – 800,000 USD/10 provinces.
Việc xây dựng một "đầu tàu" vững mạnh sẽ giúp các hoạt động XTTM có chiều sâu, hiệu
quả và liên kết tốt hơn, và đặc biệt là tiết kiệm kinh phí. Để làm đủ 3 hoạt động như trên,
mỗi tỉnh cần có khoảng 60- 80.000 USDthì mới có thể đảm bảo các đầu ra như thuê
chuyên gia nước ngoài, thuê mặt bằng, tư vấn hợp chuẩn, đào tạo v.v…
However, if a “motive force” and integration support are applied, enterprises can have
both deep and wide benefits which ensure the sustainability with all 3 essential steps in
trade promotion (product value increasing, meeting standards and effectively linking with
trade promotion).
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Table 23. Summary of action plans for craft sector in the northern region
Markets to reach USA, EU, Japan, Asia
Current roles of SMEs in the Contribute to increasing export values, product quality, job
sector creation, increasing income for farmers, hunger elimination
and poverty reduction and development of ethnic minority
groups. More than 90% of enterprises in the sector are SMEs.
Performance indicators Beginning/ 2012:

(increase in enterprise number, Number of SMEs capable for export: 95 enterprises.
export growth in provinces, Regional export weight in the country: 19.8%.
etc.) Vietnam’s export weight in the world: 3.73%.
Export growth rate of Vietnam in 5 years: 2.27%.
Targets to 2015 - 2020:
Number of SMEs capable for export: 120 enterprises.
Regional export weight in the country: 25%.
Vietnam’s export weight in the world: 5%.
Export growth rate of Vietnam in 5 years: 2.8%.
Shortcomings - Poor designs

- Unstable materials
- Weak regional and enterprise linkage
- Few enterprises meeting international standards, unstable
product quality.
- Weak market access and foreign language capacity
- Limited trade promotion for the sector in provinces
Action plans - Strengthen natural rattan bamboo product export capacity
(rattan, bamboo and bambusa materials, Dicranopteris
dichotoma , reed, Eichhornia crassipes , areca of banana,
Corypheae …) in particular and crafts in general by
focusing on increasing product values in export turnover
structure.
- Develop pilot cooperation mechanism in trade promotion
in some localities in some provinces/cities in the country.
- Develop trademark for Vietnamese rattan bamboo
products in particular and crafts in general.
Activities Description Implementing 2015 2016 2017

(number, agency
province, content, VIETCRAFT
…)
I. Development of a Rattan VIETCRAFT in
bamboo product development cooperation with
center partners
1.1. Develop information system 1 library Information x
on rattan bamboo product Center
markets The Ministry of
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Industry and Trade

Trade promotion
centers in
provinces
1.1. Develop information library 1 library Trade promotion x

of materials for rattan bamboo centers in
products in Vietnam provinces
1.2. Develop information library 1 library Cooperating with x x
of materials for rattan bamboo Materia (the
products in the world. Netherlands),
Matertial
Connexion (the
USA) and
Designing Center
(the Philippines).
1.3. Develop a library for rattan 1,000 knitting Trade promotion x
bamboo knitting methods in methods centers in
Vietnam provinces
1.4. Develop documents for 1 training VC, Bamboo x
rattan bamboo designs for document Training Center
training export enterprises (Oita, Japan)
II. Capacity building for trade

promotion enterprises and staff
in rattan bamboo sector
Information x
Build capacity for information
Center of Ministry
use and analysis
of Industry and
Trade
Trade promotion
centers in
provinces
Build capacity of marketing and 10 models in 10 Trade promotion x
trade promotion (output provinces, 70 staff centers in
channels, fairs, customer receipt) provinces
and capacity of sector
management e.g. factory audits,
certification, etc… Deploy multi-
sector trade promotion model at
provincial level
10 training Cooperating with x

Build capacity of designing for
courses and designing
rattan bamboo product export
combine with on- schools/experts in
enterprises through direct
site support, 50 foreign countries
designing support and training
enterprises and the Philippines
programs
increase income
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Build capacity of designing 10 training Cooperating with x

rattan bamboo products for courses designing
designing students with 3 designing schools/experts in
directions of meeting competitions foreign countries
international standards and the
Philippines.
III. Strengthening trade

promotion for highly value
added rattan bamboo products
Learn from model of One village 1 field visit OVOP Thailand x

One product (OVOP) for rattan
bamboo products in Thailand and
Thai designing and creation
Center.
Run showrooms for high quality 03 showrooms in Cooperating with x x
provinces designing
rattan bamboo products at
schools/experts in
provinces (cooperating with
foreign countries
provincial trade promotion
and the
centers, supported and consulted
Philippines. Trade
with foreign designing schools/
promotion centers
experts).
in provinces.
Develop marketing materials Trade promotion x
centers in
provinces
Local and international fairs 20 new customers, Trade promotion x x
6 international centers in
fairs and 30 local provinces
fairs
Other notes Cooperate with existing sources:

(Budget/ Cooperation) - Designing center in Hanoi of VIETCRAFT:
contribute with premises and a part of human
resources (including Vietnam’s and foreign designs).
- Trade promotion budget of local trade promotion
centers.
- Contribution from enterprises.
- The Vietnam Rural Industries Research and
Development Institute (VIRI).
Estimated budget:
Total estimated budget of the action: 650,000 USD, in
which proposed budget: 270,000 USD (18 months).
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3.5 Logistics sector

3.5.1 Logistics access
Macro logistics system is established by 4 closely connected factors (, which are
infrastructure; institutional framework; shippers/consignees (logistics service users); and
Logistics service providers (LSP – Logistics service provider).
Figure 14. Main factors of a macro logistics system
(Source: Logistics research in NSEC, Ruth Banomyong et al., 2007)
The combination of these four factors along with research of geological feature helps
assessment and identification of capacity of the said macro logistics system:
Infrastructure: good infrastructure system will create favorable conditions for goods
shipping and storing. Infrastructure includes roads, railways, sea ports, air ports, inland
waterways, warehouses, etc…It lasts years, even decades to build infrastructure.
However, infrastructure exists for long-time and is difficult to be destroyed or damaged.
Institutional framework: it is considered as software of logistics system that impacts
conveniences of transportation and storing of goods in infrastructure system. There are
many legal regulations and policies that impacts shippers, consignees,
importers/exporters, traders and logistics service providers. They are regulations and
policies on import, export, international payment, business registration of logistics
service providers, customs procedure, even logistics services that are allowed. The
following criteria should be mentioned in detailed analysis of institutional framework:
opening level of the economy ((export + import) /GDP), average duration for
export/import, number of documents for export/import.
Enterprises require a comprehensive legal system with regulations on commerce,
customs, etc… If the institutional framework is not in order, business performance cannot
be effective given that infrastructure is good. Thus, the most developed sector is the one
with perfect institutional framework and good logistics services.
Shippers/consignees: traders can be shippers, consignees or both. They are customers of
logistics system. Their legitimate requirement is that goods, finished products, semi
finished products, etc… are transported in a safe and effective manner. Being a part of
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supply chain management, logistics system effectively serving shippers/consignees must

be the one closely connect service providers and system users.
Shippers/consignees have different level of awareness and understanding about logistics
system that they have different feeling of service price and time. To analyze
shippers/consignees factors, some criteria must be considered such as the average export
cost for a container of 20’ (twenty-foot equivalent unit) and the average import cost per
TEU.
Logistics service providers (LSP): state or private enterprises which provide logistics
services representative for logistic industry. The quality of provided services and service
types of logistics service providers depends on the structure of logistics system, signed
contracts and professional knowledge and skills of enterprises.
The following criteria are used to assess the capacity of logistics service providers:
service quality level or capacity to meet customer’s requirements, capacity to provide
services, responsibility scope, reliability, and tracking and tracing capacity and accuracy
of documents.
3.5.2 Current status of logistic sector in the northern region
a. Infrastructure
Generally, in the northern region, there is a long traditional infrastructure system that is
convenient for logistic service development. However, in the context of international
economic integration, this system shows many limitations that need to be addressed to
strengthen foreign trade of the country.
Seaway infrastructure:
In the north of Vietnam, there are two big seaports in Hai Phong and Quang Ninh. Cai
Lan seaport in Quang Ninh is deep-lying port, however infrastructure system here is not
really good. Lach Huyen Hai Phong deep-lying seaport is expected to be the largest
watergate of the northern region but is still in construction process. At present, Chua Ve
container seaport (in Hai Phong) is nearly overloaded that cannot receive ships of more
than 3,000 TEU. Hai Phong seaport is the only seaport in Vietnam that connects with
railways, however this system is not fully exploited. The location of northen seaports is
very convenient for connecting with regional and international seaports. Seaport services
in the northern region is traditional with more convenient technical infrastructure in
comparison with the southern and south west regions in terms of trading and
transportation.
Road infrastructure:
The northern region is equipped with good road system, specially the highway system is
in completion process, namely 5B highway (Hanoi – Hai Phong), Hanoi – Lao Cai
highway, Hanoi- Lang Son highway... Most of these highways pass through industrial
zones and Noi Bai international airport and connect with Hai Phong seaport. This road
system is convenient that connect seaport with warehouses in provinces.
Airport infrastructure:
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There is a significant advantage of the region with 2 international airports (Noi Bai and
Cat Bi). Now, Noi Bai international airport is being expanded with T2 terminal to be
completed by the end of 2014. Highway system in the northern region connects with Noi
Bai international airport, however; the weakness of airport system in the northern region
in particular and in Vietnam in general is that there is only one transport mode that
connects road system from airports to rear area.
Riverway infrastructure:
In the northern region, there is Red River system with upper reach from China and
spreading all provinces in the north of Vietnam. This is potential for riverway
transportation with dense river system.
Railway infrastructure:
Railway system in the northern region is relatively good, being international gateway to
China and connects with Hai Phong seaport. The project of connecting railway to Cai
Lan seaport (Quang Ninh) is in its formulation process.
b. Institutional framework for logistics services
At present, in the northern region, there is no policy giving priority for logistics sector
development. One of the reasons is the incompleted training and awareness of the
importance of logistics. Thus, local trade promotion centers need to play consultation
roles for central and local state agencies on logistics to facilitate logistics service
providers and export enterprises.
The following analysis focuses on studying certain sectors in export development plans
of the northern region, lychee for example, to demonstrate the capacity of logistics in
supporting export, in particular upon agreed views and policies for logistics of a certain
core sector.
In realistics, some border gates in the north of Vietnam recently (2014) have issued
certain supporting policies to facilitate export enterprises in speeding up customs
clearance for fresh lychee fruit. However, other border gates (seaports, airports) have no
similar regulation.
Box 5. Lychee for export is given priority in customs clearance
In lychee season 2014, The General Department of Vietnam Customs regularly direct
The Provincial Customs in Lang Son, Lao Cai and Ha Giang provinces to facilitate and
encourage traders to export fresh lychee through border gates.
In lychee season 2014, this agency requested provincial Customs to give priority to
lychee export in processing documents and allocate staff in charge of consulting export
procedures for export enterprises. According to the General Department of Vietnam
Customs, it saves time and cost for enterprises.
According to Bac Giang Department of Industry and Trade, it is estimated that the total
yield of fresh lychee this year is 140,000 tons. Local consuming volume is about 84,000
1ST DRAFT 126

tons (60%), export volume is about 56,000 tons (40%). In which, fresh fruit consuming is
about 120,000 tons (85%); dried and canned fruit is about 20,000 tons (15%).
Lychee volume exported daily through Lao Cai and Lang Son border gates is over 2,000
tons. Some other small volume is exported through Thanh Thuy border gate in Ha
Giang.
Sources: http://kinhdoanh.vnexpress.net/tin-tuc/hang-hoa/vai-thieu-duoc-uu-tien-thu-tuc-xuat-khau-
3008456.html., and http://vov.vn/kinh-te/vai-thieu-duoc-uu-tien-thu-tuc-xuat-khau-334345.vov, research
on 26.7.2014.
It can be seen that there is no policy for encouraging core product export (e.g. fresh
lychee) and speciallythere is no guarantine regulation in Noi Bai for fresh lychee export
to markets out of Asia (as mentioned below). Discussing with staff of the trade promotion
center in Bac Giang province shows that in Bac Giang province, there is no logistics
policy to support and encourage fresh lychee export. The province has no intervention
with related parties to shorten customs clearance process for fresh lychee export, except
for export to China as mentioned above.
c. Logistics service providers (LSP)
Despite arelative large number of logistics service providers, the capacity in providing
services is limited in essential services as the providers are SMEs. . Seaway
transportation enterprises are equipped with old and weak ships that cannot meet
requirements of big ship owners in the world. Their human resources are also not
professional with weak foreign language skills which results in the low productivity of
the sector.
Logistics service providers are weak in financial sources, human resources, global
network organization, information system and linkage (vertical and horizontal linkage).
In addition, logistics service providers in the northern region concentrate mainly in Ha
Noi, Hai Phong and Quang Ninh so their activities are not focused and do not support key
export enterprises. Besides, their marketing to access customers is weak and
theirooperation with goods owners to provide customers with package services is still
limited.
Box 6. Logistics of Vietfreight

Established in 2009 as a logistics company, Vietfreight has experienced leaders from
leading companies in the sector (Vietfracht, Vietrans,...). During 4 years of operation,
with initial head office in Hanoi, the company has expanded its activities with branches
in Hai Phong, Da Nang and Ho Chi Minh City. The company is an official vendor of
Yamato Global logistics Japan Co., Ltd.
During its operations, the company puts significant efforts to improve service quality,
that’s why the company meets ISO 9001:2008 standards for all of its activities. Similar to
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all LSPs in Vietnam, the company has not provided full logistics services of a LSP. One
of its partners are Japanese coorporations (e.g. Honda), however the company provides
separate logistics services in Vietnam (e.g. local transportation, export/import customs
clearance, etc...). When interviewed by experts, the Director of the company said that
Vietfreight is not only providing logistics and transportation services merely but also
managing the whole logistics process. The staff of the company is qualified. Its network
is wide enough to fulfill tasks domestically and internationally. The company provides
logistic value added serices and supplies customers of logistic outsourcing services as
follows:
+ Expand service capacity by widening correspondent network
+ Consult customers and partners with suitable solutions
+ Analyse and integrate supply chains through performance data
+ Analyse data to identify opportunities to generate values.
Company leaders state that the company has not yet provided any logistics solutions and
supply chain for any export enterprise in Vietnam. Commodities that company often get
involved in are of electricity, electronic and vehicle auxiliaries. In its development plans,
if being supported, the company wish to expand its business to other key export sectors of
Vietnam (fishery, textile, fresh fruit). Company leaders also say that if Vietnam aims to
strengthen potential export activities, supports and logistics are in need. Now logistics
attract many experts and enterprise leaders. Export of the said commodities in the region
(Thailand, Malaysia, etc...) can bring in good lesson learnt to Vietnam’s enterprises.
Company leaders admit the weaknesses of export enterprises and LSPs in Vietnam that
they cannot be connected one another in export product supply chain.
Box 7. Logistics for fresh fruit of Hoang Ha Company

In 1992, Hoang Ha Limited Company (HIL) was established by Lisence No. 711/GP-UB
TP. This is one of earliest private companies in logistics sector in Vietnam. HIL is
equipped with firm infrastructure: warehouses for import/export storing and pre-
processing, packaging shops and transportation vehicles. In 2003, HIL built up shops for
frozen goods. This is a milestone of professionalization in frozen products sector that
many LSPs in Vietnam have not done yet.
To make activities more professional and meet more diversified demands of customers,
HIL becomes a leading vendor of many airline corporations (Vietnam Airlines, Thai
Airway, Cathay Pacific, Singapore Airlines, British Airway…), and involves in many
sectors (being member of IATA, FIATA, VLA,VASEF)…. In addition, HIL has branches
in big cities of the country, for example an airport office at Tan Son Nhat airport,
branches in Hanoi, Da Nang and Can Tho. In 2009, HIL was rewarded with “Strong
Trademark of Vietnam”. During 20 years of operations, Hoang Ha company is trusted by
partners and customers and certified by sector associations as strong trademark in the
market.
Hoang Ha Company is a large company of Vietnam in transportation and forwarding of
fresh fruit via airport and seaport as well. However, the company has not yet provided
1ST DRAFT 128

package logistic services to customers. It has not yet had close cooperation relation with
export enterprises. The company merely takes separate orders from enterprises and loads
commodities from exporters by its special trucks.
A representative of Hoang Ha Company in Hanoi says that one difficulty for fresh lychee
export in particular and fruit export via airport in general is the lack of quarantine
services. In particular, the Plant Guarantine Department in terminal 1 of Noi Bai airport
refuses guarantine for fresh lychee export to the Middle East in this summer 2014. The
company wishes that the State faciliates LSPs and export enterprises in logistics activities
for such a potential commodity.
The Company wants to cooperate with Vietrade and local trade promotion centers to
facilitate closer coopertation with potential export enterprises in Vietnam, in particular
for fresh fruit. The company completely can provide market information and support
export enterprises in export logistics.
d. Logistics services users
The awareness of export enterprises of logistics roles and contents is limited. Many
enterprises have no sight of export chain to optimize time, cost and their adaptation with
market changes. Therefore, export enterprises are insourcing logistics activities rather
than outsourcing. The reason is that they cannot see the benefits of linkage with LSPs and
they are not aware of logistics management roles. Good logistics management leads to
cost reduction and competition capacity enhancement for enterprises. If the linkage with
LSPs is well exploited, export enterprises need to focus on developing commodity
strengths only. Moreover, this is the way to push up the development of LSPs towards
sectorial concentration trend that is not interested properly by LSPs in Vietnam. Potential
export sectors in the northern region such as tea, lychee (fresh) or shuttle knit need
answer for question of how to make logistics effective.
Box 8. Logistics for fresh lychee export enterprises in Bac Giang
In reality, fresh lychee export enterprises are inconcerned with logistics. Their export is
on unusual basic because it is the fact that lychee is collected by Chinese traders right at
gardens (shipping terms is EXW), or some exporters who prefer FOB Hai Phong 28
shipping terms. Therefore, almost all logistics activities are not cared enough (VIFOCO
is outsourcing to a transport company and is very happy with provided services).
Meanwhile, according to leaders of Bac Giang Trade Promotion Center in Bac Giang
province, if fresh lychee production cost is 10, logistics cost is 7. Thus, reducing logistics
cost is a key to help exporters to increase their competition capacity.
Table 24. SWOT of logistics in the northern region
1. In the northern region, there are full 1. Quality of transportation system is
28
Information from interviews with VIFOCO, Bac Giang
1ST DRAFT 129

transportation modes: seaways, roads, limited (modern roads, seaports, etc...) due
riverways and airways. to the lack of investment budget to upgrade
2. Waterway transportation system in the and synchrodize transportation
northern region is fairly convenient,
infrastructure.
especially Red River with upper reach from
China and spreads all provinces in the North 2. Logistics cost is generally high that
of Vietnam. reduces competition capacity in
3. Being the only location in the country international market.
with connection of railway transportation
3. Lack of vertical and horizontal linkages
and seaports (Hai Phong).
4. Airport infrastructure system with two in supply chain.
international airports(Noi Bai and Cat Bi) is 4. Awareness of export enterprises and
the transit location for goods and passengers many state agencies on roles of logistics is
of other countries in the world.
not adequate.
5. Transportation human resources are well
trained that are capable to fulfil their tasks
and meet requirements of international
standards.
Opportunities Threats
1. LSPs have opportunities to expand market 1. Long lasting economic crisis
during ASEAN and international economic 2. Fierce competition between international
integration. transportation enterprises in other countries,
2. The state sets infrastructure development
in particular within ASEAN countries upon
planning and strategies based on which
logistics will facilitate LSPs. AEC establishment (ASEAN Economic
3. Contents of trade facilitation are deployed Committee).
(customs procedures, administrative reform,
etc...) will also strengthen LSPs
development.
3.5.3 Vision and targets for the sector

At macro level, the Prime Minister issued the Decision No. 950 dated 25 July, 2012 on
action plans to implement commodity import/export strategy in the period of 2011-2020,
orientations to 2030, in which main tasks are:
“Invest to develop commodity import/export infrastructure and services and push
up socialization of logistics services
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- Invest and upgrade transportation infrastructure and warehouses at large

seaports and import/export customs clearance sites to meet commodity
import/export demands by 2020, orientations to 2030.
- Develop and improve institutional framework, logistic service development
policies, standardization service procedure and upgrade infrastructure and
human resource quality.
- Develop policies and mechanism to build capacity, increase effectiveness of
export services and develop export services in Vietnam”.
Based on the said action plan and situation of logistics sector the northern region,
logistics system in the northern region must reach targets as follows:
- having solid infrastructure system that easily and conveniently connects with multi-
model transportation,
- having professtional logistics service providers to meet requirements of potential export
sectors. LSPs for sectors must be able to provide and grasp the whole export chain,
- being well suported from the state and functional agencies, in particular in improving
local trade promotion centers, regional sectorial association in the northern region to
create local and international transparent information channel to trully support export
enterprises and LSPs in the northern region as well.
3.5.4 Logistic sector strategies and development plans to support

implementation of export development plans of selected sector in the
northern region
3.5.4.1 Logistics infrastructure development plans at State and Ministrial levels
For road projects in running process, it is necessary to speed up their implementation
progress (5B highway, Hanoi – Lao Cai highway, etc…).
For development of Lach Huyen seaport, it is necessary to promply implement procedure
to address difficulties of the project and pay attention to connect with the rear of the
seaport.
There will be a study to support construction of special warehouses for potential export
sectors in the northern region (tea, fresh fruit, textile and shuttle knit clothes) at seaports,
airports and provinces potential for export. Trade Promotion Agency andsector
associations will chair investment in designing and construction of such warehouses (e.g.
PPP budget).
3.5.4.2 Logistic development plans for commodity sectors
Action plans
Actions Description (quantity, Implementers Month... Month… Month...
province, content, etc…) 2015 2016 2017
Objective of this action is Consultants Quarter
to set up ‘software’ cooperating 3-4
1ST DRAFT 131

Action plans
solutions to strengthen with sector
logistics development to experts
support right potential Local trade
export sectors. promotion
centers and
sector
associations
Strengthen Providing training courses Consultants, Quarter
awareness on makes stakeholders trade 4
logistics and (potential export promotion
supply chain of enterprises, LSP, centers, sector
potential Consultants, trade associations,
export promotion centers, sector export
commodities associations) have enterprises,
(tea, fresh fruit, comprehensive views of LSPs
shuttle roles of logistics and
knitting, supply chain for enterprise
footwear…) development. In
particular:
- 01 training course on
logistics and supply chain
of export tea
of export fresh fruit
of export shuttle knitting
goods
Build capacity Develop scope that local Consultants, Quarter

for local trade trade promotion centers trade 1-2
promotion and sector association can promotion
centers on support related enterprises centers, sector
what logistics in logistics chain (import associations
can support market information,
export transportation information,
enterprises in import customs
exporting information, etc…) based
potential on which to build capacity
commodities for trade promotion
(tea, fresh fruit, centers and sector
shuttle knitting association, etc…to
commodities) implement accordingly.
Develop Objectives of this action Consultants, Quarter
linkage are to develop linkage trade 1- 2- 3
between LSPs model between export promotion
1ST DRAFT 132

Action plans
and export enterprises and LSPs for centers, export
enterprises in every potential export enterprises,
exporting sector and make LSPs LSPs, sector
potential focus on special logistics associations
commodities activities for each
(tea, fresh fruit, potential export sector.
shuttle knitting
commodities)
Improve Initially deploy linkage Consultants, Quarter The whole
linkage model between LSPs and trade 3-4 year
between LSPs enterprises exporting promotion
and enterprises potential commodities. centers, export
exporting Then, assess the model enterprises,
potential and make adjustments if LSPs, sector
commodities needed associations
by case studies.
Develop an This action aims at Trade Quarter 1
indicator set to supporting enterprises in Promotion
measure assessing and managing Agency, local
logistics their logistics activities to sector
capacity (time, overcome weaknesses, association
cost, helping potential export where potential
reliability) for enterprises to reduce cost export sectors
enterprises and increase services are available
exporting provided to customers. In
potential addition, the indicator set
commodities makes potential export
(tea, fresh fruit, enterprises professional
shuttle knitting and easy to integrate
commodities). international economy.
Other  Training courses can be expanded to all participants
remarks  Consultation and instructions by sectors will focus on model enterprises
3.6 Tourism
3.6.1 Roles of Tourism and sustainable trade promotion
Sustainable development is an important target of socio – economic development
strategies of almost all countries, with requirements of close and harmonious linkage
between economic – socio development and environment protection, reflected by stable
economic development, social progress and justice, appropriate exploitation and saving
natural resources, and living environment improvement and protection.
Though this research is a key commodity leaded export development plan, tourism is
selected as a service sector with multi-direction impacts. In addition to the meeting of
multi-sectorial indicators in selecting sectors, tourism service development in linkage
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with production areas has been recognized as capable of playing trade promotion roles
effectively as experience shown in the following project (Box 9)
Box 9. Project ‘Enhancement of sustainable tourism, clean production and export
capacity” in Laos, 2011 - 2014
Being an effort made by many UN agencies including ITC, ILO, UNCTAD, UNIDO and
UNOPS funded by SECO, the main objectives of the project are to develop tourism
sector for Luang Prabang, to improve organic and handmade agricultural production
(especially silk products) to spread impacts to the community through lower reach
connection chain of tourism sector, based on which to improve export quality and
quantity for other sectors in the northern region of Laos.
The project selected two impacted factors to improve lower reach supply chain and
capacity of Laos trade promotion agencies on trade policies and non-tariff measures.
Even though the project focuses merely on tourism sector in Luang Prabang, it will
spread impacts on all neighbouring provinces, even all over the country.
After more than two years of operations, the project attracted 100 households in
agricultural production, 250 households in craft production with 85% women in the
project chain. With a unique trademark of “Luang Prabang Handmade”, the project
contributes to increase turnover in both quantity and value of crafts by 60% in night
markets offered for tourists. In agricultural product aspect, farmers are organized in
“Luang Prabang Organic Agriculture Association”. The Association is funded by
contributions from members, in charge of marketing, quality control and origin track and
trace system. By providing products to hotels and high-class restaurants in Luang
Prabang, members of the Association earn 700USD/month compared with
300USD/month as previously they did. Vegetables, tomato gardens... and craft producing
units are potential tourism destinations.
Source: UNCTAD (2013), Aid for Trade and Value Chains in Tourism and
www.laosaft.org
The above mentioned experience shows that tourism brings about multi- direction
impacts. Within the program framework, the project should follow a specific model.
Regional tourism development models depend on many factors such as geography,
landscape, cultural values, history of destinations and market demands. Normally,
tourism season of foreigners is from September to April, and of local people is from June
to August (summer holiday) and weekends/holidays. This report mentions tourism export
only, therefore the working team only focuses on analysis of tourism for foreigners.
3.6.2 Tourism development status and trend in general
According to ITC Trademap, the growth rate of world tourism import is 2.68%/year in
the period of 2008-2012. Analysing world tourism development growth in UNWTO
report (2013) Travel High shows some remarkable issues as follows:
+ Despite economic difficulties, travel is a habit of the majority of people in all countries.
Contributing 6% GDP of the world, tourism sector in 2012 received over 1 billion
international tourist turns. It is estimated that tourism growth rate is 3.3% to reach a
turnover of 1.8 tourist turns in 2030. In which, it is noted that emerging markets will
1ST DRAFT 134

double its growth rate and account for a half tourist turnover. It is estimated that tourist
turnover in those markets is 1 billion turns in 2030.
Figure 15. Forecast of
international tourism
growth rate in the world to
2030
Source: UNWTO (2013)
+ Demand for tourism

products will change, the
tourists are having the
tendency to change their
behaviors from regular
"sight-seeing" at destinations
to learning more deeply
about values and local life in order to develop themselves (“Consumers have developed a
deeper appreciation for locally relevant and authentic experiences with an emphasis on
living “la local vita” (the local life). These types are commonly called tourism for health
(mental and spiritual - Wellness Tourism).
+ In addition, Vietnam has a long coast, thereby besides traditional tourism modes, a
merging mode is cruise – that has appeared and been focused in some coastal destinations
such as Quang Ninh, Hue, Da Nang, Vung Tau and Phu Quoc. According to some
statistics, in 2012, Vietnam received over 285,000 cruise tourism turns – accounting for
only 5% total tourists to Vietnam. However, this is a new trend as projected by UNWTO
in cruise development strategies to 2020.
+ Tourism technology changes either. For the highly mobile characteristics, tourism
promotion and sales services will change at request of products promptly to satisfy
customers. Baseline statistics show that online sales in the world in 2012 was 524 billion
USD, making a growth rate of 8.4%, and is forecased to continue to grow to 9.5%-10% in
the next 5 years.
Moving in-deep towards typical features of tourism trend, it is noted for
international tourism market as follows:
Firstly: Visitor structure will be increasingly diversified
+ Paying capacity: travel becomes increasingly common, not only for the rich in
developed countries but for all classes from many countries;
+ Ages: the old and newly retired people travel more and more so special
programs for these ages are needed.
+ Marriage status: single people travel more and more.
+ Genders: Changes in roles and responsibilities in family increase number of
women visitors that requires innovation and supplementation of equipments, tools,
services and schedule for businesswomen.
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+ Visitor types: There are more and more family group register to travel with
participation of all family members in 3 generations, especially at weekends,
holidays or school children’s summer holidays.
Secondly: Trend of choosing sustainable, ecological and environmental friendly
services and goods
This is a trend of international tourists to Vietnam, especially tourists from Europe, North
America, Japan and Thailand. They are aware of and in high demand for safety and
health, thereby there are more and more people tend to go back to the nature. Thus,
environment friendly services and programs should be implemented and propagandized.
Thirdly: There are more and more people use their spare time and income for relax and
enjoying health and beauty services.
To be in line with this trend, it is necessary to create no smoking areas and no strong
alcohol sales and services, increase vegetable and fruit with legal origin in meal, low fat,
sugar, calorie and carbohydrate in food, low calorie and caffeine in drink, enhance health
clubs with sport equipments, yoga practicing room, tennis playgrounds, mini golf ground,
swimming pools, Jacuzzi, mineral water bathrooms, Chinese traditional medicine
soaking pools, sunbathing, massage rooms, etc…, strengthen tourism services in
combination with modern disease treatment, e.g. gout, diabetes, cardiovascular problems,
etc…
Fourthly: Increasing demands for multi-model tourism programs
For example: sea tourism for health in combination with conference, incentive tourism in
combination with market research, short term tourism in combination with casinos, etc…
that requires diversification of products, e.g. historical tourism in combination with
visiting vegetation, tea and fruit gardens, organization of entertainment activities on the
sea.
Fifthly: self-designed tours and online reservation; self-selected services instead of
package tours
The most individual tourism service is food. Thus, tourism companies, transportation
enterprises and hotels often organize tourism programs that supply a part of services, for
example Vietnam Airlines is successful in launching Free and Easy package products
including airfares, transportation from/to airports and 3 nights at hotels. If needed,
customers can buy separate tours and other services at destinations. Therefore, to
strengthen this trend, it is necessary to support market penetration capacity building for
tourism promotion agencies by contemporary tools such as mobile, social networks such
as Facebook, Twitter, etc…
Sixthly: Travel far from noisy urban areas to quiet and isolated areas. This is a trend that
makes tourism areas far from urban increasingly attractive to visitors. Thus, export of
tourism services is promising for deep-lying and remote areas, especially in combination
with trade promotion. In the coming time, focus should be put on tourism for health,
because this trend is not recognized adequately in national, regional and provincial
tourism development strategies. Therefore, supply chain based regional linkage should be
promoted, models to create new tourism products should be developed, including cultural
1ST DRAFT 136

tourism, individual health care tourism, MICE tourism, cruise and tourism locating for
each area.
Vietnam’s prospects lie in the context of new era of living tourism (experienced), eco-
tourism, tourism for health, etc… because they are based on natural resources that are
strengths of Vietnam. Obviously, real estate and investment in Vietnam are developing to
serve traditional tourism but have not caught up with new emerging trends as stated
above.
3.6.3 Vietnam’s current tourism development status
3.6.3.1 Tình hình chung Overview
In the period of 2000 – 2012, despite the general context of tourism decrease, the number
of international tourists to Vietnam increased with relatively high growth rate of 10.1%.
In particular, for areas where the world natural and cultural heritages are located, the
number of international tourists increased sharply after being recognized by UNESCO. In
the period of 2010 – 2012, tourism growth rate was high, being 16.4%. In 2012, the
number of international tourists was 6.8 million, about 3.2 times higher compared with
2.1 million turns in 2000, and 7,572,352 turns in 2013.
By means of transport: Tourists use airway the most, accounting for more than 50%, the
second common means of transport is roadway and the least is seaway. Bordering China,
Cambodia and Laos and on Asian crossway and West – East economic corridor, Vietnam
receives a stable number of international tourists by roadway of about 1 million turns,
however the weight of roadway tourism in the structure decreased from 36% in 2000 to
14.4% in 2012. Despite a long coast of over 3,200km and located in regional marine
routes but there is no seaport for tourists, the rate of international tourists traveling to
Vietnam by seaway is not in line with the country’s potentiality, with only 200,000-
300,000 turns.
By purposes: Tourism for relax and health accounts the most (over 50%), increased by
3.7 times in 2000 – 2012, from 1.1 million to 4.1 million turns of visitors, accounting for
51.6% and 60.4% accordingly. The second common purpose is commercial and working
with a growth rate of 9.3%, and then is family visiting with a growth rate of 9.9%/year
and other purposes.
By markets: Key markets of Vietnam tourism are ASEAN, Eastern North Asia, North
America, Western North Europe and Australia, partially are from Eastern Europe and
South Europe. The leading markets include: ASEAN accounting for nearly 20%
(Malaysia 4.48%, Cambodia 4.52%, Thailand 3.55%; Singapore 2.59%, Philippines
1.33%; Laos 1.62%, Indonessia 0.1%), China (in 2013 reached 1.9 turns of visitors,
accounting for 25%), South Korea (in 2013: 748,000 turns of visitors, accounting for
9.9%), Japan (in 2013: 604,000 turns of visitors, accounting for 8%), USA (in 2013:
432,000 turns, accounting for 5.71%), Taiwan (in 2013: 399,000 turns, accounting for
5.27%), Australia (in 2013: 319,000 turns, accounting for 4.2%), Russia (in 2013:
298,000 turns, accounting for 3.94%), France (in 2013: 209,900 turns, accounting for
2.77%), UK (in 2013: 184,600 turns, accounting for 2.44%), Canada (in 2013: 105,000
turns, accounting for 1.39%), Germany (in 2013: 97,600 turns, accounting for 1.29%),
details as follows
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Table 25. Number of tourists to Vietnam by countries

China 1,907,794 25.19% Philippines 100,501 1.33%
South Korea 748,727 9.89% Germany 97,673 1.29%
The
Japan 604,050 7.98% Netherlands 47,413 0.63%
USA 432,228 5.71% Spain 33,183 0.44%
Taiwan 398,990 5.27% Italy 32,143 0.42%
Cambodia 342,347 4.52% Sweden 31,493 0.42%
Malaysia 339,510 4.48% New Zealand 30,957 0.41%
Australia 319,636 4.22% Swizerland 28,423 0.38%
Russia 298,126 3.94% Denmark 25,649 0.34%
Thailand 268,968 3.55% Belgium 21,572 0.28%
France 209,946 2.77% Norway 21,157 0.28%
Singapore 195,760 2.59% Polland 14,660 0.19%
UK 184,663 2.44% Hongkong 10,232 0.14%
Laos 122,823 1.62% Indonesia 7,039 0.09%
Canada 104,973 1.39%
By visiting time and length of stay: Visitors come to Vietnam the most in January,
February, October, November and December, in winter holidays, Noel and New Year
holidays, and the least in May and June. The average length of stay of an international
visitor tends to increase from 8.5 days in 2003 to 10 days in 2013. On average, the length
of stay of 5-7 days accounts the most for visitors by tours, and 4-7 days and 8-14 days for
visitors by themselves. Markets with the length of stay of more than 10 days are Europe
(the Netherlands, Denmark, Russia, etc…), America (USA, Canada, etc…), Australian
continent (Australia, New Zealand), in particular Russia with the length of stay of 15-21
days. Asian visitors normally stay less than 10 days.
By spending structure and level: By structure: food contributes the third largest in total
tourism service turnover of Vietnam, after transportation (because international visitors
must pay the most for transportation, e.g. air tickets, seaway, etc…), and accommodation.
These 3 items account for more than 60% of the total visitor payment, the remaining of
30% is for visiting, commodity purchasing, entertainment, health care and others, in
which 15% for commodity purchasing. The average spending amount of a visitor to
Vietnam is 1,300USD. Visitors from American continent spend the most and tend to
increase. Overseas Vietnamese visitors pay high too. Asian visitors pay the least but on
average their spending per day is higher than tourists from other markets.
3.6.3.2 Advantages and disadvantages for Vietnam tourism

At the present, advantages for Vietnam’s tourism development include:
- The Vietnamese Communist Party and State pays attention to tourism
development.
- Socio – politic situation is stable.
- Natural tourism and human cultural resources are diversified.
- Tourism institutional framework and standards are developed.
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- Working force is young, abundant, hardworking and intelligent.

- Socio – economic infrastructure is improved, investment attraction capacity is
enhanced.
- People livelihood and income is improved.
Besides, there are many difficulties and challenges for tourism, including:
- World markets change unpredictably
- Tourism competitiveness is weak
- Tourism awareness and management do not meet requirements;
- Management mechanism and policies are inadequate
- Tourism development planning is not comprehensive
- Infrastructure is weak, out of date and incomprehensive
- Tourism services and products are not typical;
- There is lack of professionalized human resources
- Tourism is seasonal, while the weather and climate change are fierce
According to WEF (World Economic Forum) and the report of tourism industry's
competitiveness in 2013, the index of Vietnam's tourism industry's competitiveness in
2013 was ranked the 80th amongst 140 assessed countries and the 16th amongst 25
countries in Asia - Pacific region.
Figure 16. Vietnam ranks the 80th in the world tourism map
Source: WEF (2013)

WEF's evaluation (2013) presented 3 component indexes of cultural, natural and people
resources which were ranked the highest, at the rate of 4.30/7 points, ranked at the 43th
position. Outstanding products included heritages, fairs, international exhibitions, natural
resources, tourism activeness (25/140), and cultural resources (28/140).
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In spite of high rank in its potential, in general, Vietnam's tourism is just at average level
due to infrastructure and the most important thing is undiversity of tourism products.
3.6.3.3 Tourism of the northern area

In the North, there are 4 distinct seasons. In geography, there are hills, mountainous,
coastal and low land areas. In culture, there are many physical and non-physical heritages
and differences in customs and cultures of ethnic groups… that can make tourism
programs diversified. The North has a big potential in tourism with a lot of attractive
destinations, including Ha Long Bay, Sa Pa, Trang An (Ninh Binh), etc. The number of
international visitors to the North increased by 9.9% /year in the period of 2006-2012.
However, the North tourism turnover from international tourists is lower. Hanoi and
Quang Ninh attracts the most tourists and allocate them to the northern areas, however
direct income from tourism of provinces such as Quang Ninh is limited.
Well-known with plentiful and attractive food, the North has many special dishes for
international visitors that are highly appreciated – thereby tourism products combining
with cooking class have developed well. However, in some provinces, food is only for
local taste that does not change to adapt international visitors’ appetite, especially in
mountainous areas.
In terms of tourism infrastructure, the total number of Northern accommodation facilities
is big but with low quality. The number of 3-star hotels in the North only makes up 23%
of the total 3-star hotels nationwide.
The quality of tour guide services is not high, affecting Northern tourism services.
According to a general evaluation, the profession of tour guide is rated low. There is a
lack of tour guides who speak less frequent languages and of certified tour guides,
especially in the remote and mountainous areas.
By June, 2014, there is a total of 657 international travel enterprises in the North,
equivalent to 49.8% of total international travel enterprises nationwide, 4 times more than
in the Central region (Source: Website of General Department of Tourism). However,
most travel companies are private ones with a small scale, operating as satellites for big
ones. The Northern international travel turnover now comes mainly from packaged travel
programs so it is not high. Tourism promotion heavily depends on enterprises in Hanoi
and Hochiminh City.
To link with trade, the North has linked tourism with on-site export through some
successful models as follows:
- Bat Trang ceramic and porcelain products: introduction of Bat Trang in tourism
programs brings in benefits to visitors, tourism companies and ceramic and porcelain
producing households in Bat Trang. Income from selling ceramic and porcelain products
to visitors is a main income source of Bat Trang people that help development and
conservation of ceramic and porcelain sector. Making use of roadway and riverway, Bat
Trang tourism programs are developed in which visitors can come into Bat Trang by
riverway and go out by roadway. The city pays attention to invest in infrastructure,
including roads, light system, water sewage system, parking areas and ports. Bus system
makes travelling of visitors more convenient.
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Village people contributed to build up a ceramic and porcelain market where displays
products of households. Bat Trang Ceramic Association is formed to support
advertisement and information provision for visitors. In the context of tourism
development, in addition to displaying ceramic production process, allowing visitors to
complete a stage in ceramic production process by themselves, and selling ceramic and
porcelain products, other services are opened, e.g. food, hostels, entertainment areas,
vocational training areas, etc… to increase income for local households.
- Van Phuc Silk Village, Phu Vinh Rattan Bamboo Crafts, Quat Dong Embroidery, Ninh
Binh Embroidery, Chuyen My Inlay with mother-of-pearl, Chuong Hat, etc…However,
these villages are loosing prestige because of mixing Vietnamese products with Chinese
and poor quality products.
3.6.4 Vision and objectives

3.6.4.1 Points of view and development orientations of the Government
Tourism Development Strategies of Vietnam to 2010 and vision to 2030 which was
approved by the Government stated that:
- To develop tourism as a key economic sector that contributes an increasing rate in
GDP and facilitates socio – economic development.
- To develop tourism in a professional, modern and concentrative manner, focus on
develop in a deep direction to ensure quality and effectiveness, and confirm its
trademark and competition capacity.
- To develop local and international tourism, focus on inward international tourism
and strengthen outward international tourism.
- To enhance sustainable tourism together with conservation and making the best
uses of traditional cultural values, protection of landscape and environment, and
ensure safety, security and social order.
- To strengthen socialization, mobilize all domestic and international resources for
tourism investment development; make the best uses of the national potentiality
and advantages in terms of natural factors and traditional culture and typical
strengths of regions and areas in the country, and strengthen linkage in tourism
development.
Objectives:
- Tourism basically becomes a key economic sector that is professional and
equipped with fairly modern and comprehensive technical infrastructure.
- Tourism products are of high quality, diversified with recognized trademark and
natural characters, and can compete with countries in the region and in the world.
In particular, it is necessary to exploit strengths of food, traditional culture and
local products for trade and export promotion through tourism, focus on developing
product system and typical and high quality tourism models by making uses of typical
and outstanding tourism resources.
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To develop products, it is necessary to strongly develop cruise on an international

scale, together with sea tourism for health, sea landscape sight-seeing, sea sports and sea
eco-tourism based on cultural tourism, give priority to tourism products attached with
heritages, festivals, cultural visits, local lifestyle tourism, trade village tourism and
community tourism, develop eco-tourism, green tourism and responsible tourism, focus
on eco-tourism products, cave and cavern adventure, mountainous tourism and rural and
agricultural eco-tourism, diversify products, e.g. MICE tourism, education, health
treatments, etc…, and link to develop regional and area products.
3.6.4.2 Recommendations for tourism development models for the North

Within the program framework, to support trade promotion in regional provinces with
typical products, the working team recommends some tourism models based on two main
orientations as follows:
Orientations for activities to be implemented
 Develop new products: to link with the program products, e.g. tea, lychee, crafts,
ecological and cultural sectors, etc... to develop tours toward the new trend.
 Promote tourism: to support enterprises to access and implement modern tourism
promotion tools.
Implementation approaches
- Select 3-5 tourism enterprises and hotels in Hanoi and sectorial provinces, e.g. Hai
Duong, Bac Giang, Thai Nguyen and Lao Cai, and potential neighbouring
provinces such as Quang Ninh and Hai Phong.
- Since companies have involved in sectorial activities, continue to provide training
and select some enterprises and farmers’ households in material areas that are
capable to take part in tourism products. This is an activity that tourism sector will
implement ‘one step’ after other sectors to ensure completely selection of potential
and undertaking enterprises and material areas.
- Support product development and tour promotion activities through consultants
and training: from market research to market selection or market segment
selection or long term partner selection to develop tours and promote tourism
products.
- Support tourism enterprises by refering to approaches, seeking for and expanding
tourism products to other products in the provinces and areas, for example herbal
remedy, cultural products, etc...
Specific models are showed as below and continue to be developed during
implementation of sectorial enterprises.
Action plan Linkage model between tourism and lychee export in Hai Duong, Bac
Giang and longan in Hung Yen
Activities (for Description (number, Implementers 2015 2016 2017
example) provinces, content)
Develop products for Market research, Consultants Q1
international visitors development of Tourism
(Japan, South East tourism programs for Promotion Centers
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Asia, Europe, USA, 3 days 2 nights, at of Hai Duong,

Australia, etc…) and weekends, 2 days 1 Hung Yen, Bac
foreigners working in night and 1 day. Giang and Quang
Vietnam Ninh
Tourism
enterprises of
Hanoi and Hai
Duong
Training on tourism Enterprises and staff Consultants Q1
promotion skills based of Tourism
on modern tools (for Promotion Centers
example social of selected provinces
network, etc…), skills
for participating fairs,
receiving visitor
groups, etc…
Strengthen capacity on Training for people Consultants Q1-2
visitor reception for community on Departments of
Hai Duong and Bac visitor receipt and Culture, Sports
Giang, link spirit international visitor and Tourism of
tourism and rural services Hai Duong, Hung
tourism with hick 3 training classes Yen, Bac Giang
tourism, focus on in- with 20-25 and Quang Ninh
site export of fresh trainees/class should Hanoi Open
lychee and longan (in be planned and University
May, June and July) organized
and dried lychee and
longan (all year
around), Gai cake and
green been cake, etc…
Information and Websites in Tourism Q2-3
advertising about Vietnamese and Promotion Centers
tourism destinations, English, Invite of Hai Duong and
tourism seasons, price, tourism enterprise Bac Giang
local typical products, owners to participate Tourism
and typical and in farm trips, enterprises of
interesting characters journalists Hanoi, Hai Duong
participate in press and Quang Ninh
trips Mass media
Join 1 local tourism agencies
fair and 1
fair in a foreign
country (ITE, IBB,
WTM or JATA)
Attract visitors Tourism programs Tourism Q3-4 Q1-4
offering and visitor Promotion Centers
reception of Hung Yen, Hai
Duong and Bac
Giang
1ST DRAFT 143

Selected tourism
enterprises
Other remarks  It is necessary to raise awareness of local authorities and people
to avoid interdiction or making difficulties for households who
receive foreign visitors
 It is necessary to allocate more tourism accommodation for
foreign visitors.
Linkage model between tourism and tea and vegetable export in Thai
Action plan
Nguyen and Yen Bai
Description (number, Implementers

Activities (for 2015 2016 2017
provinces, content)
example)
Develop products for Tourism programs for 3 Consultants Q1
international visitors days 2 nights, at
(Japan, South East Tourism Promotion
weekends, 2 days 1 night
Asia, South Korea, Centers of Thai
and 1 day.
China, India etc…) Nguyen, Yen Bai
and foreigners and Lao Cai
working in Vietnam Selected tourism
enterprises
Training on tourism Enterprises and staff of Consultants Q1-2
promotion skills Tourism Promotion
based on modern Centers of selected
tools (for example provinces
social network,
etc…), skills for
participating fairs,
receiving visitor
groups, etc…
Training for people
Strengthen capacity Consultants Q2-4
community on visitor
on visitor reception
reception and Cooperation among
for Thai Nguyen and
international visitor Departments of
Yen Bai , link spirit
services Culture, Sports and
tourism and rural Tourism of Thai
tourism with hick 3 training classes with Nguyen, Yen Bai
tourism, tourism for 20-25 trainees/class and Lao Cai
health, tea garden should be planned and
visiting, introduction organized Hanoi Open
of green tea uses, University
purchase of tea
products and local
typical products, for
example vegetable,
Thac Ba visit,
studying lifestyle of
ethnic people, etc…
1ST DRAFT 144

Information and Websites in Vietnamese Tourism Promotion Q2-4 Q1-4

advertising about and English Invite Centers of Thai
tourism destinations, tourism enterprise Nguyen and Yen
tourism seasons, owners to participate in Bai
price, local typical farm trips, journalists
products, and typical participate in press trips Tourism enterprises
and interesting of Hanoi, Thai
Join 1 local tourism fair Nguyen and Yen
characters, etc… and 1 international Bai
tourism fair in a foreign
country (ITE, IBB, Mass media
WTM or JATA) agencies
Attract visitors Tourism programs Tourism Promotion Q3-4 Q1-4

offering and visitor Centers of Thai
reception Nguyen, Yen Bai
and Lao Cai
Tourism enterprises
of Hanoi, Thai
Nguyen and Yen
Bai
Other remarks  It is necessary to raise awareness of local authorities and people to
avoid interdiction or making difficulties for households who
foreign visitors.
Linkage model between tourism and embroidery and rattan bamboo

knitting product export in Ninh Binh, Nam Dinh and Hanoi
Action plan
Description (number, Implementers 2015 2016 2017
Activities (for
provinces, content)
example)
Develop products for Tourism programs for Consultants
international visitors, 3 days 2 nights, at
especially Europe, Tourism Promotion
weekends, 2 days 1
USA, Australia, and Centers of Ninh Binh,
night and 1 day.
foreigners working in Nam Dinh and Hanoi
Vietnam Tourism enterprises of
Ninh Binh, Nam Dinh
and Hanoi
Training on tourism Enterprises and staff Consultants Q1-2
promotion skills based of Tourism Promotion
on modern tools (for Centers of selected
example social provinces
network, etc…), skills
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for participating fairs,

receiving visitor
groups, etc…
Training for people
Strengthen capacity Consultants Q2-4 Q1-4
community on visitor
on visitor receipt for
reception and Department of
Ninh Binh and Hanoi,
international visitor Culture, Sports and
link spirit tourism,
services Tourism of Ninh
rural tourism and Binh, Nam Dinh and
landscape/ historical 3 training classes with Hanoi
relic visiting with hick 20-25 trainees/class
tourism, focus on in- should be planned and Hanoi Open
site export of organized University
embroidery and rattan
bamboo knitting
products together with
local special products,
e.g. dried rice, anabas,
peanut candy, etc...
Information and Websites in Tourism Promotion Q2-4 Q1-4

Vietnamese and
advertising Centers of Ninh Binh,
English Invite tourism Nam Dinh and Hanoi.
enterprise owners to
participate in farm Selected tourism
trips, journalists enterprises of Ninh
participate in press Binh, Nam Dinh and
trips Hanoi.
Join 1 local tourism Mass media agencies
fair and 1
fair in a foreign
country (ITE, IBB,
WTM or JATA)
Attract visitors Tourism programs Tourism Promotion Q3-4 Q1-4
offering and visitor Centers of Ninh Binh,
reception Nam Dinh and Hanoi.
Tourism enterprises of
Ninh Binh, Nam Dinh
and Hanoi.
Other remarks  It is necessary to raise awareness of local authorities and people
to avoid interdiction or making difficulties for households who
foreign visitors.
1ST DRAFT 146

4. Consolidated plan for the Region
4.1 Summary of results from IA report and proposed approach for

action
4.1.1 Current Trade Support Info and
Research
Network in the region Institute Uni,
Training
The IA report in the north mapped out the Institutio
key agencies supporting SMEs in export Nat’l ns
as depicted in the enclosed figure. The Produc
most perceived functionings are TPOs as t
Associa
an arm of government agency, VCCI,
tions
product associations, then to a lesser
extent are associations of SMEs, of
TPOs
young enterpreneurs in the provinces.
Product Associations at national level and Logistics SM
Government Agencies
Transpor
selected research institutes have also been t com. Es
mentioned in a number of cases as with
active performance and good support. In Prov.
some sectors and in some regions, Produc
t
cooperative alliances have marked certain asociati Cooperati
roles in production strengthening and Other ons ve
supply stabilisation, trade promotion association Alliance
thanks to recurrent support from s in the
government budget, though their main provinces
tasks which focus more on membership
representatives and protection.
Figure 17. Current trade support network
The Assessment Toolkit for IA report includes an assessment form with 150 indicators,
adapted from the Benchmarking Assisted Assessment Model which has been built by the
International Trade Centre (ITC) and officially used since 2008. The tool is in fact a
“comparison” (benchmark) between their current practices against the needs of SMEs
and best practices. Besides, there are other questionnaires for interviewing SMEs, and
other TSIs. The tools helped the team of 3 groups working independently in 3 regions to
survey to 21 TPOs and their provincial trade promotion colleagues, selective SMEs, and
a number of central associations… The IA report using such toolkit depicted high
recognition in the business community on the role of TPOs. Nevertheless, two
fundamental limitations have been identified:
- A number of basic services which are in high demand could have not been
fulfilled:
- Market information: potential market, branding;
1ST DRAFT 147

- Market survey, market prospection visit, effective B2B trade fairs;

- Sector- specific training;
- The existing products and services of TPOs are only at very basic level, many
other necessary elements for a good full package service are absent. This
practice is causing considerable inefficiency. One apparent example is trade fair.
Currently most TPOs and provincial associations are making large efforts in retail
trade fairs withvery few B2B trade fairs. If any, the main activity are event
organisation with very limited support in product development, potential buyers
identification and invitation. After the fair(s) (and the same problem with sales
missions), follow-up efforts and assistance for discussion, contract negotiation,
etc. are not in place. Consequently almost none of TPOs has results information
such as the number of new customers, the number of contracts concluded and sales
increased.
The key causes are accordingly identified:
 Limited Resources: for IA report, 28 provinces share their data through the data
collection format- 10 from the north, 8 from central region and 8 from the south. Data
showed that the Northern TPOs have smallest number of staff with an average annual
budget is of less than 2 billion VND/year (100,000 USD).
Figure 18. Average number of permanent staff and average budget of TPOs
Annual budget Total number of staff

3,000 20 17 18
2,229 14
1,998 15
2,000 1,692
10
1,000 5
-
- The North The Central The South
The North The Central The South
Source: Consolidated IA report, data from information template of 28 province

 Limited Competency: Data collection from 28 TPOs (Figure 19) shows that only
around 20% of TPO staff have knowledge of specific sector, same ratio have experience
of working in private sector, less than 10% of TPO staff can use English or other foreign
languages. This hinders their ability to access export market information, then to
understand and satisfy the need of information for SMEs
Another fact should be noted is that many staff have not received basic training of
export expertise and trade promotion. These features flag the need to have suitable
approach and methodology for capacity building for staff of TPOs.
Figure 19. Competencies of Provincial TPOs staff
1ST DRAFT 148

 Strategies:
The survey to a number of TPOs in the north discovered that most TPOs have no medium
or long term strategy. Out of 8 provinces surveyed in 2013 and 2014, only Hai Phong and
Hai Duong could show their 5-year plan. Yen Bai TPO drafted the plan for 2013-2015
but have not received approval from the province government (by June 2014).
More critically, most of these plans need improvement in product identification for focus,
targeting markets and clear action plan. In some provinces though the product sector is
named, e.g. Bac Giang TPO with lychee, see Northern IA report, the identification could
only help to modify the focus for activities of each year based on the new circumstances.
Annual workplan is the most popular type of plan which largely replicates previous
year‘s Plan- the link for result-oriented from annual plan to some kind of medium-long-
term strategy is a huge room for improvement.
The key underlying reason is the lack of capacity, skills and guidance for a good
procedure to develop medium and long term Trade promotion Strategy and Annual
Workplan. The survey shows that most of TPOs only focus on developing Annual
workplan, which is proposed by TPO’s internal Division (and therefore mostly learn from
previous year‘s approved budget line). Only few TPOs have tried to identify targeted
markets and analyse products potential- a sound result and service-orientation and value
focus is not yet the main drivers for TPO’s activity development and service delivery.
Besides, the consultation with associations at provincial and central level has been
limited and ad-hoc, skills in working with private sector is emphasized as the must for
enhancement.
Further, since many are a unit under DOIT, most of TPOs do not seem to be adequately
represented in the main province’s forums discussing trade support issues. The TPOs
themselves, have access to quite limited information and methodology for development
of a good strategy.
1ST DRAFT 149

 Diversed and unstable modalities
3 3 13
7
6 combine with Investment
16 and Tourism Promotion
10
0 combine with Investment
Promotion
16
9 30 combine with Industry
5 Promotion
Trade promotion only
Northern Center Mekong All country
region region River Delta
Figure 20. Four types of TPOs across the country

The screening of 62 provinces points out 4 available types of organisation of TPOs. In the
north, most TPOs are an administrative unit under DOIT and the size is quite moderate.
Official staffing range from 7 to 12 staff with additional 1-5 contracted employees. Each
TPO has 3-4 divisions, one for administrative and finance, 2 for technical units and 1 for
information. Recurrent budget from state budget is about 1 billion VND, and budget for
trade promotion is about 900 million VND (45,000 USD). In addition, all TPOs received
budget allocation from the National Trade Promotion Program and a few of them are
participating in some projects. Service fee is very small, about 2%, as margin from local
trade fairs organisation.
In case of TPOs combined with Investment or Industry promotion, there is a slight bias
over the other than trade, particularly in terms of budget allocation. However there are
still good cases of effective synergy thanks to prudent coordination and similarity of
promotion expertises.
These findings from IA suggest the need to share experience and guidelines for
consideration and application of suitable modality to fit the context of each province.
Each modality has its pros and corns and it can not be concluded which modality is more
effective. Any guidelines should avoid administrative imposing but go into technical
substances to facilitate the province to justify and apply to their own situation.
4.1.2 Proposed approach
IA report recommends a holistic approach to build-up capacity of all key players, e.g.
TPOs, associations at provincial and national levels, etc. to support SMEs using
„Coaching“ principles. Key targets are SMEs, TPOs and association staff who will
receive training and guidance to execute promotion activities, so as „learning by doing“.
International and national sector experts will carry out training with introductory courses,
method of implementation and then, all participants will be doing their job under the
supervision and distant coaching.
The findings of product sector situation analysis and suggestion from this REDP
reaffirms the applicability of coaching approach for sustainable results of the whole
program. From financial and management point of view, the approach optimizes the
resources while ensuring the ownership and commitment of the participating
1ST DRAFT 150

stakeholders. In the context that provinces are diversed in terms of SMEs concentration
for different product sectors, the key beneficiaries should be staff of selected SMEs,
TPOs and associations who will further the equipped knowledge and skills. To ensure
coverage of the program, the provinces with selected products should be maximized but
activities and requirements must ensure in-depth knowledge and skills transferred.
Accordingly, by product sector, in each province there should be well-selected 3 to 5
SMEs to build up models, then combine with information sharing schemes for early
disseminations and replication (learning and application of other SMEs, TPOs). Such
requirements induce the need to have in place a close M&E information system. Part of
that will be suggested in Section 5 of this report.
Experience from CBI- the Center for Promotion of Import from Developing Country to
EU shows that there must be a comprehensive assessment (company audit) for all SMEs
applicants to ensure the basic conditions for export and anticipate commitment level. The
audit also provides baseline data for further measuring of results.
Based on the analysis of section 3 and 4.1.1, this REDP for Northern region can be
consolidated to have two key components- General Trade Promotion Capacity Building
(Component A) and Export Development Support (Component B). The implementation
scheme with participation of TPOs, associations at provincial and national level will
create the platform for partnership development (a Component C as suggested in IA
report).
4.2 Plan for Regional Export Development

4.2.1 Activities for General Trade Promotion Capacity Building (Component A)
This part recollects and makes some more details from the suggestion of IA reports which
focuss in awareness raising and expertise improvement for TPOs and associations staff in
trade promotion techniques.
A1. Awareness raising workshops:
Participants: Leaders of provinces, TPOs, associations in the region, province
Content:
+ Sharing good regional and international practices (the Philippines,
Thailand…), roles of trade promotion in overall socio-economic
development, the need to have adequate resources for trade promotion;
+ Overview of different organisational models/modalities, pros and cons
+ ...
Facilitators/trainers/resource persons: Nat'l facilitator, STC, Guest speaker
from neighbouring countries such as Thailand, the Philippines, making use of online
tools.
Time: first 6 months of 2015 of repetition in each following year
Place/venue: in one province/city but for 2015, if possible, make it 2 places to
facilitate the participation of province leaders as well- one possible location is Yen
1ST DRAFT 151

Bai for northern and mid-land province, the other is Hai Phong or Ninh Binh for Red-
River Delta and its neighbours
Remarks:
+ Can try to combine with trade fairs or festival or basic trainings
A2. Indicators for evaluation and (pilot) evaluation - 2011- 2015 Trade
Promotion
Participants:
+ For national Trade Promotion Program- ministries, associations, at central
level;
+ 2-3 provinces with 5 year 2011-2015 Trade Promotion Program can also be
assisted for showcase
Content:
+ Development of Indicators for Evaluation, consultation with TPOs,
associations
+ Independent evaluation - 2011- 2015 Trade Promotion Plan: apply the
indicators to have lesson learnt for the new program of 2016-2020, for
aligning the Vietrade -SECO
+ (Distance) assistance for 2-3 provinces to apply the indicators and execute
the evaluation by themselves
+ Workshops for disseminations
Facilitators/trainers/resource persons: Independent consultants, staff of Export
Development Policy, Vietrade
Time: April- Sep 2015, with the indicators ready from April for pilot in May- June
and continue of A3.
Place/venue: in Ha Noi with distant coaching for selected provinces
A3. Support for development of 5 year 2016-2020 provincial Trade Promotion
Program
Participants: Central ministries and associations, 2-3 provinces
Content:
+ Select 2-3 provinces with evaluation of 5 year 2011-2015 Trade Promotion
Plan with good quality, and (ii) provinces without 2011-2015 plan but with
committment for 2016-2020 plan;
+ Apply the indicators set and EPA methodology to select product sector with
potential for exports, then develop strategy, goals, targets and action plan
for 2016-2020.
+ ....
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Facilitators/trainers/resource persons: Consultant, staff of Department of

Export Development Policy, Vietrade
Time: June- Aug 2015
Place/venue: Ha Noi and 2-3 selected provinces
Remarks:
+ The support can extend to 1-2 product associations to have models of 5
year plan/strategy for product associations.
A4. Manual and training of basic Trade promotion expertises and Customer
Relation Management
Participants: all provinces, staff from relevant divisions
Content:
+ To develop manuals for key expertises, using materials for recognized
sources, e.g. ITC, CBI. The materials should be simple and clear with
hands-on activities and principles for Market information, B2B Trade fair,
sales misisons, buyer missions, Customer Relation Management (CRM)
+ Carry out 2-3 trainings for the region („recruitment“ must ensure relevant
experience)
Facilitators/trainers/resource persons: consultants, officers of relevant
departments of Vietrade
Time: 2015- 3 trainings, each 2-3 subjects, 2016 and 2017- 1 revisit training with
update information for all
Place/venue: in one province/city in the region
Remarks:
+ The program support with trainers, venue, materials
+ Staff of TPOs pay their own cost of travel, accomodation
+ Training methodology must be practical with key theory and then practical
knowledge. There should be examples, linkages with selected sectors for
the regions for practice and exercise.
+ This activity is a very important activity as it lays the ground for TPOs
to assign their staff to work with SMEs in each product sector.
A5. Support for selected internal management of TPOs: staffing, HRM, financial
management
Participants: 3-4 provinces upon registration and selection
Content:
+ Based on the indicators for Trade Promotion Assessment, develop and pilot
the indicators for staff performance assessment
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+ Study and guide methods for service fee accounting, suggestion of

incentives schemes;
+ Workshops for disseminations
Facilitators/trainers/resource persons: Consultants
Time: 2016 - 2017
Place/venue: 3-4 provinces
Remarks:
+ These activities can take place in a later stage, to amplify the results of A6,
A7 and A8
+ There’s not the need to implement in many provinces but there should be at
least 1 to 2 for models
A6. Capacity building in working skills, private sector consultation
Participants: 3-5 provinces each year upon registration and selection
Content:
+ Develop and training for usage of survey questionnaires, business
consultation,
+ To implement such consultation for improvement of trade promotion,
product and service portfolio enhancement
Facilitators/trainers/resource persons: Consultants, joint training, then distant
coaching/assistance
Time: end of 2015 on ward
Place/venue: training in one province (most convenient for the registered group),
Remarks:
+ Upon the available resource and interest of provinces, this activity can take
place right from mid 2015 to assist 3-4 provinces to have better results of
Activity A2 and A3 for good 2016-2020 plans
+ The tool kits can be refined further and expanded to other provinces’
application who have tried A7 and A8.
A7. Product and service development and diversification
Participants: 3-5 provinces each year upon registration and selection
Content:
+ To use the tool kit for private sector consultation to assess current P/S
porfolio
+ To base on the strategy of Trade Promotion, needs of private sector to
develop new Product/service(s)
+ Assist the pilot of new product/service(s)
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+ To implement the P/S on large scale, repeat with indicators for assessment
as mentioned above
Facilitators/trainers/resource persons: Consultants, joint training, then distant
coaching/assistance
then mostly distant coaching
Remarks:
+ this activity can take place right from mid 2015 to assist 3-4 provinces who
have completed Activity A2 and A3 for better refining of their 2016-2020
plans
+ upon tool and methodogoly improvement, end of 2016 and 2017 can
continue with other provinces, particulary the ones which have completed
private sector consultation (A6)
+ .....
A8. Utilization of benchmarking for TPOs self-evaluation
Participants: 6-7 provinces upon registration and selection
Content:
+ To refine further the Benchmarking models (see the recommendation in
Annex of IA reports) in light of the results from 5 year 2011-2015 National
Trade Promotion Plan;
+ To design a software for easy of use: web-based forum with functions
allows TPOs to conduct self-assessment, view the weakness, learning from
good cases of experience
+ To pilot for 2-3 provinces to use each year for improvement
+ Workshop and manual for national-wide usage
Facilitators/trainers/resource persons: consultant, staff of Vietrade, joint-
training, then distant assistance
then mostly distant coaching
Remarks:
+ This is a quite technical based activity so there should be joint effort from
national level- in 2015 pilot in 2 provinces in each region, then for each
consecutive year, there should be more implementation in 3-4 provinces
more so that by the end of the project, there are about 2/3 of them being
familiar with benchmarking;
1ST DRAFT 155

+ Workshops, trainings should be open to all provinces, even the ones outside
the program so they can learn and apply by themselves;
+ Vietrade should make use of the result of benchmarking by refering these in
their annual assessment and report for award as a means for promoting the
benchmarking.
4.2.2 Activities under Sector-specific Export Development Plan (Component B)
Activities under A4 will be furthered by TPOs staff, associations staff and SMEs staff in
sector-specific plans as suggested in Section 2. The following summary tries to set the
frame for the key activities with essential remarks for success.
By coaching approach, the critical factors for success is the committment from
stakeholders and SMEs fulfill basic condition for export. While component A should start
right from beginning of 2015, this REDP recommends component B should make some
preparation only during the first half of 2015 and then take the full swing from second
half with the following steps:
Quarter 4/2014 and Q1/2015:
+ Registration of staff for each product sector, SMEs from provinces
+ Discussion and agreement on the implementation scheme for each product
sector (see more under section 5.1)
+ Recruitment of international and national experts
From Q1 and Q2 of 2015:
+ Company audit for selection of SMEs
+ Completion of the baseline data
Accordingly, from quarter 3, all technical assistance for product sectors will be fully
implemented upon the local „coach“ (TPOs staff, associations staff, ..) who are well
equipped with basic skills. Table 26 below summarizes the key proposed action for each
product sector and time for start (only tourism is proposed to start at a later stage to wait
for readiness of participating SMEs in other sectors). (*), (**) or (***) are illustrations
for levels of priorities.
Some of the key notes for each expertise
Selection of SMEs for participating in the Program: The selection should closely
follow REDP for each sector which specific criteria and consideration for choosing.
Priority should be given to SMEs fulfilling basic elements for exports and with
possibilities to synergize with other support programs in strengthening production
capacity so as to supplement them with trade promotion competency.
1 & 2: Market Information and Sector e-bulletin: for these two activities headlines,
VITIC should be the key supporters to work along with Vietrade and product
associations, provincial TPOs to analyse existing inventory for data sources, listing out
additional needed one; to assist product associations to develop periodically bulletins for
1ST DRAFT 156

each product sector and to assist provincial TPOs to prepare their own bulletins for the
SMEs in their provinces.
3: Market research: This is the core start for all product/service sectors whereby sector
experts will work with TPOs’ staff and selected SMEs to develop their own export
development plans. Each plan is actually one small project for each SME to implement
along the lifetime of the program under the coaching of the experts. The plan must show
targeted markets, product developments, market distribution channel, selection of suitable
trade promotion activities, e.g. trade fairs, communication methods, ...
4: Product development: Based on targeted markets, SMEs will develop new product
range to fit with the demand and requirements in the new market. For handicraft and
service (logistics and tourism), this is the critical area of intervention.
5: B2B trade fairs: SMEs and TPOs are trained and worked to organise domestic B2B
trade fairs or participate in either domestic or international B2B trade fairs.
For most of selected sectors, international B2B trade fairs are the valuable chance for
learning, practising the expertise as well as market trend learning. In each province, from
the second half of 2015 through 2016 and first half of 2017, the Program will select from
each province 1-2 SMEs with satisfactory market research, product development, etc. to
participate in international B2B trade fairs. Part of the expense will be covered by
National Trade Promotion Programs. The Vietrade-SECO program will support training,
preparation, technical support at the trade fair, and if needed, to finance selected
competent staff of provincial TPOs to go to the trade fairs for further learning.
For domestic trade fairs and festivals, the Vietrade-SECO program will assist technical
support for preparation, potential buyers identification and invitation to combine with
buyer visits. A type of special trade fair called reversed trade fairs or buyer trade fairs is
proposed for Garment and Footwear sectors. This is one of the new idea which is
expected to solve the critical need of having a market for materials and accessories for
both of these manufacturing sectors. The Program should arrange to accomodate in the
budget at least one reverse trade fair for each sector in the year 2015 to 2017.
6: Market study trip, market prospection: to combine with trade fair visit to organise
market study, to meet potential clients nearby the trade fairs
7: Buyer mission: as mentioned in activity 5, the orgnisation of domestic trade fairs and
festival will be furthered to combine with inviting potential buyers to the product sites in
the province. This is the job for TPOs staff and SMEs staff to learn how to organize and
receive buyer missions. In some sectors like green tee or tourism, this is of priority to
have media for image communication.
8: Communicaion, branding: to combine with media trip as described in activity 7
and/or to apply new expertise of modern marketing (e.g. social marketing) for branding.
9: Training:
All the above mentioned activities must start with training of international and national
experts. The training will be open for all other non-participating SMEs with a separate
section on experience sharing from participating SMEs.
1ST DRAFT 157

4.2.3 Partnership enhancement (Component C)

There are not any activities explicity designed for partnership component but the
approach and methodology proposed component B with facilitate a „new“ environment
of Vietrade, TPOs, product associations and other related agencies to work together to
service SMEs in market information provision, provision of required trade promotion
services. Section 5 will have more details on this.
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Table 26. Summary of proposed activities for Export Development Plan by sectors in Northern region
Activities headlines Time Lychee Green tea Garment Canvas Handicraft- Logistics Tourism
shoes Bamboo,
rattan
Proposed participating Bắc Giang Yên Bái Nam Định Hải Phòng Nam Định As registered and selected
provinces Hải Dương Thái Nguyên Hưng Yên Hà Nội Thái Bình
Vĩnh Phúc Thái Bình Hải Dương Ninh Bình
Lào Cai Ninh Bình
0. Selection of SMEs for Q1-2 2015 * * * * * Q1 2016
participating in the Program
1. Market Information Q1-2 2015 * * * * *
2. Develop and ciruclate Q2-3 2015 * * * * * Q2 2016
Sector e-bulletin
3. Market research Q2-3-2015 *** *** *** *** *** *** ***
Q2 2016
4. Product development Q3-4 2016 * * * * *** *** ***
Q2-3 2016
5. B2B trade fairs
- Domestic 2016- 2017 * * *** *** * *
Lychee Thái Nguyên
workshops Tea festival
2017
- International 2016- 2017 *** *** *** * *** *
6. Market study trip, market 2016- 2017 * * * * *
prospection
1ST DRAFT 159

Activities headlines Time Lychee Green tea Garment Canvas Handicraft- Logistics Tourism
shoes Bamboo,
rattan
7. Buyer/visitor mission: 2016- 2017
- Buyer visit * * * * * *
- Media trip *** ***
8. Communication, branding 2016- 2017 * *** * * *** * ***
9. Training 2016- 2017 *** *** *** *** *** *** ***
Remarks National National National National
coordination coordination coordination coordination
1ST DRAFT 160

5. Implementation and Management
5.1 Implementation and coordination mechanism

For component A, since most activities are of some common groups and will be the same
for all 3 regions, it is proposed that PMU will work directly with provincial coordinators
for implementation.
Upon finalising the list of provinces “registered” for each activity, PMU and provincial
coordinators will employ consultants who will cooperate with regional/provincial
coordinators and assistants to implement activities and submit progress report to PMU.
Biannual meeting of PCC will serve as a platform for feedback, experience sharing and
monitoring of progress as well as revision recommendations.
For component B which focuses on product sector, upon finalisation of participating
provinces, each sector will form a Sector Working Group with representatives of the
PCC, of participating provinces, product associations and national consultants as
portrayed in the following Figure 21:
Figure 21. Organisation chart for Sector-specific Export Development Component
Component B
Product Sector 1 Product Sector 2 …..
Sectoral Working Group- leaders and staff of participating TPOs,

product associations, international and national experts
TPOs and associations staff, province

TPOs and associations staff, province 2 …….
1
Company 1 Company 3
Company 2 Company 4
Company …
Company …
To support the Sectoral Working group, there will need to be the

participation/”intervention” from PMU which is anticipated to be of 3 levels:
+ With some competent central associations, monitoring and supervision through reports
are only required;
1ST DRAFT 161

+ With the cases of associations with limited capacity (most associations), the PMU need
to support from consultant recruitement and participate in critical activities such as
training for market research and export development plan to supervise quality of
implementation as a supplementary means for required reports.
+ For the case of product associations with even limited personnel for the Working
Group and local coach, PMU may need to have more involvement with more consultants
or part-time staff for implementation.
5.2 Monitoring and Evaluation of Results

The program will need to have in place a good information system with frequent data
update using a clear set of indicators for progress monitoring and results/impacts
assessment. The reporting should include of activity report, quarterly progress report and
annual report.
For Monitoring:
- Activity reports prepared by consultants and product sector working group.
Besides technical content, the report should have clear template to ease data
collection of the agreed indicators for monitoring and assisting provincial
coordinators and assistants to update in the program’s database;
- Quarterly and Annual report: from each province to regional coordinators and
assistants so that they can prepare regional reports. These also need to be designed
carefully with simple formats for data entry, data consolidation. Those data must
include both indicators for monitoring (as suggested in Table 27) and evaluation
(Table 28).
Table 27. Indicators for Monitoring, responsibility and frequency of collection
Indicators Need to Activity Responsibility for collection and
supplement for report report
baseline Province Consultant Frequency
database
1. Number of TPOs staff
participate in the activities * * * Quarterly
(ID assigned for staff)
2. Number of TPOs with
annual effective client * * * * Quarterly
survey
* * * * Quarterly
client relation management
4. Number of TPOs use the
benchmarking model for * * * Quarterly
self-assessment
5. Number of staff with
knowledge of product * * Annual
sector
6. Number of staff with CRM
* * * Annual
skills
1ST DRAFT 162

For results and impact evaluation: As specified in the Project document, there will be
one mid-term review by end of 2015 and project-end evaluation by Quarter 3 of 2017.
Although these evaluations will be performed by independent consultants, the program
will organise its own information system to monitor and self-assessment of results.
As listed out in Table 28, there would be 3 levels of results, impacts:
- Enterprise
- Province; and
- Regional and national.
Table 28. Result/impact indicators for annual report
Indicators Need to Consultant Province Regional PMU
supplement coordinator
for baseline
database
1. Sales of the company * * * *
2. Export revenue of the
* * * *
company
3. Export markets * * * *
4. Number of SMEs
competent of export in each * * *
product sector
5. Number of SMEs with * * *
marketing staff
6. Increased Number of
SMEs involved in direct * * *
export
7. Increased Export
*
turnover of exporting SMEs
8. Increased Share of SME
Exports in total national * * *
exports
9. No. of provinces with
80% business satisfaction on * * * *
service quality
increased budget allocated * * * *
by province
trade promotion strategy * * * * *
formulated
12. Ranges of new product
* * * * *
and services
13. Number of agencies
confirmed to have more *
strategic partners
14. Perception of TPOs and
product associations on * * *
Vietrade’s role
15. Increased Number of
*
export products range
1ST DRAFT 163

Indicators Need to Consultant Province Regional PMU

supplement coordinator
for baseline
database
16. Increase of export
markets by sector, by * * * *
national
17. Perception on the
improved range and quality
* * * *
of services provided of
TPOs
18. The national framework
integrates all government
* * *
trade-related policies and
measures
Remarks for the detailed development of M&E system for the Program:
 The must to have sufficient baseline data: EPA and IA reports as well as this
REDP provide a large pool of data for a number of above-listed indicators.
However there are still several indicators which need to add more baseline data.
The most cost-effective means is to integrate data colllection in the coming
activities (workshops, training, company audit and selection) to input those into a
data file (ideally a simple software). This will save the cost of a separate survey.
Example is the company audit can help to collect lots of indicators about current
sales, export, product range and assessment of TPOs’ services;
 Reporting templates should be simple and make wise usage of Excel to enable
timely data collection and consolidation at province, region and national level. The
inclusion of both progress and result indicators is the must to alert consultants and
all TPOs staff on the expected results of the Program;
 The need to further refining the set of indicators: the two tables of Table 27 and
Table 28 have only suggested several indicators based on the analysis of EPA, IA
and REDP. The progam need to work more with the provinces and donors to
refine this set, so as to develop reporting templates and information system for the
effective management of the whole Program.
1ST DRAFT 164

ANNEX
Annex 1. References
1. IPSARD (2011), “Báo cáo Nghiên cứu cơ sở khoa học và đề xuất giải pháp tăng
giá trị gia tăng cho sản phẩm chè của Việt Nam”
2. Nguyễn Trọng Khương (2013). Đề tài NCKH “Nghiên cứu đề xuất chính sách và
giải pháp xuất khẩu vải quả và thanh long sang thị trường Trung Quốc”. Cơ quan
chủ trì: IPSARD. Nghiệm thu tháng 8 năm 2013
3. GDH (2013), “Lychee Export Development Plan for Australia”
4. R. BANOMYONG, Trinh T.T.Huong et al. (2007) - "NSEC Logistics
Development Study”, an ADB’ Edition.
5. Báo cáo đánh giá tiềm năng xuất khẩu ngành dịch vụ khu vực miền Bắc, Cục Xúc
tiến thương mại, Bộ Công thương, 2014.
A. Tài liệu bằng tiếng Việt
6. Bộ Nông nghiệp và Phát triển Nông thôn Việt Nam (2006), “Cẩm nang ngành Lâm
nghiệp”.
7. Bộ Nông nghiệp và Phát triển Nông thôn, “Đề án phát triển xuất khẩu hàng TCMN giai
đoạn 2011-2015”.
8. Chiến lược phát triển du lịch Việt Nam đến năm 2020 và tầm nhìn đến năm 2030, Viện
Nghiên cứu và Phát triển du lịch Việt Nam.
9. Cục Chế biến Thương mại Nông lâm thủy sản và nghề muối (2009), “Báo cáo tổng hợp
quy hoạch các làng nghề gắn với vùng nguyên liệu đến năm 2020”.
10. Trung tâm Nghiên cứu và Phát triển các Làng nghề Thủ công truyền thống Việt Nam,
HRPC (2009), “Các chuyên đề phục vụ nghiên cứu về Quy hoạch làng nghề gắn với vùng
nguyên liệu cả nước đến năm 2020”.
11. Nguyễn Văn Thanh (2001), Thương mại công bằng, NXB Chính trị Quốc gia.
12. Nghị viện Châu Âu, Nghị quyết về thương mại công bằng, số A4-0198/1998. Mục 15,
ngày 2 tháng 7 năm 1998 (trích dẫn bởi Nguyễn Văn Thanh (2001) - Thương mại Công
bằng, NXB Chính trị quốc gia).
13. Tổng cục Môi trường (2008), “Báo cáo môi trường làng nghề quốc gia 2008”.
14. Trung tâm Sản xuất sạch Việt Nam và HRPC (2010), “Báo cáo đánh giá tiềm năng và các
yếu tố thiếu bền vững cho ngành mây – song Việt Nam”.
15. Tổng cục Thống kê (2009), “Kết quả điều tra chi tiêu của khách du lịch năm 2009”.
16. Vietrade/ITC (2006), “Chiến lược xuất khẩu quốc gia ngành TCMN Việt Nam”.
17. UNCTAD/WTO (ITC) và VIETRADE (2005), “Đánh giá tiềm năng xuất khẩu của Việt
Nam”.
1ST DRAFT 165

18. Nguyễn Thị Thảo, Đánh giá tiềm năng xuất khẩu ngành thủ công mỹ nghệ miền Bắc Việt
Nam, 2014.
19. Nguyễn Bảo Thoa, Đánh giá tiềm năng xuất khẩu hàng thủ công Việt Nam, EPA, 2014.
B. Tài liệu tiếng Anh

1. Tác giả “Chains for Sustainable Handicrafts Production in Vietnam”.
2. Dan Jaffee (2007), Brewing Justice, Fair Trade Coffee, sustainability, and survival,
University of California Press, Thomson-Shore, Inc.
3. European Affair (2013), “Trade in creative and cultural goods and services in the context
of EU”.
4. Forest Science Institute of Vietnam (FSIV) (2009), “Vietnam Forestry Outlook Study”.
5. INBAR, FAO (2005), “World bamboo resources”.
6. Alfons Eiligmann (2010), Inclusive Tourism Linking the handicraft sector to tourism
markets, International Trade Center.
7. Jean-Marie Krier (2007), Fair Trade – New facts and figures from an ongoing success
story, Dutch Association of Workshops.
8. Kamal Malhotra (2003), Making global trade works for People, UNDP.
9. Michael Freudenberg (2013), “Export Opportunity Scan for Vietnam”.
10. Rattan in Phu Tho, Hoa Binh, Thanh Hoa and Nghe An, Vietnam”.
11. Science Institute of Vietnam (FSIV) (2009), “Vietnam Forestry Outlook Study”.
12. Trang Hieu Tuong, Alfons Eiligmann (2010), “Value chain study for Bamboo and
Enterprise Opportunities Ltd (2006), “Mekong Bamboo Sector Feasibility Study”.

13. Vietrade/ ITC (2006), National sector export strategy, Art and Crafts Viet Nam.
14. United Nations Industrial Development Organization (2013), “Greening Value.
15. United States agency for international development (2006), “Global maket assesment for
handicrafts”.
16. UNESCO Institute for statistics (2009), “The 2009 UNESCO framework for Cultural
statistics”.
1ST DRAFT 166

Annex 2. List of People met
Họ và tên Địa chỉ thư tín Địa chỉ email Số điện thoại
Trần Hoàng Minh Sở Công thương tỉnh 0902581801
Bắc Giang
Lương Đình Định Sở KHĐT tỉnh Bắc
Giang
Nguyễn Thị Ánh Hiệp hội chè Việt Nam 0983313668
Hồng
Nguyễn Giang Giám đốc Công ty gtien@vietfreight.vn 0913 211 451
Tiến Vietfreight
Đỗ Thị Đức Lý Phó tổng giám đốc dothiducly@gmail.com 0913 286 539
Công ty CP Tập đoàn
Tân Cương, Hoàng
Bình, Thái Nguyên
Nguyễn Xuân Giám đốc Công ty vifoco_bg@yahoo.com 0912 393 739
Việt VIFOCO
1ST DRAFT 167

Annex 3. Other tables and figures
Table 29. Production and harvest of Viet Nam lychee and other countries
Nước Sản xuất (tấn) Tỷ trọng (%)

Trung Quốc 1.482.000 57,00
Ấn Độ 624.000 24,00
Việt Nam 156.000 6,00
Madagascar 100.000 3,85
Đài Loan 80.000 3,08
Thái Lan 43.000 1,65
Nepal 14.000 0,54
Băng la đét 13.000 0,50
Reunion 12.000 0,46
Nam Phi 8.600 0,33
Mauritius 4.500 0,17
Mexico 4.000 0,15
Pakistan 3.000 0,12
Úc 2.500 0,10
Israel 1.200 0,05
Mỹ 600 0,02
Khác 51.600
Thế giới 2.600.000 100,00
Nguồn: AgroData (2014)
Table 30. Seasons of lychee harvesting of key producers in the world
T1 T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12

Phía bắc bán cầu
Trung
Quốc
Đài Loan
Việt Nam
Thái Lan
Ấn Độ
Israel
1ST DRAFT 168

Mexico
Hoa Kỳ
Phía nam bán cầu
Australia
Nam Phi
Madagascar
Mautirius
Braxin
Table 31. Tea value chain
Tác nhân Đơn vị Chè xanh

1. Hộ trồng chè
Tổng chi phí VND/kg 31,749
Giá trị sản xuất VND/kg 58,290
Lợi nhuận VND/kg 26,541
2. Hộ thu gom
Lợi nhuận VND/kg 608
3. Doanh nghiệp chế biến xuất khẩu
Table 32. Greentea value chain

Tác nhân Đơn vị Chè xanh
1. Hộ trồng, sao chè
2. Hộ thu gom
3. Hộ bán buôn
3. Hộ bán lẻ
1ST DRAFT 169


1ST DRAFT 170

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Cục Kinh tế Liên

The study is prepared in a short period from May to Aug 2014, so

1ST DRAFT iii

Box 3. Enterprises’ expectations on coming free trade agreements.................................74

Table 19: Action plan for textile exports of the North......................................................96

1ST DRAFT vii

1ST DRAFT viii

Accordingly, by product sector, in each province there should be well-selected three

Component A is a series of activities which will be implemented subject to the interest

The objectives for each product sector are:

Current situation Targets

12-15 100% 6% 220% 20 95-99% 6,5% 50%

270 90% 7,2% 13,3% 250(*) 90% 7,5% 15%

95 19.08% 3.73% 2.27%/ 120 25% 5% 2.8%

A remarkable feature of decoration and household appliances in the world is a rapid

Logistics and Tourism

1.1 Background Information

correspondent region. In a similar manner, the Institutional Assessment applied the

1.2 14 northern provinces under the Program

The following section is a more specific presentation about restrictions, difficulties

associated with forest and ecological environment protection, develop agriculture,

1.3 Seclection of Products for REDP

Air transportation (5)

Products with low Litchi (1) Frozen shrimp (4)

difficulty for fresh storage and transportation. Post-harvest technology and

1.4 Structure of the report

2.1 Key concepts and tools for analysis

2.2 Limitations and constraints of the analysis

3. Sector-specific Export Development Plans

Therefore, on production scale and harvesting time, main potential opponents of

According to the forecast of Australian lychee importers, the demand of lychee

Table 2. Products of lychee, requirements of quality, packaging and features of

Product’s Image Description of distribution/transaction forms

Fresh lychee Packaging, preserving and transporting:

Canned Canned lychee products are of great diversity,

Product’s Image Description of distribution/transaction forms

Lychee Lychee puree is used for mixed drinks, sorbets,

Lychee Dried lychees, Lychee gummys, Lychee in

Lychee jam Lychee jam is greatly favoured in the USA and

Lychee Lychee syrup is processed with specific recipe

Lychee juice Lychee juice is very popular at supermarkets in

Lychee tea China and Taiwan have produced lychee

Product’s Image Description of distribution/transaction forms

Lychee Skin Lychee skin care products are processed for

Source: Collected from websites of large stores/supermarketsin the USA and EU

Table 3. Reference of lychee price in some markets

Product Market Distributor Retail price

Fresh lychee The UK8 mysupermarket.co.uk 12 lychee (200g) can: £ 1.69

Fresh lychee Germany9 www.freshplaza.com Week 48,49 (2012): EUR

Fresh lychee (of California LocalHarvest 5 pound can: USD 79

Fresh lychee Domestic Retail shops 200,000- 300,000 VND/kg

Fresh lychee Amazon.com USD 30.99 /2 pound (USD 32

Fresh lychee BuyExoticFruits.com, USD 29.99 /kg (discount 10%

Fresh lychee Japan Retail stores USD 16 /set of 5-6 lychees

Source: Internet, searched by consultant

3.1.1.2 Required standards in the world

3.1.2 Viet Nam Lychee production and export

Source: The General Department of Viet Nam Customs

Farm gate price

In common practice, there is a big difference of lychee price among levels of

3.1.2.2 Currently produced and exported products

3.1.2.3 Current markets and types of export

1 China 386,288 1,024,048 324,349 3,843,312 14,620,374 18,564,683 17,000,000