Vietnamese Enterprises:How to Effectively Participate in the Global Value Chain

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

Lessons Learned for VN Animal Feed GVC

VN Handicrafts GVC

Handicrafts Problems

Greening the Handicrafts GVC

Conclusion

Every GVC Requires Different Strategies

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.

VN Seafood Processing: Three Levels

1. Sourcing and production of raw materials, including from the sea or aquaculture

2. Processing and export, including post-harvest sale, transportation, processing, freezing and exporting

3. Import and distribution: sale and delivery to grocery stores and restaurants

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

ProcessingPackagingShipping

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)

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

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

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

INVIVO Case Study

Distribution NetworksDifferent feed products for different life stagesDedicated network of medium and small distributors Small quantities allowed for quick use avoiding need for specialized storageDistributors didn’t offer the same products to farmers in the same areaNurtured relationships with distributors and avoided direct competition

Technical AssistanceSales staff shared their technical and managerial expertiseTechnicians helped farmers improve their productivity and the quality of their

production through better use of feeds

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

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

Greening the VN Handicrafts Industry

Two-pronged approach for industrialization

Reduces the use of natural resources, waste and pollutionCreates 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

Conclusion

Three different sectors require three different strategies

GVC must be focused on verticals

Enhance value not production