FOREIGN TRADE UNIVERSITY

FACULTY OF

---------***---------

REPORT

SELECT AND ANALYZE NEW MARKET FOR

THE PRODUCT LINE “NATURAL SPICES
SPECIALITY” OF DH FOODS

Topic: International Marketing

Class: MKTE401(HK1-2324).2
Instructor:
Group: Group 4

Hanoi, 8 September , 2023

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 WORK ASSIGNMENTS

No. Name Student ID Evolution

1 Nguyễn Cẩm Nhung 2113150055

2 Hoàng Hải Khanh 2112150081

3 Lê Thị Như Quỳnh 2113150061

4 Nguyễn Phạm Hiền My 2112150122

5 Đỗ Thu Thảo 2113150069

6 Nguyễn Minh Châu 2113150011

7 Nguyễn Mai Chi 2112150038

8 Phạm Phương Anh 2113550023

9 Nguyễn Mai Khuê 2112550021

 TABLE OF CONTENTS

INTRODUCTION....................................................................................................................
CHAPTER 1: COMPANY OVERVIEW..............................................................................
I. About DH Foods...........................................................................................................
II. Product lines.................................................................................................................
III. Rationale for the chosen company and products......................................................
1. Reasons for choosing DH Foods................................................................................
2. Reasons for choosing NATURAL Spices Speciality.................................................
CHAPTER 2: MARKET SCREENING AND SELECTION..............................................
I. Market screening..........................................................................................................
1. Criteria for elimination...............................................................................................
2. Criteria for selection...................................................................................................
II. Market selection for exporting DH Foods spices.....................................................10
1. Market atractiveness.................................................................................................10
2. Competitive Strength................................................................................................16
CHAPTER 3: MARKET ENTRY AND MARKETING MIX...........................................19
I. Internal factors...........................................................................................................19
1. Firm size (-):.............................................................................................................19
2. International experience (+):....................................................................................19
3. Product.....................................................................................................................19
II. External factors..........................................................................................................20
1. Sociocultural distance (-).........................................................................................20
2. Country risk / Demand uncertainty (-).....................................................................20
3. Market size and growth (Medium)...........................................................................20
4. Trade barriers ( - )....................................................................................................20
5. Intensity of competition (medium)...........................................................................21
6. Small number of export intermediaries available (-)...............................................21
III. Transaction-specific factors......................................................................................21
1. Tacit nature of know-how: Not very (-)...................................................................21
2. Opportunistic behavior (increase transaction cost): Unlikely (-).............................21
IV. Desired mode – characteristics..................................................................................22
1. Risk-averse: High.....................................................................................................22
2. Control: Low............................................................................................................22
3. Flexibility: High.......................................................................................................22
V. Conclusion...................................................................................................................22
CONCLUSION.......................................................................................................................24
REFERENCES.......................................................................................................................25
APPENDICES........................................................................................................................30
Appendix 1: List of countries that have signed FTA with Vietnam.....................................30
Appendix 2: Non tariff measures of Canada, Malaysia and Sweden’s spices products......33

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 INTRODUCTION
Since ancient times, spices have been the soul of Vietnamese cuisine and culture. With
favorable climate and rich soil conditions, Vietnam is one of the leading countries in the
world in terms of spice production and export. In 2022, Vietnamese spices held
approximately 11% of the global market share. Among these, Vietnam ranked first in black
pepper exports and third in cinnamon and cloves exports. Vietnamese spices also held a
significant share in the import of several markets such as the United States, the EU, and
India.

In the current context, as living standards improve significantly and consumers become
more concerned about health problems, the demand for high-quality and health-safe spice
products is on the rise. Recognizing the evolving preferences of consumers towards
healthier and natural food options, DH Foods places a strong emphasis on producing spices
that not only enhance culinary experiences but also contribute positively to overall well-
being.

The current objectives for spice manufacturing companies in general, and DH Foods in
particular, is to internationalize their products, enhance competitiveness, and export spices
to international markets. To achieve this goal, enterprises need to conduct comprehensive
research and assessment of both the business environment and internal characteristics of
the company. Selecting the right market is of paramount importance, as it marks the initial
step towards entering a new market and ultimately determines the success of the business
in that market.

Therefore, our essay "Select and analyze new market new market for the product line
“NATURAL Spices Speciality” of DH Foods" aims to do market research to assist DH
Foods in selecting the most promising foreign market and devising an appropriate market
entry strategy.

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 CHAPTER 1: COMPANY OVERVIEW
I. About DH Foods
Founded in 2012, DH Foods Joint Stock Company is a firm in the F&B industry that
specializes in Vietnamese spice products. The company aims to offer professional services
in agricultural products import and export and deliver great support to local suppliers and
partners. With 11 years in operation, DH Foods has successfully become a leading
company in developing and modernizing its various product lines of Vietnamese regional
spice specialities. In particular, the company currently has a total of 9 product lines ranging
from dipping sauces and salt to cooking and marinating spices and fish sauce. DH Foods
has also established its own reputation in national and global markets, including over 50
cities and provinces in Vietnam as well as numerous countries all over the world.

Mission: DH Foods’ ambition is to provide traditional Vietnamese spice products with

regional characteristics that are healthier for family meals.

Vision: Bringing the interests of consumers to the forefront of research activities on

product quality and business development orientation.

II. Product lines

With the strict criteria of “No Artificial Colors, No Preservatives, and No Foreign Matter”,
DH Foods is deeply aware of consumers’ health by developing convenient but still healthy
spice products. DH Foods’ target customers are mainly health-conscious homemakers, and
Vietnamese diaspora. The company’s 9 key product lines include:
 Tay Ninh Dipping Salt Speciality
 Sauce Speciality & Chilli Sauce
 NATURAL Spices Speciality
 NATURAL Cooking & Marinade Spice
 Sate Sauce
 Soup Base for Cooking
 NATURAL Phu Quoc Fish Sauce
 NATURAL Dipping Salt Speciality
 Horeca Products

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 III. Rationale for the chosen company and products
1. Reasons for choosing DH Foods
Despite being a small and medium-sized enterprise (SME), DH Foods is one of the leading
companies in exporting agricultural products in Vietnam. The company’s wide range of
high quality spice products meet not only the requirements of the domestic market but also
the strict standards of demanding foreign countries. Up to 2023, DH Foods has
successfully exported its products to 10 foreign markets, including the United Kingdom,
the United States, the Netherlands, Russia, Japan, Australia, South Korea, Germany,
Taiwan and France. Although the revenue earned from these foreign markets is only
accounting for 10% of the total revenue, the annual growth rate proves to be very high -
30-50% for the Japanese and Dutch markets (DH Foods JSC, 2022). In addition, DH Foods
also has great export potential. Over the past 6 years, revenue has increased by 50%, with
the 2021 revenue being 144.2 billion VND (51.6% growth from 2020). The company also
attracts a lot of investors with the latest capital call being 32 billion VND (DH Foods JSC,
2022). Besides, DH Foods also has sufficient manufacturing capacity thanks to its own
factory (Le Minh Xuan factory) in Ho Chi Minh City without having to outsource.
Therefore, with great export potential in terms of financing, capital and manufacturing, DH
Foods is an ideal choice for further market expansion.

2. Reasons for choosing NATURAL Spices Speciality

The analysis focuses on the NATURAL Spices Speciality product line of DH Foods, which
is one of its two key export products together with Tay Ninh Dipping Salt, due to the
following two reasons. Firstly, Vietnamese spices carry a high cultural value as they are
directly linked to the unique and authentic cuisine of Vietnam. This gives the product a
high differentiation advantage compared to other kinds of F&B products. Secondly,
Vietnamese spices are suitable for one of the main target customers of DH Foods -
Vietnamese diaspora. Living in foreign countries and far from home, this consumer group
always searches for authentic Vietnamese flavors that can only be made with authentic
spices of Vietnamese origin. Therefore, the NATURAL Spices Speciality from DH Foods
will help satisfy their needs the most.

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 CHAPTER 2: MARKET SCREENING AND SELECTION

In the screening process, we decided to screen markets worldwide. However, because of

limitations in time and resources, the group included two criteria for elimination to narrow
down the potential markets. Then, we had three criteria for selection which accounted for
40%, 30%, and 30%, and each country will be scored on a scale of 0 to 4 on each criterion
to find the top 3 countries with the highest scores to research more thoroughly.

I. Market screening
1. Criteria for elimination
1.1. Current importers of DH Foods
The screening process excluded all the countries DH Foods has already exported to
including Japan, Korea, Netherlands, England, The USA, Germany, France, Australia,
and Russia.

1.2. Countries that have not signed FTAs with Vietnam

We excluded all countries that have not signed any Free Trade Agreement with
Vietnam. Free Trade Agreements (FTAs) have become increasingly prevalent in the
modern global economy. These agreements are bilateral or multilateral trade pacts that aim
to reduce barriers to trade and promote economic cooperation between participating
countries. FTAs offer numerous advantages that contribute to economic growth, increased
market access, and enhanced international relations.
After eliminating countries of two aforementioned factors, the group decided to select all
other nations (exactly 46) to do further research.

2. Criteria for selection

2.1. Share in the world spice imports
When a company needs to export a product to a foreign market, one of the first factors it
needs to consider is market size. Market size can be understood as the total amount of
demand (calculated in terms of annual product consumption or product consumption value)
of the country for the product line the company is trading (Melendez, 2019). Estimating the
market size before exporting helps the company calculate the level of sales as well as the
potential revenue that the company can reach and capitalize from, thereby making safer
decisions in exporting. For the purpose of selecting a new market to enter, our group
collected data from ITC's Trademap tool on the share (in percentage) of 46 countries in the

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spice import industry (HS code no. 0910) and then scored each country on a scale of 0 to 4
(larger number means larger share).

2.2. The tariff applied to the products

For a product exported to a foreign market, import duties in that country will increase the
cost of the product to consumers. Meanwhile, price is a significant factor that attracts
consumers when deciding to choose products. Therefore, the import tax rate has an impact
on determining the competitiveness of a product in the new market.
Applying to DH Foods Natural spice products line, in order to review and select potential
import countries, the group used the ITC’s Trademap tool and rated the tariff from 0 to 4
(with 4 being the country with the lowest tariff rate).

2.3. Total Vietnamese population

DH Foods focuses strongly on Vietnamese and Asian-rooted people as targeted customers.
According to Mr. Nguyen Trung Dung (the Chairman of the Board of Directors of Dh
Foods) in DH Foods Shareholders Meeting 2022 ‘With 300 million consumers, of which
30 million are of Asian descent and 3 million are of Vietnamese origin in the US, it would
take 10 or 20 years to serve this market alone. That opens up opportunities not only for Dh
Foods but also for Vietnamese cuisine’, However, for the limited research time, our group
chose to find figures on the Vietnamese overseas population only. Then, we graded the
population on a similar scale (with higher numbers are countries with higher Vietnamese
populations).
After screening all possible markets for the DH Foods Natural spice products line, we
narrowed it down to Canada, Malaysia, and Sweden to research further.

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 Share Average Total Score (0-4)
in the tariff Vietnamese Share Average Total
world (estimated) population in the tariff Vietnamese
spice aplied by (~30%) world (estimated) population Final
No. Importer
imports the country spice aplied by score
(%) (%) imports the country
(~40%) (~30%) (%) (%)

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1 Armenia 0 2.8 1000 0 2 0 0.6

2 Austria 1.3 1.1 5000 2 3 1 2

3 Belarus 0.1 2.8 1000 0 2 0 0.6

4 Belgium 2.3 1.1 300 3 3 0 2.1

5 Brunei 0.1 0 * 0 4 0 1.2

6 Bulgaria 0.1 1.1 * 0 3 0 0.9

7 Cambodia 0 14.1 100025 0 0 4 1.2

8 Canada 3.1 0.3 275530 3 4 4 3.6

9 Chile 0.1 3.3 * 0 1 0 0.3

10 Croatia 0.1 0.7 * 0 4 0 1.2

11 Cuba 0.1 18.5 * 0 0 0 0

Czech
0.6 1.1 80000 1 3 4 2.5
12 Republic

13 Denmark 1 1.1 16141 2 3 2 2.3

14 Estonia 0.2 1.1 * 0 3 0 0.9

15 Finland 0.1 1.1 13291 0 3 2 1.5

16 Greece 0.2 1.1 1200 0 3 0 0.9

17 Hong Kong 0.5 0 7000 1 4 1 1.9

18 Hungary 0.4 1.1 5000 0 3 1 1.2

19 India 2.9 27.8 * 3 0 0 1.2

20 Indonesia 0.3 4.6 150 0 0 0 0

21 Ireland 0.3 1.1 5000 0 3 1 1.2

22 Israel 0.3 3.7 175 0 1 0 0.3

23 Italy 1.3 1.1 5000 2 3 1 2

24 Kazakhstan 0.2 2.8 50 0 2 0 0.6

25 Kyrgyzstan 0 2.8 * 0 2 0 0.6

26 Lao 0 20.2 100000 0 0 4 1.2

27 Latvia 0.2 1.1 * 0 3 0 0.9

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28 Lithuania 0.2 1.1 * 0 3 0 0.9

Luxembour
0.2 1.1 200 0 3 0 0.9
29 g

30 Malaysia 2 0 70000 3 4 4 3.6

31 Malta 0 1.1 400 0 3 0 0.9

32 Mexico 0.2 13.4 10000 0 0 2 0.6

33 Myanmar 0 2.9 600 0 2 0 0.6

New
0.3 1.4 10086 0 3 2 1.5
34 Zealand

35 Peru 0.1 0 * 0 4 0 1.2

36 Philippines 0.4 11.3 400000 0 0 4 1.2

37 Poland 1.6 1.1 45000 2 3 3 2.6

38 Portugal 0.9 1.1 * 1 3 0 1.3

Republic of
0.1 1.1 12000 0 3 2 1.5
39 Cyprus

40 Romania 0.4 1.1 3000 0 3 0 0.9

41 Singapore 1.2 0 15000 2 4 2 2.6

42 Slovakia 0.1 1.1 15000 0 3 2 1.5

43 Slovenia 0.1 1.1 * 0 3 0 0.9

44 Spain 2.9 1.1 2000 3 3 0 2.1

45 Sweden 1.5 1.1 21874 2 3 3 2.6

46 Thailand 0.9 25 250000 1 0 4 1.6

II. Market selection for exporting DH Foods spices

1. Market atractiveness
1.1 Market Size
Market size serves as a rough estimate of market potential. Cavusgil (1997) measured
market size by a country’s total population and weighted 20%. The total population of a
country gives us important information about the size of a nation’s markets (Mullen, Sheng

9
2015); however, the population of Vietnamese people living in this country is most
accessible for marketing (i.e., advertising, sales, distribution, after sale service, etc.).
To estimate market size, this report indicates the population of Vietnamese people which
consists of people of full or partial Vietnamese ancestry who were born in or immigrated
to.
Weight: 15%.
As evaluated in the Second chapter, the scores of 3 countries are:

Country Canada Malaysia Sweden

Score 4 4 3

1.2 Market growth

Estimating market growth helps businesses assess the potential demand for their products
or services in foreign countries.
Cavusgil (1997) measured market growth rate by single variable, which is average annual
growth rate of industry and this important dimension was given a weight of 15%. While
Cavusgil et al. (2004) used GDP annual growth rates to reflect a market’s recent economic
growth as well as using growth in commercial energy use as a second indicator and weight
this dimension at 12%.
To specify Vietnamese consumers, the authors use the average annual growth rate of the
Vietnamese population in the researched countries.

Weight: 10%.

Score 0 1 2 3 4

Average annual growth rate of <0% 0.1 - 1.1 - 3% 3.1 - >5%

Vietnamese population in the researched 1% 5%
country

a. Canada
In 2001, the Vietnamese community numbered 151,400 individuals, while by 2016, it had
surged to 240,615 (Statistics Canada, 2016). The authors found a 3.9% average annual

10
growth rate for the Vietnamese population in Canada over 15 years, highlighting a
dynamic presence driven by immigration and community expansion.
b. Malaysia
In 2003, the Vietnamese community was estimated at 80,000 individuals (Joshua Projects,
2023), while in 2020, it had increased to 101,220 (Statista Canada, 2023). The calculation
showed a 1.5% average annual growth rate for the Vietnamese population in Malaysia over
17 years, indicating modest growth in the community.
c. Sweden
In 2010, the Vietnamese community was estimated at 14,584 individuals, while in 2020, it
had increased to 21,874 (Statistics Sweden, 2023). The calculation to determine the
average annual growth rate of the Vietnamese population in Sweden over a 10-year period
yielded a result of 4.9%.

Country Canada Malaysia Sweden

Score 3 2 3

1.3 Market accessibility

Cavusgil (1997) defined market accessibility as the extent to which a foreign market is
open, which is represented by two variables: per capita imports from the United States and
the average annual growth in U.S. imports over the past five years. The dimension has a
weight of 20%. While Mullen and Sheng (2007) combined total imports of goods and
geographic distance to measure market accessibility to estimate market accessibility.
Distance and time are important factors of competitiveness of intermodal transport
(Kreutzberger, 2008). As distance still matters and firms must explicitly consider the
effects of distance when they make decisions about entering international markets
(Ghemawat, 2001).

For the purpose of researching in the category of spices and Vietnamese consumers, the
research combined growth rate in imported value between 2018-2022 of Vietnamese spices
(HS: 0910) and the geographic distance, with each contributing 50% to the total score.

Weight: 10%.

Score 0 1 2 3 4

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Growth rate in imported value in
2018-2022 of Vietnamese spices (HS: <0% 0 - 4% 4 - 8% 8 - 12% >12%
0910)

Geographical distance (thousand

> 16 13 - 16 8 - 13 4-8 0-4
kilometers)

a. Canada
Initially, according to Trade Map (2022), the five-year growth rate of spices imported by
Canada is 5%. In 2021, Vietnam exported $1,7M in Spices (HS: 0910), becoming the 9th
largest exporter of spices in Canada. Canada can be considered as a potential market for
DH foods spices.
Secondly, the distance from Canada to Vietnam is 12,624 kilometers (Distance World,
2020). Moreover, the exploitation of the Canadian market has not been as expected,
because the geographical distance between Vietnam and Canada is too far, which results in
higher transportation cost and longer shipping time.
b. Malaysia
Firstly, as per Trade Map data (2022), Malaysia experienced an 1% increase in its imports
of spices over a five-year period. In 2022, Vietnam achieved exports of spices valued at
$0.45 million, securing its position as the 11th largest spices exporter to Malaysia.
Secondly, the distance between Malaysia and Vietnam measures 2,039 kilometers,
(Distance World, 2020). The relatively short distance offers potential cost advantages in
transportation. Shorter distances typically mean lower transportation costs, including
reduced fuel expenses and faster transit times.
c. Sweden
Initially, based on Trade Map statistics from 2022, Sweden saw a 22% growth rate in its
spice imports over a five-year span, which is an impressive growth rate. Thanks to high
demand, Northern Europe is a promising land for Vietnamese agricultural products.
(Vietnamplus, 2023)
Secondly, the distance from Sweden to Vietnam spans 7,883 kilometers (Distance World,
2020). This relatively moderate distance might result in moderate transportation costs
compared to longer international routes.

Country Canad Malaysia Sweden

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 a

Growth rate in imported value between 2018-2022 of

2 1 4
Vietnamese spices (HS: 0910)

Geographical distance 2 4 3

Total score 2 2.5 3.5

1.4 Non-tariff barriers

Non-tariff barriers (NTBs) are a pivotal factor that determines whether the company
can successfully penetrate a foreign market or not. They are defined as any
restrictions arising from prohibitions, conditions, or specific market requirements
that can complicate and increase costs of importing or exporting a product.

Felbermayr et al. (2017) believed NTBs is gaining prominence in the formulation of trade
agreements. It was observed that when NTBs are imposed, trade is more significantly
affected compared to tariffs. Specifically, an increase of 10% in NTBs is associated with
an average trade reduction of 1.7%. (Hoekman and Nicita, 2011).

In this essay, our group considers the quantity of non-tariff barriers to determine the score
for each country. The details are based on MAC map and presented in the below table:

Score 0 1 2 3 4

Number of non-
more than 41- 50 31 - 40 20 -30 less than 20
tariff barriers
50 barriers barriers barriers barriers barriers
applied

While conducting the assessment, we considered not only the quantity of obstacles but also
assessed the intricacy of each requirement.
Weight: 15%.

a. Canada
Canada is one of Vietnam's new partners in the CPTPP agreement. Canada is considered a
relatively demanding market for imported goods and is one of the countries widely using
non-tariff measures (NTMs) globally. Additionally, in the context of the COVID-19
pandemic, Canada tends to increase import requirements, enhance inspection and goods

13
examination, and tighten transportation controls. Canada currently applies 33 product
standards for Vietnamese spice products, with a particular focus on labeling, product
quality, ingredient compositions
b. Malaysia
Although Vietnam and Malaysia are ASEAN partners, Malaysia still enforces strict
requirements for spice products imported from Vietnam. Currently, the Malaysian
government has introduced 70 product standards in place for salt and spice items. Due to
its multicultural and multi-religious nature, with Islam as the majority religion (comprising
over 60% of the population), exports to Malaysia, especially in the agricultural and food
sectors, must meet not only international trade standards but also adhere to specific "Halal"
requirements for Muslim consumers. Products entering this market must bear the "Halal
Food" label from the Department of Islamic Development Malaysia (JAKIM) to confirm
their adherence to high-quality and food safety standards.
c. Sweden
As a Northern European country, Sweden is also a demanding market with strict standards,
including those for spice products imported from Vietnam. Currently, Sweden enforces 35
product standards for Vietnamese spice items. The Swedish market has significant demand
for various products, including textiles, footwear, and food. However, it places a strong
emphasis on environmental control factors, which exporting businesses must carefully
address. In addition to quality and origin requirements, Sweden is highly concerned about
the production processes leading to the final product and its environmental impact.

Country Canada Malaysia Sweden

Score 2 0 2

1.5 Political Stability

Numerous researchers have reached the consensus that political instability has adverse
effects on both economic growth and international trade. Touny (2016) asserted that a one-
unit increase in political instability has a substantial negative impact of 68% on Foreign
Direct Investment (FDI) inflows in the Middle East region. Similarly, Dutta and Roy
(2011) argued that a politically unstable country is less likely to attract foreign investment.
Consequently, assessing the stability of the political environment emerges as a crucial
consideration.

14
In our study, we use the Global Peace Index (GPI) to assess the level of political stability
in Canada, Malaysia and Sweden. The Global Peace Index is computed through the
utilization of 23 indicators, combining both quantitative and qualitative data from reputable
sources. This index evaluates the state of peace across three main categories: (1) the level
of societal safety and security; (2) the extent of ongoing domestic and international
conflicts; (3) the extent of militarization. The criteria for marking are presented in the
below table:

Score 0 1 2 3 4

GPI >3 2.51 - 3.0 2.01 - 2.5 1.51 - 2.0 1.0 - 1.5

Weight: 10%.

a. Canada
Canada secures the 11th position in the 2023 Global Peace Index with a score of 1.35. The
nation has seen an overall improvement in its state of peace, primarily driven by
advancements in the Ongoing Conflict and Safety and Security domains. Key indicators,
including the Political Terror Scale, the impact of terrorism, incarceration rates, and public
perceptions of criminality, have notably progressed over the past year.
b. Malaysia
Malaysia stands among the top 20 most peaceful nations globally, scoring 1.513. It excels
in the Ongoing Conflict domain, securing the 5th position, and ranks 2nd in Militarization.
However, its performance in Societal Safety and Security is relatively low due to internal
racial and religious issues. The recent rise of Anwar Ibrahim to power in November 2022
is hoped to spark optimism for positive transformations in Malaysia's political and social
landscape.
c. Sweden
With a score of 1.625, Sweden ranks 28th globally and 19th in the European region
according to the Global Peace Index 2023. Compared to other North European countries,
Sweden holds the lowest position. The country's societal safety is reported to be relatively
stable in the past few years.

Country Canada Malaysia Sweden

Score 4 3 3

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 2. Competitive Strength
II.1. Product fit
Product fit is a term that refers to how well a product meets the needs and expectations of
the target market. Product fit can be measured by various indicators, such as customer
demand, retention, loyalty, referrals, reviews, ratings, and revenue. In this part, we will
measure the spices product fit through customers’ preferences.
Weight: 20%.

a. Canada
DH food may have a moderate fit in Canada, as the Canadian market for spices is
relatively small but increasing. According to Statista, the market is expected to grow
annually by 6.63% (CAGR 2023-2028). DH food offers natural spices with no synthetic
colors and no artificial preservatives, which may appeal to Canadian consumers who are
seeking organic products. However, it may face competition from other spice brands that
have organic certification, which is seen as a sign of quality and gives exporters an
advantage in a competitive market. Therefore, it may need to obtain organic certification
and market its products as diverse and convenient to increase its product fit in Canada.
b. Sweden
DH food products may have a low fit in Sweden, as the Swedish market for spices is also
small and has lower growth than Canada. It also offers natural spices with no synthetic
colors and no artificial preservatives, which may interest Swedish consumers who are
interested in organic products. However, it may face more challenges in Sweden than in
Canada, as organic certification is more important for Swedish buyers who source spices
and herbs from abroad. But with the criteria of “No synthetic color, no artificial
preservatives, and 0% impurities”, the company also ensures that its products meet the EU
standards and regulations.
c. Malaysia
DH food may have a high fit in Malaysia, as the Malaysian market for spices is much
larger and faster growing than Canada and Sweden. It offers diverse spices that are
collected throughout Vietnam, which may appeal to Malaysian consumers who are looking
for authentic and affordable spices. Moreover, Malaysia imports spices primarily from
Asian countries such as China, India, Thailand, Bangladesh, and Indonesia, which may
give DH food an advantage over other spice brands that are from other regions. Therefore,

16
Dh food product may have a good product fit in Malaysia by offering diverse, authentic,
and affordable spices.
In conclusion, the scores of 3 countries are:

Country Canada Malaysia Sweden

Score 3 4 2

II.2. Price
Assessing the price factors can help businesses to compare the feasibility, and
attractiveness of exporting their products to different countries.
Weight: 20%

Score 0 1 2 3 4

Disparity between the percentage

of the average price of spices
imported from Vietnam and The >100% 50-100% 0-50% -50%- 0% < -50%

World to the host country

a. Canada
According to data by the International Trade Centre in 2022, the average price of spices
imported by Canada from Vietnam was 4,051 U.S. dollars per ton, which was higher than
that from the global average (2,918 U.S. dollars per ton) about 38.82 %. Such a percentage
might indicate that price is not a competitive factor for Vietnam to export to Canada
compared to the world overall.
b. Sweden
In 2022, the price at which Sweden imported spices from Vietnam was 4,857 US dollars
per ton, which was lower than that from the world on average - 5,250 US dollars per ton
(ITC, 2022) by 7.4%. Therefore, Sweden seems to have a competitive advantage regarding
price when it comes to DH Foods exporting their spices products.
c. Malaysia
There was a high disparity percentage (about 71.52%) between the unit value of spices
imported from Vietnam and the world on average to Malaysia, with the number being
1,331 and 776 US dollars, respectively. Based on this analysis, a conclusion could be

17
drawn that, regarding price factors, Malaysia might not be a potential destination for DH
Foods to export its spices products.

Country Canada Malaysia Sweden

Score 2 1 3

2.3 Summarize the evaluation criteria and scoring

In conclusion, Canada has the highest overall score, implying that it is the most attractive
market for Vietnamese spice exporters in terms of market attractiveness and competitive
strength. So, the proposed market to penetrate in is Canada.

Weight Canada Malaysia Sweden

Market Market size 15% 4 4 3

attractiveness
Market growth 10% 3 2 3

Market 10% 2 2.5 3.5

accessibility

Non-tariff 15% 2 0 2
barriers

Political Stability 10% 4 3 3

Competitive Product fit 20% 3 4 2

strength
Price 20% 2 1 3

Total score 100% 2.8 2.35 2.7

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 CHAPTER 3: MARKET ENTRY AND MARKETING MIX
I. Internal factors
1. Firm size (-):
According to the latest regulations of the Vietnamese government (2023), DH Foods is
categorized as a small and medium-sized enterprise (SME). Established in 2012 with a
mere capital of 1.2 billion Vietnamese dong, DH Foods has now become a well-known
spice brand with over 200 employees and revenue exceeding 100 billion Vietnamese dong.
Although DH Foods has experienced a significant growth in the last 10 years, the current
financial power of the company is not strong and stable enough to open foreign branches.
As a result, this factor decreases internalization.

2. International experience (+):

DH Foods has many years of experience in exporting goods to foreign markets. Up to date,
DH Foods’ products have been made available in many supermarkets in Japan, South
Korea, Taiwan, France, the Netherlands, Australia, the US, the UK, Germany and Russia.

3. Product
 Product complexity (-):
Product complexity refers to the diversity and sophistication of the productive know-how
required to produce a product. The spice products with HS code: 0910, according to the
Product Complexity Index (PCI) developed by Harvard University, are at a low level of
complexity with the rank 1128th in 2021. Therefore, with the product line “ NATURAL
spice specialty” (HS code: 0910), product complexity of DH Foods is evaluated low and
decreases internalization.
 Product differentiation advantage (-):
DH Foods' "Natural Specialty Spice" line primarily consists of familiar and fundamental
Vietnamese spices. These products do not introduce any groundbreaking flavors or new
functionalities. The unique selling point of these products lies solely in their 100% origin
from Vietnam and their ability to deliver the most authentic Vietnamese flavors. In
addition, DH Foods brand is relatively new in the international market, and its advertising
campaigns have not been overly prominent or heavily invested in. Consequently, the
product differentiation advantage in this case is low, leading to a decreasing level of
internalization.

19
 II. External factors
1. Sociocultural distance (-)
Canada is a multicultural country with nearly one-fifth of the population are immigrants
from all over the world. Hence, Canada is open to cultural differences, including the
cuisines of other countries. However, the target customer of DH Foods in this market is
Vietnamese individuals or those of Vietnamese descent living in the country. Therefore,
sociocultural differences have little impact on DH Foods' choice of entry mode.

2. Country risk / Demand uncertainty (-)

In Canada, the economy is strongly influenced by global commodity prices, especially for
oil and natural resources, impacting economic stability, consumer spending, and business
investments. The complex regulatory landscape, with federal and provincial regulations
covering trade, taxation, and industry-specific requirements, poses compliance challenges.
While generally politically stable, Canada is not immune to policy shifts accompanying
political changes, affecting business strategies. Overall, Canada faces significant country
risk and demand uncertainty, making externalization a likely strategy.

3. Market size and growth (Medium)

Canada is among the top 5 countries that has the largest number of Vietnamese diaspora. In
2001, the Vietnamese community comprised 151,400 individuals. However, by 2016, this
community had experienced substantial growth, reaching a total of 240,615 individuals, as
reported by Statistics Canada in 2016. The growth rate of the Vietnamese population in
Canada was around 3.9% over the course of 15 years. To conclude, the size of the
Canadian market is medium and it grows at a moderate rate .

4. Trade barriers ( - )
Vietnam and Canada both signed The Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) agreement. This agreement has become effective
since December 30, 2018 and opened up numerous opportunities for Vietnam to access
such a vast and potentially lucrative market as Canada. Notably, since January 1, 2021,
Canada removed a total of 96.3 percent of the tax lines for goods originating from
Vietnam. All in all, the trade barrier factor is evaluated at a low level and decreases
internalization.

20
 5. Intensity of competition (medium)
In the Canadian market, there are spice products from Vietnamese exporting companies
such as Thinh Plus, Tien Duc JSC., and K Agricultural Factory. However, these companies
do not focus on spice and seasoning products only, but agricultural products in general.
This results in less diversity compared to DH Foods’ products. DH Foods' entry into the
Canadian market is expected to gain strong support from the Vietnamese diaspora due to
its quality, diverse range, and appealing packaging. Overall, competition for DH Foods is
limited, making externalization a viable strategy.

6. Small number of export intermediaries available (-)

Canada is the 5th largest spice import market for Vietnam, with a value reaching nearly 2
million dollars (Trademap, 2022). This is why there is a significant number of importers
and retailers in Canada, with over 200 importers and thousands of distributors and retailers
across the country. Some prominent importers include Bigimex Trading Inc., Just Spices
Corporation, Horton Spice Mills Ltd., Dr. Oetker Canada Ltd, and more. If DH Foods
decides to export to Canada, it would indeed represent a substantial advantage for the
company.

III. Transaction-specific factors

1. Tacit nature of know-how: Not very (-)
Sanchez-Peinado et al. (2007) use the following measures for ‘tacit know-how’:
 The difficulty in understanding the involved skills and knowledge;
 The difficulty in transferring skills and knowledge;
 The difficulty in valuing a priori the exact price of a product/service;
 The difficulty in copying skills and knowledge.
The know-how and product benefits associated with DH Foods' spice products are not
difficult to transfer and explain to an independent partner, nor do they justify the exact
price. The easiness involved in transferring tacit know-how provide an incentive for firms
to use export modes, in order to remain core technology.

2. Opportunistic behavior (increase transaction cost): Unlikely (-)

Opportunistic behavior refers to seeking self-interest with guile. Canada is generally
known for its stable and well-regulated business environment, which can contribute to a
lower likelihood of opportunistic behavior. Moreover, partners with a strong reputation for
fairdealing are less likely to be view ed as opportunistic (Wang 2002). Similarly, partners

21
considered to be trustworthy are typically perceived as less opportunistic (Cavusgilet al.
2004). There are 14 Canadian companies in the Fortune Global 500, which ranks the
world's largest companies by annual revenue, which implies that opportunistic behavior
rate in Canada is low.

IV. Desired mode – characteristics

1. Risk-averse: High
Because DH Foods is a small and medium-sized enterprise (SME), they tend to avoid
taking risks. They are inclined to favor export methods like indirect and direct exporting,
or even licensing, which usually involve minimal financial and management resource
commitments.

2. Control: Low
DH Foods has a low degree of control over its products and operations in foreign markets.
It transfers most of the control to the agent, who acts as an intermediary between DH
Foods and the customers in the foreign market. The agent is responsible for finding and
contacting potential buyers, negotiating prices and terms of sale, delivering the products,
collecting payments, and providing after-sales service. The agent also has to deal with the
local market conditions, such as competition, demand, regulations, culture, etc. DH Foods
also has to pay a commission or fee to the agent for each sale, which reduces its profit
margin.

3. Flexibility: High
In considering their market entry strategy, DH Foods' management needs to carefully
evaluate the flexibility associated with different options. Hierarchical modes, which often
demand substantial equity investments, tend to be the most expensive and the least
adaptable, making quick adjustments challenging. Given the constraints of limited capital
resources and a lower level of management resource commitment, especially in terms of
human resources, DH Foods would be wise to opt for export modes.

V. Conclusion
Based on the aforementioned detailed analysis of factors affecting DH Food and the above
table about entry mode decision, Dh Foods will choose the direct export method to bring
the product into the Canadian market. With this form of direct export, Dh Foods will
produce products in Vietnam and sell its products to Canada through an export

22
management company. The company will distribute products to retail systems across the
Canadian market.

This form will minimize the risk for Dh foods when it is possible to take advantage of the
capacity, market understanding, service quality of the intermediary company and still
assume the power to decide the price policy, the conditions of sale, advertising and use of
its own name.

In conclusion, DH Foods enters Canada market by Externalization - Direct export to

Canada. This approach provides DH Foods with greater control over its marketing mix,
particularly when working with agents in the Canadian market. By directly managing the
export process, DH Foods can tailor its marketing strategies and ensure that its products
align with the specific preferences and demands of consumers.

23
 CONCLUSION

In conclusion, it is imperative to underscore the critical role played by diligent market

research and selection in the success of product exports. This initial phase serves as the
foundation upon which the subsequent phases of the export process are built. Through the
meticulous evaluation of various criteria profoundly impacting business operations within
new markets, the Canadian market emerged as a particularly promising destination for DH
Foods' export endeavors, specifically targeting the “NATURAL Natural Spices” product
line. Moreover, it is worth noting that Sweden and Malaysia also warrant consideration due
to their uniformity of evaluation criteria as well as convenience in exchange and purchase.

The rigorous scrutiny and analysis of these criteria hold the key to DH Foods's entry into
new markets and, consequently, the continuous evolution of its business operations. This
strategic expansion ultimately contributes to the elevation of the Vietnamese spices brand
onto the global economic stage.

We would like to express our gratitude to Dr. Tran Thu Trang for her invaluable assistance
in the preparation of this report. Recognizing that our efforts may be subject to limitations
stemming from constraints in time, knowledge, and practical experience, we humbly
welcome any constructive feedback and suggestions aimed at refining this assignment.
Your input is genuinely appreciated, and we extend our heartfelt thanks for your
consideration.

24
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29
 APPENDICES
Appendix 1: List of countries that have signed FTA with Vietnam

No Other
Name V-FTA A-FTA
. multilateralism
ATIGA; ACFTA;
AHKFTA; AKFTA;
1 Darussalam, Brunei/ BRUNEI RCEP; CPTPP
AJCEP; AIFTA;
AANZFTA
ATIGA; ACFTA;
AHKFTA; AKFTA;
2 Kingdom of Cambodia RCEP
AJCEP; AIFTA;
AANZFTA
ATIGA; ACFTA;
AHKFTA; AKFTA;
3 Republic of Indonesia RCEP
AJCEP; AIFTA;
AANZFTA
ATIGA; ACFTA;
Lao People's Democratic AHKFTA; AKFTA;
4 RCEP
Republic AJCEP; AIFTA;
AANZFTA
ATIGA; ACFTA;
AHKFTA; AKFTA;
5 Malaysia/Malaysia RCEP; CPTPP
AJCEP; AIFTA;
AANZFTA
ATIGA; ACFTA;
AHKFTA; AKFTA;
6 Union of Burma/Burma RCEP
AJCEP; AIFTA;
AANZFTA
7 Republic of the RCEP ATIGA; ACFTA;
Philippines/PHILIPPINES AHKFTA; AKFTA;

30
 AJCEP; AIFTA;
AANZFTA
ATIGA; ACFTA;
Republic of Singapore/ AHKFTA; AKFTA;
8 RCEP; CPTPP
Singapore AJCEP; AIFTA;
AANZFTA
ATIGA; ACFTA;
Kingdom of AHKFTA; AKFTA;
9 RCEP
Thailand/THAILAND AJCEP; AIFTA;
AANZFTA
People's Republic of
10 RCEP ACFTA
China/China
Hong Kong Special Economic
11 AHKFTA
Zone/ Hong Kong
12 Japan/JAPAN VJEPA RCEP; CPTPP AJCEP
13 Republic of Korea/Korea VKFTA RCEP AKFTA
14 Republic of India/ INDIA AIFTA
15 Israel VIFTA
VN-EAEU
16 Republic of Armenia/ Armenia
FTA
VN-EAEU
17 Republic of Belarus/ Belarus
FTA
VN-EAEU
18 Kazakhstan/Kazakhstan
FTA
VN-EAEU
19 Kyrgyz Republic/Kyrgyz
FTA
VN-EAEU
20 Russian Federation / RUSSIA
FTA
Federation of
21 RCEP; CPTPP AANZFTA
Australia/Australia
22 New Zealand / New Zealand RCEP; CPTPP AANZFTA
23 Republic of Austria/Austria EVFTA

31
24 Kingdom of Belgium/Belgium EVFTA
25 Bulgarian Republic EVFTA
26 Republic of Croatia/ CROTIA EVFTA
27 Cyprus/ Cyprus EVFTA
Czech Republic/Czech
28 EVFTA
Republic
Kingdom of
29 EVFTA
Denmark/DENMARK
Republic of Estonia/
30 EVFTA
ESTONIA
31 Republic of Finland/Finland EVFTA
FRENCH REPUBLIC/
32 EVFTA
FRANCE
Federal Republic of Germany/
33 EVFTA
GERMANY
34 Hellenic Republic/GREECE EVFTA

35 Hungarian Republic / Hungary EVFTA

36 Republic of Ireland/Ireland EVFTA

37 Republic of Italy/ITALY EVFTA
38 Republic of Latvia/ LATVIA EVFTA
39 Republic of Lithuania EVFTA

40 Luxembourg EVFTA

41 Manta Republic/ MANTA EVFTA

42 Netherlands EVFTA
43 Republic of Poland EVFTA
Portuguese Republic/
44 EVFTA
PORTUGAL
45 Romanian Republic/Romania EVFTA
46 Slovak Republic EVFTA
Republic of
47 EVFTA
Slovenia/SLOVENIA

32
48 Kingdom of Spain/ SPAIN EVFTA
Kingdom of
49 EVFTA
Sweden/SWEDEN
United Kingdom/ United
50 UKVFTA
Kingdom
51 Republic of Cuba/ VNCBFTA
Republic of Canada/
52 CPTPP
CANADA
53 MEXICANS/MEXICANS CPTPP
54 Republic of Chile/Chile VCFTA CPTPP
55 Republic of Peru/Peru CPTPP

Appendix 2: Non tariff measures of Canada, Malaysia and Sweden’s spices products

Country Number of NTBs Details of NTBs

Canada 33 A210 - Tolerance limits for residues of or

contamination by certain (non-microbiological)
substances transport and storage

B600 - Product identity requirement

B700 - Product-quality, safety or -performance

requirement

B830 - Certification requirement

B851 - Origin of materials and parts

B852 - Processing history

B890 - Conformity assessment related to TBT, n.e.s.

C200 - Direct consignment requirement

33
Malaysia 70 A130 - Systems approach

A140 - Authorization requirement for SPS reasons

for importing certain products

A150 - Authorization requirement for importers for

SPS reasons

A210 - Tolerance limits for residues of or

contamination by certain (non-microbiological)
substances

A220 - Restricted use of certain substances in foods

and feeds and their contact materials

A310 - Labeling requirements

A320 - Marking requirements

A330 - Packaging requirements

A420 - Hygienic practices during production related

to SPS

A500 - Treatment for elimination of plant and animal

pests and disease-causing organisms in the final
product (e.g. post-harvest treatment) or prohibition of
treatment

A610 - Plant-growth processes

A630 - Food and feed processing

A640 - Storage and transport conditions

A800 - Conformity assessment related to SPS

A820 - Testing requirement

A830 - Certification requirement

34
 A840 - Inspection requirement

A850 - Traceability requirements

B330 - Packaging requirements

B410 - TBT regulations on production processes

B420 - TBT regulations on transport and storage

B600 - Product identity requirement

B700 - Product-quality, safety or -performance

requirement

B810 - Product registration/approval requirement

B820 - Testing requirement

B830 - Certification requirement

B840 - Inspection requirement

B851 - Origin of materials and parts

B852 - Processing history

B890 - Conformity assessment related to TBT, n.e.s

C200 - Direct consignment requirement

C300 - Requirement to pass through specified port of

customs

Sweden 35 A120 - Geographical restrictions on eligibility

A130 - Systems approach

A140 - Authorization requirement for SPS reasons

for importing certain products

A150 - Authorization requirement for importers for

35
SPS reasons

A210 - Tolerance limits for residues of or

contamination by certain (non-microbiological)
substances

A220 - Restricted use of certain substances in foods

and feeds and their contact materials

A310 - Labeling requirements

A330 - Packaging requirements

A410 - Microbiological criteria of the final product

A420 - Hygienic practices during production related

to SPS conditions

A630 - Food and feed processing

A830 - Certification requirement

A840 - Inspection requirement

A850 - Traceability requirements

A851 - Origin of materials and parts

A852 - Processing history

A853 - Distribution and location of products after

delivery

B140 - Authorization requirement for importing

certain products

B310 - Labeling requirements

B320 - Marking requirements

B700 - Product quality, safety or performance

36
requirement

B840 - Inspection requirement

E100 - Non-automatic import-licensing procedures

other than authorizations covered under SPS and
TBT chapters

E125 - Licensing for the protection of public health

37