International Business

VINAMILK
TAIWAN EXPORT
BUSINESS PLAN
Group Members Lecturers:

Bui Thien Phuoc Nguyen Bich Thuy

Ho Le Linh Dan Nguyen Le Loc Tien
Phan Chu Lien Phuong
Huynh Dang Sy Dan
Nguyen Bui Truc Quynh
Le Thao Nhi

JUNE 2021
Table of content

01 Introduction 3

02 Vinamilk 4
Overview 4
Organization Chart 8
International Business Strategy 9
Key Statements 9
International Presence 10

03 Vinamilk’s Taiwan Division 12

Taiwan Analysis 12
Entry Mode 15
Division Organizational Chart 18
Taiwan Division’s Business Plan 18
Production 19
Supply Chain 19
Marketing 20
Accounting 25
Success Measurement 26

Conclusion
04

05 References
27
 INTRODUCTION
According to some studies, Dairy products such as fresh milk, yogurt, and cheese are good
providers of nutrients such as B vitamins and vitamin D. It is also a good source of calcium, which
is important for people of all ages. The addition of dairy products in the daily diet plays a huge role
in the growth and development of children, especially helping to develop physical strength, height,
and weight, stimulating intelligence, strengthens resistance, and protects the digestive system
effectively... Besides, drinking milk is healthy for your eyesight and improves red blood cell count,
as well as providing magnesium for muscles, calcium for bones and teeth, phosphorus for energy,
carbs for vitality, and potassium for nerve function (Keventer, 2019). It also plays an important
role in reducing the risk of many health problems such as: preventing bone loss, reducing the risk
of high blood pressure and colon cancer.
Nowadays, in developed countries with high living standards, such as the United States, Europe,
and Australia, the dairy processing sector has grown rapidly and extensively. Milk and dairy
product consumption is extremely high in these countries, ranging between 350 and 450 liters per
person per year.
For developing countries, the dairy industry is also growing, and it is increasingly assuming a
larger role in the economy. According to MR. Tran Quang Trung, in recent years, Vietnam's dairy
industry has always achieved a good growth rate. In order to increase the quality of milk supply to
the market, companies in the industry are constantly establishing, improving, and rebuilding
factories and equipment, as well as employing high-tech, high-automation technologies on a
regional and worldwide scale (Vietnam Plus, 2019).
The Vietnam Dairy Products Company (Vinamilk) was founded in 1976 as a state-owned
corporation under the Ministry of Industry. After 43 years of growth and development, Vinamilk's
goods can now fight not only with domestic competitors but also with foreign competitors in the
export market.
Due to variables such as geography, population, economics, etc... it can be seen that Taiwan is a
market with a lot of potentials for Vinamilk to make money. Furthermore, Taiwan and Viet Nam
have established a relationship economy since the 1990s until now, however, milk trading has not
been paid much attention by the two countries, so it can be considered that this is the right time to
promote it.
With the desire to be able to approach and develop in the Taiwan market, this report would like to
tell you in detail the reasons and factors that suggest that Vinamilk should manufacture products in
Taiwan.

VUON CAO VIET NAM 03

 VINAMILK OVERVIEW
COMPANY HISTORY
Vietnam Dairy Products Joint Stock Company, known as Vinamilk is a trademark of Vietnam. In
1976, Vietnam Dairy Products Company was established with the name of the Southern Dairy -
Coffee Company, under the General Department of Food Industry of the South, after the government
nationalized three dairy factories: Thống Nhất factory, Trường Thọ factory and Dielac Powdered Milk
Factory. By 1982, the company Milk - Coffee Southern transferred to the food industry and was
renamed Enterprise Milk - Coffee - Confectionery I. Until March 1992, the name of the company
officially changed to Vietnam Dairy Products Company (Vinamilk) - under the Ministry of Light
Industry, specializing in the production and processing of milk and products milk.
In 1995, in the strategy of expanding, developing, and meeting the needs of the North Vietnamese
market, Vinamilk officially inaugurated the first dairy factory in Hanoi. In the following years, in
order to develop the nationwide market, Vinamilk continued to inaugurate many more dairy factories
in the southern and central provinces of Vietnam.
In addition to affirming its brand position in the domestic market, Vinamilk also has many strategic
steps to build a foothold for the Vietnamese dairy brand in the world market through trade promotion
activities and export promotion actively.
After more than 40 years of establishment and development, the company 14 manufacturing factories,
2 logistics factories, 3 branches of sales offices, 1 dairy factory in Cambodia (Angkormilk), and 1
representative office have been built in Thailand.
Up to now, Vinamilk is a leading enterprise in the field of dairy products produced in Vietnam.
Products from the Vinamilk brand are distributed evenly across 63 provinces and cities nationwide
with 220,000 points of sale. In addition, Vinamilk has exported products to 54 countries and
territories with a total turnover of more than $ 2.2 billion.

VUON CAO VIET NAM 04

 BUSINESS ACTIVITIES
Vinamilk has three principal business activities that serve as its main source of generating capital and
maintain sustainable development.
Producing, trading milk and dairy products.
Producing and trading beverage.
Breeding dairy cows, producing fresh milk material (in 100% capital-owned companies).

MAIN PRODUCTS

LIQUID MILK

EATING & DRINKING BABY CEREAL

YOGURT

POWDERED MILK ENERGY DRINK CONDENSED MILK

FOR CHILDREN & ADULTS & BEVERAGES & ICE-CREAM

VUON CAO VIET NAM 05

VISION
Vinamilk's vision statement is "To become a world grade brand in food and beverage industry, where
people put all their trust in nutrient and health products". Their goal, in terms of development, is to
establish the brand and its excellence not just in Vietnam, but throughout the world. Vinamilk's vision
encompasses the entire process of influencing decision-making, pathways, marketing strategies, and
market expansion. The vision is not simply about outsmarting competitors, gaining market share, or
expanding corporate sales. Vinamilk wants to position itself as a worldclass brand with high quality
goods that customers can rely on.

CORE VALUES
Vinamilk has built three core values that focus on one important element - Sustainability. According
to CEO Mai Kieu Lien, Vinamilk believes Sustainable Development is a guideline that sets a business
goal in tandem with environmental preservation and advantages for associated parties. This presents a
tremendous potential as well as a significant challenge that will necessitate Vinamilk's resolve, effort,
and the cooperation and alliance of all parties involved, therefore ensuring the continuous
improvement and success of the corporation.

Raw Material Development: Vinamilk successfully supplied stable

production, satisfying the demands of local consumption and export,
despite years of numerous supply chain setbacks throughout the
decades, thanks to the tenacity of domestic raw milk resources and a
diversified network of foreign suppliers.

Digital Transformation: Vinamilk has advocated for the use of

technology in management for many years, and it was specifically
promoted in 2020 to meet the needs of social distancing and trade
restrictions during the worldwide pandemic. Vinamilk's farms and
facilities have also used new production methods in innovative ways to
ensure a green and clean environment along the value chain.

Corporate Social Responsibility: Vinamilk has actively carried out

corporate social responsibility projects, especially during the most
difficult times of the Covid-19 outbreak when it raised funds to help the
government and Vietnamese citizens to combat the virus. The company
always keeps in mind that businesses can only thrive in a healthy
community.

VUON CAO VIET NAM 06

SWOT ANALYSIS
1. Strengths:
Strong brand: With a long history of formation along with the process of construction and
development after more than 40 years, Vinamilk has become a familiar brand with many diverse
product lines, quality as well as trust in the hearts of customers. domestic goods.
Wide distribution network: Vinamilk is one of the enterprises with the largest distribution network of
dairy products today. Vinamilk's products are spread all over the country and are also exported to
foreign markets, combining many modern and traditional distribution channels.
Diverse product line: Besides supplying powdered milk and liquid milk, Vinamilk also launched many
other nutritional products to meet the needs of customers throughout the country. Products include
yogurt, caramelized condensed milk, soy milk, energy drinks, fruit juices, fruit ice cream flavors,
green tea drinks, so on.
Good marketing strategy: Vinamilk invests heavily in its advertising, PR, and marketing programs,
which are very methodical and professional, highly humane, touching the hearts of users, such as the
School Milk programs, the Rising Milk Fund. Vietnam, the campaign “One million Vietnamese trees
fund”, etc.
2. Weaknesses:
The market share of powdered milk is not high: because of the increasingly strict needs of consumers
as well as facing competition from foreign milk brands, imported from the UK, USA, Netherlands ....
making Vinamilk milk no longer hold a monopoly position in the dairy market.
Depends on foreign raw materials: Currently, because domestic raw materials are not enough to
supply for production, about 70% of Vinamilk's raw materials are imported from abroad to ensure
supply when the demand for milk is increasing.
3. Opportunities:
The number of potential customers is high and there is a great demand: Along with the development
of the economy, consumers pay more attention to health and use more dairy products. Moreover, the
demand for dairy products in Vietnam has grown steadily.
Trends of product consumption towards health: Nowadays, most customers are concerned about their
health and they tend to buy health products. And in addition to health supplements, milk is the second
food in the nutritional products that consumers will mention.
4. Threats:
Market entry of many strong competitors: The growing economy means more and more competition.
Vinamilk is currently facing many other famous milk brands such as Nestle, Dutchlady, Abbott, Enfa,
Online, Mead Johnson, etc.
Customers prefer to use foreign milk: Most Vietnamese consumers prefer to use foreign products over
domestic products, they believe that foreign products are always better than domestic products. This is
also one of Vinamilk's challenges for Vietnam's dairy market.

VUON CAO VIET NAM 07

ORGANIZATIONAL CHART

Functional Structure
As seen from the structure, the Board of Management is the head of the organization. According to
Vinamilk's 2020 annual report, the current Board is held by ten members who are responsible for the
organization's strategic planning.
The next position on the management ladder is the Chief Executive Officer (CEO), who is selected by
the Board every five years. Ms. Mai Kieu Lien is the current CEO and has been holding the position
since 1992. She is in charge of planning Vinamilk's long-term goals, which serve as a framework for
defining the objectives of each department. She also coordinates with the Internal control & Risk
management and the Internal audit to maintain stability within the organization.
The final main level is the 11 departments, each has one specific function and is led by an executive
director. Below them are employees who share the same primary field, specification, and talents. As a
department, they can operate in the same setting, thus being able to stay focused and build more of
their expertise on one single goal.
Overall, Vinamilk uses a functional organizational structure, as its 11 departments clearly show the
main characteristic of this type of structure: numerous departments, each is responsible for its own
separate function. The use of functional structure allows Vinamilk to make effective use of its human
resources thanks to specialization, which produces speed and clarity during the operation process.

VUON CAO VIET NAM 08

CURRENT INTERNATIONAL
BUSINESS STRATEGY
KEY STATEMENTS
Building a solid foundation
The main things Vinamilk has done to prepare
for global operation are investing in modern
manufacturing facilities, being proactive in
raw material procurement, and keeping a
strong domestic ground to lay a solid platform
for overseas expansion.
For manufacturing facilities, since the early
2000s, Vinamilk has built 13 factories
outfitted with cutting-edge, automated
machinery imported from the G7 and Europe
to ensure that product quality meets
international standards (VNExpress
International, 2020).
Regarding raw material procurement, Vina-
milk owns 12 large farms across the country.
Following the successful acquisition of Moc
Chau Milk in 2019, Vinamilk's cowherd has
grown to 150,000 heads, with daily raw milk
output exceeding one million liters, ensuring
that the company meets the needs of
Vietnamese consumers. No longer worrying
about the domestic market, Vinamilk can
therefore comfortably expand into new areas
overseas.
Regarding keeping a strong domestic ground,
by following the development guide of the
National Brand program to focus on product
development, quality control, and consumer-
oriented approach, Vinamilk's products have
gained a stable place in every Vietnamese
consumer’s shopping cart. The company has
accounted for more than half of the domestic
milk market since 2010, which provides them
strong capital power to expand internationally
(Vietnam News, 2020).
VUON CAO VIET NAM
Building trust
Vinamilk has been researching specific
markets, leveraging product quality advan-
tages, and investing in modern distribution
channels to establish a trustworthy brand
image that attracts the best of the best local
partners as well as a large customer base.
Finding a good partner means setting one solid
foot in a market and limiting the risks when
investing; while maintaining a good size of
customer base helps the firm to stay alive and
further expand throughout the region.
An example of researching specific markets is
South Korea, where Vinamilk has worked
closely with local partners to develop
customized business strategies, ranging from
selecting popular soy-based nut drinks to
utilizing e-commerce retail platforms.
Taking advantage of strengths in product
quality is another important key for Vinamilk
to win trust. Being able to pass quality tests in
every market, including some of the most
severe international standards, Vinamilk was
able to clinch big export contracts with the
reputation of proven quality and capacity to
provide on-demand.
Finally, to successfully manage modern
distribution networks, the company employs
advanced IT programs such as Enterprise
Resource Planning and Customer Relationship
Management. These connect Vinamilk distri-
bution networks across the foreign markets to
central headquarters in both online and offline
circumstances, which enables the company and
its partners to cooperate smoothly (VNExpress
International, 2020).
09
INTERNATIONAL PRESENCES
As of 2020, Vinamilk has had presences in 55 countries, with a total export turnover of nearly $2.2
billion. Overcoming challenges caused by the Covid-19 epidemic, the company generated $47 million
in net revenue from export activities in the first quarter of 2020, a 7.5 percent increase over the
previous year (Sai Gon Online, 2020). Below, we are going to take a look at some notable markets.

Middle East: The most crucial market
In 1998, Vinamilk shipped the first batch of
Dielac powdered milk products to Iraq, the
first time a Vinamilk product has gone
overseas. Vietnamese ambassador managed to
strike the deal thanks to the strained
relationship between Iraq and Western
countries at the time which prevented major
Western milk exporters from entering the
country (Vinamilk, 2016).
The opportunity was a huge first step for
Vinamilk. From Iraq, Vinamilk was able to
establish a distribution network in other
Middle Eastern markets. Dielac was so well-
received that it even became a general term for
all powdered milk products on the market, as a
result of consumer trust (Vietnam News,
2020). The Middle East has now become the
major export market for Vinamilk, accounting
for 75% of the company's export sales
(Bizhub, 2020).
The United States: Acquisition
In 2016, Driftwood Dairy was acquired by
Vinamilk at 100% ownership. This US
company was founded in the 1920s and has
been known to be a reputable supplier of milk
and juice to kindergarten students. This
acquisition is a huge competitive advantage
for Vinamilk in its drive to break into the
American market (Voice of Vietnam, 2016).
Thanks to the acquisition, later that year,
Vinamilk was confident to participate in the
Summer Fancy Food Show in the US. There,
the company introduced condensed milk and
creamer products under the brand Driftwood
Dairy, which quickly caught the attention of
customers. As the exhibition ended, a big
contract was signed and it was decided that
Vinamilk's condensed milk and creamer
products would be sold in supermarkets
throughout Arizona and California (Vietnam-
net, 2016). In 2019, The US export revenue
reportedly reached $6 million and was
expected to keep growing (Vinamilk, 2020).

Iraqi baby met Dielac powder milk for the first Vinamilk's representatives at the Summer Fancy
time in 1998. Photo: Vinamilk. Food Show 2016. Photo: Vinamilk.

VUON CAO VIET NAM 10

China: The next promising market
In 2017, Vinamilk signed a cooperative
agreement to supply milk to China. The
cooperation agreement was inked during State
President Tran Dai Quang's visit to China and
the international forum "One Belt, One Road"
(Communist Party Newspaper, 2017). China is
the world's most promising dairy market with
an estimated annual worth of $30 billion USD.
Later in 2020, Vinamilk successfully exported
its first batch of Ong Tho sweetened
condensed milk to China despite operating
under stringent conditions, including social
isolation enforced by the coronavirus crisis.
The exports propelled Vietnam into the top
five dairy exporters of condensed milk to
China (Dairy Reporter, 2020).
Furthermore, early this year, Vinamilk
continues to send 10 containers of seed milk to
China, including almond-flavoured and red
bean-flavored soy milk, after getting excellent
responses from business partners and local
clients, in an attempt to target more sectors
within the market. With an annual growth rate
of 9%, it is expected that by 2030, China will
overtake the Middle East to become Vietnam's
biggest export market (Sai Gon Online, 2021).
Leaders of Vinamilk and Chinese partner
signed the deal in 2017. Photo: Communist
Party Newspaper.
VUON CAO VIET NAM
South Korea: A challenge
In early June 2020, Vinamilk signed a deal to
ship 85 containers of products to South Korea
valued at $1.2 million. Vinamilk already had a
presence in the South Korean market with its
sweetened condensed creamer, but this time, it
introduced soy milk and milk tea to boost its
sales (Dairy Reporter, 2020).
South Korea is a challenging target, because
its nutritional product market is intensely
competitive, with many large domestic food
corporations dominating. As a result, Vinamilk
had to spend more than a decade exploring and
building its strategy for this specific market.
The company has done a wide range of market
studies, including container design, consumer
flavor, and taste preferences using a rigorous
self-developed methodology. This planning
aided the corporation in selecting and creating
products that appealed to local tastes.
Vinamilk's milk tea, for example, includes
twice the tea leaf extract compared to other
competing goods, allowing customers to
appreciate the strong aroma that is only found
in European teas (PRNewswire, 2020).
Success in the tough South Korean market will
grant Vinamilk valuable experience to tackle
other demanding markets in the future.
Vinamilk's soymilk product rebranded when
entering South Korea. Photo: Vinamilk.
11
TAIWAN MACROECONOMIC ANALYSIS
In this section, we look into the characteristics of Taiwan that influence our decision to establish a
new division and engage in business in this country. The key factors being studied are Geography,
Population, Culture, Politics, Economics, and Legal. Overall, the analysis result provides us valuable
insights and awareness of the current positive trends and changes in Taiwan that ultimately make us
conclude that Taiwan is a promising market for milk export.

Geography
The distance between Vietnam and Taiwan is
roughly 1,708 kilometers. Traveling between
Vietnam and Taiwan takes 1.9 hours by air and
35 hours by sea (DistanceFromTo, 2021). Out of
all the countries Vinamilk has been exporting to,
only Laos, Cambodia, Thailand, and China have
shorter traveling distances. With the short
distance coupled with Taiwan's high GDP per
capita of $32,123, we figure that the profit
gained from export relative to the shipping
distance of Taiwan is potentially high.
In addition, due to its geographic location,
Taiwan has a tropical and subtropical climate.
Similar to Vietnam's, its summer lasts long while
its winter is brief and mild (Britannica, n.d.). Thanks to this, we expect that the taste of Taiwanese
people for drinks is quite identical to that of the Vietnamese. This climate factor may let us select a
large number of goods from our 200 product lines to sell in Taiwan without needing much
customization for local tastes, compared to other markets such as the United States and South Korea.

Population
Taiwan has a population of over 23 million people, which ranks 57th in the list of all countries and
dependencies, and 23th in Asia, according to the 2021’s statistics (Worldometer, 2021). Thanks to its
population, Taiwan is one of the wealthy Asian markets with large consumption strength, thus it is
possible to bring high profit when exporting our product to this market. Like other developed Asian
countries, Taiwan is considered to face an aging population, decreasing birth rate, possibly resulting
in some other social and economic problems. However, we consider that these challenges would not
be critical to take into account for the export strategy of Vinamilk in a long run, because earlier this
year, the Taiwanese government has started their interventions to address the population problem by
increasing fund to maintain the demographic structure of the country (Focus Taiwan, 2021).

VUON CAO VIET NAM 12

Culture
Unlike Chinese food tradition where milk
products are largely absent, the Taiwanese
consumption of milk has been increasing by
largely several metric tons every year and
reached the highest volume of over 600,000
metric tons of fluid milk in 2020. Dairy products
were not prevalent in ancient Taiwan because
cows used to be only bred for labor and meat.
However, in the early 1900s when the
Westerners and the Japanese came to Taiwan, The Eluanbi Lighthouse in Pingtung, Taiwan (1929) which
they opened the first dairy farm to scale up the held the earliest dairy cattle used for the Western officers
production of milk in the country. At this time, stationed in the country. Photo: Taiwan Memory.
there was a small portion of land served as dairy
farms and milk products were consumed mainly by the Western and Japanese communities, thus the
Taiwanese locals considered dairy as privileged and not popular in daily usage. After the Civil war,
the government set up the land allocation and open more dairy ranches, as a result, reduced the price
of the products. The perception of dairy products as a luxury still remained, therefore made them
become essential in the agricultural sector as well as in their people’s consuming habits.
Nowadays, milk and milk-related products have become the favorite beverages in the local dietary in
Taiwan with a wide range of local and foreign brands on the grocery shells (Taipei Times, 2019).
Taiwanese people tend to require high quality and quantity of dairy products as they care about
keeping a healthy diet, therefore Vinamilk has a huge opportunity to introduce our high-end product
lines in this market.

Economics

Taiwan is the seventh-largest economy in Asia with a GDP of $1.4 trillion (PPP) in 2021. Its GDP per
capita is $59,398 (PPP), which makes the Taiwanese people the thirteenth-richest in the world (Asia
Fund Managers, 2021). The country's economy has grown steadily in the past few decades, and the
consumption strength gears for prosperity as the lifestyle of citizens become wealthy and generous. In
addition, thanks to the government's quick and smart response to contain the COVID-19 pandemic,
Taiwan did not suffer devastating economic hits like other countries in the region. As a result, in 2020
Taiwan was the best performed Asian economy as it is the only one with a positive GDP growth
number of 3.1% (CNBC, 2021). Moreover, in terms of economic freedom, Taiwan has effective
business regulations, an open market policy, and free movement of goods and capital, all of which
have helped small and medium-sized businesses thrive and become the backbone of Taiwan's
economic progress. The country also has a strong legal structure that safeguards the property rights of
both domestic and foreign businesses. These factors help Taiwan become the 10th most economic-free
country (National Development Council, 2019). In conclusion, Taiwan's economy's size, growth rate,
and freedom level are all positive variables that signal a success for Vinamilk to enter the country.

VUON CAO VIET NAM 13

Politics
The politics of Taiwan is maintained under a stable state without any major crisis or internal warfare,
the level of democracy of the government is highly promoted and received positive feedback from
their citizens. In the 2020 Democracy Index, Taiwan was ranked 11th globally and top of Asia. It
leapfrogged Japan and South Korea to become the beacon of democracy in the region (Focus Taiwan,
2021). As a result, it is believed that foreign corporations are supported under their transparent
commercial regulations and do not face such risks in terms of corruption and bribery. In addition,
since the early 1990s, the Taiwanese government has established cooperation with many Vietnamese
companies and continues to encourage the partnership between the two countries. This relationship
further proves that now is a great opportunity for Vinamilk corporation to establish collaboration
with Taiwanese partners to promote and export dairy products.
It should be noted that we are fully aware of the risk when investing in Taiwan due to its strained
relationship with China, a country of which Vietnam is a closed ally. There has always been worry
about the possibility of China invading the island for unification, which may devastate any foreign
business operation there. However, many international affair experts have pointed out that, this
concern is often blown out of proportion. Even though the two countries do not officially recognize
each other, they have been silently building peace and stability for decades (Al Jazeera English,
2021). Taiwan and China have lifted the ban on travel to one another and engaged in trading since
1987. In fact, according to the official Taiwan Government website, nowadays Taiwan is one of the
biggest investors in China. In addition, since taking office on May 20, 2016, Taiwan President Tsai
Ing-wen has strived to establish a stable, predictable, and long-term cross-strait relationship based on
current realities and political underpinnings between the two countries (Taiwan Government Website,
2021). We conclude that the current political situation between Taiwan and China does not affect our
business operation.

Legal
Taiwan follows the common international licensing procedure to export and import. Most of the time, a
one-time registration procedure is only needed and can be easily obtained from concerned government
departments such as the Embassy (How to Export, 2019). The licensing process for Vinamilk is expected to
be time- and cost-saving. The only difficult part is passing the regulation for exported product's quality,
which is extremely strict and thorough, especially regarding dairy products where the government demands
official international-standard sanitation certificates that prove the products are healthy and safe for human
consumption (Food Navigator, 2020). The regulation process is strict and thorough, however, Vinamilk
can confidently pass it as the company has experience from exporting to other much harsher markets.
Moreover, in 2016, Taiwan passed the revolutionary Labor Standards Acts which made changes in work
circumstances that prioritize both labor and management rights and, more importantly, foster more market
flexibility. This led to an event later that year when the Taiwanese government signed the “New
Southbound Policy” to enhance the corporation and connection with ASEAN countries, including Vietnam
(Taiwan Today, 2017). Their market aims to be more diversified and profitable by lowering several trade
barriers, thus this is an opportunity for Vinamilk to capitalize on.

VUON CAO VIET NAM 14

ENTRY MODE
ENTRY STRATEGIES
Mode of Entry: EXPORT & JOINT VENTURE
To enter Taiwan's dairy market, we are going to establish a new Taiwan division team that is
specifically assigned the task of developing and managing an Export strategy and form a Joint
Venture with a local partner to collaborate with Vinamilk on operation activities including market
study, distribution, and marketing.

Export
Overall, exporting is the act of produce goods or services in one country and sell them in another. In
our case, the country holding the production is Vietnam, the country being exported to is Taiwan,
and the goods being sold are a specific group of products from the Vinamilk catalog that we find
potentially has competitive advantages in the Taiwanese market.

The benefits of export

Increased Sales and Profits: Selling goods and services to a previously untapped market boosts sales
and revenue. Entering Taiwan might result in a loss in the first few years. However, additional sales
in Taiwan will boost overall profitability in the long run, once its export development expenditures
are covered.
The cheapest method of international sales: After setting up the supply chain, shipping is usually the
only cost left for operations. The company does not need to build up whole new manufacturers in the
host country.
Lower costs per unit: Successfully exporting to a new international market usually necessitates an
increase in output to fulfill demand. Increased output cuts per-unit costs and allow existing capacity
to be better used, in another word, it helps Vinamilk to achieve economies of scale.
Diversification: Vinamilk can further diversify its foreign operations and spread the risk by selling
to more markets. The company will be less affected by negative changes in the home market or in a
single country's business cycle.

VUON CAO VIET NAM 15

Joint Venture
We plan to form a partnership with a local distribution company, preferably based in the capital city,
Taipei. According to Mr. Vo Trung Hieu, International Business Director of Vinamilk, when it
comes to business partners, Vinamilk's approach is "to shake hands with partners as companions in
foreign markets, sharing a common goal to develop business and brand instead of playing the role of
‘seller – buyer’ in the traditional export way”. For characteristics of the partner, we look for a
company that has experience in distribution, is respectful and reliable, and share the same ideology
of sustainable development. Taking a look at Vinamilk partner in China - YiYiYuan company from
Hunan Province, we have found three companies that might satisfy our needs.
MORIE CORPORATION (Taipei)
Echo Woi International Co., Ltd. (Taipei)
Henry International (Kaohsiung)
Vinamilk is going to be the supplier and the chosen partner is going to be the distributor. Together,
we plan to join hands to learn and come up with an effective business strategy, including doing
market researches, choosing suitable products for consumers’ tastes, and making the decision for e-
commerce channels to penetrate the market.

Main Strategy: TRANSNATIONAL

We are going to keep the main decision-making at the headquarter in Vietnam. Keep the main
operations of cow farming and milk processing in the established 3 mega factories in Binh Duong
province to maintain low cost through economies of scale.
On the other hand, there is still a level of independence from the local partner. Because they are
going to work with our division to decide a specific selection of products from Vinamilk’s total 200
product lines (which we list on the next page) that we find to be suitable for the Taiwanese people’s
tastes. The purpose of this decision is to differentiate product offerings for the Taiwanese market to
account for local differences.
In addition, we also transfer the successful product strategies which Vinamilk has used in other
Asian countries with similar cultures and tastes to Taiwan. This operation fosters a multidirectional
flow of skills between different subsidiaries in Vinamilk’s global network in order to apply the
experience and learning experience the company has achieved from previously exporting to other
countries.

VUON CAO VIET NAM 16

PRODUCT SELECTION

Beauty Yogurt
Vinamilk Beauty Yogurt is a great
combination of fresh aloe vera,
pomegranate, strawberry, mixed
fruits and nata de coco that helps
bring you youthful and vibrant skin!

Probeauty Yogurt
Contains antioxidants from two types
of "super fruits" Pomegranate and
Blueberries, help to slow the skin
aging.

Love Yogurt
Enjoy the mesmerizing taste of
Vinamilk Love Yogurt Yogurt with
premium ingredients: Crispy
Walnuts, Soft Sticky Rice and
fragrant Cam Sticks.

Bird Nest Milk

High-quality pasteurized fresh milk
containing extremely nutritious and
delicious bird's nest can be given as a
gift because of its luxurious
packaging.

VUON CAO VIET NAM 17

DIVISION ORGANIZATIONAL CHART

VUON CAO VIET NAM 18

PRODUCTION & SUPPLY CHAIN
1. Suppliers
a. Domestic raw materials
According to Lê Thu, Vinamilk currently has 12 dairy farms, and the company is cooperating and
signing contracts directly with nearly 6,000 dairy farming households. These dairy households have a
role in providing input milk for production through milk collection stations. After the first standard
inspection, raw materials will be sent to Vinamilk's factories. It is estimated that the total number of
cows supplying milk to Vinamilk is nearly 130,000 with average raw milk production of 950 - 1,000
tons/day.
b. Imported raw materials
In addition to the company's fresh milk material region in Vietnam, Vinamilk imports raw materials to
supply production services to satisfy the needs of domestic and export markets for powdered milk
products (children and adults) and nutritional powder. Milk materials imported by Vinamilk to produce
powdered milk have 100% origin/origin from the US, Australia, New Zealand, EU, and Japan. The milk
material will be transported to the factory after being imported through middlemen or directly. (Lê Thu)
2. Manufactory
After being transferred to the production plants, the milk sources will be further inspected for
quality before proceeding to the production line. Milk ingredients will go through a long process:
Standardization: this helps to regulate the fat content of the milk, which today is of primary concern
to customers.
Deaerate: the removal of gas helps to remove foreign gases in the milk, avoiding causing the milk
to lose its characteristic scent.
Mixing: serving to create products with different flavors.
Pasteurization and sterilization: to remove all residual bacteria, absolutely guarantee for consumers.
Milk will be packed in sterilized packaging paper and packed into large crates to ship to smart
warehouses.
3. Distributors & retailers in Taiwan
From the smart warehouses, Vinamilk’s products will be shipped to export directly to the company in
Taiwan. The company here will be responsible for distributing products to retail locations as well as
major supermarkets in Taiwan such as Costco, Wellcome, Simple Mart, Pxmart, so on.
4. Customers
Customers in Taiwan can directly buy Vinamilk's products at retail locations as well as supermarkets
that have been distributed before.

VUON CAO VIET NAM 19

MARKETING

STP ANALYSIS
1. MARKET SEGMENTATION
Market segmentation is the study that identifies how your organization divides a customer or
solidarity into smaller groups based on characteristics such as age, income, personality traits, or
behavior. These segments can then be used to optimize products and advertisements for different
customers.

Demographic segmentation
Demographic segmentation is the division of leads together by focusing on a number of features such
as age, sex, income, career, cultural background, and family status. Taiwan is densely populated but
the land area is small. As of the end of 2008, the population of Taiwan was 23 million people, with
an average of 640 people per square kilometer. With a large population, the number of people
capable of consuming Vinamilk products is very high.
However, the fertility rate among women is among the lowest in the world, at 1.12 children per
woman because the fight for gender equality is very active here. This may cause difficulties for
powdered milk and fresh milk - Vinamilk's best-selling products if they want to open a branch in
Taiwan.

Geographic segmentation
Taiwan's geographical area is mostly mountainous and rugged, which results in few dairy plants
being located there, but it is still possible to create a milk market or other drink as there is little
competition.

2. MARKET TARGETING
Market targeting is the segmentation of customers into certain groups that suit the enterprise's own
orientation. That is, the target market is the market part in which all the potential customers of a
business and business must attract and satisfy the need to make them loyal customers. The market has
a wide range, so when setting business strategies, planners divide the market into different segments
to ease their research and make the most relevant orientation and strategy for their products and
development goals.
Vinamilk offers quality products, filled with nutrient products for the health of its customers. They
don't have to worry too much about using Vinamilk's products. Vinamilk works for all people of all
ages, which is a very important competitive advantage of Vinamilk.

VUON CAO VIET NAM 20

Vinamilk's product lines are mostly developed for children and teenagers because they have a large
demand for milk and the consumption of dairy products is the largest. Vinamilk divides target
customers into two groups:

Individual customer group: those who are in need and are willing to pay for special milk powder
products with children from 6 months old. Or the families that have children who are in high school or
middle school who are very interested in fresh milk products. These are groups of customers with high
demand for dairy products as children greatly need milk for their development.

Group of organizational customers: distributors, wholesalers, retailers, stores, supermarkets... The

company's desire and willingness to distribute powdered milk products and there are teams that require
a discount, sales bonus, order on schedule, and related to product distribution.

3. MARKET POSITIONING

Market positioning is the process of bringing its product with superior characteristics, features, and
distinct from its competitor to the consumer. Provide powerful support in the marketing of
products/services that have their own identities, creating reliability for users.

When positioning the market targeting, it is noted to clarify the 4P value in marketing to ensure a more
efficient positioning strategy. It's The Promotion - Price - Place – Product.

Properties, product benefits: The dairy products of Vinamilk are all quality products, extracted from
cows that are cared for by specialists in the blue fields. As quality and affordable, Vinamilk's items are
well-suited and meet all consumer needs.

Brand values: In Vietnam, according to a 2020 report, Vinamilk's CRP point led the rankings and
made Vinamilk the most purchased brand by Vietnamese consumers for eight consecutive years.

Competitor: In terms of the dairy market in Vietnam, Vinamilk is the most widely trusted brand. In
Taiwan, however, Vinamilk has to compete with many other milk firms because Taiwan has imported
milk from other countries, such as the United States or Canada, and is believed to be used by its
residents. But Vietnamese Vinamilk still has a competitive advantage in terms of geographical
distance, the entry of raw materials from Vietnam through Taiwan is still more convenient from the
U.S. or Canada, which contributes to the quality being better because of the low use of preservative.

VUON CAO VIET NAM 21

4P PLAN
1. PLACE
Management and construction of distribution system
Vinamilk now has two distribution channels:
Distribution through traditional channels (220 independent distributors and more than 140,000 retail
locations) and distribution of more than 80% of the company's output.
Distribution through current channels (supermarket, Metro): Benefit of Vinamilk through a system of
dairy plants that are elongated in many localities throughout the country. With 1,400 vendors
offering as a nationwide mussels distribution network with 5,000 agents and 140,000 retail locations
operating Vinamilk products as well as other direct distribution channels such as head school,
hospital, and supermarket. Changes to the repaired product, when the cost of raw materials is high,
dairy firms have prints that customers still have to accept.
So Vinamilk is able to shift the disadvantages from an external supplier side to a customer.
Building a distribution network
To support its distribution network, Vinamilk can open product showrooms at large stores in major
cities and areas of Taiwan's local population.
Taiwan has a crowded supermarket and department store, so it is not difficult for Vinamilk to sell
his products to the people. Refrigerators, refrigerators, and refrigerators are also invested in
expanding the yogurt group's growth needs if Vinamilk wants to expand its branch in Taiwan.
Vinamilk plans to add marketing campaigns and develop more sales points. In addition to internal
distribution networks, the company has official distributors in the United States and Europe. And
Thailand. In the future, it will continue to establish distribution networks in Taiwan and various
neighboring countries.
Some distribution network restrictions
The agency system is one of the great advantages of Vinamilk against its competitors, but good
management of these agents, especially in small remote provinces, poses a huge challenge for
Vinamilk.
+ Limited in transport: The milk transport regulations are loaded with a maximum of 8 barrels, but
many retail distribution agents of Vinamilk milk load up to 15 punches, followed by loading and
unloading, toppling with damage to the packaging.
+ Storage restrictions: Vinamilk's cold products regulation must be kept for 45 days at temperatures
below 6 ° C and 15 ° C for 20 days. At normal temperatures (30 to 37 degrees C), two or three days
of milk will be sour. Vinamilk's market is very large and encompasses the country, so the
management and supervision also point to distributors, major and prestigious agencies. As for the
grocery counters and small, retail distributors below, "Vinamilk does not have enough manpower to
supervise. Meanwhile, Vinamilk only is responsible for shipping to general dealers, while
distribution to subordinates "is primarily by motorbikes or element cars without refrigeration so
quality assurance is left open. Thus, from shipment to the packaging of Vinamilk milk, but the
manufacturer does not have a new draft to change the status quo, which affects a lot of credibility
and confidence in the manufacturer.

VUON CAO VIET NAM 22

2. PRICE
"Low Cost" strategy
The low-cost strategy is familiar to many businesses and is also one of the pricing strategies adopted
by Vinamilk when exporting to a majority of its foreign markets. Therefore, for Taiwan, our team
plans to continue using this strategy due to its proven effectiveness.
When applying the low-cost strategy, we pursue a better price offering for customers compared to
competitors'. In the context of the dairy market in Taiwan, there is an intense competition by over 40
businesses and hundreds of dairy brands of various types of local and multinational corporations,
From our researches, we find that Vinamilk produces products at a lower cost than most companies
currently in the market. Vinamilk remained steadfast in the stormy market. The most obvious effect
is that the brand's market share has gradually increased from 17% to 25-50% of the country's market
share. The main products are fresh milk, milk powder, condensed milk, yogurt, ice cream, cheese,
and so on.
Vinamilk is very careful with the rise in the price of products as this greatly affects the ability of
consumers in the Vietnamese context of income to less than many countries in the world. By cutting
possible costs, re-branding, good control of the retail points so that sales are not dependent on the
points of sale, the company has saved many of the promotional costs. The phenomena of hugging,
unloading, price competition, geographically, thanks to the trading promotion advantages of the
major agents that have been addressed.
This strategy not only increases the efficiency of the company but also stabilizes prices and brings
practical benefits to consumers. Vietnamese price dairy products are delivered to Vietnamese
consumers. Through retail points, Vinamilk also quickly captures consumer feedback to change,
"Focusing on differentiation"
Focusing on differentiation is one of the fundamental contents of competing strategies. It is also
Vinamilk's pricing strategy.
With a long history of presence in the Vietnamese market, Vinamilk is very knowledgeable about
consumer trends. This contributes to Vinamilk's implementation of a focus strategy based on
differentiation. Striving to develop different products for market segments by analyzing, exploring
the geographical elements, customer objects, or product properties that implement a focused
strategy, Vinamilk has focused on designing new and appropriate packaging patterns. In addition, the
focus on improving product quality, diversifying commodity categories, researching more new
product lines to meet consumer demand, limiting the risk to the business. Media power was also
utilized by Vinamilk.
The diversity of products represented by the company having over 200 dairy products such as
condensed milk, powdered milk, nutrient powdered milk, fresh milk, sour milk, etc. Beverage
products were also emphasized for products such as soy milk, juice, coffee, cake. By improving
manufacturing technology, in conjunction with nutrition institutions, Vinamilk succeeded in creating
consumer confidence. A great example of this was in 2007 when Milk Kid became one of the fastest-
selling market Milk products.
The price strategy of Vinamilk is frequently changed to fit the market context. Thus, Vinamilk has
remained a pioneer in the field of milk processing and production for many years in a row and has
become one of the top ten brands in Vietnam.

VUON CAO VIET NAM 23

3. PRODUCT

Vinamilk provides a wide range of nutritious yogurt types such as: eating yogurt, UHT drinking yogurt
and Yogurt for Yeast Infection. These products are suitable for people coming from different age groups
and are divided into brands: Vinamilk yogurt, Vinamilk Beauty yogurt, Vinamilk Probi yogurt, Vinamilk
Probeauty, Vinamilk Susu and Vinamilk Drinking yogurt. In each brand, Vinamilk produces many flavors
with high nutrients so that customers feel free to choose. Vinamilk also divides its products into various
purposes with a reasonable price based on the average income. For eating yogurt, most of them are packed
with a group of 4 cups of 100 grams of yogurt and it stands for 4 people in a family. According to the
statistics, the product sale of yogurt made up 73% of the yogurt sale in the market in 2018.

4. PROMOTION

Vinamilk plans to promote products in separate places such as supermarkets, convenience stores or other
places to help Taiwanese citizens recognize the brand. Furthermore, we also conduct promotion strategies
in other places to expand brand awareness. To be more specific, we would do some free samples in places
that easily attract people’s attention like schools, amusement parks or hospitals. By doing this, people will
gradually know Vinamilk and consider using them. On top of that, Vinamilk intends to do some TV
commercials by inviting popular Taiwanese stars who have a huge impact so that it could draw the
attention of the fans. We also put some billboards on the road so it could help leave an impression on their
mind.

VUON CAO VIET NAM 24

FINANCE PLANNING

We made this table by estimating the first year's revenue in Taiwan to be quite small, only
1/50th of Vinamilk's current total export revenue. In the next year - 2023, revenues and profits
increase marginally, around 1.05% as we anticipate that marketing strategies are not yet
widespread to engage people, and the impact of COVID-19 may still exist. In the third year -
2024, we estimate a 1.2% increase in profit as the brand is now starting to gain ground and
have a place in the minds of Taiwanese consumers.

VUON CAO VIET NAM 25

SUCCESS MEASUREMENT

Vinamilk will succeed when profits increase according to the diagram. That index needs to
gain 1.2% in the third year and keep that momentum going.

VUON CAO VIET NAM 26

REFERENCES
CAS Media, 2020. Tầm quan trọng của sữa - Thực phẩm không thể thiếu của mọi độ tuổi. [online]
SỮA HOÀNG YẾN. Available at: <https://suahoangyen.vn/tam-quan-trong-cua-sua> [Accessed 17
June 2021].
Team Keventer, 2019. Importance Of Milk In Everyday Life | Keventer. [online] Keventer.com.
Available at: <https://www.keventer.com/blogs/importance-of-milk-in-everyday-life/> [Accessed 17
June 2021].
Hằng Trần (TTXVN/Vietnam+), 2019. Triển vọng phát triển cho ngành công nghiệp chế biến sữa Việt
Nam | Kinh doanh | Vietnam+ (VietnamPlus). [online] VietnamPlus. Available at:
<https://www.vietnamplus.vn/trien-vong-phat-trien-cho-nganh-cong-nghiep-che-bien-sua-viet-
nam/613333.vnp> [Accessed 17 June 2021].
www.distancefromto.net. (n.d.). Distance from Vietnam to Taiwan. [online] Available at:
https://www.distancefromto.net/distance-from-vietnam-to-taiwan [Accessed 25 Jun. 2021].
Taiwan - Climate. (2019). In: Encyclopædia Britannica. [online] Available at:
https://www.britannica.com/place/Taiwan/Climate.
www.worldometers.info. (n.d.). Taiwan Population (2021) - Worldometer. [online] Available at:
https://www.worldometers.info/world-population/taiwan-
population/#:~:text=Taiwan%20population%20is%20equivalent%20to [Accessed 25 Jun. 2021].
focustaiwan.tw. (n.d.). Taiwan to increase funding in hope of boosting sagging birth rates - Focus
Taiwan. [online] Available at: https://focustaiwan.tw/politics/202104270007.
www.taipeitimes.com. (2019). A milklover’s guide to Taiwanese milk - Taipei Times. [online]
Available at: http://www.taipeitimes.com/News/feat/archives/2019/08/24/2003721022 [Accessed 25
Jun. 2021].
focustaiwan.tw. (n.d.). Democracy Index ranks Taiwan top in Asia, 11th globally - Focus Taiwan.
[online] Available at: https://focustaiwan.tw/politics/202102030014.
Hale, E. (2021). Is China really about to invade Taiwan? [online] www.aljazeera.com. Available at:
https://www.aljazeera.com/news/2021/4/14/is-there-really-a-risk-that-china-will-go-to-war-with-
taiwan.
Ministry of Foreign Affairs (2019). History. Government Portal of Republic of China, Taiwan. [online]
Available at: https://www.taiwan.gov.tw/content_3.php.
Office, A.E. (2020). Taiwan Economy - GDP, Growth, Investments I Asiafundmanagers.com. [online]
AsiaFundManagers.com. Available at: https://www.asiafundmanagers.com/int/taiwan-economy/.
Lee, Y.N. (2021). Asia’s top-performing economy in 2020 could grow even faster this year. [online]
CNBC. Available at: https://www.cnbc.com/2021/02/23/taiwan-asias-top-performing-economy-in-
2020-could-grow-faster-in-2021.html.
Council, N.D. (2015). National Development Council. [online] 國發會全球資訊網(英⽂網). Available
at: https://www.ndc.gov.tw/en/nc_8455_32199.
howtoexportimport.com. (n.d.). Export Registration process in Taiwan. [online] Available at:
https://howtoexportimport.com/Export-Registration-process-in-Taiwan-9489.aspx [Accessed 25 Jun.
2021].
foodnavigator-asia.com (n.d.). Wary of dairy: Taiwan steps up regulations for all milk and related
product imports. [online] foodnavigator-asia.com. Available at: https://www.foodnavigator-
asia.com/Article/2020/03/11/Wary-of-dairy-Taiwan-steps-up-regulations-for-all-milk-and-related-
product-imports# [Accessed 25 Jun. 2021].

VUON CAO VIET NAM 27