VIETNAM NATIONAL UNIVERSIY – HO CHI MINH CITY

INTERNATIONAL UNIVERSITY

EXPORTING
CANNED COCONUT MILK
Instructor Name: Vo Quynh Mai

Group member:

Vu Minh Hoang IELSIU16063

Nguyen Thu Nga IELSIU15076

Tran Le Thao Nguyen IELSIU15103

Le Hoang Nhu IELSIU15037

Cao Huynh Nhu IELSIU15003

Nguyen Phan Duc Tai IELSIU15116

Huynh Minh Trieu IELSIU15030

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Table of Contents
1. Introduction ..................................................................................................................................... 2
2. Identifying foreign buyers .............................................................................................................. 3
2.1 Market assessment .................................................................................................................. 3
2.2 Sources of foreign buyers ....................................................................................................... 4
2.3 Pros and cons of various sources ........................................................................................... 6
2.4 Qualification ............................................................................................................................ 7
3. Identify local suppliers.................................................................................................................... 8
3.1 Sources of local suppliers ....................................................................................................... 8
3.2 Pros and cons of various sources ......................................................................................... 10
3.3 Qualification .......................................................................................................................... 10
4. INCOTERMS - FOB .................................................................................................................... 10
5. Payment terms for Export Transaction ...................................................................................... 11
6. Trade intermediaries .................................................................................................................... 12
6.1 Transportation ...................................................................................................................... 12
6.2 Freight forwarder ................................................................................................................. 12
7. Other information ......................................................................................................................... 12
7.1 HS code .................................................................................................................................. 12
7.2 Tariff ...................................................................................................................................... 12
7.3 Government regulations ....................................................................................................... 14
• Vietnam ...................................................................................................................................... 14
8. Conclusion ..................................................................................................................................... 19

1. Introduction
Grown in abundance in South East Asia, coconuts are well-known as a healthy food not only
because of its delicious taste but also the numerous health benefits bringing to human. With the
advantage in the top 10 countries growing a large number of coconuts in the world, Vietnam has
strongly promoted the production and export of the coconut fruits. By exploring the increasing
demand of domestic and foreign markets as well as the export of coconut products from competing
countries such as Philippines and Indonesia, we could see that the coconuts milk is very high
potential in the export market.

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Although the model of coconut milk in Vietnam has recently developed, it received certain positive
feedbacks from foreign customers around the world. With the tropical climate are being
advantages for coconuts growth, Vietnam has full potential to meet the demand of coconut milk
with a large volume of many markets.

Many importers in the United States, Canada, Australia, Korea and Singapore require coconut milk
with different sizes for directly using or mixing to make many kinds of beverages. Coconut milk
brings a lot of export potential to Vietnam market.

2. Identifying foreign buyers

2.1 Market assessment
Basic need and potentials:
Researchers have shown that cytokines found in coconut milk help the growth of skin cells and
moisture maintenance. Due to the richness of minerals, vitamins and nutrients, coconut milk can
help people strengthen their immune system by fighting against viruses, anti-biotics and balance
the cardiovascular. The combination of high nutrients content and wide application of coconut
milk makes the consumption of this organic product significantly.

The striving for “healthy lifestyles” and raising the number of people towards adopting vegan diet
due to concern about environment and animal is anticipated to raising the market demand for
coconut milk. Furthermore, the flexible application of coconut milk throughout the food industry
is becoming one of the decision factor contributing to its increased market share.

In this paper, our group will focus on the importers of coconut milk in North America region,
especially The United State (US) and Canada since they are the two biggest market size in the
world which are projected to generate a high revenue. Besides, fewer domestics suppliers because
of shortage in yields of coconut is also the reason why we choose these countries

Financial and economic conditions:

North America is forecasted to account for relatively high-value share in coconut milk of the global
market at the end of 2027. To importing countries, the stability of core Consumer Price Index
(CPI) in the US at the end of 2017 bring Viet Nam a chance to reach this huge marketplace.
Moreover, the growth of the market in the US increased by 0.2% at the end of 2017 is a good sign
for us.

High inflation rates may bring lots of profits for exporter because of the availability of foreign
exchange. Viet Nam also has many banks that linked to oversea which can carry out transaction
and payment as HSBC, Standard Chartered Bank, etc.

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Political and legal factors:
Entry barries
An import licence is used to import a quantity of goods within a set period with the details of the
time limits. Any import duty have to be paid will depend on rates in force on the day that importers
place the goods under Customs control.

In order to be imported to foreign countries, such as US, the imported food have to be subjected
by Food and Drug Administration (FDA) inspection at the ports of entry. All the good owners have
to make sure that their food products must meet the same legal requirements in the US.

Taxes and price controls and protection of intellectual rights is concentrated.

Socialcultural forces
Since the last 5 years, Asian cuisine has become popular among food lovers around the world. The
passion for Thailand, Indian dished like curry with the taste of coconut milk or coconut, which is
the main factors to maintain the increase of the global coconut milk consumption over these years.
The demand for Asian dishes has substantially increased owing to the positive review of a large
number of tourist visiting Asian countries. For example, Asian restaurants in the US has doubled
their sales indicating that the interest has significantly grown within a short period of time.

Another factor fueling up the growth in consumption of coconut milk is the increasing of the
number of lactose intolerant population. Since the non-containing of lactose and retaining the
crucial nutrients, coconut milk is the best choice for these people.

Increasing consumption of ice-cream and vegan desserts has drive the demand of coconut milk
market not only in the developed countries but also in developing ones. Some top-notch hotels
have also started offering, vegan dessert and ice-cream made from plant-based substitutes for
regular milk on their menus.

Competitive forces
Companies holding a large coconut market share currently having ambitious not only in expanding
their operations in a new region but also repositioning and innovating the canned coconut milk
with competitive price. By applying intensive supply chain for coconut milk products,
manufacturers can reach the untapped market to enlarge their market. The key players profiled in
the coconut milk fields are Goya Foods, Inc. (U.S.), WhiteWave Foods (U.S.), McCormick &
Company (U.S.), Native Forest (U.S.), which are also our main competitors.

2.2 Sources of foreign buyers

By using the source of Alibaba, Global sources and Canton Fair, we found out 3 foreign buyers:

652 Trading LTD

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652 Trading LTP is a distributor located in Ohio, US. Despite the small scale of the company, 652
Trading Ltd has average total revenue of range from 10 million to 50 millions dollars for metal
scrap, food and beverages, nuts and seeds, and vegetable oil. South America, Western Europe, and
North America are their top 3 target markets. Below the main markets and their total revenues of
652 Trading Ltd.

Main markets and their revenues of 652 Trading Ltd

10.00%

10.00%
25.00%

10.00%

15.00%
10.00%

10.00% 10.00%

South America Western Europe North America Eastern Europe

Southeast Asia Africa Southern Europe South Asia

Total revenue of main market of 652 Trading

Sun Hing Foods, Inc

Sun Hing Food is a wholesaler whose headquarters is in California, US with small scale of 51 –
100 staffs. With 37-years working in the importing foreign products to US, Sun Hing Foods focus
on condensed milk, evaporated milk, coconut milk and rice.

LE Group Industries, LLC

Le Group Industries Limited Liabiliies Company target mainly on America, Mid East and Africa
with the product of camolino rice, evarporated milk and imitation cheese.

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 Main market and their revenue of LE Group Industries
2.00%

10.00%

10.00%
45.00%

13.00%

20.00%

Mid East Central America Africa South Asia North America South America

Total revenue of main markets of LE Group Industries

2.3 Pros and cons of various sources

Having various sources give us a precious opportunity to introduce our products, search for buyers
to expand and develop our market. Not only can we field-test our product for export potential but
also having to know who our competitors are. Therefore, we can analyze data and information to
get higher benefits.

However, we have some disadvantages when choosing to export canned coconut milk through
foreign distributors. The intermediaries mightt also be offering similar products, including directly
competitive products to the same customers instead of providing exculise representation.
Furthermore, incorrect, unreliable information of the foreign buyers, losing foreign sales control
are also our concerns. We have less the opportunities to tailor our offerings to the buyer’ needs
due to not directly contact to them.

Sources Credibility Cost

Canton Canton Fair is a China Foreign Trade Good Membership

Fair Center held annually in Guangzhou, fee at Canton
China. It has not only been one of the Fair: 150 RMB
biggest annual economic events in
FOB (*)

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 China, but also be the one of the biggest
events in the world.

In 2016, Canton Fair has attracted over

360000 visitors and over thousands
representatives, companies,
manufactures, etc, … who come to
introduce, buy and sell their new
products.

Alibaba Providing the manufacturing sourcing In fact, Alibaba is just a FOB

options with affordable price for all sizes product introduction
of business, Alibaba is the Chinese e- website as provide a link
commerce company based on online between suppliers and
platform where supporting establish a buyers. Thus, online
connection between suppliers and buyers are sometimes
buyers. face risks such as fraud,
poor product quality, etc.

Credibility is relatively
good

Global Global Sources (base in Hong Kong) is Good FOB

Sources firmly established within the sourcing
world as a high-quality supplier/buyer
connection platform. Attending Global
Sources’ trade Shows & Summits gives
potential buyers the opportunity to vet
and meet suppliers as well as evaluate
their products in person. It is a great
place to network and build relationships
with suppliers.

2.4 Qualification

In case there is a foreign distributor wanting to buy the coconut milk, we will make follow up visits
to buyers showrooms/ retail/ warehouses and/or their websites. To give a right evaluate whether
our products can grow well in the overseas market, we have to know our buyers' target market than
finding the more about the specific characteristics of their customers such as interests, ages,

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income level, occupations. … This step also helps me determine the rate of maintaining margins
the foreign distributor can achieve to become our potential buyer.

In detail, the potential buyers have three essential characteristics, which are: having a particular
need, having the ability to pay for our products and owning the decision-making power or the
authority to make the purchase.

Moreover, trading document of the buyers has to be checked by using the B2B trading portal which
is the prevalent practive among global suppliers. All the major B2B portals have millions of buyers
from around the world actively looking for suppliers. As a leading B2B portal, Alibaba, Global
Sources or Canton Fair also makes it easier for suppliers and buyers to locate each other.

With the potential buyers have previously purchased from international suppliers, we can search
them for some ducument such as Bill of Lading, Perfoma Invoice, Letter of Credit, Invoice and
Quotation. Using the exactly order details of these documents, we can target the potential buyers
with large buying requirements and determine the size of buyers’s buying capacity.

Finally, reputation within the indutry is another thing our group wil identify. Careful investigation
the foreign distributors is necessary before entering into an agreement with them. We need to know
the following information about the distributor:

• History and currently including principal officers background

• Trade and banks references
• Introducing new products approaches to the market
• Data on whether special requirements of my company can be met

The information can be accessed on the foreign seller through a U.S Commercial Services program
called International Company Profile (https://2016.export.gov/usoffices/). Moreover, we have to
ask a prospective foreign seller for references and follow up with them over the phone.

3. Identify local suppliers

3.1 Sources of local suppliers
Since the small scale of our business now, our group choose to buy the finised canned coconut
milk from domestic manufacturers. However, to get more profits and gaining more control on the
production process to minimize cost, we have a long-term strategy for buying raw coconut and
having our own production line when required machines are ready.

At the present, after determining that choosing right sources of local suppliers is one of the
essential factor to exporting success, we have found prospects:

Vietnam Regional Specialities Fair 2017 is a favorable place for the enterprise and individuals to
introduce the regional specialities product of Vietnam to consumers, thereby enhance the

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enterprise brand image. At this festival, the booth of Luong Quoi Coconut Co., Ltd gained not only
the attention but also the positive review about the canned coconut milk from customers because
of good taste in the free product trial.

Double checking the quality of this supplier, our group research on the Vietnam Chamber of
Commerce in Industry (VCCI) hold on December 6th, 2007. This program is one of the activities
aiming to promote Vietnamese business community to sustainably develop. In this program,
Luong Quoi Coconut Co., Ltd is in the list of top 100 leading enterprise in Vietnam in 2017.

Asia-Pacific Economic Cooperation (APEC) is the forum for 21 member economies in Pacific
Rim who promote the free trade throughout the Asia Pacific region. The APEC summit is
Vietnam’s most important external event in 2017. In that summit, Ben Tre Import and Export Joint
Stock Corporation (Betrimex) coconut milk is one of the products promoting the brand of “Made
in Vietnam” of coconut products from the fresh ingredients. Their products have gained the interest
and satisfaction and positive feedback from the guests.

These informations partially persuade our group to choose Luong Quoi Coconut Co., Ltd and
Betrimex are our local suppliers.

Betrimex Corporarion Luong Quoi Coconut Co., Ltd

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 3.2 Pros and cons of various sources
For the Vietnam regional specialties fair 2017, sponsoring and getting a booth for such big events
will cost us a lot of money. However, in return, this cost would give us a potential opportunity to
introduce our quality product for both domestic and foreign community. Some of the attendees
will become our buyers asking for purchase in the future.

About the Vietnam Chamber of Commerce and Industry, our main challenges are not only having
a deeper research about the market but also the fact that our potential buyers have had their own
suppliers. Therefore, it would be better when we can develop a model or giving them data to
persuade them about the quality products and consistent source of the coconut milk. In spite of
this, it would be easier for us to trade with the enterprises because most of them have had their
complete a good supply chain.

3.3 Qualification
Information about certificates of Betrimex Corporation:

- “ENTERPRISE INTEGRATION AND DEVELOPMENT” CUP – 2012

- QUALITY SUPPLIER – 2013,2014

- TOP 100 BRANDS, PRODUCT, SERVICES FAMOUS OF VIETNAM – 2016

Certificates of Luong Quoi Co., Ltd including: ISO 22000:2005, GMP, EU Organic, Kosher, FDA,
BRC, HACCP and USDA – Organic certification.

We will visit the suppliers’ showrooms/ retail/ warehouse and their website to make sure they can
provide adequate quantity. Moreover, checking randomly the production process to know whether
they have high quality products to export or not.

Similar to qualification of foreign buyers, we also look closely at the reputation of our suppliers
within the industry to determine if they are suitable.

4. INCOTERMS - FOB
We can buy the insurance for our products since our products are guaranteed to be less damaged;
the canned coconut milk will be packed into big carton boxes then loaded on containers. Besides,
canned coconut milk is listed among the products that can easily get import license. However,
since we are just a small start-up business, we cannot afford the cost of risk happens during the
time of delivering and the cost of hiring ships to deliver the goods to named port of destination.
Therefore, we have made the decision to offer FOB term to our foreign buyers.

Under a FOB agreement, we shoulder all transportation costs up to the port of shipment, including
all loading costs. On the other hand, the buyer is responsible for all marine freight, insurance,
unloading costs right from the port of loading and transportation costs from the destination port to
his or her factory. There are also some more advantages of using FOB term, such as:

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- We will not be responsible for both marine insurance and arrange the sea transportation

- The product can be recovered before being hauled on the vessel. This maybe a good thing for us
in case of our buyer is defaulting or withdrawing the trade.

- Because the freight is arranged by the buyer, exporters like us are not responsible for any loss of
transit. Although the title of the goods is already transferred to the cargo is on the board, the freight
arranger has to negotiate with the owner to recover if any transit-loss happen, which is quite
complicated.

For our buyers, FOB giving them an ultimate control over the shipment since they can choose their
own suitable freight carrier. Furthermore, they also can select both the route and transit time. The
biggest benefit for our buyers is that they have a central point of contact with only one company
when any problem or questions might arise throughout the transportation process.

The diagram below demonstrates the obligation of seller and buyer and the transfer of risk:

5. Payment terms for Export Transaction

Viet Nam is a country with a tropical monsoon climate, suitable for planting coconut trees – the
available material in Viet Nam for our products. So that our sources are domestically gathered
without importing. Hence, we do not have payment term for the import transaction.

We choose Letter of Credit (L/C) because Letters of credit (LCs) are one of the most secure
instruments available to international traders, it can give security to both the seller and the buyer,
especially it has no risks for the exporters. Because the documentary credit is a bank undertaking,
the seller can look to the bank for payment, instead of relying upon the ability or willingness of
the buyer to pay, and it is also a conditional undertaking, payment is made on behalf of the buyer
against documents, which may represent the goods and give the buyer rights to them. We also

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avoid the need to make a prepayment or to establish an escrow account because an LC also protects
the buyer since no payment obligation arises until the goods have been shipped as promised and
ensure payment, provided that the terms and conditions of the letter of credit have been fulfilled.

As a seller, we can discount the L/C before maturity and receives payment on presentation of
documents to the bank after shipment of goods, unlike open-account sales or documentary
collection. Besides, we can reduce the production risk If the buyers change or cancel their orders.
The opportunity to get financing in the period between the shipment of the goods and receipt of
payment, especially in case of deferred payment. The instrument is designed to reduce the risk
taken by each party. The seller gets assured that if documents are presented on time and in the way
that they have been requested on the LC the payment will be made.

6. Trade intermediaries
6.1 Transportation
Having determined the US as our potential distributors due to the widespread application of
coconut milk to vegan dessert and Asian dishes, we decided that the US will be our first shipment.

It will be full container load (FCL) shipments, expected to have 40’ RF (Reefer Container)
containers with a gross weight of 30,415kg and measurement of 56 CBM (cubic meter). For each
container, we will have 1000 carton boxes, each holds a pair of packed in 24 can/bags. The
containers will be loaded at Cat Lai Port, Ho Chi Minh City and go through a 26-day journey
(assuming no problems) to California, US. Our first shipment will depart on 20 May as the buyer
would require us to deliver the products as soon as possible.

As mentioned in the INCOTERM part, we will use FOB’s terms for exporting our canned coconut
milk by seaway which means that the carriers and transportation route will be selected by our
buyers.

6.2 Freight forwarder

Being a young exporter having not much experience in the field, we need help from a freight
forwarder to deal with carriers while they need an intermediary for a smooth process. With an
extensive knowledge of requirements, documentation regulations as well as transportation cost and
banking practices, the forwarder will help us a lot in the process of exporting.

7. Other information
7.1 HS code
HS code for coconut milk is 2008.19.15

7.2 Tariff
The Vietnamese tax for exporting coconut products, especially coconut milk is 18% and the tariff
to export this product to US is 1%.

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 7.3 Government regulations
• Vietnam
According to Department of Commerce, coconut milk is not on the list of prohibited and regulated
products for export. This product is also not on the list of products that Vietnam applies export
quota. Therefore, the process of exporting might be easy and we do not need to concern about the
quantity when we export coconut milk. However, all of the rules about tariff, tax and required
documents for exporting should be strictly followed.

• United State

Trade Regulations of USA clearly defined:

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“Entry documents must be filed within 15 calendar days of the date that the shipment arrives at a
US port of entry, unless an extension is granted. Entry documents include the following:
− A bill of lading, airway bill, or carrier’s certificate (naming the consignee for customs
purposes) as evidence of the consignee’s right to make entry.
− A commercial invoice obtained from the seller, which shows the value and description of
the merchandise. A pro forma invoice may be submitted when the commercial invoice
cannot be produced.
− Packing lists, if appropriate, and other documents necessary to determine whether the
merchandise may be admitted.
− Food items must list all ingredients in order from most to least prevalent and must list
nutritional information.
− Labeling for foodstuffs and pharmaceuticals should be submitted to the US Food and Drug
Administration for approval, before shipments are made.”
Especially, we might need some certificates for food products when export to US, such as:
• North American Free Trade Agreement (NAFTA) Certificate of Origin
• Certificate of US Food and Drug Administration (FDA) Registration
• Generally Recognized as Safe (GRAS) Certification
Below are some certificates for food products:

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Sample of NAFTA Certificate of Origin

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Sample of Certificate of US FDA Registration

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Sample of GRAS Certificate

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 8. Conclusion
Having studied Import – Export course and applied its knowledge for the project help us a lot in
the principle of dealing with the transaction. However, we have to make more attempt to work in
the real life for many years to get more experience in the future.

First, we had to make a choice on which product to import/export. After going through all the
considerations, we decided to choose coconut milk as our product for export. Identifying the
product and having a deep knowledge of the product is key to success in this business and we will
always have to keep that in our minds for the future.

The second thing to do is to find a partner, identifying foreign buyers seems sensible on the report
but in real work, many more factors would affect the final decision on whether to deal with those
buyers or not. The problem is, either you are doing import or export, your partner is over the sea
and completely strange, you have to build the relationship and trust to your partner, which will be
the same the partner would do. A strong relationship is one of the important keys to the success of
import-export business. Choosing right partner would also affect your business too. One other
problem is that we can’t know as much as we want about their business. Have they had issues
dealing with other suppliers before, we can’t find out on the Internet. However, that kind of
information can be tracked when we have had some years in the market and extend our network.

Then, finding suppliers for our product is also one of the main keys. Specifically, for our product,
we had to find suppliers but our concern is that it would not give us a consistent quality of coconut
because there are various types of coconuts grown in different parts of our country, so it is a big
deal to decide which one is the most suitable, which may make it hard for us to build a relationship
with foreign buyers. To do this, it requires full knowledge about the import-export regulations in
countries, good vision and prediction about the risks and mistakes also unexpected situations could
happen.

By far, we have learned about the Incoterms as well as the payment terms: Cash in advanced, Open
Account, Documentary Collection and Letter of Credit. We found that it was hard and difficult to
digest at first but then we found it interesting. However, to make a real contract, it requires much
more than just an interest. Touching the legal side of the import/export business is a good
experience and provided us the initial looks at what we may do in the future. So many terms were
established for different circumstances and again, we feel if we want to do well, experience plays
a big part. Getting to deal with many different terms will surely give us better decisions for later
cases.

Last but not least were the decisions regarding transportations and intermediaries. In this last
assignment, we chose to look for help from a freight forwarder so that our lack of experience about
documentary would be taken care of. For the future, we hope we can deal with it ourselves to
minimize the cost of the whole transaction.

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To conclude, it is just an “on paper” experience for this exporting coconut milk business. It will
completely different thing when we go to work in the real company. We do not have enough
confidence to be ready for the work if it comes across our desk tomorrow and there are still many
things that we have hesitated it would affect our overall performance. Even though it does not
mean that we can’t do it, we believe that later, when we have the chances to practice, time to collect
knowledge and experience, we will be ready for the job.

We would like to give a huge thank you for your thoroughness in not only teaching but also telling
us a lot of stories and experience gained in your previous work. This knowledge is precious which
helping us a lot in our work in later. Thank you, teacher!

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