Analysis and Forecast of Building Business strategies Rice ...€¦ · rice export business more...

Department of Business Administration

I-Shou University

Master Thesis

Analysis and Forecast of Building Business strategies Rice Vinh Long Import

- Export Joint Stock Company period 2014 - 2020

Advisor: Dr. Chun-I Chen

Dr. Ho Sy Tan

Graduate Student: Nguyen Kien Nghiep

July 2014

i

Acknowledgements

First of all, I would like to thank the teaching staff of I-Shou University for dedicated,

enthusiastic help and knowledge impartation during my study process to solve this topic for

graduate thesis

Especially, I am grateful to Dr. Chun - I Chen from I-Shou University and Dr. Ho Sy

Tan from the Vietnam University of Electricity, who are always dedicated, taking time to

teach, provide information and guidance for me to complete my thesis

Finally, I wish all teachers have plenty of heath, success and happiness.

WISH ALL THE BEST FOR YOU!

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Abstract

When Vietnam became a member of the World Trade Organization (WTO) in 2007,

many countries and regions all over the world have to import goods from Vietnam mainly of

rice. In the trend of globalization, businesses must integrate into the world economy with very

fierce competition and many great challenges in operating their business.Therefore,

businesses must constantly strive to change to suit the growing trend to affirm his reputation

on the domestic market and international.

It is the leading exporter of the province Vinh Long Import - Export Joint Stock

Company (IMEX CUU LONG), it is the state-owned enterprises (51% of the state capital)

under the People's Committee of Vinh Long Province, specializes in buying sale of food,

agricultural raw materials, semi-processed agricultural products (plates, bran); husking rice,

polished rice and export agents, export trustee for other companies needs. Since its inception

it has played a big part in the economic development of the local society and the business is

certified as eligible enterprises engaged in export of rice under Decree 109 government.

Therefore, it is necessary to study and recommend solutions to build forecasting strategies

rice export business more effectively in the future.This is reasons that I decided to study

"Analysis and forecast of building business strategies rice Vinh Long Import - Export

Joint Stock Company Period 2014 -2020".

Research methods began collecting data (secondary) Vietnam's rice exports and

company about types, rice exports turnover from 2008 to 2013. Then conducted data analysis

(secondary):

-Using method of comparing the relative, absolute for comparison, compare types and

rice exports company over the years.

- Using the rate histograms showing the structure of exported rice varieties through the

years

- Analysis of the current situation clearly assess Vietnam's rice exports in the current

period

- Provide orientation perspective SWOT: strengths, weaknesses, opportunities and

threats of company

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Application of Grey theory models and we proposed Nonlinear Grey Bernoulli

Model (NGBM) to Improve the linear model to nonlinear one. The NGBM be applied to

forecast rice exports for next year.

After analysis we found GM (1,1) with 5 data, n = 0 has Average Relative Percentage

Error (%) is 1.41% and NGBM data with n = 5 data, n= - 0.18 average relative error (%)

0.64% is optimal and we use the GM (1,1) to forecast rice production for export next

year.Obtained results will be useful for planning the marketing strategy of company in the

future.

Keywords: Grey system theory, nonlinear grey Bernoulli model, GM(1,1), rice

forecasting.

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Table of Contents

Acknowledgements .............................................................................. i

Abstract ............................................................................................... ii

Table of Contents ............................................................................... iv

List of Tables ..................................................................................... vii

List of Figures .................................................................................. viii

List of Abbreviations ......................................................................... ix

Chapter 1 INTRODUCTION ............................................................ 1

1.1 Research background and motivation....................................................... 1

1.2 Research purposes .................................................................................... 2

1.2.1 General Purpose ................................................................................................... 2

1.2.2 Specific Purposes ................................................................................................. 2

1.3 Research significance ............................................................................... 2

1.4 Scope of research ...................................................................................... 3

1.5 Research flow chart .................................................................................. 3

Chapter 2 LITERATURE REVIEWS AND RESEARCH

MODEL OF RICE EXPORT ............................................................ 4

2.1 Characteristics of Vinh Long ................................................................... 4

2.2 The situation of rice exports in Vietnam in the period of 2008 - 2013 .... 4

2.2.1 The global rice market .......................................................................................... 4

2.2.2 The situation of rice exports in Vietnam in 2008-2013 ....................................... 6

2.3 Analysis of the competitiveness of Vietnam's rice exports .................... 15

2.4 Introduction about Vinh Long Import– Export Joint Stock Company ... 18

2.4.1 The development process ................................................................................... 18

v

2.4.2 Lines of business ................................................................................................ 18

2.4.3 Charter capital and shareholder structure in 2013 .............................................. 19

2.4.4 Organizational Structure .................................................................................... 19

2.4.5 Company image .................................................................................................. 20

2.4.6 Achievements ..................................................................................................... 21

2.5 Analysis of strategies of rice business and exports of Imexcuulong (2008

- 2013) ............................................................................................................. 22

2.5.1 Exported rice is mainly ...................................................................................... 22

2.5.2 Prices of exported rice from 2008 to 2013 ......................................................... 23

2.5.3 Main rice export markets of Imexcuulong ........................................................ 25

2.5.4 Forms of export of Imexcuulong ....................................................................... 26

2.5.5 Business situation of the Company in the period of 2008- 2013 ....................... 27

2.6 Analysis of competitiveness in rice export activities at Imexcuulong ... 28

2.6.1 Current status of rice exports in Vinh Long Province ........................................ 28

2.6.2 Competitiveness Analysis of Telecommunication companies ........................... 29

2.6.3 Foreign competitors ............................................................................................ 32

2.6.4 Analysis of strengths and weaknesses of Imexcuulong .................................... 34

2.6.4.1 Major strengths - weaknesses ..................................................................... 34

2.6.4.2 Major opportunities - threats ....................................................................... 35

2.7 Forecasting method: ................................................................................ 35

2.7.1 The concept: ....................................................................................................... 35

2.7.2 Characteristics of forecasting ............................................................................. 36

2.7.3 Forecasting methods ........................................................................................... 36

2.7.3.1 Qualitative forecasting method ................................................................... 36

2.7.3.2 Quantitative forecasting method ................................................................. 38

2.8 Grey theory ............................................................................................. 39

2.8.1 History of Grey theory ....................................................................................... 39

2.8.2 Recent progress of Grey System Theory. ........................................................... 40

2.9 Current research in forecasting of rice exports ....................................... 42

vi

Chapter 3 RESEARCH METHODOLOGY ................................. 44

3.1 Grey Forecasting Model ......................................................................... 44

3.1.1 Traditional grey model GM (1,1) ....................................................................... 44

3.1.2 Novel nonlinear grey Bernoulli model NGBM (1,1) ..................................... 47

3.2 Error analysis .......................................................................................... 48

3.3 Relative percentage error analysis .......................................................... 48

3.4 Topological rolling error analysis ........................................................... 49

3.5 Numerical Examples ............................................................................... 49

3.5.1 GM(1,1) with 4 data and 5 data .......................................................................... 50

3.5.1.1 GM(1,1) with 4 data………………………………………………………50

3.5.1.2 GM(1,1) with 5 data .................................................................................... 52

3.5.2 NGBM with 4 data ............................................................................................ 52

3.5.3 Rolling NGBM with 4 data ................................................................................ 54

Chapter 4 PRACTICAL CASE AND ANALYSIS ........................ 55

4.1 Data collecting ........................................................................................ 55

4.2 Results of forecast and analysis .............................................................. 55

4.2.1 GM (1,1) with 5 data .......................................................................................... 55

4.2.2 NGBM with 5 data ............................................................................................. 57

Chapter 5 CONCLUSION AND RECOMMENDATIONS ......... 60

5.1 Conclusions ............................................................................................. 60

5.2 Suggestions ............................................................................................. 60

References ......................................................................................... 63

vii

List of Tables

Table 2.1 Ten leading rice exporters - importers in the world in 2011 ...................................... 5

Table 2.2 Ten leading rice exporters in the world ...................................................................... 6

Table 2.3 Quantity and turnover of Vietnam’s rice exports (2008 – 2013 ) ....................... 13

Table 2.4 Prices of Vietnam’s rice exports in the period of 2008 - 2013 ................................ 13

Table 2.5 Price comparison of rice exports among countries .................................................. 15

Table 2.6 Standards for Vietnam's exported rice ..................................................................... 23

Table 2.7 Prices of exported rice of the Company in the period of 2008- 2013 .................... 24

Table 2.8 The fluctuation of rice outputs for export to the Company's main markets in the

period of 2008 - 2013 ............................................................................................................... 25

Table 2.9 Outputs of exported rice under forms of export of the Company in the period of

2008 – 2013 .............................................................................................................................. 27

Table 2.10 Business results of the Company in the period of 2008- 2010 ............................. 27

Table 2.11 Product structure and value of exported rice from 2011 to 2013 ........................... 28

Table 3.1 Rice exports from 2008 – 2013 ................................................................................ 50

Table 3.2 Forecasting results and errors by using GM(1,1) with 4 data .................................. 51

Table 3.3 Forecasting results and errors by using GM(1,1) with 5 data .................................. 52

Table 3.4 Error analysis of forecasting and rice exports from 2013 to 2016 by NGBM with 4

data (optimun n = -0.26) ........................................................................................................... 54

Table 4.1 Forecasting demands for rice exports ...................................................................... 55

Table 4.2 Forecasting demands for rice exports and the average error in GM(1,1) ................ 56

Table 4.3 Forecasting demands for rice exports and the average error. Errors in NGBM

(optimun n = -0,18) .................................................................................................................. 57

viii

List of Figures

Figure 1.1 Research Flow Chart ................................................................................................. 3

Figure 2.1 Top 10 largest rice import markets from Vietnam in 2008 ..................................... 7

Figure 2.2 Top 10 largest rice import markets from Vietnam in 2009 ...................................... 8

Figure 2.3 Top 10 largest rice import markets from Vietnam in 2010 ...................................... 9

Figure 2.4 Top 10 largest rice import markets from Vietnam in 2011 .................................... 10



Figure 2.7 Types of exported rice in 2013 ............................................................................... 14

Figure 2.8 Markets of rice exports in 2013 .............................................................................. 14

Figure 2.9 Market share of rice exports in Vinh Long province as of September 2013 .......... 29

Figure 4.1 Forecasting demands for rice exports and the average error in GM(1,1) ............... 57

Figure 4.2 Forecasting demands for rice exports and the average error. Errors in NGBM ..... 59

ix

List of Abbreviations

WTO : The World Trade Organization

FAO :Food and Agriculture Organization of the United Nations

NGBM : Nonlinear Grey Bernoulli Model

GM : The grey model

AGO : Accumulated Generating Operation

IAGO : Inverse Accumulated Generating Operation

SWOT :Strengths, Weaknesses, Opportunities andThreats

VN : Vietnam

VNĐ : Vietnam money

IMEXCUULONG : Vinh Long Import & Export Joint Stock Company

Eq : equation

LSM : Least Square Method

1

Chapter1 INTRODUCTION

1.1 Research background and motivation

Today, economic conditions are changing strongly, the process of globalization is

taking place rapidly in both depth and width and affecting most countries in the world.

Therefore, forecast is very important in range. All government departments have a statistical

analysis of economic data.. Planners can use these data to forecast future trends for the

economy to develop and to help them make decision.However, the sampled data is incomplete

or fewer samples, lack of information and experience, which transforms the system affected

by elements known and unknownsuch as: in business, techniques, marketing and weather …

So, scientists and economists forecast that using the information system limits and causes

difficulty in making decision. Grey System Theory proposed by Julong Deng Xiaoping

provides an efficient method to handle uncertain systems, to find developed law and to

establish corresponding forecast models. Thus, the theory has become quite popular with his

ability to deal with systems with unknown parameters section. As an advantage for the model

to count normally, Grey theory models only require a limited amount of data to estimate the

behavior of unknown systems

In two decades, Grey theory was developed quickly and attracted attention of many

researchers. It has been applied widely and successfully in various systems such as sociology,

economics, finance, science and technology, agriculture - chemistry, industry, transportation,

mechanics, meteorology, logical ecology, hydrology, geology, medical, military and so on.

Considering the complexity and uncertainty of the factors affecting the development of the

exporting market of Vietnam, forecasting demand on rice exports market can be regarded as a

Grey system with unknown and known information. Thus, we will analyze the Grey theory

system to forecast business strategies of IMEXCUULONG in the period of 2014 -2020.

In this thesis, we will apply the Grey forecasting model as a research tool to analyze

and forecast business strategy of rice exports at IMEXCUULONG in the period of 2014 -

2020 under GM (1, 1) and NGBM (1.1) used to compare, evaluate forecasts and propose for

following years.

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1.2 Research purposes

1.2.1 General Purpose

Food commodities in general and rice in particular have special significance for human

life. Other hand, rice production is related to agriculture, rural,farmers, a sensitive area and

plays a very important role for the economy of many countries around the world. Moreover,

rice is one of the important comparative advantages of Vietnam. In the condition trade

liberalization, boosting rice production and exports will contribute to exploit comparative

advantages for economic development, political stability – social.

In Vietnam, over the years, rice production and export has achieved many important

accomplishments. Rice exports have become one of the major export items of Vietnam.

Contribute to the overall achievement including the production and export of rice in the

Mekong River Delta provinces, which has IMEXCUULONG. It is a major supplier of rice for

export markets of Vinh Long. Beside, it not only improve product quality but also meet the

needs of customers domestic and international

1.2.2 Specific Purposes

- Situation analysis of rice exporters of Vietnam in 2008 – 2013

- Situation analysis of the rice export activities of the IMEXCUULONGin 2008 – 2013

- Analyze the competitiveness of rice export activities of the company

- Application of Grey theory and Nonlinear Grey Bernoulli model for forecasting rice

production for export period 2014 - 2020 and give some solutions to improve operational

efficiency for its rice exports in the near future.

1.3 Research significance

At present, Vietnam's rice exports tend to increase in volume, but the export of rice

IMEXCUULONG to other countries still face many challenges. For research, we build GM

(1,1) and NBGM (1.1) and analysis Error analysis is based on the data being processed.

Therefore the subject is meant to help businesses may see again all the aspects related to rice

export volume of the company, so that might make a better strategy for the future about this

staples, it not only for the purpose of bringing revenue and prestige for the company but also

contributes to enhance brand reputation Vietnam Rice, contributing to the enrichment of the

country of Vietnam

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1.4 Scope of research

- Situation Analys is of the rice export company in 2008 – 2013 and give somesolutions

to improve the yield and quality of rice exports.

- Forecast strategic business rice exports in IMEXCUULONG period 2014 - 2020.

1.5 Research flow chart

Firstly, we will research, identify the topic, update data from rice export markets of

Vietnam in countries around the world and collect data to report export outputs of the

company over time from 2008 to 2013. Then, we use GM (1,1) andNGBM (1.1); results will

compare their performance in forecasting the outputs of demand on rice exports in the period

of 2013 - 2018. Finally, we will decide which forecast has better precision.

Figure 1.1 Research Flow Chart

Literature Review

Research Topic

Data collecting

Suggestion to the company

Screen the Collected Data and

Choose the Appropriate Datafor Forecasting

Build GM(1,1) and NGBM( 1,1 )

Forecasting Model

Analyze the Forecasting resultsandExplain

Their Meaning inManagement

4

Chapter 2 LITERATURE REVIEWS AND RESEARCH

MODEL OF RICE EXPORT

2.1 Characteristics of Vinh Long

Vinh Long is a province located in Mekong Delta, 135 km distant from Ho Chi Minh

City and 33km distan tfrom Can Tho city to the South along

1A Highway. It has a natural area of 1,479 km2, 01 city

named Vinh Long, 07 districts (Binh Minh Town, Long Ho

District, Mang Thit District, Tra On District, Tam Binh

District, Vung Liem District and Binh Tan District) with

107 communes, wards and townships and townships and 846

clusters and hamlets). It is adjacent to Tien Giang province to

the North, Eastern adjacent to Ben Tre, bordering Tra Vinh

Province to the South, adjacent to Can Tho city to the west, adjacent to Dong Thap Province

to the Northwest, adjacent to Hau Giang and Soc Trang provinces to the Southwest.

Vinh Long has no mountains, basin topography in the center and higher toward the

North, Northeast and Southeast. Vinh Long is located between Tien and Hau rivers flowing

into the East Sea with the system of crisscrossed rivers and canals convenient for water

transport. It has mild climate, fertile land and located in tropical climates, there are two

distinct seasons: rainy and dry seasons. Its average annual of rain is 1400-1450 mm,

extending from April to November, the temperature is relatively high and stable, the average

temperature is 270C and the average moisture is 79.8% that are favorable for rice agricultural

development in the direction of multi and intensive cultivations. (Source: vinhlong.gov.vn)

2.2 The situation of rice exports in Vietnam in the period of2008-2013

2.2.1 The global rice market

In terms of consumption, rice is the staple food of about 55 % of the world's population

widely distributing from Asia to Africa and South America. In addition, although countries in

Europe and North America only uses rice as food additives, the consumed volume is also up

to millions of tons per year. Regarding the production, Asia accounts for over 90 % of the

world's rice outputs. According to calculations and forecasts of FAPRI (Food and Agricultural

Policy Research Institute) , the global outputs of rice production and consumption in the crop

MY THUAN Bridge

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year of 2009-2010 would be approximately 436 million tons and increase to around 477

million tons in the crop year of 2019-2020. Besides, the issue of food security has bound

nations for regular rice reserves in large amount (ranging from 90-96 million tons). On that

basis, the volume of two -way trade of rice on the world market often accounts for 7 - 8.5 %

Compared to the yearly outputs of rice production and consumption (over 31 million

tons in 2010 and forecasted to increase by more than 41 million tons in 2020). Joining the

global rice market has 3 groups of countries as follows:

Group 1 isin excess and regularly export, including Thailand, Vietnam, Myanmar,

Cambodia, Pakistan and the United States …

Group2 islack of rice and regularly import, including Indoniesia, Philippines,

Malaysia, Iran, Iraq, Saudi Arabia, Nigeria and other African countries, some EU countries

InGroup 3, India and China are in particular, with the dominant level about 50% of

the world's rice production, consumption and reserves. Basically, two countries with the

largest population of the world can afford for food self-sufficiency and are regular net

exporters of rice; however, they also have strong ability to disrupt the world rice market due

to sudden increase in export outputs (when reversing the stockpile of food security &

insurance) or sudden increase in import outputs (when having bad harvest, it must buy to

supplement for the stockpile of food security & insurance).

According to the data of 10 countries leading in rice export & import in the world

(Table 1), regardless of sharply disturbed periods of the world rice market beacause of

Chinese and Indian sudden increase in the volume of export or import as mentioned above,

we can see the distribution of rice import markets is not too concentrated (10 largest

importing countries account for less than 50%). On the other hand, the supply of rice exports

is very concentrated (10 largest exporting countries account for more than 97%, particularly, 3

leading rice exporters, including Thailand, Vietnam and India account for a high proportion).

Table 2.1 Ten leading rice exporters - importers in the world in 2011

Exporters Million tons Importers Million tons

1. Thailand 10,64 1. Indonesia 3,09

2. Vietnam 7,00 2. Nigeria 2,55

3. India 4,63 3. Iran 1,87

4. Pakistan 3,41 4. Bangladesh 1,48

6

(Source:http://vinanet.vn/ )

Besides, demand on rice import of Latin American countries, namely Brazil,

Colombia, Peru Cuban, Caribbean and EU region is also forecasted to increase in 6%, by 3.7

million tons and 10.5 million tons in Africa in 2012. In Europe, the rice import of 27 EU

countries is forecasted to be about 1.3 million tons, increasing by 8% over 2011. According to

FAO, rice business in 2011 reached about 34.3 million tons (more 1 million tons than the

previous forecast), increased by 9% compared to 2010. This increase is the result following

the strong import demand, which is mainly in Asia (Bangladesh, China, Indonesia and Iran)

and Africa (Nigeria, Ivory Coast and so on)

However, 10 leading rice exporters in the world such as Thailand, Vietnam and India

usually vary by year as in Table 2, in 2012, India replaced Thailand to be the 1st rice exporter

Table 2.2 Ten leading rice exporters in the world

Unit: Million tons

No. Countries Export in

2012 No. Countries

Export in

2012

1 India 8,0 6 Uruguay 0,85

2 Vietnam 7,72 7 Cambodia 0,8

3 Thailand 7,5 8 Argentina 0,65

4 Pakistan 3,75 9 Myanmar 0,6

5 Brazil 0,9 10 China 0,48

(Source: http://www.ngheandost.gov.vn/journalDetail/)

2.2.2 The situation of rice exports in Vietnam in 2008-2013

* In 2008: 2008 is considered as the year most successful in rice exports of Vietnam

in this period. If in 2007, Vietnamese rice was exported to more than 70 countries and

territories, in 2008, this figure increased by 128 countries and territories. In 2008, the export

5. Brazil 1,29 5. EU-27 1,47

6. Cambodia 0,86 6. Philippines 1,20

7. Uruguay 0,84 7. Malaysia 1,07

8. Myanmar 0,77 8. Saudi Arabia 1,05

9. Argentina 0,73 9. Iraq 1,03

10. China 0,48 10. Ivory Coast 0,93

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totaled 4,424 thousand tons in quantity and 2,758 million USD in value. In the top of 10

markets with largest export turnover in 2008 (accounting for 71.4 % of total export turnover

of rice) of Vietnam: Philippines (reaching 1,086 million USD and 1,475 thousand tons,

accounting for 39.4 % in value and 33.3 % in quantity) ; Cuba (reaching 410.6 million USD

and 489 thousand tons, making up 15 % in value and 11.1 % in quantity) ; Malaysia (reaching

263 million USD and 460 thousand tons, accounting for 9.6 % in value and 10.4 % in

quantity) ; Angola (reaching 119.3 million USD and 205 thousand tons, making up 4.3 % in

value and 4.6 % in quantity); Senegal (reaching 90.5 million USD and 204 thousand tons,

accounting for 3.3 % in quantity and 4.6 % in value).

Figure 2.1 Top 10 largest rice import markets from Vietnam in 2008

(Source: http://www.isgmard.org.vn/ )

* In 2009: Thanks to proactive in domestic supply and favorable opportunities from

the world market, Vietnam's rice exports in 2009 gained remarkable achievements that

Vietnam was the second largest rice exporter after Thailand on the table of overall ranking

rice exporters in the world. According to the Vietnam Food Import and Export Association

(VFA), the rice exports in 2009 reached 5,859 million tons, a record ever. Compared to 2008,

the rice exports increased by 26.23% in quantity, equal to 1.23 million tons.

8


( Source: http://www.vinanet.com.vn )

* In 2010:The rice exports reached 6.88 million tons in quantity and 3.23 billion USD

in value; generally, Vietnam's rice export market in 2010 did not change much compared to

2009, but there is a change in positions among markets. Philippines was still the largest

market for rice exports of our country with 1.475 thousand tons in quantity, worth nearly 947

million USD, reducing 13.59% in quantity and increasing by 3.29% in turnover compared to

the same period last year. The following was Singapore with 539,298 tons in quantity,

turnover reached nearly 227 million USD; Taiwan was with 353,143 tons in quantity and

reached the turnover of over 142 million USD.

9


( Source: http://www.vinanet.com.vn/)

* In 2011:The rice exports reached 7.2 million tons in quantity and 3.7 billion USD in

value. Compared to 2010, the rice exports increased by 4.4% in quantity and 14% in value. In

2011, Vietnam was ranked the second after Thailand and beyond the 3rd country, India.

Reasons were: firstly, the Thai government increase domestic purchase price of rice that led

the country's rice export prices to be pushed, so Vietnam's rice exports benefited; secondly,

the flood situation in the last five months in Southeast Asian countries led to short-term

supply to also have a little shortage and thirdly, prices of other cereals (corn, wheat) also

increased.

The rice export market also changed, overcoming the Philippines, Indonesia to

become the leading rice consumption market (accounting for 26.8% of share of the rice export

value and 4 times as much in quantity and in value as 2010), Senegal and China were also two

markets having tremendous growth over the same period last year, approximately 3 times as

much as.

10


( Source: http://vinanet.vn/)

* In 2012:Vietnam's rice exports reached 8.016 million ton, earning 3.67 million USD

(increasing 12.71% in quantity and slightly increasing 0.45% in turnover compared to 2011).

China is the largest consumption market of Vietnamese rice with 2.09 million tons, equivalent

to 898.43 million USD, accounting for 24.46% of total turnover, sharply increasing 574.97%

in quantity and 459.11 % in turnover compared to the previous year. The 2nd largest market is

the Philippines reached 1.11 million tons, worthing 475.26 million USD, accounting for

12.94% of total turnover, increasing 14% in quantity but decreasing 0.22% in turnover;

following, Indonesia reached 929, 905 tons, worthing 458.39 million USD, accounting for

12.48% of total turnover, decreasing 50.62% in volume and 55% in turnover; exported to

Malaysia with 764, 692 tons worthing 403.16 million USD, accounting for 10.98%,

decreasing 44.16% in quantity and increasing 38.02% in turnover.

In 2012, Vietnam was ranked the second after India (even there was a point of time

Vietnam was ranked the 1st). So, from a major food importer, Vietnam has become one of the

world's leading rice exporters.

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( Source: http://www.vinanet.com.vn/)

*In 2013:Vietnam exported nearly 6.6 million tons of rice, decreasing by up to 1.4

million tons of rice (i.e. decreasing by 17.76%) compared to 2012, the turnover reached

nearly 2.93 billion USD, decreasing by 20.36%, this is the lowest export level in the last 3

years. With this result, Vietnam was ranked the third after Thailand and India on the table of

the world's rice exporters; Vietnam's decrease in rice exports was due to high competition

pressure and decrease in demand of traditional markets such as Malaysia, the Ivory Coast, the

Philippines and Indonesia.

12


( Source: http://www.tintucnongnghiep.com/)

The above data on tables show that the rice exports have increased both in quantity

and value, particularly in 2009, despite the increase in

quantity, it decreased in value (3.2%) compared with 2008.

This suggests that Vietnam's outputs and rice export markets

are relatively stable.

In 2013, the rice exports fell in quantity (17.7%) and

decreased in value (20.2%) compared with 2012 because

major rice exporters such as India had a bumper harvest and

increase in exporting, Thailand solved the large inventory (13 million tons of rice). On the

other hand, Vietnam's rice has not had focused contracts to keep price, so we are squeezed by

foreign traders. Furthermore, the familiar markets of Vietnam such as Indonesia, Malaysia

decreased in importing. Vietnam's rice was subjected to fierce competition with Thai rice in

export items such as fragrant rice, white rice. The average price of rice also fell more than

13USD/ton.

Overall, regarding the rice consumption on the world market, Vietnam holds the 2nd

and 3rd positions after Thailand and India. Besides, it also suggests that the executive of

business and rice exports should be more flexible to have solutions to suit the actual

conditions, when is necessary to promote the export, when is necessary to restrict to ensure

the domestic food security.

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In terms of outputs, turnover and prices

- In terms of export turnover and outputs:

Table 2.3 Quantity and turnover of Vietnam’s rice exports (2008 – 2013 )

Years

2008 2009 2010 2011 2012 2013

Quantity

(thousand tons) 4,424 5,859 5,878 7,187 8,016 6,681

Turnover

(million USD ) 2,758 2,664 3,229 3,703 3,673 2,930

(Source: data gathered from VINANET)

- In terms of rice exports:

Table 2.4 Prices of Vietnam’s rice exports in the period of 2008 - 2013

Unit: USD/ ton

Targets

2008 2009 2010 2011 2012 2013

Rice with 5% broken 450 460 470 500 428 410

Rice with 10% broken 440 450 - 495 - -

Rice with 15% broken 410 430 460 485 410 383

Rice with 25% broken 390 400 450 470 380 375

Total average 422,5 435 460 487.5 406 389,2

(Source: data gathered from the Vietnam Food Association)

- The structure of Vietnam's rice exports in 2013is expressed as follows:

+ Types of exported rice:High-grade rice(Rice with 5-10% broken) was 2.293

million tons, accounting for 34.32%. Middle-grade rice (Rice with 15-25% broken) was 1.357

million tons, accounting for 20.31%. Lower-grade rice (Rice with 25-50% broken) was

1.151% million tons, accounting for 17.23%. Types of fragrant rice were 990 thousand tons,

accounting for 14.82%. Sticky rice was 434 thousand tons, accounting for 6.50%. Broken rice

was 305 thousand tons, accounting for 4.57%. Parboiling rice was 108 thousand tons,

accounting for 1.62% and other types of rice accounted for 0.64%.

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Figure 2.7 Types of exported rice in 2013

(Source: Final Report of rice exports in 2013 and export orientation in 2014 of the

Vietnam Food Association dated Jan 09, 2014)

+ Markets of rice exports:he export focused on areas such as Asia with 4.019 million

tons, accounting for 60.15%, Africa with 1.872 million tons, accounting for 28.02%, America

with 458 thousand tons, accounting for 6.85%, Europe with 217 thousand tons, accounting for

3.25%, Mideast 65 with thousand tons, accounting for 0.98% and Australia with 50 thousand

tons, accounting for 0.75% of the total export volume.

Main markets included China, Africa, the Philippines, Malaysia, Indonesia, Singapore,

Hong Kong, and Cuba.

Figure 2.8 Markets of rice exports in 2013

(Source: Final Report of rice exports in 2013 and export orientation in 2014 of the

Vietnam Food Association dated Jan 09, 2014)

15

The two tables above show that Vietnam mainly export lower-grade rice, its major

markets are Asia and Africa, markets in Europe and the U.S. are still limited, i.e. rice with 15

-25% broken is mainly. In terms of high-grade rice and markets in America and Europe, high-

grade rice is still limited, in particular, this type of rice is mainly consumed in developed

countries, the added value is brought sharply and Vietnam's rice has not confirmed its place

yet.

Currently, Vietnam has 145 traders issued Certificate of eligible to export rice by the

Ministry of Industry and Trade (up to December 20, 2011). This means they can be involved

in directly exporting rice to foreign countries, including Vinh Long Export-Import Joint Stock

Company. In particular, making up the highest share of rice exports are Northern Food

Corporation and Southern Food Corporation (61%). (Source: Vietnam Food Association)

2.3 Analysis of the competitiveness of Vietnam's rice exports

Thailand, Vietnam, India and Pakistan are usually ranked at the top positions in the

world's important rice exporters. However, in terms of exporting value, up to now, Vietnam

has been nearly ranked the last in this group. For example, according to FAO's data, in 2009,

in terms of the quantity of exported rice, Vietnam was ranked after Thailand, following by

Pakistan and India. However, regarding value, Vietnam was ranked the last when compared

under 1 ton of rice in 2009 as follows: India with 1,083 USD, followed by Pakistan with 704

USD, the third, Thailand with 626 USD and the last, Vietnam with 475 USD for 1 ton of

exported rice. Obviously, value is coupled with the quality, so Vietnam's quality of exported

rice was also the worst among 4 countries. According to some other recent data, the prices of

rice in 2012, according to USDA (U.S. Department of Agriculture), excluding prices of

fragrant rice and types of rice, only white rice with different rates of broken rice, the main

exported product of Vietnam, has prices as follows:

Table 2.5 Price comparison of rice exports among countries

Types of rice Export Price ( USD/ton)

Thailand Vietnam India

Rice with 5% broken 555 428 445

Rice with 10% broken (Thailand)

Rice with 15% broken (Vietnam) 555 410

Rice with 20-25% broken 555 380 385

( Source:http://sokhcn.soctrang.gov.vn )

16

According to the quote above, long, white qualified types of rice of Vietnam are only

sold at the lowest prices compared to the same types of Thailand and India.

In 2013, Vietnam's rice exports were ranked the third after India and Thailand.

Regarding prices, Vietnam’s rice was located in market segment of low-grade rice; thus,

prices are always lower than prices of Thai rice. Regarding export market, Vietnam is under

new competitive pressure from emerging countries Asia and Africa remain two market's

major rice exporters of Viet Nam. Thailand is the country's leading rice exporter in the world

- especially in the segment of premium rice. In fact, many rice exporters in Vietnam are

focused on investment in exporting parboiled rice and fragrant rice. China, HongKong,

Taiwan and Singapore are main customers of these types of rice. In this segment, Vietnam

faces strong competitor, Thailand. Thailand owns strengths of high-grade types of rice and

countries can hardly compete with its fragrant rice. In average, the world's consumption of

fragrant rice is about 2-3 million tons per year, in which, Thailand has exported

approximately 1.5-1.8 million tons. So, Vietnam's enterprises are difficult to squeeze into this

narrow door. Regarding low- grade rice, Vietnam is dominant and the greatest rice exporter in

the world.

However, currently, VN is subject to intense competition in this market segment due

to the strong rising from India, Myanmar, and even Cambodia. If selling with high prices, we

cannot compete with Thailand; on the other hand, if competing with low prices, we face India;

Vietnam's rice is really struggling before the participation of India, this country's rice quality

is not really good but it has price advantage. Regarding prices, India will prevail over

Vietnam.

In recent years, Vietnam's rice exports have gained some notable achievements such

as: continuously increasing volume and export turnover ( in 2012, volume reached 7.72

million tons and turnover reached 3.5 billion USD), continuing to hold the second position in

the world in rice exports, after India. The main export markets of Vietnam in the crop year of

2011/2012 were Asian countries, accounting for 77.7 % of total rice export volume of the

country (equivalent to 6 million tons). Indonesia, Philippines and Malaysia are still the three

traditional import markets. Potential of rice consumption of these markets is still quite large;

however, according to the USDA, in the next few years, rice export volume from Vietnam to

these markets will be narrowed down. Forecast of Vietnam's rice exports to these markets will

continue to grow in the crop year of 2012/13. On the other hand, Vietnam will face the fierce

competition from Thailand, India, Pakistan and Myanmar when exporting rice to China.

17

2003 reached nearly 6.6 million tons, turnover reached nearly 2.93 billion USD,

decreasing by 20.36%, this is the lowest level of exports in the last 3 years. With this result,

Vietnam was ranked the third after India and Thailand on the table of the total rice exporters;

Vietnam's rice exports decreased due to high competitive pressure and decrease in demands of

traditional markets such as Malaysia, Philippines and Indonesia. Poor rice quality and low

export value led the export turnover to be low and certainly, incomes of participants were also

low, especially, farmers producing rice for export. Reasons leading the quality and value of

Vietnam's rice to be low are as follows:

Firstly, Vietnam still has not exported varieties of qualified, delicious, fragrant and

famous like Dao Market's Fragrant Rice, Fragrant Nhen, Tai Nguyen, Red Dust, and Dragon

Blood and so on. In addition, there are also varieties of fragrant / scented rice selected by

scientists to create but have not been exploited for export, for example, OM 3536, OM 4900,

OM 7347, OM 6162, ST 3, ST 5 and MTL 495. Most of our exported fragrant rice is derived

from foreign countries, for examples: Jasmine 85, Khaodak Mali, DS 10 and DS 20, so if

branding, we also face many problems;

Secondly, we have not built brands for white rice and fragrant rice like Thailand,

India, and Pakistan yet. We only have general brand of white, long rice with percentages of

broken rice for both fragrant rice and white rice. So, rice has the poor quality due to mixing

various varieties, including varieties of low quality. Through research, we learned one of the

main reasons for varieties with low quality such as IR 50404 to be still grown with the high

percentage is because traders or plants purchase, mix and mill with varieties of long, white

rice with certain degrees to become rice with 5, 10 ... 25 % broken ( because IR 50404 is

shorter, which is regarded as broken rice). We have not had brand name for each variety like

Thailand, Pakistan and India. Most brand names of rice of these countries are names of

varieties creating special quality for varieties and prices are also decided by the quality of

individual variety;

Thirdly, we have not diversified rice for export, most of which is just middle-grade

white rice, less fragrant rice and little parboiled rice or sticky rice. Meanwhile, Thailand is

diversified in exporting rice with particular brands.

In our opinion, issues are not only to compete to gain the export position, to increase

the value by improving quality and developing export markets for each type of rice with its

own brand of Vietnam is the most important issue to increase the export turnover for our

country, participating businesses and especially to improve farmers' lives, to significantly

18

contribute for our country to overcome the difficult time, to create economic, political and

social stability and to set the premise for the following developments.

2.4 Introduction about Vinh Long Import– Export Joint Stock Company

Full name: VINHLONG IMPORT - EXPORT JOINT STOCK COMPANY

Commercial name: IMEXCUULONG

2.4.1 The development process

The company was formerly known as Mekong Foreign Trade Company established

under Decision No. 439/UBT dated Nov 10, 1976 by the President of People's Committee of

Mekong Province, as the synthetic export & import unit of rice, agricultural products,

handicraft goods, frozen seafood and garments, materials, equipments and machinery and

essential consumables.

Mekong Foreign Trade Company was registered to be re-founded and renamed to

Vinh Long Import and Export Company under Decision No. 540/QD-UBT dated Nov 20,

1992 of the People's Committee of Vinh Long Province.

In 2006, in order to adhere the decision No. 96/2005/QĐ-TTg dated May 06, 2005 by

the Prime Minister on monitoring plans to arrange and reform state-owned companies

belonging to the Vinh Long People’s Committee, Vinh Long Import – Export Company

carried out equitization and was transformed into a joint stock company under the decision

No. 2608/QĐ-UBND dated December 29, 2006 by the Chairman of the Vinh Long People’s

Committee.

On December 01, 2007, Vinh Long Import – Export Joint Stock Company was

officially put into operation under the Certificate of Business Registration No. 1500171478

issued by Business Registration Office – Vinh Long Department of Planning & Investment

2.4.2 Lines of business

-Buying and selling: food, agricultural raw materials,by-products (broken rice,

bran..),replacement parts, and other products, fertilizers, fuel.

-Milling and polishing rice

-As agent, exporting and entrusting for other companies in need

19

2.4.3 Charter capital and shareholder structure in 2013

Objects Number of

shareholders

In amount

(VND)

Number of

shares

Rate

(%)

The State 01 52,816,780,000 5,281,678 53.46

The staff of the Company 33 6,435,080,000 643,508 6.51

External investors 143 39,543,200,000 3,954,320 40.03

Total 177 98,795,060,000 9,879,506 100.00

( Source: Department Finance - Accounting )

2.4.4 Organizational Structure

The company has 124 personnels, including 01 head office, 01 representative office, 05

units of production and processing of all kinds of exported rice.

MEETING OF SHAREHOLDERS

BOARD OF DIRECTORS BOARD OF SUPERVISORS

GENERAL MANAGER

Staff manager

production manager

sales manager

Cai Cam Food

Factory

Tan Quy Tay Food

Factory

Co ChienFood

Factory

Department of

Administration -

Organization

Department of

Planning and

Investment

Department of

Accounting and Finance

HCMC Represen

tative Office

Lap Vo Food

Processing One

Member Co., Ltd

Vinh Trach Food

ProcessingOne

Member Co., Ltd

Direct operation

Inspection and supervision

20

Head office:

- Address: No. 3 – 5, 30/4 Street, Ward 1, Vinh Long City, Vinh Long Province, Vietnam

- Tel: 84.70 3823.618 - Fax: 84.70 3823.822

- Email: [email protected], Website : www.imexcuulong.vn

2.4.5 Company image

Company's logo Company's head office

Slogan: “The trust of customers is the driving force of development for our Company”.

Subordinates:

1. Representative Office

Address: No. 206, Vo Thi Sau, Ward 7, District 3, Ho Chi Minh City

2. Cai Cam Food Factory

Address: No. 171/18A, 1A Highway, Tan Quoi Hung Hamlet, Truong An Commune,

Vinh Long City, Vĩnh Long Province.

3.Co Chien Food Factory

Address: No. 209, September 14th Street, Ward 5, Vinh Long City, Vinh Long

Province, Vietnam

4. Tan Quy TayFood Factory

Address: Tan Lap Hamlet, Tan Quy Tay Commune, Sa Dec Town, Dong

ThapProvince,Vietnam

5. Lap Vo Food Processing One Member Co., Ltd

Address: Binh Hiep B Hamlet, Binh Thanh Trung Commune, Lap Vo District, Dong

Thap Province, Vietnam

6. Vinh Trach Food Processing One Member Co., Ltd

21

Address: Tay Binh Hamlet,Vinh Trach Commune, Thoai Son District, An

GiangProvince, Vietnam

Facilities and operations of the Company

* Warehouses:

- Total storage capacity: 37,500 tons

- Total area of warehouses: 27,270 m2

* Machinery and equipments:

- 08 lines of rice miller and polisher

- The average production capacity: 40.000 – 50.000 tons/year

* Products supplied to market:

- Types of white rice with 5% broken ; 10% broken ; 5% broken ; 25% broken and

100% broken

2.4.6 Achievements

-In 2008:Exported 125,740 tons of types of rice,gained revenues of 1,600 billion

VND, granted by the provincial People's Committee with:

+ Emulation Flag of the People's Committee of Vinh Long Province asthe Provincial

Excellent Emulation Unit in 2008

+ Merit of the People's Committee of Vinh Long Province for building the enterprise

in the typical right and sustainable direction of development in the emulation movement in

highly efficient business and production in 2008

- In 2009:Exported159,330 tons of types of rice, gained revenues of 3,095 billion

VND, ranked the 6th in Top 10 Vietnam’s largest export enterprises by the Vietnam Food

Association and chosen to be ranked the 44th in 500 Vietnam's fastest growing enterprises by

Vietnamnet.

- In 2010:Exported198,150tons of types of rice,gained revenues of 3,042 billion

VND, ranked the 3rd in Top 10 Vietnam’s largest export enterprises by the Vietnam Food

Associationand chosen to be ranked the 2nd in 500 Vietnam's fastest growing enterprises by

Vietnamnet.

22

+ The company has been SGS United Kingdom Ltd UK UKAS assessment and

certification according to ISO 9001:2008 formanufacturing operations

and trading of rice.

Through its operation process, the Company was recognized as

a large, prestige rice exporter and supplier in the Mekong Delta region and enrolled in to the

Gold List of Vietnam's Leading Reputable Exporters; awarded the Third-Class Labor Medal

by the State President.

- In 2011:Exported253,900tons of types of rice, gained revenues of 5,102 billion

VND, awarded the Merit for Typical Enterprise in the Mekong Delta region by the Vietnam

Chamber of Commerce and Industryand ranked the 141st in 500 Vietnam's largest enterprises

in 2012 by Vietnamnet (VNR 500).

- In 2012:Exported 340,645tons of types of rice, gained revenues of 3,620 billion

VND, awarded the Merit for Typical Enterprise in the Mekong Delta region by the Vietnam

Chamber of Commerce and ranked the 141st in 500 Vietnam's largest enterprises in 2012

(VNR 500) by Vietnam Assessment & Report Joint Stock Company and Vietnamnet.

On June 26, 2012, the Minister of Industry and Trade signed the

Decision No. 3588/QĐ-BCT to recognizeIMEX CUULONGwas one of 44

reputable rice exporting enterprises in 2011.

Beside, it was one of 3 food commodities trading and exporting

enterprises of Vinh Long Province achieving this title.

- In 2013: Exported 451,845tons of types of rice, gained revenues of 3,353 billion

VND, chosen to achieve the title “Reputable exporting enterprise” in 2013 by the Ministry of

Industry and Trade

(Source: Final Reports in 2009, 2010, 2011, 2012 and 2013 )

2.5 Analysis of strategies of rice business and exports of Imexcuulong

(2008 - 2013)

2.5.1 Exported rice is mainly

Before increasing demands of rice consumers in the world, in addition to reasonable

prices, rice exporters are trying to improve their quality of products in order to turn it into a

23

powerful competitive advantage. Particularly, in Vietnam, the government has promulgated

TCVN 5644 -1999 standards applied for the export of long, white rice.

For IMEX CUULONG, in addition to sticky rice, fragrant rice, medium rice, long,

white rice is one of exported commodities gaining the most revenues. Of which, there are rice

with 5% broken, rice with 15% broken, rice with 25% broken and rice with 100% broken.

Standards applied to rice adopted by the Company, in accordance with the standards of

Vietnam's rice exports are as follows.

Table 2.6 Standards for Vietnam's exported rice

Targets (max) Rice with

5% broken

Rice with 15%

broken

Rice with 25%

broken

Rice with 100%

broken

Broken rice 5% 15% 25% 100%

Impurities 0.1% 0.2% 0.5% 0.5 %

Pollen grains 5% 7% 8% -

Red & Red Stripe 0.5% 3% 5% -

Golden grains 0.5% 1% 1.5% -

Damaged grains 0.5% 1% 2% -

Immature grains 0.1% 0.2% 0.5% -

Paddy (grains /kg) 15 25 30 -

Moisture 14% 14% 14% 14%

(Source: Vietnam Ministry of Agriculture and Rural Development)

In addition to basic standards prescribed by the Vietnam State, depending on tastes

and habits of each market, there will have seperate regulations on product quality specified in

export contracts signed between two Parties. These conditions and criteria will be assessed by

the independent inspection agency ( the 3rd Party) specified by the Buyer.

2.5.2 Prices of exported rice from 2008 to 2013

Prices of exported rice depend on the outputs of rice exports of the Vietnam Food

Association (VIETFOOD), Northern Food Corporation (Vinafood 1) and Southern Food

Corporation (Vinafood 2), which are 03 Vietnam's representatives for participation in rice

tender in foreign markets and when winning bid, they will redistribute to members of the

Association.

24

Besides, the Company is also allowed to participate in direct rice exports to overseas

customers, but rates are announced by Vietfood at floor price from time to time, exporting

businesses will be based on that basis to count prices of exported rice which are not allowed

to be lower than the floor price to ensure benefits for farmers with interests of 30% or more.

Table 2.7 Prices of exported rice of the Company in the period of 2008- 2013

Unit: USD/ tons

Targets 2008 2009 2010 2011 2012 2013

Rice with 5% broken

425- 450 410-415 416-430 440-450 425-550 388 - 445

Rice with 15% broken

403-425 360-370 395-415 380-385 390-402 367-394


410 - 420 350-355 392-405 365-380 382-390 353 - 370


350- 380 290 - 295 339-345 330-350 335-345 340 - 348

(Source: Department of Planning and Investment)

Through Table 2.7, we can find prices of rice from 2008 to 2013 tended to gradually

increase, caused by the world's growing demand for rice entailing inflation, affecting most

economies, making many items simultaneously increase their prices, pushing prices of

exported rice of the Company in particular and of Vietnam in general to increase.

In early 2013, prices of rice fell by 30-50 USD /ton in average (rice with 5 % broken).

This fact made the export turnover insecured because the rice markets are making important

changes in recent years, many countries producing and exporting rice have significant

changes in policy for rice items. Some countries have used a huge budget to buy rice at high

prices from producers such as Thailand, India and China; some countries have taken

advantage of natural conditions, soil, climate, farming conditions and quality of rice, so their

rice has trademarks or taken advantage of the geography to be located near then consumer

markets, low freight to gain competitive advantages in the marketplace. Specifically, India,

the 2nd largest rice producers has turned back the export market meanwhile countries such as

Myanmar, Cambodia and Pakistan are striving to increase the outputs for rice exports. On the

other hand, the importing countries adjust the import policy in the direction to increase food

self-sufficiency, to diversify the supply sources, to sufficiently import, not to increase in

inventory and to observe the markets to seek opportunities for import with the most beneficial

prices.

25

The situation above has increased the global rice supply, inventories in the exporting

countries and changed the relationship of supply - demand in the direction that markets are

belonged to buyers. World's rice prices tend to decrease sharply since late 2012, particularly,

in quarter III/2013 and Vietnam's rice exports is slowing down due to being affected by this

situation, affecting prices of rice exports of the Company. On the other hand, the Company

has to compete with the rice exporting enterprises inside and outside the province, which

made pricesof rice exports in 2013 decrease compared with 2012.

2.5.3 Main rice export markets ofImexcuulong

The Company exports rice to most regions such as Asia, Europe, Africa, America and

Middle East; Asia is considered the traditional market of the Company (accounting for 30-

40%), including Indonesia, Philippines and Malaysia. However, this is a focused market dealt

and negotiated by the Vietnam Food Association, so the Company mainly exports to this

market according to contracts signed between the Governments. Markets in Europe are export

destinations of high-grade rice products. Several new markets are also paid attention to

promote by the Company such as markets in Australia and Middle East. In addition, the

African market is also a potential commercial market that the Company is paying attention to

develop.

Export markets of the Company during the period of 2008 - 2013 have many

fluctuations in quantity of export items in the continents:

Table 2.8 The fluctuation of rice outputs for export to the Company's main markets in the period of 2008 - 2013

* Main rice export markets of the Company in the period of 2008- 2010

Markets 2008 2009 2010

Comparison

2009/2008 2010/2009

Absolute-ness

(tons)

Relative- ness (%)

Absolute-ness

(tons)

Relativen -ess (%)

Asia 57,114 86,080 103,510 28,966 150.72 17,430 120.25

Europe 18,375 24,250 38,220 5,875 131.97 13,970 157.61

Africa 28,291 37,000 39,820 8,709 130.78 2,820 107.62

America 21,790 12,000 16,600 -9,790 55.07 4,600 138.33

Total 125,570 159,330 198,150 33,760 126.89 38,820 124.36

26

* Main rice export markets of the Company in the period of 2011-2013

Markets 2011 2012 2013

Comparison

2012/2011 2013/2012

Absolute-ness (tons)

Relative-ness (%)


Relative-ness (%)

Asia 142,100 184,272 257,578 42,172 129.68 73,306 139.78

Europe 34,400 58,239 85,728 23,839 169.30 27,489 147.20

Africa 64,900 73,070 78,850 8,170 112.59 5,780 107.91

America 12,500 25,064 29,689 12,564 200.51 4,625 118.45

Total 253,900 340,645 451,845 86,745 134.17 111,200 132.64

(Source: Department of Planning and Investment - Yearly export report)

Overall, we find that rice with 5% broken still remains its main role in the structure of

types, this is an item with high quality and high economic efficiency. Types of rice with 15%

broken and 25% broken also fairly account for high proportion in the structure of types, these

are two low-grade products; thus, to increase the scale of outputs of high-grade rice, it

requires the Company to innovate technology, machinery and equipments, to improve skills

of workers. Normally, high-grade types of rice are exported to demanding markets such as

Japan, USA and Europe. Diversification in types of exported rice is a strength helping the

Company meet demands of each market and have competitive strength with domestic and

foreign rivals.

2.5.4 Forms of export of Imexcuulong

Export activity of the Company is implemented through two forms: direct export and

entrusted export

For direct export: customers are foreign traders opening representative offices in

Vietnam or overseas customers through commercial contracts for direct transactions and

purchases from the Company to export to other countries or markets

For entrusted export: are focused contracts signed by the Government with foreign

countries, representative for the Fovernment is the Southern Food Corporation entrusting the

Company to implement or enterprises signing contracts to export or to entrust to export with

large quantities that their current capacities do not ensure to implement enough the number of

contracts.

27

Table 2.9 Outputs of exported rice under forms of export of the Company in the period of 2008 – 2013

* Forms of export of the Company in the period of 2008- 2010

Markets 2008 2009 2010

Differences 2009/2008 2010/2009

Absolute -ness (tons)

Relative-ness (%)


Relative-ness (%)

Direct export 70,040 105,330 141,730 35,290 150.39 36,400 134.56

Entrusted export 55,700 54,000 56,420 -1,700 96,95 2,420 104.48

Total 125,740 159,330 198,150 33,590 126,71 38,820 124.36

* Forms of export of the Company in the period of 2011-2013

Markets 2011 2012 2013

Differences 2012/2011 2013/2012

Absoluteness (tons)

Relative -ness (%)


Relative-ness (%)

Direct export 186,500 262,500 293,000 76,000 140.75 30,500 111.62 Entrusted export

67,400 78,145 158,845 10,745 115.94 80,700 203.27

Total

253,900 340,645 451,845 86,745 134.17 111.200 132.64

(Source: Department of Planning and Investment)

2.5.5 Business situation of the Company in the period of 2008- 2013

Table 2.10 Business results of the Company in the period of 2008- 2010

Targets

2008 2009 2010

Outputs (tons)

Value (1000USD)

Propor

-tion

(%)

Outputs (tons)

Value (1000USD)

Propor

-tion (%)

Outputs (tons)

Value (1000USD)

Rice with 5% broken

77,374 34,413 63.95 82,280 34,146 56.65 97,605 41,482


15,550 6,531 12.14 22,000 8,140 13.50 25,925 10,629


21,117 8,657 16.09 33,800 11,830 19.63 45,920 17,908


11,699 4,211 7.83 21,250 6,162 10.22 28,700 9,901

Total 125,740 53,812 100 159,330 60,278 100 198,150 79,920

(Source:Department of Accounting and Finance)

28

Table 2.11 Product structure and value of exported rice from 2011 to 2013

Targets

2011 2012 2013

Outputs

(tons)

Value

(1000USD)

Propor

-tion

(%)

Outputs

(tons)

Value

(1000USD)

Propor

-tion

(%)

Outputs

(tons)

Value

(1000USD)

Rice with

5% broken

116,890 52,600 51.16 182,561 100.408 62.42 268,794 119,613

Rice with

15% broken

38,160 14,691 14.29 49,725 19.989 16.65 68,925 26,880

Rice with

25% broken

63,700 23,569 22.92 68,659 26.777 8.51 66,045 24,436

Rice with

100%

broken

35,150 11,951 11.62 39,700 13.696 8.51 48,081 16,732

Total 253,900 102,811 100 340,645 160.870 96.09 451,845 187,661

(Source:Department of Accounting and Finance)

Rice with 5% brokenis an export product with the highest proportion in year. This is

the type of rice having the highest quality, exported to demanding consumer markets such as

the Middle East, South Africa, Russia and Malaysia.

Rice with 15% brokenis the middle-grade rice, often exported to Cuba, Indonesia,

Bangladesh...Rice outputs of this product are in the middle, particularly, in 2010, it suddenly

increased, becoming the most exported product of the Company.

Rice with 25% brokenand 100% broken are low-grade types of rice, exported to

populous countries with low per capita income (Philippines, Africa ...)

2.6 Analysis of competitiveness in rice export activities at Imexcuulong

2.6.1 Current status of rice exports in Vinh Long Province

In VinhLongProvince, there are 04 units having export license as follows:

- Vinh Long Import & Export Joint Stock Company (ImexcuuLong)

- Vinh Long Food Company(VinhLongfood)

- Cuu Long Food Company (CuuLongfood)

29

- Hong Trang Trading Joint Stock Company

Figure 2.9 Market share of rice exports in Vinh Long province as of September 2013

( Source: Internal Report as of October 2013)

In which, Vinh Long Import & Export Joint Stock Company makes up the market

share of rice exports 45 % as much as other units (Vinh Long Food Company was newly

established in 2011). In the past October 2013, the Company was ranked the 3rd all over the

country for export outputs, after sau Southern Food Corporation and Northern Food

Corporation by the Vietnam Food Association.

Some high-grade rice products of Imexcuulong

2.6.2 Competitiveness Analysis of Telecommunication companies

Competitors

Competitors are suppliers of similar or alternative goods of businesses to markets.

Jasmine milky fragrant rice Taiwan fragrant rice Jasmine fragrant rice

30

This is the biggest obstacle for businesses to overcome because when the larger market share

of competitor is, the more narrow the business's market share is.

Understanding competitors has significant meaning for businesses. In the field of rice

exports, Vinh Long Import & Export JSC faces domestic and foreign competitors. First of all,

we will learn about a few typical domestic competitors.

Domestic competitors: In the country, there are many businesses engaged in rice

exports. Due to so many businesses, I chose businesses in the same area and having the same

export markets with the Company to analyze.

Vinh Long Food Joint Stock Company

Like IMEXCUULONG, rice products of VINHLONGFOOD

also do not have their own brands. However, VINHLONGFOOD

trademarked for Jasmine Rice, Huong Lai Rice and Tam Thom Rice.

Some rice products of VinhLongFood

In order to enhance the competitiveness in foreign markets, company has applied the

quality management system according to ISO 9001: 2008 in manufacturing and business,

which certified by the UKAS Organization, United Kingdom in 2001.

With a synchronous system of 40 polishing lines with capacity of 100 tons / hour,

color sorter with new generation of South Korea along with standard dryer system and auto

conveyor system, yearly, the Company has the capacity to produce, supply domestic and

exported rice from 400,000-500,000 tons with high quality to meet all requirements of

customers.

Jasmine rice Huong Lai rice Tam Thom rice

31

The color of rice is pure white, without discoloration, damage and insects. Natural

flavor of rice is light, without strange flavor(s), consistent with consumption.

Hong Trang Trading Joint Stock Company: a new company participated in the

export market from 2010 and is branding for rice exports.

Tien Giang Food Company

One of the leading food exporters of Tien Giang province, a

member of the Southern Food Corporation, has actively expanded

relationships, actively promoted trade and created stable sources of

goods for supply-demand under customers' requirements with

reputation, good quality. Currently, the company's rice products

with trademarks such as 9 Golden Dragons, Vietnamese Flavor and

Gao Market’s Jasmine Rice…are very popular in the markets in Asia, Europe, Africa, the

Middle East and America.

Some rice products of Tien Giang Food Company

\

Tra Vinh Food Company ( IMEXTRAVINH )

The company specializes in processing and exporting types

of rice, exporting to major markets such as Asia, Europe and

Africa... However, IMEXTRAVINH is still not branding for

exported rice. Policy of quality of IMEXTRAVINH is as follows:

“Safety - Hygiene - Quality

Satisfied customers- Successful business”

32

General comments:By learning about domestic competitors, in general, the majority

of their rice products still do not have brands, but they have registered trademark for their

products. Thus, domestic competitors do not put pressure on brand. However, regarding

quality, the basis for brand development of rice, they have equivalent or better quality to

exported rice of the Company. In addition, these Companies have reputation in the

marketplace, they can attract more customers and sign more export contracts, i.e. the

Company's market share will drop down. Simultaneously, with the increase in contracting,

these competitors will actively buy more rice, which affects the inputs of the Company.

Therefore, Vinh Long Import & Export Joint Stock Company must constantly

maintain and improve the quality of rice as well as the Company's reputation in order to

enhance the competitiveness.

2.6.3 Foreign competitors

The following are some of the leading rice exporters and regarded as the main

competitors of Vietnam as well as of the Vinh Long Export-Import Joint Stock Company.

Thailand:

Thailand is the country paying much attention to the cultivations of wet and dry rice

with long-term agricultural development policy and efficient support of its farmers. These

conditions have ensured for Thai rice exports to keep the top position since 1967. During 12

years from 1988 to 2000, Thai rice exports ranged from 4-6 million tons / year. Thailand has

traditional, stable and expanding trading partner systems.

Thai export prices are taken as the price of international standards, according to FOB

Bangkok.

Thai rice brands

Thailand built rice brands before us a long time, Thai has good strategy for its Jasmine

Rice on the world market, when it comes to Thailand, customers will think of Jasmine Rice,

Jasmine Rice has a variety of types, but they are not necessarily to be good; on the other hand,

they promote very animatedly, and this is the dominant view of Thai rice over Vietnam's rice.

Prices

Thai rice prices are always higher than Vietnam's because Thailand understands

attitudes, tastes of consumers; the majority of Thai rice have their own brands and have

helped Thai rice enhance the value on the world market.

33

Quality: From a long time, Thailand considered carefully about the quality, they

choose quality first and then production, they care from seeds, most of Thai farmers use

certified rice seeds because good seed will give good grain. Besides, every 5 years, Thailand

opens a strategy with the goal of raising the proportion of high-quality rice up 90% to achieve

the goal under the spirit mentioned above.

+ Synchronization from production - harvesting - processing - preservation.

+ Distribution System: There is synchronous coordination between stages

+ Rice reserves are bought at high prices but cannot be sold out

+ Wrong rice mortgage policy (must buy all rice from farmers to ensure farmers to

have interests) has spent a lot of money; this policy pushes up prices unreasonably high. 80%

of Thai farmers desire to sell rice to the Government because of higher price than the market

price, this has caused a serious shortage of rice on the free markets, the exporters cannot buy

rice to execute contracts with international buyers and cannot offer new contracts; in addition,

theGovernment's intervention program has partly pushed prices to be higher than prices of

competitors on the world markets.

+ Disordered politics affecting the enhancement of farmers' productivity.

+ Thai competitiveness gradually reduced on the markets of white rice.

+ Thai labor cost higher than Vietnam's.

The United States:

After Thailand and Vietnam, the U.S. is also the country having the leading rice

exports, rice export markets of the United States include Asia, Africa and Europe.

Brand: The U.S. has Jazzmen brand, which is also a rice brand famous for

deliciousness nearly equal to Thai Jasmine rice and Latin American rice brands.

Characteristics of rice are without chemicals in the manufacturing process, and rice is a

natural, soft, and odorless.

Quality: American rice quality is graded A due to being ranked the 1st of the world

in science and technology for processing in accordance with the uniform packaging, labelling

and preservation.

34

Prices: American rice prices are high, partly due to high production costs, the rest is

due to strong brands, and American farmers are supported by the Government with 100 USD /

ton.

India:This is the 4th rice producing country in the world

Brand:

Like Thailand, India has branded for a long time, Indian rice brands have been known

by many countries around the world such as Basmati; thanks to strong brands, Indian rice is

exported to 40 countries around the world in Europe and Latin America. Thanks to marketing

and advertising along with mass cultivation of Indian farmers, the grain meets high quality,

low impurities.

Prices:India mainly exports Basmati rice with high quality, so its prices fluctuate

from 1000-1400 USD / ton, much higher than prices of Vietnam's rice, the prices of Vietnam's

exported rice are hovered at about 300-500 USD / ton.

2.6.4 Analysis of strengths and weaknesses of Imexcuulong

2.6.4.1 Major strengths - weaknesses

Major strengths

1 Human resources (qualification, training and development policy)

2 Management capability

3 Reputation of company's brand

4 Applying the quality management system under ISO 9001: 2008

standards

5 Competitive prices

6 Distribution network

7 Diversification policy for export products

Major weaknesses

1 Financial capability

2 Production and processing capabilities (the level of technology,

processing capacity)

3 Rice storage capacity

4 Grain materials purchasing network

35

5 Promotional activities

6 Market research for expansion

7 Weak market information forecast and analysis

8 Own brand of rice

2.6.4.2 Major opportunities - threats

Major opportunities

1 Remanding high demand for rice in the world

2 Vietnam as members of Commercial Organizations

3 Thai rice mortgage policy

4 Paid attention to by the Government

5 Favorable location (located in the Mekong Delta, the rice granary

of the country)

Major threats

1 Policy for restrictive import of food self-sufficiency in some

countries

2 Policy to discharge a large amount of inventories to the markets

(Thailand, India…)

3 Influenced by climate change

4 Fierce competition on price and quality in the world

5 Non-modern rice processing technology in Vietnam

6 Unbranded Vietnam's rice

7 High interest rates

2.7 Forecasting method

2.7.1 The concept

Forecasting is a science and an art of predicting things which will happen in the future,

based on scientific analysis of the data collected.

When forecasting, it should be based on the collection and processing of data in the

past and present to determine the movement trend of phenomenon in the future thanks to a

36

number of mathematical models (Quantification). However, forecasting can also be a

subjective prediction or an intuition about the future (Qualitative) and for the qualitative

forecasting to be more accurate, people try to eliminate the subjectivity of forecastors.

Although definitions differ somewhat, basically, they all agree on forecasting about

the future, talking about the future. First of all, forecasting is an indispensable attribute of

human thinking, people always think of the future, towards the future. In the era of

information technology and globalization, forecasting plays a more important role as higher

demands for market information, development situation at any point of time in the future.

Forecasting is used in many different areas; each area has a particular requirement for

forecasting, so forecasting methods are used differently.

2.7.2 Characteristics of forecasting

- There is no way to certainly determine what the future is (inaccuracy of forecasting).

Whatever the method we use, there always exists uncertain factor until the reality takes place.

- There is always a blind spot in forecasting. We cannot forecast exactly what will

absolutely happen in the future. In other words, not everything can be forecasted if we are

lack of knowledge about the issue needing forecasting.

-Forecasting provide input results for policy planners in proposals for economic and

social development policies. The new policy will affect the future; thus, it will also affect the

accuracy of forecasting.

2.7.3 Forecasting methods

Computational forecasting methods are to forecast macroeconomic and microeconomic

indicators. However,to apply these methods, we need to understand clearly theoretical

principles of each method to apply appropriately for each specific case and to be able to

improve the forecasting results to facilitate more during the decision-making of policy

makers.

Forecasting methods, including:

2.7.3.1 Qualitative forecasting method

From a long time, quantitative models are often successful in short-term forecasts,

limited forecasting ranges. Qualitative forecast can be regarded as being affected by

professionals; they depend on market specialists or markets in general to give a grounded

37

consensus. The qualitative models can be useful when forecasting short-term success of

companies, products and services, but they are is restricted due to depending on the evaluation

of the measured data. The qualitative models, including:

a) Gathering comments from the Board Executive

This method had widely used in businesses. While conducting forecasting, they will

get opinions of senior executives, the people in charge ofthe work,the important parts of the

businessand use statistical data for general indicator such as turnover, costs and profits... In

addition, it is necessary to get more opinions of experts in marketing, finance, production and

engineering.

The advantage of this method is gathering many experiences from many different

professionals.

The biggest disadvantage of this method is the subjective opinions of members and the

common opinion of most people with high position dominant opinions of others

b) Consulting sellers.

The advantage of this method is that sellers who have frequent contact with clients, so

they understand demand tastes of consumers. They can forecast the amount of consumed

products in theirin-charge areas.

By gathering opinions of sellers in many different areas, we have a synthesized

forecasting amount of demands for the product under consideration.

c) Delphi method

This method collects opinions of experts inside or outside enterprises according to

available forms of questions and implemented as follows:

- Each expert is given a written request to answer some questions serving the

forecasting.

- The forecasting staff gathers answered questions, sorts, select and summarize

opinions of experts.

- Based on this summary, the forecasting staff continues to raise other questions for

experts to answer.

- Gathering new opinions of experts. If unsatisfied, continue the above process until

reaching forecasting requirements.

38

The advantage of this method are avoiding personal contacts, without collision

between experts and they are not affected by comments of someone having advantage in the

number of people consulted,

According to Green, Armstrong and Graefe (2007), Delphi methodattracts managers

because of the ease to understand and forecasting support of experts. Green et al (2007) gave

eight advantages of Delphi method in market forecasting: (1) Wider applying, (2) Easy to

understand, (3) Possible to answer complex questions, (4) Ability to maintain confidentiality,

(5) Avoiding multiple tasks, and (6) Detection of new knowledge, and (7) Few participants.

d)Method of surveying consumers

This method collects information from consumers on current and future demands. The

demand survey is carried out by salesmen or market research staff. They collect customers'

opinions through questionnaires, direct interviews or phones ... This approach helps

businesses not only forecast demands but also improve product designs. This method

takelonger, thepreparation is complex, difficult and expensive and it cannot inexact in

questions answered of consumers.

Advantages: The best way to calculate demand forecast, their preferences through

their purchases; able to survey customers' tastes for product improvement.

Disadvantages: Suitable for industrial products, the accuracy of data.

2.7.3.2 Quantitative forecasting method

The quantitative forecasting model is based on data in the past, these data are assumed

to be related to the future and can be found. All forecasting models by quantification can be

used through the time series and this value is observed, measured over periods under each

series.

Advantages:

- Absolutely objective forecasting results

- Method of accuracy forecasting

- Consuming little time to find out the forecasting results

Disadvantages:

- Only forecasting well in short and medium terms

39

- No method can offer complete external factors affecting outcomes of the forecasting

model.

a) Short-term forecasting:

Short-term forecasting estimates the future in the short term, supplies information for

operational managers to make decisions on issues such as

- How much should be reserved for a particular product next month.

- How to schedule for the production for each product next month?

- How much the number of materials to be ordered to receive next week is?

b) Long-term forecasting

Long- term forecasting is estimating the future for a long time, often more than a year.

Long-term forecasting is essential in production management to support strategic decisions on

product planning, technological process and production methods. For example:

- Designing new products

-Determining how much the necessary production capacity is? Where to place

machinery, equipments needing to be used?

- Scheduling for suppliers under supply contracts to provide long-term materials.

In short

Over the past half century, there have been many methods applied to forecast

macroeconomic and microeconomic indicators, behaviors of small and medium enterprises.

However, each method is applied differently in each specific situation to achieve the best

forecasting results.

2.8 Grey theory

2.8.1 History of Greytheory

Grey theory was first proposed by Deng in 1982 (a famous Chinese mathematician)

and has over 20 years of history. This theory does not rely on statistical methods to deal with

grey quantity, but deals indirectly with original data, and tries to identify its intrinsic

regularity. Accumulated generating operation (AGO) is the main idea of grey theory,

originates from cumulative distribution or ogive in the elementary statistics. AGO aims to

reduce the randomness of raw data to a monotonic increasing series. Grey theory has been

40

widely and successfully applied in various fields, such as prediction electronics industry

production value, traffic, marketing, seismology, agriculture, engineering, tourism and so on.

Mathematically, the conventional grey forecasting model is based on knowledge of the

least square method and the first order linear ordinary differential equation. Notably, the

model obtains satisfactory forecasting results. To improve forecasting precision, some

researchers studied the grey model itself by modifying the background value Z(k) in the

model. Meanwhile, other researchers turned their attention to constructing the hybrid grey

models, for example the grey-Fuzzy, grey-Taguchi, grey-Markov, grey-Fourier, grey-

Deseasonalized Data, and other models. These hybrid models involves increasing complex

mathematics that is difficult to easily understand and apply. This investigation examines the

improved grey model as well as the knowledge of the elementary ordinary nonlinear

differential equation, otherwise known as the nonlinear grey Bernoulli model (NGBM). This

model was preliminarily demonstrated to be effective and efficient compared to the

conventional grey model. ( Source: Chen CI. (2008). Application of the novel nonlinear grey

Bernoulli model for forecasting unemployment rate.Chaos, Solitons & Fractals, 37, 278-287.)

The results could provide the investors as a reference for future investing plan and the

proposed methodology could be also easily used by the investors or researchers to forecast the

future changing trend of the market's rice export not only in company but also in Vietnam

2.8.2 Recent progress of Grey System Theory.

In scientific development history, simplicity, practicality, and efficiency (producing

effects immediately), have been nearly believed by all the scientists. Back in the sixth century

BC, natural philosophers understood the material world in a common desire: reducing the

material world to some simple common elements for purposes of research. Ancient Greek

mathematician and philosopher Pythagoras (Pythagoras) brought forward four elements (soil,

water, fire, gas) theory that the material is constituted by the four elements in about 500 BC.

There are also five elements theory in ancient China that the basic of everything is allied to

five things, namely, metal, wood, water, fire and soil.

Newton’s law of mechanics unified macroeconomic phenomena as a simple form. In

“Natural Philosophies Principle of Mathematics”, Newton said: “The nature don’t do

useless thing, just doing a little is all right, instead doing more is useless; as nature likes

simplification, but doesn’t love boasting itself with other extra reasons.” In the era of

relativity, Einstein proposed two standards of the test theory: “certified external” and “internal

41

completeness” that is “logical simplicity.” He said that, from the view that scientific theories

reflect the harmony and order of the nature, real scientific theory would be simple, practical,

effective.

During the systems research, because of the disturbance from not only inside but olso

outsideand the limitation of cognitive level, the information people get is always uncertain.

With the development of science and technology and the progress of social society, people’s

understanding about the uncertainties of various systems is much more profound than ever

before, and the studying on it is also more in-depth. During the later half of 20th century, in

the field of Systems Science and Engineering, a variety of systems theory and methodology

on uncertainty had been emerging constantly. For instance, Prof. L.A. Zaden had established

fuzzy mathematics in the 1960s, Professor Deng Julong had pioneered a difficult and fruitful

research on grey system theory, Professor Z. Pawlark had initiated Rough Set Theory in the

1980s and Professor Wang Guang-yuan had contributed a great deal in unascertained

mathematics. All those above are significant achievements in researches on unascertained

systems, and they also expound the theories and methodologies on describing and dealing

with numerous unascertained information from different aspects.

More than 100 academic works of grey system have been published by some domestic

and foreign publishing organizations like Science Press, Defense Industry Press, Press of

Huazhong University of Science and Technology, Science and Technology Press of Jangsu,

People’s Press of Shangdong, eferences of Science Technology Press, Quanhua Science and

Technology Books Press of Taiwan, Gaoli Books Limited Company of Taiwan, Technology

Press of Japan, American IIGSS Academic Press, German Springer-Verlag Publish Company,

and son on. A group of boundary subjects have been emerging, such as grey hydrology, grey

geology, grey plant thremmatology, grey regional economy system analysis, grey philosophy.

National, provincial and municipally science foundation sponsor grey system research

positively in china, many research projects about grey system theory and application obtain

kinds of subsidization. Statistics have indicated that there are more than 20 research findings

of grey system obtaining reward from national or provincial authorities. In 2002, a grey

system scholar from China won prize of World Organization on Systems and Cybernetics.

More than twenty years have passed since grey system theory was pioneered by Prof.

Deng Julong in 1982. The young people who join in theoretical research of grey system in the

1980’s have been graying at two temples now. In the long history of scientific development,

the 20 years pass in a flash. Many scientific theories require the unremitting efforts of several

42

generations of people and have gone through hundreds of years before reaching maturity and

perfect. Grey system theory is over 20 years old, it is still in the growth period, and it is

unavoidable that there exist immature and imperfect parts in grey system theory. People

engaged in grey system theoretical research should welcome and take serious in all criticisms.

And then problems and the flaws can be overcame unceasingly, the new growing point be

excavated unceasingly, exploring unceasingly, innovating unceasingly, thus making the grey

system theory, originated by Chinese scholars, go forward unceasingly. ( Source: Liu S.,

(2007). The Current Developing Status on Grey System Theory. The Journal of Grey System

2, 111-123 )

Today Grey system theory is constantly evolving consistent with the trend of systems

science and systems theory uncertainty, are widely used in the world, applied research in

many areas of life, economic, social, security and defense, etc…

2.9 Current research in forecasting of rice exports

In Vietnam, the forecasting of the rice export industry is based on the method of

econometric analysis to forecast the amount of outputs, prices as well as export turnover of

Vietnam's rice in the coming years. Econometric analysis is implemented according to the

following steps (the Chart).

Chart: Method of econometric analysis

Step 1: Give out the theories or hypothesis the relationship between economic

variables. For example, prices will depend on the productivity of rice variable.

Mentioned assumptions

Forecast

Decision-making

Setting up the model

Estimating the parameters

Analysis of results

43

Step 2: Setting the model toán education for the description moi quan between the

system variables this window,

Y= 1 + 2X + U

There in : Y: value of rice exports

X: the output of rice production

β1: block coefficient

β2: the slope

U: random element

The existence of random elements derived from the relationship between economic

variables are generally not accurate.

Step 3: Estimating the model parameters in order to get a measure of the impact of the

changes to the existing data. These estimates are the empirical testing of economic theory.

Step 4: Analysis of Results: Based on the results received, consideration is consistent

with economic theory or not, testing statistical hypotheses about getting in estimating model.

Y= 1 + 2X + U

if β2 is positive and less than 1 is economically logical if not, they must find a proper

model.

Step 5: Forecast: If a suitable model for the economy, the model can be used to predict

the value to find.

In addition, I also use trend extrapolation methods, which means the study of the

history of moving objects and the prediction rule found in the past, present to future

relationship based on inheritance relationship. Three elements past, present and future

transition and continuity for each form rule development, therefore, to discover the law of

development should be analyzed both qualitatively and quantitatively. Qualitative analysis is

based on the concepts, categories and laws of economics through scientific abstraction to

clarify the nature of the subject economic forecasts categories and quantitative analysis is

apply statistical methods and probability to describe the form of the mathematical model.

44

Chapter 3 RESEARCH METHODOLOGY

3.1 Grey Forecasting Model

The grey model GM (1, 1) is a time series model. The original observation data vary

with time, as do the randomness characteristics. Such a grey system is modeled by adopting a

simulated exponential function, which is also the nature of the general solution of a first order

ordinary differential equation. The method used to produce such an exponential like function

from raw data are termed accumulated generating operation (AGO) in grey system theory.

Grey modeling is constructed based on these processed data. The forecasted value is then

derived from inverse accumulate generated operation (IAGO). The mathematical expression

for general form of grey dynamic model of ( β, λ), abbreviated to GM (β, λ) model, can be

expressed as

,......dd )()(

33)(

221)(

111

)(1

1

1

)(1

XbXbXbbXadt

Xa

dt

X

(

3.1)

where ξ is the number of the AGO transformation, β is the order of the differential

equation, and λ is the number of types of the observation data. The parameters of the GM (β,

λ) model are determined using the least-square method based on the discrete form of equation.

(1). The GM (1,1) and GM(1, λ ) models are widely applied to numerous research fields. In

this research, we use grey forecasting model as research tool to predicting rice export market

in Vietnam. The following calculation procedures are for the traditional grey model GM (1, 1)

and the novel nonlinear grey Bernoulli equation NGBM (1, 1).

3.1.1 Traditional grey model GM (1,1)

This section reviews the operation of traditional grey forecasting in detail.

Step 1: Assume that the original series of data with m entries is:

,)(),...,(),...,2(),1( )0()0()0()0()0( mxkxxxX (3.2)

where raw matrix X(0) stands for the non-negative original historical time series

data.

Step 2: Construct )1(X by one time accumulated generating operation (1-AGO),

which is

45

,)(),...,(),...,2(),1( )1()1()1()1()1( mxkxxxX (3.3)

Where

mkixkxk

i

...2,1),()(1

)0()1(

(3.4 )

Step 3: The result of 1-AGO is monotonic increase sequence which is similar to the

solution curve of first order linear ordinary differential equation (by setting b = 1,k =1).

Therefore, the solution curve of following differential equation represents the approximation

of 1-AGO data.

bXadt

Xd

)1(^

)1(^

(3.5 )

where ^ represents Grey forecast value. The a and b are model parameters. ^

x{1)(1) =

x{0)(1) is the corresponding initial condition.

Step 4: The model parameters a and b can be determined by discrete form of Eq.

(3.5)

t

tXttX

dt

Xdt

)()(lim

1^1^

0

1^

( 3.6 )

let 1 t , and the forecast value is approximated by 1-AGO,

then

,...3,2,1),1()()1(xX

011

1^

kkXkxkdt

d

( 3.7 )

and )()1(^

tX is defined as

,...3,2,1),1()1()1()()( )1()1()1()1(^

kkzkxPkPxtX (3.8)

where z(1) is termed background value, P is in the range of 0-1, which traditionally

equals to 0.5. The source model then can be obtained as

bkazkx )()( )1()0( ,...4,2,1k (3.9)

From Eq. (3.9), by least square method, the model parameters a and b are

46

,

1

NTT YBBB

b

a

( 3.10 )

Where B and NY are defined as follows

,

)(

)2(

)2(

,

1)(

1)3(

1)2(

)0(

)0(

)0(

)1(

)1(

)1(

mx

x

x

Y

mz

z

z

B N ( 3.11 )

or, a and b can be expressed in the following form

m

k

m

k

m

k

m

k

m

k

kzkzm

kzkxmkxkza

2

2

2

)1(2)1(

2 2

)1()0()0(

2

)1(

)()()1(

)()()1()()( (3.12)

2

2

)1(

2

)2()1(

2 2 2

)1()1()0(

2

2)1()0(

)()()1(

)()()()()(

m

k

m

k

m

k

m

k

m

k

m

k

kzkzm

kzkzkxkzkxb

(3.13)

Step 5: Solve Eq. (3.5) together with initial condition, and the particular solution is

a

be

a

bXkX ak ))1(()1(ˆ )0()1(

,......,3,2,1k (3.14)

Hence, the desired forecasting output at k step can be estimated by inverse

accumulated generating operation (IAGO) which is defined as

,...3,2,1),()1()1(^)1(^)0(^

kkxkxkx (3.15)

,...3,2,1,))1()(1()1(, )0()0(^

kea

bxekxor aka (3.16)

Based on the above description, the grey predictor composed of AGO, IAGO, and

GM(1,1) can be constructed by

(0)^

)0( X.AGO(1,1).GM.IAGOX ( 3.17 )

47

3.1.2 Novel nonlinear grey Bernoulli model NGBM (1,1)

The procedures for deducing NGBM (1,1) are as follow. The step 1 and 2 are as

same as traditional grey model. Step 3: Eq. (3.5) is a linear differential equation and the

only adjustable variable is P. Based on the elementary course in elementary differential

equation, Bernoulli equationis introduced to replace the traditional grey differential

equation. The Bernoulli equation has the following form

,X1^)1(^

)1(^ n

bXadt

Xd

(3.18)

where n belongs to real number. In this research, this novel grey differential

equation is named as nonlinear grey Bernoulli equation (NGBM). Observing the above

equation, when n = 0, the solution reduces to Eq. (3.14), when n = 2, the solution reduces

to grey-Verhulst equation.

Step 4: discrete form of Eq. (3.18)

,...4,3,2)]([)()( )1()1()0( kkzbkazkx n (3.19)

where NGBM parameters a and b are calculated by the following matrix

manipulation,

,1)( N

TT YBBBb

a

(3.20)

,

)(

)2(

)2(

,

)()(

)3()3(

)2()2(

)0(

)0(

)0(

)1()1(

)1()1(

)1()1(

mx

x

x

Y

mzmz

zz

zz

B N

n

n

n

(3.21)

alternative form of parameters a and b are shown below

m

k

m

k

m

k

nn

m

k

m

k

m

k

nnm

k

n

kzkzkz

kzkxkzkzkxkza

2 2 2

21)1(2)1(2)1(

2 2 2

)1()0(2)1()1()0(

2

1)1(

))]([()]([)]([

)()([)]([})]()[({)]([(3.22)

m

k

m

k

m

k

nn

m

k

m

k

m

k

nm

k

n

kzkzkz

kzkzkxkzkzkxb

2 2

2

2

1)1(2)1(2)1(

2 2 2

)1()1()1()0(2)1(

2

)1()0(

)]([)]([)]([

)]([)}()({)]([})()({ (3.23)

48

Step 5: The corresponding particular solution of Eq. (18) together with initial

condition

isxx )1()1(ˆ )0()1(

,....3,2,1,1,)1()1()1/(1

)1()1()0(^

)1(

kn

b

ae

b

axkX

n

knan

(3.24)

The solution curve of traditional GM, Eq. (3.14), is dominated by the parameters a and

b which are related to the raw data sequence )},(),...,(),...,2(),1({ )0()0()0()0()0( mXkXXXX

and P value. X(0) is the result of observation data, so the only controllable parameter is P.

Chang et al. [4] demonstrated by choosing optimal P values can improve the model precision.

For NGBM, P is set to be 0.5 as traditional grey model; the power n serves as the adjustable

parameter. The numerical examples in this research will show it is efficient in improving the

model precision.

3.2 Error analysis

To examine the precision of the proposed model, further tests are required to

determine the error between the forecast value and actual value. This study adopts two error

analysis methods, relative percentage error (RPE) analysis and topological rolling error

analysis, to assess the model precision.

3.3 Relative percentage error analysis

Relative percentage error (RPE) compares the real and forecast values to evaluate the

precision at specific time k. RPE is defined as

%100)(

)(ˆ)()(

)0(

)0()0(

kx

kxkxkRPE , k=2,3,4,…,m (3.25)

where x(0)(k) is the actual value and x{0) (k) is the forecasted value by Eq. (24). The

total model precision can be defined by average relative percentage error (ARPE) as follows

,)(

1

1)(

2

m

k

km

avgARPE

k=2,3,4,…,m. (3.26)

49

3.4 Topological rolling error analysis

The meaning of the GM (1, 1) topological rolling model is firstly based on the first

four data, generally {x(0)(1),x(0)(2),x(0)(3),x(0)(4)}, to build the GM(1,1), and forecast the value

of the next point (x(0)(5)). The procedure is repeated once the result is obtained. The new

sequence {x(0)(1),x(0)(2),x(0)(3),x(0)(4),x(0)(5)} is then used to forecast the value of this next

point (x(0)(6)). This procedure is repeatedly until the end of the sequence. The analysis steps

are described as

Assume the original sequence is

X(0)={x{0) (1) , x{0) (2), … , x{0) (k), … , x{0) (m)}, m≥ 4. (3. 27)

take the partial of original sequence, which is called topological subsequence

X(0) (1; k) ={x{0) (1), x{0) (2), x{0) (3),… , x(0) (k)}, k ≥ 4.

if k = 4, X{0) (1; 4) = {x{0) (1), x{0) (2), x{0) (3 ), x{0) (4)}, ( 3.28 )

k = 5, X{0) (1; 5) = {x{0) (1), x{0) (2), x{0) (3 ), x{0) (4), x{0) (5)}

Eq (3.28)is employed to build the GM(1,1) model, and the forecast value )1()0(^

kx

is obtained. The modeling process can be summarized as

)(X.AGO).1,1(GMIAGO.)1( )0(^

)0( kkX (3.29)

The topological rolling error is defined as

%,100)1(

)1(ˆ)1()1,tp(

)0(

)0()0(

kx

kxkxk (3.30)

and average topological rolling error is

1

4

)1,(4

1),(

m

k

ktpm

avetp

(3.31 )

where tp represents topology.

3.5 Numerical Examples

A numbers of rice export from 2008 to 2013 are employed as original data, and we

use the GM(1,1) to forecast the numbers of rice export from 2014 to 2020.

50

Table 3.1 Rice exports from 2008 – 2013

(Source: Department of Accounting and Finance)

3.5.1 GM(1,1) with 4 data and 5 data

3.5.1.1 GM(1,1) with 4 data

(a) Take the data from year 2009 to 2012 as raw data and form an original sequence:

340,645253,900;198,150; 159,330;

)4(),3(),2(),1( )0()0()0()0()0(

xxxxX

(b) Use one time AGO to operate the original sequence to form the AGO sequence:

952025 611,380; 357,480; 159,330;

)4(),3(),2(),1( )1()1()1()1()1(

xxxxX

where .4,3,2,1),()(1

)0()1(

kixkxk

i

(c) Solve for (a) and (b) by least square method:

1)4()3(2

1

1)3()2(2

1

1)2()1(2

1

1)4(

1)3(

1)2(

)1()1(

)1()1(

)1()1(

)1(

)1(

)1(

xx

xx

xx

z

z

z

B

1781703

1484430

1258405

340645

253900

198150

)3(

)3(

)2(

)0(

)0(

)0(

x

x

x

YN

Year 2008 2009 2010 2011 2012 2013

Rice export 125,740 159,330 198,150 253,900 340,645 451,845

51

57.125345

273301.0;)( 1

NTT YBBB

b

a

(d) By using grey prediction equation (3.12) to find the predictor:

a

be

a

bxkX ak

)1()1( )0(

^)1(

)60.458635(60.617965

273301.0

57.125345

)273301.0(

57.345,125159,330

273301.0

)273301.0(

k

k

e

e

Where k=2,3,4.

(e) Calculate the inverse of above AGO predictor and the real predicted equation

would be as follow:

aka ea

bxe

kXkXkX

)1()1(

)()1()1(

)0(

^)1(

^)1(

^)0(

k

k

e

ee

273301.0

)273301.0()273301.0(

98.147777

))273301.0(

57.125345 159330()1(

where k=1,2,3,4.

(f) The forecasting result is shown in the table 3.2.

Table 3.2 Forecasting results and errors by using GM(1,1) with 4 data

Year 2009 2010 2011 2012 2013 2014 2015

Actual rice exports 159,330 198,150 253,900 340,645

Forecast value

by using GM(1,1)

159,330 194,224 255,268 335,498 440,944 579,531 761,675

Relative Percentage

Error(%)

0 1.98% -0.54% 1.51%

Average Relative

Percentage Error(%)

1.34%

52

3.5.1.2 GM(1,1) with 5 data

In this subsection the original data is the numbers of actual rice exports from 2009 to

2013. We use GM(1,1) with these five data in order to predict the numbers of rice exports

from 2014 to 2018. Model results and errors are shown in the following:


451845 340645,253900, 198150, 159330,

)5(),...,4(),3(),2(),1( )0()0()0()0()0()0(

xxxxxX

(b) The rest steps are the same as 4 data GM(1,1) and the predictor could be solved as:

)(ˆ)1(ˆ)1(ˆ )1()1()0( kXkXkX

akea

bxe

)1()1( )0(

k

k

e

ee

2781368.0

)2781368.0()2781368.0(

408.146254

))2781368.0(

88.219,123330,159()1(

Where k=1,2,3,4,5.

(c)The forecasting result is shown in the table 3.3.

Table 3.3 Forecasting results and errors by using GM(1,1) with 5 data

Year 2009 2010 2011 2012 2013 2014 2015 2016

Actual rice exports

159,330 198,150 253,900 340,645 451,845

Forecast value by using GM(1,1)

159,330 193,153 255,091 336,891 444,920 587,591 776,012 1,024,854

Relative Percentage Error(%)

0 2.52% -0.47% 1.10% 1.53%

Average Relative Percentage Error(%)

1.41%

3.5.2 NGBM with 4 data


340,645253,900; 198,150;159,330;

)4(),3(),2(),1( )0()0()0()0()0(

xxxxX

53

(b) Use one time AGO to operate the original sequence to form the AGO sequence:

952,025611,380;357,480;159,330;

)4(),3(),2(),1( )1()1()1()1()1(

xxxxX

where ，

k

i

ixkx1

)0()1( )()( k=1,2,3,4.

(c). Solve for (a) and (b) by least square method：

)]()1([2

1

)]4()3([2

1

)]()1([2

1

)]3()2([2

1

)]2()1([2

1)]2()1([

2

1

)1()1(

)1()1(

)1()1(

)1()1(

)1()1()1()1(

nXnX

XX

nXnX

XX

XXXX

B

=

781703781703

484430484430

258405258405

340645

253900

198150

)4(

)3(

)2(

)0(

)0(

)0(

x

x

x

YN

NTT YBBB

b

a 1)(

The parameters a and b could be solved only if optimun power indexγis determined

by MATLAB software.

(d) By using grey prediction equation (3.24) to find the NGBM predictor:

ykyay

a

be

a

bXkX

1

1

)1()1()0()1( )1()1(ˆ

)1

1(

)1()-(1 )a

b-159330(

a

be a

54

(e) The forecasting result is shown in the table 3.4, we use NGBM with optimal n =-

2.6 to forecast the numbers of rice exports from 2013 to 2015. Obtained results are as follows

Table 3.4 Error analysis of forecasting and rice exports from 2013 to 2016 by NGBM with 4 data (optimun n = -0.26)

Year 2009 2010 2011 2012 2013 2014 2015

Actual rice exports

159,330 198,150 253,900 340,645

Forecast value by using GM(1,1)

159,330 198,074 253,221 337,380 457,277 625,305 859,431


0 0.04% 0.27% 0.96%

Average Relative Percentage Error(%)

0.42%

3.5.3 Rolling NGBM with 4 data

NGBM is suitable for nonlinear raw data. The nonlinear raw data means the change

between each number is magnificent or simply you could not use a linear equation to fit these

data well. In previous case, GM(1,1) and NGBM are used to fit the growth of rice

exportsfrom 2009 to 2012. As GM(1,1) is a linear model, its forecasting error is 1.34%.

NGBM is a nonlinear model of which forecasting error is 0.42%. This means the growth of

rice exportsis nonlinear.and we should use the GM (1,1) to forecast the growth in the export

of rice at IMEXCUULONG in the period 2009-2012.

55

Chapter 4 PRACTICAL CASE AND ANALYSIS

4.1 Data collecting

The data analyzed in this article were taken from data collected rice Vinh Long Import

- Export Joint Stock Company in 2008-2013 in the rice export market in the world. We use

model GM (1,1) to forecast rice export output from 2014 to 2020 and show it in following

tables:

Table 4.1 Forecasting demands for rice exports

Year Actual rice exports

( tons )

Growth speed

( % )

2009 159,330 26.71

2010 198,150 24.36

2011 253,900 28.14

2012 340,645 34.17

2013 451,845 32.64

We see that the export output of the company increases with the years. And the rate of

production of rice in the markets of Asia, Africa and America in 2009 - 2013 is very stable, in

the range of 24.36% - 34.17%.

4.2 Results of forecast and analysis

4.2.1 GM (1,1) with 5 data

We used data in 2008-2013 given in Table 4.1 and NGBM with n suitable for output

rice export forecast from 2014 to 2020, using GM (1,1) with 5 data n= 0. forecast results as

follows:

56

Table 4.2 Forecasting demands for rice exports and the average error in GM(1,1)


( tons )

Forecast value

by using GM(1,1) ( Tons )


Average Relative

Percentage Error(%)

Growth speed ( % )

2009 159,330 159,330 0.00%

1.41%

26.71

2010 198,150 193,153 2.52% 21.23

2011 253,900 255,091 -0.47% 32.07

2012 340,645 336,891 1.10% 32.07

2013 451,845 444,920 1.53% 32.07

2014 587,591 32.07

2015 776,012 32.07

2016 1,024,854 32.07

2017 1,353,490 32.07

2018 1,787,510 32.07

2019 2,360,705 32.07

2020 3,117,704 32.07

According to results of forecasting, the total rice export volume in 2020 would be

3,117,704tons increasing by 1,856.76% over 2009. The growth rates from 2011 to 2020 are

the same and equal to 32.07%. This figure shows us that the rice export outputs in years

increase under linear. The average rate of errors of this forecast from 2009 to 2013 was

1.41%, relatively low. This finding demonstrates that the rice export power company was

developing and displayed through the following chart forecasts:

57

Figure 4.1 Forecasting demands for rice exports and the average error in GM(1,1)

4.2.2 NGBM with 5 data

Table 4.3 Forecasting demands for rice exports and the average error. Errors in NGBM (optimun n = -0,18)


( tons )

Forecast value

by using GM(1,1) ( Tons )


Average Relative

Percentage Error(%)

Growth speed ( % )

2009 159,330 159,330 0.00%

0.64%

26.71

2010 198,150 198,110 0.02% 24.34

2011 253,.900 253,920 -0.01% 28.17

2012 340,645 335,065 1.64% 31.96

2013 451,845 447,718 0.91% 33.62

2014 602,264 34.52

2015 813,369 35.05

2016 1,101,197 35.39

58

2017 1,493,279 35.61

2018 2,027,124 35.75

2019 2,753,798 35.85

2020 3,742,798 35.91

According to results of forecasting, the total export volume in 2020 would be

3,742,798 tons, increasing 2,249.09% compared to 2009. The annual growth rates from 2014

to 2020 are relative, its errors are not major, reduction is gradually reducing, which proves the

world's rice consumption is relatively stable, food security is concerned about by countries.

Some countries most importing Vietnam's rice before as Philippine have also decreased in

importing Vietnam's rice recenty due to their stable and growing domestic rice production, or

previously, Indian was the rice importer, currently, it is the largest rice exporter in the world

(ranked in the top 3 largest rice exporters in the world, including Thailand, Vietnam and

India). We can see the highest growth in 2020 is 35.91 %. The growth rate decreases yearly.

The average error rate of this forecast in 2009-2013 compared to the actual is 0.64 %

relatively low.According to Error Analysis Modeling, Models with small values are

Considered as optimal candidate models. The results show that the average error remains of

GM(1,1) is under 10%. This model reveals a high degree of prediction validity, presenting a

clearly viable means of forecasting rice export for the years 2010-2012 were 1,401,378 tons;

1,741,391 tons and 2,158,408 tons. In order to meet demand, we need to have plans to

expand and build grain storage, upgrading equipment investment, new technologies have high

productivity in the future.

59

Figure 4.2 Forecasting demands for rice exports and the average error. Errors in NGBM

The result was found on GM (1,1) has the ability to effectively deal with incomplete

information and uncertainty when using only a few data points. According to the Error

Analysis Modeling, the Models with small ( )avg values are considered as optimal candidate

models. Results show that the average error remains of GM (1,1) is less than 10%. This model

shows a high degree of predictive value, this is a proven effective means of clear rice

production forecast for the year 2018-2020. In order to meet demand, we need to have plans

to expand and build grain storage, upgrading equipment investment, new technologies have

high productivity in the future.

60

Chapter 5 CONCLUSION AND RECOMMENDATIONS

5.1 Conclusions

The GM (1,1) model has the ability to effectively handle incomplete and uncertain

information when only using few data points. The results show the average error rate in GM

rice export forecasting is 1.41%, meanwhile this rate in NGBM is 2.63%. The average errors

of GM (1,1) is less than 10%. This model shows a high degree of predictive value, proves that

this is an effective clear mean for forecasting the rice export outputs of the Company

Based on results of forecasting, we can see the outputs of rice exports in 2020 is

2,158,408 tons, increasing 1,254.52% over 2009. Therefore, rice export potential in the future

is still great and growing. The chart shows the forecasting figures tend to upward and in the

future, it is increasing rapidly .

This thesis only uses 5 input data for forecasting. This model is extremely efficient for

cases lacking of input information to forecast, especially, for nonlinear input data.

Based on the analysis:

(1) GM (1,1) is used to forecast the development of the Company's rice export

industry in particular and of Vietnam in general.

(2) Relative error: The average value of exported rice outputs of models is 1.41% and

2.63%, showing that the forecasting models are reliable. For diversified process with good

uptrend, we have a relatively good accuracy with GM (1,1).

(3) GM (1,1) is implemented as an effective forecasting method, it has been widely

applied in all sectors, meanwhile, for a growth forecast for Vietnam's rice industry, by

introduction of GM (1, 1), the forecasting gives very good results

We used NGBM to forecast features affecting the growth of the rice export market in

Vietnam in 2014-2020 and received satisfactory results. We can see that in a short time and

with n adjustable parameters, obtained results are quite accurate.

5.2 Suggestions

Overall, Vinh Long Import Export Joint Stock Company, after the equitization, has

had very positive movements, partly because the Company is concerned about and directed by

the province, provincial People's Committee, partly because the Company has the staff which

61

is dynamic, close-knit, and determined to overcome difficulties and survive together to

improve manufacturing operations of the Company.

Mostly, rice export value of the following yeat is higher than the previous year.

Especially, rice is the main export commodity of the whole province, annually contributing

billions to the local budgets. The increased capital of the Company makes the financial ratio

of the company increasingly grow.

The Company has implemented well the expansion of its rice export markets, at the

time of establishment, the Company only exported rice to countries mainly in Asia with low

quantities. Up to now, the Company's products are present in many markets in Asia, Africa

and Europe with increasing quantities. Simultaneously, the Company has entered the

American market; this potential market facilitates to open a great opportunity for consumption

and improvement of dependence on a market.

Rice processing capacity of enterprises is increasingly improved, namely opening

warehouses, investment in rice polishing machine... The Company has exported more new

types of rice, rice supply to meet demands of export markets of the Company and the

Company owns more processing technologies.

However, the Company still has ineffective implementation aspects such as the

undiversified market structure, which is mainly with markets in Asia and Africa, so the

customers seeking still has many limitations. Actually, the Company is lack of officials

specialized in marketing management, so the Marketing work of the Company has just been

based on experiences, agility of the staff so far. Marketing activities of the Company are not

synchronized and spontaneous in nature because there is no formal marketing department,

meanwhile, in today's market mechanism, if businesses want to stand firmly, they must search

for markets, understand markets and expand markets. Rice export activities of the Company

have achieved relative results, but compared to its potential, the Company has not fully

exploited and achieved the maximum efficiency yet. The Company is capable of striving to

reach a higher level of rice exports if knowing to grasp and manipulate market opportunities.

These are challenges as well as motivations for the Company to strive more, especially in the

process of brand development, investment in machinery and equipments, synchronous

development between stages to be able to produce high-quality rice at competitive prices,

thanks to these, the Company can stand firmly on the markets and sustainably develop.

62

RECOMMENDATIONS TO THE COMPANY

To constantly expand domestic and foreign agricultural goods consumption

markets; to invest in and innovate technology; to improve product quality; to enhance

commercial promotion and market expansion.

To diversify circulation channels and cargo traffic levels.

To improve the procurement of raw materials to create stability and quality

assurance

To focus on market research, penetration into new markets such as the EU, North

America, Middle East, Eastern Europe, especially African markets ... and to strengthen the

current markets

To train and re-train to raise the skill levels for workers - employees

To build and consolidate warehouses, especially in the current period, it is coming

in the rainy season, goods are perishable.

63

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