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Vietnamese Enterprises: How to effectively participate in the global value chain


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2016 Presentation given to two VCCI-sponsored audiences (Vinh and Hanoi) on how Vietnamese can take advantage of Global Value Chain.

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Vietnamese Enterprises: How to effectively participate in the global value chain

  1. 1. Vietnamese Enterprises: How to Effectively Participate in the Global Value Chain
  2. 2. Organization of Talk What is a Global Value Chain? VN Seafood Processing GVC Seafood is a Buyer-Driven GVC International Standards and Regulations What VN Seafood Processors Can Do VN Animal Feed GVC Animal Feed Problems INIVO Case Study
  3. 3. Global Value Chain (GVC) Network of interlinked stages of production for the manufacture of goods and services that straddles international borders. Involves combining imported intermediate goods and domestic goods and services into products that are then exported for use as intermediates in the subsequent stage of production.
  4. 4. VN Seafood Processing: Three Levels 1. Sourcing and production of raw materials, including from the sea or aquaculture 1. Processing and export, including post-harvest sale, transportation, processing, freezing and exporting 1. Import and distribution: sale and delivery to grocery stores and restaurants
  5. 5. Seafood Processing is a Buyer-Driven GVC Consumer demand has come to include traceability, safety and health Led by supermarket chains, large retailers and foodservice operators Established production requirements Processing Packaging Shipping
  6. 6. Regulations and International Standards World Trade Organization (WTO) tariff and non-tariff regulations UN Food and Agriculture Organizaton (FAO) standards Global Aquaculture Stewardship Best Aquaculture Practices (BAP) Aquaculture Stewardship Council (ASC) Marine Stewardship Council (MSC)
  7. 7. What VN Seafood Processors Can Do Create value added products Develop joint ventures Ensure transparency of market information and product quality Create new products by organizing production, procurement, storage and processing Meet requirements of the market and customers Ensure the seafood chain link adheres to sustainable development Streamline the fisheries value chain by increasing efficiency
  8. 8. VN Animal Feed GVC Problems Vietnam does not have a domestic industrial-scale production Animal feed producers choose what is more cost-effective Animal feed price becomes higher with tax and fee Livestock products cannot compete with imports
  9. 9. VN Pig Farms 80% of the total pig production comes from farms >50 sows Average farm has ~20 sows Large quantities of generic feed will not respond to Vietnamese farmers’ needs
  10. 10. INVIVO Case Study Distribution Networks Different feed products for different life stages Dedicated network of medium and small distributors Small quantities allowed for quick use avoiding need for specialized storage Distributors didn’t offer the same products to farmers in the same area Nurtured relationships with distributors and avoided direct competition Technical Assistance Sales staff shared their technical and managerial expertise Technicians helped farmers improve their productivity and the quality of their production through better use of feeds
  11. 11. Animal Feed - Lessons Learned Economic efficiency Foster partnerships between large farm input producers and networks of dedicated distributors Tap into new markets while enabling smallholder producers
  12. 12. VN Handicrafts - Problems Vietnam doesn’t have a firm brand in the global market Poor competitiveness with low value products produced in large quantities Around 90% were produced following ordered designs by retail giants Small-scale production fails to ensure uniformity Poor linkages between trade villages and exporters Production chain lacks originality and creativity
  13. 13. Greening the VN Handicrafts Industry Two-pronged approach for industrialization Reduces the use of natural resources, waste and pollution Creates high quality environmental goods and services in an effective and industrial manner Sectoral strategy unlocks additional development opportunities Drives competitiveness Increases resource productivity Enhances environmental performance
  14. 14. Conclusion Three different sectors require three different strategies GVC must be focused on verticals Enhance value not production