Vietnam is a country that has faced several political and economic problems throughout the years. During these years, Vietnam Northern Food Corporation or VINAFOOD 1 has been able to thrive with their agricultural products. The company is a state-owned enterprise which has a long 60 years of history along with the country. Its foundation was to contribute to eradicating hunger problems in the country during the early years of the country’s independence. Starting their product profile with rice, the company grew to have multiple agricultural products such as corn, cassava, wheat, salt, and many more. In the present, the company has multiple subsidiaries and seven different associate companies. The company also has joint ventures with foreign countries. The company’s long term plans include promoting trade promotions with foreign markets along with continuing to ensure national food security. The product that will be imported from this company is their brand rice, specifically the long grain white rice. The characteristics of the brand rice is that it has long seeds, flexible, fragrant, glossy, and rich in flavor. The harmonized system code for the product is 1006.30.00.91 with its additional information that can be found in figure 1 below.
Market Entry
The team will do an importation of long grain white rice products from Vietnam. VINAFOOD 1, located in Hanoi City in Vietnam will be the manufacturer and supplier for the long grain white rice that will be imported to Canada. The product will be imported via sea transportation and will be received at the port of Vancouver. The product will then be distributed to local asian grocery stores for purchase by the customers.
Product Pricing
The final pricing of the rice product is calculated to be CAD 16.83. This has been determined through the computation of the landed cost including the factors such as, product quantity, freight cost, customs duties and markup percent. There will be a total of 6,300 units of long grain white rice to be imported to the country with a unit price of CAD 5.74. A 40 feet full load container will be used to import a total of 900 boxes of the product containing 7 bags of 3.5 kg rice each. The price for a full load of 40 feet container is determined to be CAD 4.750. The customs duties of the product and the customs goods and services tax (GST) will be of no cost due to the fact that Vietnam and Canada are under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The markup percent will be 110% considering the advantage over the competitors pricing. One of the competitors determined is Tilda Basmati Rice from Walmart that has a selling price of CAD 18.47. Another competitor determined is the Glutinous Rice from Superstore that has a selling price of CAD 17.99.
By using efficient cost management strategies, the organization successfully decreased its overhead expenses, enabling a greater proportion of the generated income to be kept as net profit. The achievement of a net profit of 47,529.11 CAD was finally facilitated by the implementation of a smart markup strategy and the attentive monitoring of overhead costs.
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Vietnam Northern Food Corporation, known as VINAFOOD 1, stands as a testament to resilience and dedication amidst Vietnam’s historical challenges. Established over six decades ago, the company’s primary mission was to combat hunger in the newly independent nation. Since then, VINAFOOD 1 has evolved into a thriving state-owned enterprise specializing in various agricultural products, including rice, corn, cassava, wheat, salt, and more. Today, the company boasts multiple subsidiaries, seven associate companies, and international joint ventures. VINAFOOD 1’s steadfast commitment to ensuring national food security and expanding its presence in foreign markets is evident in its long-term strategic plans.
The focus of this import venture is VINAFOOD 1’s long grain white rice. This product features distinctive qualities such as long, flexible seeds, a fragrant aroma, glossy appearance, and a rich flavor profile. The Harmonized System (HS) code for this product is 1006.30.00.91, facilitating its classification for international trade purposes.
The importation of VINAFOOD 1’s long grain white rice will involve shipping the product from Hanoi City, Vietnam, to Vancouver, Canada, via sea transportation. Upon arrival, the rice will be distributed through local Asian grocery stores, catering to the preferences of a diverse customer base.
The final price of the rice product in Canada has been meticulously calculated at CAD 16.83. This price encompasses various factors, including product quantity, freight costs, customs duties, and a markup percentage. A total of 6,300 units of long grain white rice will be imported, with an individual unit price of CAD 5.74. These units will be shipped in 40-foot containers, each containing 900 boxes, with each box holding seven bags of 3.5 kg rice. The container’s transportation cost is CAD 4,750, which, when coupled with the other expenses, results in the aforementioned final price. Importantly, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) ensures that customs duties and the goods and services tax (GST) will not be incurred in this import venture.
To establish a competitive pricing strategy, a markup percentage of 110% has been employed, giving VINAFOOD 1 a clear advantage over competitors. Two notable competitors in the Canadian market have been identified: Tilda Basmati Rice from Walmart, priced at CAD 18.47, and Glutinous Rice from Superstore, priced at CAD 17.99. VINAFOOD 1’s strategic pricing positions it favorably within this competitive landscape.
One key driver behind the success of this import venture is VINAFOOD 1’s efficient cost management strategies. By systematically reducing overhead expenses, the company has maximized its net profit. Notably, a net profit of CAD 47,529.11 has been achieved through a well-thought-out markup strategy and vigilant monitoring of overhead costs.
VINAFOOD 1’s journey from its inception during Vietnam’s early years of independence to its current position as a thriving agricultural conglomerate is a testament to resilience and adaptability. The importation of its long grain white rice into the Canadian market demonstrates the company’s commitment to expanding its global presence while maintaining competitive pricing. Through meticulous cost management and strategic pricing, VINAFOOD 1 has not only ensured its own success but has also contributed to the broader goal of addressing food security challenges both nationally and internationally.
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