Contents

EXECUTIVE SUMMARY................................................................................................................2
1. Company Overview.................................................................................................................2
2. Analysis method and scale......................................................................................................3
FACTORS FOR ANALYSIS..............................................................................................................4
Section I. Country Overview.......................................................................................................4
Section II.  Political and Legal Analysis........................................................................................4
A. Political ideology...............................................................................................................4
B. Political risk......................................................................................................................5
C. Legal system......................................................................................................................6
D. International relations.....................................................................................................8
Section III. Economic Analysis.................................................................................................9
A. Economic system...............................................................................................................9
B. Economic development..................................................................................................10
C. Economic transition.......................................................................................................11
D. Financial markets...........................................................................................................12
E. Infrastructural forces.....................................................................................................13
Section IV. Market Potential.....................................................................................................14
A. Identify basic appeal......................................................................................................14
B. Analyze the market potential........................................................................................15
1. Import level....................................................................................................................15
2. Sales level......................................................................................................................15
3. Calculate market potential indicator.............................................................................15
C.    Select the market or site..............................................................................................16
1.     Field trips..................................................................................................................16
2. Main Competitor...........................................................................................................15
3. Customer loyalty to competitors....................................................................................17
4. Threat from substitute products.....................................................................................17
CONCLUSION AND RECOMMENDATION..................................................................................18
REFERENCES..............................................................................................................................20

1|Page
 EXECUTIVE SUMMARY
1. Company Overview

The Vietnam National Tea Corporation Ltd (Vinatea or Vinatea Corp), was established
in 1958 as the pioneer of Vietnamese tea and agriculture trading. For nearly 6 decades, we
have been dedicated to creating opportunities for Vietnamese agriculture growth through the
solidification of our reputation as the trusted international partner. With the motto “The place
of your trust in Vietnam”, Vinatea promises to bring customers drinks of the best quality.

With our headquarter in Hanoi, Vinatea has developed a nationwide network that
includes over 20 processing plants, 2 packaging facilities, 11 commercial branches, and many
research centers. Vinatea specializes on tea-based drinks, with the products ranging from
fresh green tea leaves to dry tea bags. Nowadays, we provide over 200 domestic businesses as
well as 120 foreign businesses worldwide. Vinatea intends on broadening its market, bringing
in more revenue, and gaining the confidence of customers all over the world in order to
establish a world of advanced tea culture.

Vinatea is currently thinking about approaching the Uzbekistani market. Although the
market has already been exploited by some Vietnamese companies, it is still a fresh place for
investment, as the demand for tea and agricultural products is high. Vinatea intends to create
trade relationships with Uzbekistani businesses if it is possible to do so, creating the
foundation for more investment.

2. Analysis method and scale 

The Report will support us for learning more about the market in Uzbekistan. Vinatea
has been able to focus on the political stability, economic growth, and market potential as the
three most significant factors that could influence the success of investment into the nation
based on the data gathered. It will provide the answers to several queries on whether Vinatea
should invest in Uzbekistan. Each component and each of its sub-factors have been rated on a
scale of 100, and the average has been determined. 

Here is the table showing the assessment and scaling on each factor: 

Political and Political Legal Intellectual Taxation Trade

legal safety enforcement  property privileges relation

2|Page
 stability  protection 

48 49 45 35 55 55

Economic Business Fiscal Financial Infrastructure  Trade

growth  freedom freedom  market  regulation

58 65 75 67 35 50

Market Import Sales Consumption Market Competition

potential  capacity  capacity  level intensity  free level

64 80 65 65 60 50

The country's overall potential score is 57, which indicates that the investment may be
successful. The possibility, nevertheless, doesn't appear compelling enough for us to invest
right immediately. Vinatea has decided that we shouldn't export at this time after giving it
some serious thought. Instead, better monitoring is required to reduce any potential risks and
maximize the possible profits. One year is suggested as the duration.

3|Page
 FACTORS FOR ANALYSIS
 Section I. Country Overview 

Uzbekistan is a doubly landlocked country located in Central Asia that borders the
countries of Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan. Uzbekistan
has a varied landscape that includes a rolling sandy desert, mountains along the border with
Tajikistan, and the Aral Sea in the west. In truth, Uzbekistan is a great market for tea, with a
demand that exceeds the domestic supply due to its continental climate (hot in the summer,
cold in the winter). According to the World Bank, as of 2021, the estimated population of
Uzbekistan is around 34.2 million people. The government system is a republic under
authoritarian presidential rule, with little power outside the executive branch.  

Uzbekistan is known for its mixed economy in which there is limited private freedom,
but the economy remains highly controlled by the government. Uzbekistan has a variety of
natural resources, including: natural gas, Petroleum, Gold, Copper, Uranium, Coal, Potash,
Agricultural land,.. that have the potential to contribute significantly to the country's
economic development.

The main industries in Uzbekistan include: cotton production, Gabon mining industry, textile
industry, food processing, chemical industry, automotive industry. Uzbekistan is the fifth
largest exporter and sixth largest producer of cotton in the world. 

Currently, there have been some recoveries in relation between Uzbekistan and
Vietnam. Uzbekistan and Vietnam have signed some bilateral pacts and agreements to
promote trade between the 2 countries. It is currently one of Vietnam's principal partners for
tea imports. This is the reason Vinatea made the decision to take an interest in this nation.

Section II.  Political and Legal Analysis

A. Political ideology
The Republic of Uzbekistan is a presidential constitutional republic, whereby the
President of Uzbekistan is the head of state. Nursultan Nazarbayev led the country from 1991
to 2019. He was succeeded by Kassym - Jomart Tokayev. The president may veto legislation
that has been passed by the parliament and is also the commander in chief of the armed
forces.  

Executive power is exercised by the government and by the Prime Minister of

Uzbekistan. Legislative power is vested in the two chambers of the Supreme Assembly, the
4|Page
Senate, and the Legislative Chamber. The judicial branch (or judiciary) is composed of the
Supreme Court, Constitutional Court, and Higher Economic Court that exercises judicial
power.

This country has a long history of domestic disputes and political crises, resulting in
unstable economic situations. Currently, the country has five key parties, nationalist or
religious political parties are prohibited. The presidential transition in Uzbekistan represents a
novel development in the post-Soviet space. The reform program is centrally controlled and
managed, in line with the country’s long history of state planning. 

Overall, Uzbekistan has also made significant moves towards political liberalization but
remains an authoritarian state whose institutional framework and presidential system are not
up for discussion. Priority should be placed on the area’s most relevant for fostering an open
society: promoting political competition, encouraging open debate, and fostering independent
public engagement.

B. Political risk
According to the Economist Intelligence Unit, on June 15th, 2022, Uzbekistan had the
political risk rating remaining at C, reflecting the authoritarian nature of the regime. Shavkat
Mirziyoyev was re-elected as president for another five-year term in October in an election
that was neither free nor fair. The war in Ukraine and the risk of instability in Afghanistan
will keep event risk high.

 Besides, in Uzbekistan, rampant corruption is present in all levels of government and

business. Political dissent is heavily suppressed, and constitutional and other legal guarantees
of free speech are not observed in practice. Protests are fiercely repressed. Border disputes
between Kyrgyzstan and Tajikistan can result in border closures. There have been several
terrorist incidents linked to Islamist militants. Foreign interests face a potential risk of being
targeted. Furthermore, Uzbekistan is a parliamentary republic that has operated as a de-facto
authoritarian regime since its establishment in 1991. The death of Uzbekistan's long-running
ruler Islam Karimov and the appointment of Shavkat Mirziyoyev as his successor in 2016 led
to cautious optimism that the investment climate will gradually improve because of limited
political reforms. However, subsequent elections have resulted in no real change to the
nation's power dynamics. The government recently relaunched a privatization scheme,
offering minority shares in industrial, telecoms, and textile companies, although this has had a
limited impact on foreign investment.

5|Page
  In fact, the country’s internal conflict is a threat to the success of any company, as the
market can be affected by the Government and the military force. If Vinatea wants to
penetrate into the market, it will need to gain favorable treatment from these forces. To adapt
to the political risk, our company thinks purchasing political risk insurance is an important
way to protect the organization and investors financially. This insurance protects against
political actions that would cause the organization to experience a major financial loss.
Besides, we will use local banks, or a bank with branches is an often-overlooked way to
mitigate political risk.

C. Legal system
Uzbekistan is a country that follows a civil law system, and its legal system is based on
legislation made by Parliament and the executive bodies. Both Vietnam and Uzbekistan
follow a civil law system, so there are some similarities between the two legal systems due to
their shared history and culture. 

Vietnam and Uzbekistan have both undergone significant legal reforms since gaining
independence. As a result, they share some similarities in their legal systems, including a
reliance on written laws and regulations, a centralized court system, and a strong emphasis on
the role of the state in regulating and enforcing the law. Despite these similarities, however,
there are also significant differences between the two legal systems. For example, Vietnam's
legal system is heavily influenced by Confucianism, while Uzbekistan's legal system has been
influenced by Islam. Additionally, there are differences in the specific laws and regulations
governing various aspects of society and the economy.

Uzbekistan was identified as a country that requires increased attention with regard to
the protection and enforcement of intellectual property rights. Despite some positive steps
taken by the government of Uzbekistan, including the adoption of a new trademark law in
2019, significant challenges remain in the country with respect to the protection of IP rights.
In addition, Piracy and counterfeiting are significant problems in Uzbekistan, particularly in
the areas of software and entertainment products. Overall, Uzbekistan faces significant
challenges in the area of intellectual property protection and enforcement. While progress has
been made in recent years, much work remains to be done to create an environment in which
IP rights are respected and violations are effectively addressed.

The protection of intellectual property rights, including patents, trademarks, and

copyrights, is an important aspect of economic development and growth in Uzbekistan. The

6|Page
country has established a legal framework to protect these rights and has taken steps to
enforce them nationally. Trademarks are protected under the same law, and the Uzbekistan
Patent Office is responsible for registering and enforcing trademarks. The law provides for the
protection of both registered and unregistered trademarks and prohibits the unauthorized use
of trademarks that are identical or similar to registered trademarks.

Uzbekistan has established laws and regulations to ensure product safety and liability to
protect consumers and promote fair business practices. Some of the key laws and regulations
related to product safety and liability in Uzbekistan: The Law on Consumer Protection was
adopted in 1992 and has since been amended several times. It provides for the protection of
consumer rights, including the right to safe and quality products or Technical Regulation on
Safety of Products was adopted in 2018.

Uzbekistan's tax system is based on a flat tax rate, meaning that all individuals and businesses
are subject to the same tax rate regardless of income level. The tax system is designed to
encourage investment and economic growth by offering various tax incentives for businesses.

The following are the main taxes in Uzbekistan: Corporate Income Tax, Personal Income Tax
and Value Added Tax (VAT)

Uzbekistan also offers various tax incentives to encourage investment and economic
growth, such as:

1. Tax Holidays: New businesses in certain industries are eligible for a tax holiday,
during which they are exempt from paying corporate income tax.

2. Investment Tax Credits: Businesses that invest in certain industries or regions may
be eligible for tax credits.

3. Export Tax Exemptions: Businesses that export goods may be eligible for
exemptions from certain taxes, such as VAT.

Uzbekistan's tax system is relatively simple, with a flat tax rate and various tax
incentives designed to promote economic growth. However, tax compliance and enforcement
can be a challenge, and the government is working to improve tax administration and reduce
tax evasion.

On product liability, we have not found any notable law or regulation on tea in the legal
system of Uzbekistan. In fact, tea is classified as a normal beverage, thus regulated under the
food and beverage laws. Due to the corruption of the government, the enforcement of laws is

7|Page
inefficient. It is even said to have little or no protection for foreign investors. Combined with
the political situation, the legal system makes Uzbekistan an unsafe choice for new
businesses.

D. International relations
In 2021, Uzbekistan's foreign policy is primarily focused on promoting regional
stability, economic development, and cooperation with its neighbors and other countries
around the world. Here are some of Uzbekistan's key allies and adversaries.

Key Allies:

- Russia: Uzbekistan maintains close political, economic, and security ties with Russia,
which is also a major trading partner and investor in Uzbekistan's economy.

- China: Uzbekistan has been strengthening its economic relations with China in recent
years, with China becoming one of Uzbekistan's largest trading partners and investors.

Adversaries:

- Afghanistan: Uzbekistan shares a border with Afghanistan and has been affected by
the conflict in that country. Uzbekistan has been working to promote stability in
Afghanistan through diplomatic and economic efforts.

Uzbekistan is a member of several multilateral agreements and organizations. Uzbekistan is a

member of the United Nations and participates in various UN bodies and initiatives, such as
the UN General Assembly and the UN Development Programmer. Uzbekistan is also a
founding member of the SCO, which is a regional organization focused on security and
economic cooperation. 

The effects of multilateral agreements on individual countries depend on the specific

terms and conditions of the agreement, as well as the broader economic and political context
in which the agreement is signed. When Uzbekistan were to enter into a free trade agreement
with a group of countries that includes Vietnam, this could have direct effects on Vietnam's
trade relationship with Uzbekistan and with the other countries involved in the agreement.
Depending on the terms of the agreement, Vietnam's exports to Uzbekistan and imports from
Uzbekistan could increase or decrease. Moreover, if Uzbekistan were to enter into a
multilateral agreement that promotes regional stability and economic development, this could
indirectly benefit Vietnam by creating a more stable and prosperous environment for trade
and investment in the region.

8|Page
Section III. Economic Analysis

A. Economic system
The economic system of Uzbekistan can be described as a mixed economy with
elements of both socialism and capitalism. The government controls key industries such as
energy, telecommunications, and transportation, while private enterprise is allowed in other
sectors such as manufacturing, agriculture, and services.  

Vietnam and Uzbekistan have some similarities in their mixed economic systems. State
ownership of key industries: Both countries have a significant degree of state ownership and
control over key industries, such as energy, telecommunications, and transportation. This
allows the government to influence the direction of economic development and promote
national interests. Market-oriented reforms: Both countries have pursued market-oriented
reforms to varying degrees. Vietnam has been more proactive in implementing economic
reforms, which has led to significant economic growth and integration into the global
economy. Uzbekistan has also implemented some market-oriented reforms in recent years,
such as liberalizing the foreign exchange market and reducing barriers to foreign investment.
Focus on export-oriented growth: Both countries have placed a strong emphasis on export-
oriented growth as a means of driving economic development. Vietnam is a major exporter of
products such as textiles, electronics, and agricultural goods, while Uzbekistan is a major
exporter of cotton and other agricultural products.  Support for small and medium-sized
enterprises (SMEs): Both countries have recognized the importance of SMEs in driving
economic growth and have implemented policies to support their development. For example,
Vietnam has implemented policies to promote SME access to credit and technology, while
Uzbekistan has established a special fund to support SMEs.

Despite these similarities, there are also some notable differences between the two
countries' mixed economic systems. For example, Vietnam has been more successful in
integrating into the global economy, while Uzbekistan has been more cautious in this regard.
Vietnam has also implemented more extensive economic reforms, while Uzbekistan has been
more gradual in its approach.

Fiscal policy and monetary policy are two key tools used by governments to manage
their economies. In Uzbekistan, the government uses a combination of fiscal and monetary
policies to achieve its economic goals. The fiscal policy of Uzbekistan is largely controlled by
the government. The government sets the budget, which includes revenues and expenditures.

9|Page
The government's main sources of revenue are taxes and customs duties. The government's
main expenditures include infrastructure development, education, and healthcare.

B. Economic development
Year Nominal GDP GDP growth GDP per capita
USD Billion (% y-o-y) USD

2012 67,52 7,1 2354,59

2013 73,18 7,3 2487,24

2014 80,84 6,9 2613,75

2015 86,19 7,2 2753,97

2016 86,14 5,9 2867,05

2017 62,08 4,4 2943,1

2018 52,63 5,4 3047,31

2019 59,90 5,7 3161,42

2020 59,89 1,9 3159,73

2021 66,94 7,44 3327,78

In 2021, Uzbekistan's GDP was estimated to be around $66.9 billion, with a GDP per
capita of around $3000. Uzbekistan's economy has been growing steadily in recent years, with
an average annual GDP growth rate of around 5-6%.

Level of black-market activity:  The level of black market activity in Uzbekistan is

difficult to quantify, but it is believed to be relatively high.  The spread between the official
and black-market exchange rates is now as high as 35 percent. The dual exchange rate has
hurt not just individual entrepreneurs, but the economy as a whole. This is partly due to the
country's strict regulations and bureaucracy, which can make it difficult for businesses to
operate legally. 

According to the Human Development Index (HDI) published by the United Nations
Development programmed (UNDP), Uzbekistan has a score of 0.72, which is considered
"high human development". This score is based on indicators such as life expectancy,
education, and income. Uzbekistan is classified as a developing country by the United
Nations. As such, companies exporting to Uzbekistan may face some unique challenges
because of its developing status. Here are a few potential impacts:

10 | P a g e
 - Trade barriers: Developing countries often have higher trade barriers, such as tariffs
and regulations, than more industrialized countries. This can make it more difficult
and expensive for companies to export to Uzbekistan.
- Infrastructure: Developing countries often have less developed infrastructure than
more industrialized countries. This can impact the transportation of goods and may
result in longer transit times or more damage to products in transit.
- Political and economic instability: Developing countries may be more prone to
political and economic instability, which can impact the business environment.
Companies exporting to Uzbekistan may need to be prepared for unexpected changes
in the regulatory or economic landscape.
- Potential for growth: On the positive side, developing countries often have a lot of
potential for growth. If a company can successfully navigate the challenges of
exporting to Uzbekistan, there may be significant opportunities for growth and
expansion in the market. 

Uzbekistan's unemployment rate was estimated to be around 5% in 2021, while inflation

was around 9%. The country has also been implementing a number of structural reforms in
recent years to modernize its economy, including the liberalization of the exchange rate and
the privatization of state-owned enterprises.

Overall, Uzbekistan's economy is showing positive signs of growth and development,

but there are still challenges related to corruption, bureaucratic inefficiencies, and the
informal sector. The government's ongoing reforms and efforts to attract foreign investment
will likely continue to shape the country's economic trajectory in the years to come.

C. Economic transition
The quality of management expertise and capital available in Uzbekistan has improved
in recent years due to the government's efforts to modernize and liberalize the economy. The
country has implemented several reforms aimed at attracting foreign investment, including the
liberalization of the exchange rate and the privatization of state-owned enterprises.
Additionally, the government has established a number of special economic zones to attract
foreign investors and has provided incentives for companies that invest in priority sectors
such as agriculture, tourism, and manufacturing. However, there are still challenges related to
corruption, bureaucratic inefficiencies, and a lack of transparency in the business
environment. Companies looking to export products to Uzbekistan should carefully evaluate
the regulatory environment and potential risks before making any investment decisions. It is

11 | P a g e
also important to assess the demand for the products in the Uzbekistan market and the level of
competition from local and international competitors.

Uzbekistan has a rich cultural heritage, but there are concerns that it is being eroded by
modernization and globalization. Traditional crafts and practices, such as carpet weaving and
traditional clothing, are being replaced by mass-produced goods. Additionally, there are
concerns about the suppression of religious and ethnic minorities in the country, which can
lead to social tensions and conflicts.

Uzbekistan faces a number of environmental challenges, including desertification, water

scarcity, and pollution. These issues are exacerbated by a combination of natural factors, such
as the arid climate and the depletion of the Aral Sea, as well as human activities such as
overuse of water resources, unsustainable agricultural practices, and industrial pollution.
Agricultural practices: Uzbekistan is one of the world's largest producers of cotton, but the
industry is heavily reliant on unsustainable agricultural practices such as monoculture, the use
of pesticides and fertilizers, and the diversion of water resources. These practices have
contributed to the depletion of the Aral Sea and other environmental problems. Uzbekistan
has undergone rapid urbanization in recent decades, with the growth of cities such as
Tashkent and Samarkand. This has led to increased demand for energy, water, and other
resources, putting further strain on the environment.

Overall, addressing these cultural and environmental challenges will require a

combination of policy changes, public education, and awareness-raising, and sustainable
development practices. The Uzbek government has taken some steps to address these issues,
but there is still a long way to go to ensure a sustainable and culturally vibrant future for the
country.

D. Financial markets
The exchange rate between the currency of Uzbekistan and major currencies such as the
US, the EU, and Vietnam is: 1 UZS = 0.0000879367 USD, 1UZS = 0.0001 EUR, 1 UZS =
2.09797 VND. Overall, Uzbekistan's government has implemented significant economic
reforms in recent years, including in the area of currency controls and restrictions. It is
important to note that Uzbekistan may still have some restrictions in place, particularly for
foreign investors. For example: limitations on the amount of foreign currency that can be
taken out of the country or restrictions on certain types of transactions. Moreover, some
foreign companies operating in Uzbekistan may be required to convert a portion of their

12 | P a g e
earnings into some.  Uzbekistan had significantly liberalized its foreign exchange market and
removed most of its previous currency controls and restrictions. The country has moved
towards a more market-based exchange rate system, allowing the Uzbekistani som to float
freely against other currencies. Uzbekistan Bank Lending Rate was reported at 22.316 % pa in
Dec 2022. This records a decrease from the previous number of 22.419 % pay for Nov 2022.
Uzbekistan Bank Lending Rate data is updated monthly, averaging 18.637 % pa from Jan
2013 to Dec 2022, with 120 observations. 

The average percent of interest banks in Uzbekistan is not high enough so import prices
increase relative to the prices of domestic goods and services. Exports become more
competitive and more profitable. Imports drop and exports increase, lowering the net export
component of aggregate expenditure and demand. If Vinatea exports to Uzbekistan, they
would face some restrictions but the benefit will be worthy enough, but the most important
things are more competitive in the market. Converting money to soms may be the biggest
problem for a lot of companies who want to export to Uzbekistan because compared with
other types of money, soms is the money has lowest value than other money like USD or
EUR. 

E. Infrastructural forces
Uzbekistan's infrastructure is extensive, but badly needs modernization. Currently it is
the only country in Central Asia with a subway system. Uzbekistan has been hugely
expanding its transport infrastructure to further its aim of becoming a transport and logistics
hub for Central Asia. Uzbekistan ports play an important role in the export and import trade of
the country. The ports authority of Uzbekistan runs the seaports, which are operated by the
Government of Uzbekistan. Uzbekistan ports have direct shipping connections with other
countries through the important shipping lines. So if Vinatea exports to Uzbekistan, they will
receive the most support from the government for transportation, it would not be difficult to
face some restrictions from this country.

The average internet connection speed in Uzbekistan is around 7.2 Mbps, which is
lower than the global average. However, Uzbekistan is investing in improving its internet
infrastructure, and the government has set a goal to increase the average internet speed to 50
Mbps by 2025. The cost of mobile phone services in Uzbekistan is relatively affordable
compared to other countries in the region. The average monthly cost of a mobile phone plan is
around 30,000 Uzbekistani som (about $3.50 USD).

13 | P a g e
Section IV. Market Potential

A. Identify basic appeal. 

Uzbekistan has several characteristics that are significant, which the exporters need to
consider before deciding to go to this market.

- Climate

Uzbekistan has a continental climate with hot summers and cold winters. In summer
temperature can reach 40 degrees, in winter there are places down to -20 degrees. Which is
affecting the majority of citizens' demand for drinking habits, tea is the most suitable product
not just because of its taste, but also because it is good for their health. Climate in Uzbekistan
shares some common features with Vietnam, it is favorable to preserve and transport tea. 

- Absolute product bans

Uzbekistan has implemented a number of product bans over the years, including bans
on certain types of food, clothing, and cosmetics. These bans have been put in place for a
variety of reasons, including concerns over safety, health, and morality: narcotic drugs,
psychotropic substances, and precursors; portable laser emitters and so on. Luckily all banned
products are not related to tea in Uzbekistan, that means we can easily export tea legally into
this country.

- Access to financing

Access to financing in Uzbekistan has improved in recent years, but there are still some
challenges that individuals and businesses may face when seeking financing. However, there
are still some obstacles to accessing financing in Uzbekistan:

- Lack of collateral, which is often required by lenders. This can be a particular

challenge for small and medium-sized enterprises (SMEs) and individuals who may
not have sufficient assets to use as collateral.
- Limited availability of credit information, can make it difficult for lenders to assess
the creditworthiness of borrowers. This can result in higher interest rates or the denial
of financing altogether.

Overall, while there have been improvements in access to financing in Uzbekistan, there is
still room for further progress. The government and financial institutions will need to continue
to work to address these challenges in order to ensure that individuals and businesses have the
resources they need to succeed.

14 | P a g e
B. Analyze the market potential.
1. Import level
Uzbekistan is a major tea-consuming country, to meet the demand, Uzbekistan has been
pushing the import of tea. In 2020, Uzbekistan imported $51.1M in Tea, becoming the 40th
largest importer of Tea in the world. Uzbekistan imports Tea primarily from: China ($33.8M),
Kenya ($5.41M), Sri Lanka ($2.99M), Russia ($2.07M), and Vietnam ($1.5M).

The fastest growing import markets in Tea for Uzbekistan between 2019 and 2020 were
Kenya ($2.66M), China ($725k), and Vietnam ($616k).

2. Sales level
The tea market in Uzbekistan was equal to 26.20 million USD (calculated in retail
prices) in 2015. Until 2025, the tea market in Uzbekistan is forecast to reach 201.33 million
USD (in retail prices), thus increasing at a CAGR of 19.13% per annum for the period 2020-
2025. This is a decrease, compared to the growth of about 26.50% per year, registered in
2015-2019.

The average consumption per capita in value terms reached 0.86 USD per capita (in
retail prices) in 2015. In the next five years, it grew at a CAGR of 24.56% per annum.

The tea market has evolved dramatically in the past few years in line with consumers’
changing behavior. Today, tea drinkers are more interested in high-quality products with a
great story and drinks that give them specific health benefits, which has driven demand for
healthy green, functional botanical tea and herbal blends. In addition, the perception of tea has
also changed, as it is viewed by most younger consumers as a sensual and wellness drink. 

3. Calculate market potential indicator

According to Global EDGE, the Market Potential Index (MPI) overall score of
Uzbekistan in 2021 is 16, ranked 69th globally. However, it has a mild market growth rate
(with an index of 39) and a sufficient capacity for market consumption (with an index of 17)
(global EDGE). As a potential market, Uzbekistan has an open market that offers Asian
countries opportunities to become trade partners. Uzbekistan is among the world's leading
cotton producers. It is known for its orchards and vineyards and is also important for raising
Karakul sheep and silkworms. Uzbekistan's mineral and oil and gas reserves are substantial.
Despite their significant progress in economic and administrative reforms, serious problems
remain, such as the high level of corruption, weak rules of law, decreasing labor freedom, and
especially, the high applied tariffs. Overall, the market development in Uzbekistan is still

15 | P a g e
considered slow,  and the environment for investment and business there makes it difficult for
foreign companies to make a good entry.

C.    Select the market or site. 

 1.     Field trips
Tea is the main drink in Uzbekistan. Any meal starts with Uzbekistan tea and ends with
it. The most popular is green tea (kuk-choy). Black tea (kora-choy) is most popular in
Tashkent. Uzbek tea is taken without sugar. Uzbekistan tea with sugar has its own name -
kand-choy. Frequently various herbals and spices are added to Uzbekistan tea. In
Karakalpakstan people drink tea, both black and green, with milk. Uzbekistan holds one of the
highest levels of tea consumption per capita in the world – 2.65 kg per capita annually. 

2. Main Competitor
Some kind of tea in Uzbekistan: Green tea (kok choy), tea of special order (rais choy),
Black tea (kora choy), Uzbek tea with black pepper (murch choy), Uzbek tea with basil
(raikhonli choy), tea with seeds of black cherry (sedanali choy), tea with saffron, ........

In 2021, Uzbekistan imported 32.2 thousand tons of tea worth $ 42.8 million from 24
countries, the State Statistics Committee said. Reportedly, tea imports increased by 836 tons
compared to 2020.

Top spot country in 2021 from where Uzbekistan imported the largest amount of tea
was China at 25.8 thousand tons, followed by Kenya with 2.2 thousand tons and Iran with 1.4
thousand tons.

- China with a share of 68% (29 million US$)

- Kenya with a share of 8.58% (3.67 million US$)
- Russia with a share of 4.8% (2.05 million US$)
- United Arab Emirates with a share of 3.49% (1.49 million US$)
- Iran with a share of 3.41% (1.46 million US$)

Uzbekistan has signed contracts for importing around 2.3 million kg of tea from a string
of Indian firms including The State Trading Corp. of India Ltd, Jay Shree Tea & Industries
Ltd, Siewert and Dholakia Pvt. Ltd and Harrisons Malayalam Ltd. The industry expects
exports to nearly double to 5 million kg from 2.72 million kg last year. Uzbekistan is expected
to be the next big market for high-quality orthodox variety tea.

16 | P a g e
3. Customer loyalty to competitors 
 Customer loyalty towards tea exporting companies in Uzbekistan is influenced by
several factors, including the quality of the tea, the price, and the reputation of the company:

- The quality of the tea. Uzbekistan is known for producing high-quality tea, and
customers expect the tea they purchase to be fresh, flavorful, and of premium quality.
- The price of the tea. Customers want to get the best value for their money, and if a
company offers high-quality tea at a reasonable price, it is more likely to retain its
customers.
- The reputation of the company: If a company has a good reputation for delivering
quality products and excellent customer service, customers are more likely to continue
doing business with them.
- Marketing and promotional activities: discounts, loyalty programs, and personalized

As a result, we need tactics to gain customers’ attention, promoting our products so that we
can gradually attract them and make them switch to our tea brand.

4. Threat from substitute products 

    In Uzbekistan, there are several substitute products for tea that are commonly consumed.
Here are a few examples:

- Ayran: This is a popular yogurt-based drink that is consumed throughout Central Asia.
It is made by mixing yogurt with water and salt, and sometimes other ingredients such
as mint or coriander. Ayran is a refreshing and tangy drink that is often consumed with
meals.
- Chai Somsa: This is a type of Uzbek pastry that is often served with tea but can also
be consumed on its own. Chai Somsa is a savory pastry filled with spiced meat or
vegetables and is a popular snack in Uzbekistan.

Overall, while tea is the most consumed beverage in Uzbekistan, these substitute products are
also popular and enjoyed by many in the country.

CONCLUSION AND RECOMMENDATION

17 | P a g e
 As analyzed above, we expect to encounter some difficulties during the penetration into
the market. The main obstacle standing in our way is ’s political status. In fact, the country’s
internal conflict is a threat to the success of our company, as the market can be affected by the
Government and the military force. If Vinatea wants to be trade into the market, it will need to
gain favorable treatment from these forces. One way to do this is to form a joint venture with
an existing Uzbekistan company. However, this is not preferable since it will shrink our hope
of developing as well as the prospect of high profits.

These difficulties will not only arise from the country’s political and economic
situation, but also from the fact that there are many competitors planning to expand their
influence. Trends towards consuming convenient tea have boosted tea bags sales. All our
rivals have adopted the same strategies, shifting from unpackaged tea to packaged tea. This
corner of the market is still new for all competitors, meaning Vinatea has more chance to
enter this part. Most of our competitors focus on higher-income consumers, pushing the price
up to earn more profit. As a result, we are planning to focus on average income consumers,
while at the same time improve the way consumers can enjoy loose tea with much
convenience, in order to save the resource and avoid potential risks.

Because of to this controllable factor, we recommend Vinatea to hold off on exporting

until the internal situation in Uzbekistan has improved. Besides the challenges brought about
by the nation's internal conflicts and economic instability, the Uzbekistan market also looks to
have potential. Vinatea wants to join the market for green tea products by emphasizing low-
and middle-class consumers. Even though, the development of the nation's infrastructure will
have a significant impact on how effectively the business does. In the meanwhile, Vinatea
may take out some research on product appeal, figuring out what consumers in Uzbekistan
need, in order to develop more desirable items that attract customers. From fresh tea to dry tea
and tea bags, we have previously possessed a variety of items. Before to officially developing
new types, we might concentrate on adapting current items to the new market as the main
plot.

In summary, Uzbekistan is a promising country. But, investing in a market with little

protection and information despite numerous risks and challenges is still too dangerous. Even
so, we think that one year would be sufficient time for Vinatea to completely review the
marketplace before making the final choice. It is true that the larger the risk, the higher the
chance of profit it may provide. 

18 | P a g e
19 | P a g e
 REFERENCES
 [1] Yunusov, Khaydarali ,“The Development of Legal Systems of Central Asian
States”,2014.[Online]. Available: https://bom.so/pfzeJM
[2] “ Uzbekistan: Introduction”. [Online]. Available:
https://globaledge.msu.edu/countries/uzbekistan
[3] “ Uzbekistan Country Report”. [Online]. Available: https://crisis24.garda.com/insights-
intelligence/intelligence/country-reports/uzbekistan
[4] “ LEGAL PROTECTION AND ENFORCEMENT OF IP IN UZBEKISTAN”.
10.01.2023 . [Online].
Available:https://uzbekembassy.com.my/eng/news_press/society/legal_protection_and_enforc
ement_of_ip_in_uzbekistan.html?fbclid=IwAR1WmdoHPl5dpF0Uz754dUn3-
uPcy0R4FrhYfUR5iIteJuRO6_eNAOBsyfI
[5] “ U.S. Relations With Uzbekistan”. July 26,2022. [Online]. Available:
https://www.state.gov/u-s-relations-with-uzbekistan/
[6] “Uzbekistan” [Online]. Available: https://vi.wikipedia.org/wiki/Uzbekistan
[7] “ Transition economy” [Online]. Available:
https://en.wikipedia.org/wiki/Transition_economy
[8] Murat Sadykov ,“ Uzbekistan: Black Market Stifling Entrepreneurs”. Sep 3, 2010
[Online]. Available: https://eurasianet.org/uzbekistan-black-market-stifling-entrepreneurs
[9] “Rule of Law Partnership In Uzbekistan”.  April 30, 2020. [Online]. Available:
https://www.usaid.gov/uzbekistan/fact-sheets/rule-law-partnership-uzbekistan
[10] “US dollar exchange rate on the black market reaches all-time peak”.  17/08/2019.
[Online]. Available: https://kun.uz/en/news/2019/08/17/us-dollar-exchange-rate-on-the-black-
market-reaches-all-time-peak
[11] “Uzbekistan Overall”. [Online]. Available:
https://www.ghsindex.org/country/uzbekistan/
[12] “Monetary policy guidelines”. [Online]. Available:
https://cbu.uz/en/monetary-policy/trend/

20 | P a g e