report topic trung nguyen enters the korean coffee market

He is a successful businessman and is known as the "coffee king"of Vietnam.Trung Nguyen Coffee quickly became one of Vietnam''''s leading coffee brands, specializing in theproduction and su

MINISTRY OF EDUCATION AND TRAININGFPT UNIVERSITY

I Trung Nguyen company overview 31 Company Background 32 Product 33 Service offered 3-4II Korean Analysis 4

1 Introduction 42 Political system 4-63 Economic system 6-84 Cultural 8-95 Technology 96 Regional economic integration 9-10III Korean Market analysis 10

1 Market prospect analysis/Potential demand 10-112 Customer’s preferences and tastes 11-123 Competition 12-13IV Recommendations 13-14V Reference 15-16

1 Company Background

Trung Nguyen Coffee is a coffee brand established in 1996 in Buon Ma Thuot city, Dak Lak province,Vietnam by Mr Dang Le Nguyen Vu He is a successful businessman and is known as the "coffee king"of Vietnam.

Trung Nguyen Coffee quickly became one of Vietnam's leading coffee brands, specializing in theproduction and supply of high-quality coffee products, including coffee beans and filter coffee TrungNguyen's products are produced from the best Arabica and Robusta coffees and are carefully cared forduring cultivation and processing.

Over the years, Trung Nguyen Coffee has expanded its production and business scale to other countriesaround the world, including Asian, European, and American markets They have also opened many coffeeshops in Vietnam and around the world, offering not only coffee but also other food and beverageproducts.

2 Product

Trung Nguyen Coffee offers high-quality coffee products, including coffee beans and filter coffee TrungNguyen's coffees are produced from the best Arabica and Robusta coffees and are carefully cared forduring cultivation and processing Here are some typical products of Trung Nguyen Coffee:

Coffee beans: Trung Nguyen offers a wide range of coffee beans, including Arabica and Robusta beans.

Arabica coffee beans have a mild, delicious taste, which is often preferred by consumers Robusta coffeebeans have a stronger and richer flavor.

Filtered coffee: Filtered coffee is a traditional method of making coffee in Vietnam Trung Nguyen offers

filter coffee products, including Trung Nguyen Legend filter coffee, one of the brand's most popular filtercoffee products.

Roasted and ground coffee: Trung Nguyen offers roasted and ground coffee, which can be used to make

coffee using a coffee machine or traditional coffee brewing methods.

Packaged coffee products: Trung Nguyen offers packaged coffee products, including instant coffee and

instant coffee These products are often used for quick coffee making or for traveling.

In addition, Trung Nguyen Coffee also offers other food and beverage products, including tea, chocolate,and confectionery products.

3 Service offered

Trung Nguyen Coffee offers a wide range of different coffee-related services, including:

Online coffee service: Trung Nguyen provides a website where customers can order their coffee products

online and have them delivered to their door.

Consulting services: Trung Nguyen provides consulting services to customers about their coffee

products, including how to choose and brew the right coffee.

to learn how to make professional coffee.

Store management services: Trung Nguyen provides store management services to their business

partners, including store design, merchandise management, and staff training.

Event services: Trung Nguyen provides coffee delivery services for events, including conferences,

seminars, and weddings.

With these services, Trung Nguyen Coffee is trying to satisfy customers' demand for high-quality coffeeproducts and coffee-related services.

II Korean Analysis

1 Introduction

South Korea located in Eastern Asia, takes up the southern half of the Korean Peninsula Together withNorth Korea, it shares boundaries with the Yellow Sea and the Sea of Japan The majority of SouthKorea's landscape is mountainous The president serves as the head of state, and the prime minister is incharge of the government A blend of private freedoms, centralized economic planning, and governmentcontrol make up South Korea's economic system South Korea is a member of the Asia-Pacific EconomicCooperation (APEC) and the Asia-Pacific Trade Agreement (APTA).

2 Political system

The politics of Korea takes place within the framework of a presidential-parliamentary democraticrepublic.

Current Political LeadersPresident: Yoon Suk-yeol (since 10 May 2022)

Prime Minister: (since 14 May 2021) President Yoon has nominated HAN Duck-soo to the role of primeminister)

Current Political Context: South Korea is adjusting to a quickly shifting geopolitical environment under

the leadership of the recently elected Yoon Suk-yeol by working to raise its international profile andstrengthen ties with important allies But, in order to sustain this significant strategic shift, bothdomestically and in the US and Japan, it will need to be institutionalized at a deeper level In a broadersense, South Korea will also need to increase its involvement in international organizations and networksso that it can collaborate with other nations to deliver global public goods, solve issues with supplychains, and deal with other international concerns.

South Korea has a high Index of Economic Freedom The Index of Economic Freedom comparesdifferent jurisdictions' levels of trade freedom, tax burden, judicial efficiency, etc Rankings may bedetermined nationally or by larger geographic areas The Heritage Foundation assigns a grade to eachnation based on ten freedoms, with 100 denoting the maximum degree of economic independence fromgovernment intervention According to Heritage Foundation (2023), Korea with a score of 73.7 ranked15th in the world for economic freedom Why does Korea have such a free economy? Part of this isprobably because Korea follows a democracy.

Source: Country Rankings: World & Global Economy Rankings on Economic Freedom (n.d.).Indexdotnet.azurewebsites.net https://indexdotnet.azurewebsites.net/index/ranking

The high index of economic freedom means that Trung Nguyen has easier access to the Korean marketthan countries with low economic freedom In addition, A study of 102 countries over a 20-year periodprovided evidence of a strong relationship between economic freedom (as provided by a marketeconomy) and economic growth (Gwartney, 2006) A country with a free market economy is usually acountry with a high level of economic development Korea is a country with such a high index ofeconomic freedom that its economy is also very developed A market that is both easier to penetrate andhas a high level of economic development like Korea is a possible place for Trung Nguyen Coffee toenter.

Moreover, South Korea also has a low Country Risk Rating A country risk assessment is an evaluationthat assesses a country's political situation and policies to determine how much risk exists of a change inthat country's government Country risk assessment is a measure of the threat of nationalization.According to Coface (2022), South Korea Country Risk Rating is at the A2 level of the country riskassessment

Countries risk assessment

South Korea / Economic Studies - Coface (n.d.) Www.coface.com Retrieved March 11, 2023, fromhttps://www.coface.com/Economic-Studies-and-Country-Risks/South-Korea?

A2 level of country risk assessment shows that the level of risk in South Korea is low Political situationsand policies are relatively stable That is a decisive factor for Trung Nguyen's desire to enter the Koreanmarket

Regulatory Environment: Both foreign and native businesses may encounter difficulties in the Koreanregulatory environment Government employees frequently interpret laws and regulations differentlybecause they are written in vague words Foreign investors like Trung Nguyen that seek certainty in theKorean market are frustrated by this.

Political Violence: The Democratic People's Republic of Korea, usually known as North Korea or theDPRK, and the Republic of Korea (ROK) are technically at war An almost 60-year-old armisticeagreement has kept the Korean Peninsula generally peaceful and stable Tensions between the nationshave occasionally risen as a result of military and political provocations The risk of war is a importantalarm for Trung Nguyen's decision to enter the Korean market.

=> In terms of politics, Korea has some attractions for Trung Nguyen to enter as a highly liberal economyand a stable political background However, Korea also has some less attractive points for Trung Nguyento enter such as Regulatory Environment is not clear and it contradicts with North Korea.

The Korean economy is a highly developed mixed economy characterized by conglomerates owned bywealthy families known as Chaebol On March 15, 2021, the Organization for Economic Cooperation andDevelopment (OECD) stated that Korea's nominal GDP in 2020 is anticipated to be 1.624 billion USD,ranking 10th in the world This is a famous country known for its miraculous economic growth from oneof the poorest countries in the world to a high-income developed country in just a few generations.The politically stable developed and developing countries with free market economies and no significantincrease in either inflation rates or private sector debt tend to have the most alluring international markets.(Hill, 2022)

Free market system and political stability have been covered in the above two sections So let's learnabout the Free market system and political stability that have been covered in the above two sections Solet's learn about either inflation rates or private-sector debt in the next part.

In Seoul, the capital of South Korea, the rate of consumer price inflation in 2022 was about 4.5 percent.This percentage increased from the 2.1 percent of the previous year and was the highest since 2012.Nonetheless, Korea's inflation rate in 2022 is 4.25% lower than the 8.75% global inflation average 4.25%is a significant percentage.

Global inflation rate from 2000 to 2021, with forecasts until 2027

Source Global inflation rate from 2000 to 2027 (n.d.) Statista Retrieved March 11, 2023, fromhttps://www.statista.com/statistics/256598/global-inflation-rate-compared-to-previous-year/?

According to Statistics Korea, South Korea's consumer price index increased 4.8% in February 2023compared to a year earlier, slowing from January's 5.2% increase and reaching its lowest rate in tenmonths The market's forecast for a 5.05% for the inflation rate in February was similarly lower thanreality, which reduced pressure on the central bank to keep hiking interest rates In order to battleinflation, the Bank of Korea increased its policy rate by a total of 3 percentage points starting in August2021, pushing borrowing costs to a record-high 3.5% Inflation, according to BOK Governor RheeChang-yong, may drop below 5% in March before steadily easing to a low-3% range by year's end But,

the BOK may tighten policy further if it anticipates that the US Federal Reserve will continue risinginterest rates as it tries to reduce inflation

South Korea Inflation Rate

Source: Mario (2019, October) South Korea Posts Deflation for the First Time on Record Tradingeconomics.com;TRADING ECONOMICS https://tradingeconomics.com/south-korea/inflation-cpi

In general, the inflation rate of Korea compared to the world is quite small Usually, when a country haslow inflation, that country's economic situation is stable When Trung Nguyen enters a market with such alow inflation rate, it will make its operations more stable, and they do not have to worry about reducingthe value of assets pegged to the domestic currency compared to foreign currencies.

Private-sector debt: Private-sector debt is the total of all loans held by both individuals and businesses,

excluding debts owed to financial institutions like banks.

According to Cho Kye-wan, a senior staff writer, As of December 2022, the ratio of financial institutions'borrowings from households and businesses to nominal GDP reached 220.8 percent, the highest levelrecorded since data collection began in 1975 and an increase of 0.3 percentage points from three monthsearlier, according to the BOK.

In comparison to the GDP from 2021, household credit increased by 2.7 percentage points to 106.1percent, while corporate credit increased by 4.4 percentage points to 114.7 percent.

By the end of the year, household debt had increased by 7.8% year over year to $1.862.1 trillion won($1.5 trillion), although this was a slight slowdown from quarterly increases of 10.3% year over year inthe second quarter and 9.6% year over year in the third quarter due to tighter loan regulations and higherinterest rates.

According to the bank, the debt-to-disposable-assets ratio increased by 4.3 percentage points to 173.4percent, increasing concerns about a higher financial strain on households.

The financial stress index (FSI) was close to the "warning" level of 8 to 22 at 7.4 in February, 2022.

Korea, with such a high private-sector debt ratio, has lost ground in the eyes of an FDI investor EvenTrung Nguyen is the same High private-sector debt in Korea will make Trung Nguyen's operation a bigrisk when operating in this market.

=> In terms of the economy, the low inflation rate compared to the world in Korea is a bright spot forTrung Nguyen if they wants to enter here On the other hand, the high Private-sector debt index here is apoint to note because it will be detrimental to Trung Nguyen when entering the Korean market.

4 Cultural

Koreans can drink coffee all day Young people in the land of kimchi have a habit of drinking coffeeregularly, some people drink 3-5 cups of coffee a day, starting in the morning, on the road, after meals,after shifts, evening coffee Koreans mostly like milk coffee Korean coffee taste has a neutral colorwhen compared to the coffee of some countries, the coffee is not too rich, and strong in the style of purecoffee but also not bland, and fewer tastes like instant coffee The combination of sweet, greasy milk anda strong bitter taste make Korean coffees Meanwhile, Trung Nguyen coffee is very suitable for the tasteof Vietnamese people, it has a dark brown color, a strong aroma, and a characteristic-rich taste So ifTrung Nguyen wants to enter in Korea coffee market, it is very important to adjust the taste of coffee tosuit the taste of customers here If it can be adjusted to better suit the taste of Koreans, in a market withhigh demand for Coffee like Korea, Trung Nguyen will be able to reach many customers.

In Korea to reduce the use of disposable products, and to protect the environment, in the coffee industry,it is not allowed to use disposable products When entering Korea, Trung Nguyen should use glass orreusable cups when customers drink at the shop When customers buy to take away, Trung Nguyen shouldalso provide biodegradable cups to meet the environmental protection needs of Koreans.

In Korean culture, Koreans will usually do things very quickly, so they will not like to sit around waitingfor a drip of coffee like VN When Trung Nguyen comes to Korea, they should pay attention to reducinginvestment in filter coffee, but instead, Trung Nguyen should focus on other types of coffee with fastservice.

5 Technological

Korea is a country that came up from the agricultural sector Korea has introduced many researchtechnologies on coffee, especially in the field of mixing and combining with other beverages.

Some of the Korean coffee research technologies include:

Air-conditioned roasting method: This method allows the coffee to be roasted without the use ofhigh heat, which preserves the flavor and nutrient content of the coffee.

Mix coffee with other drinks: Korea has many popular drinks, such as tea, condensed milk, andtoast They have developed many recipes to blend coffee with these beverages, creating uniqueand appealing drinks.

Using automatic coffee machines: Korea is one of the most advanced countries in technology, sothey have developed many types of smart automatic coffee machines, saving time and increasingcoffee efficiency preparation process.

Use green coffee: Green coffee is unprocessed, which helps to preserve the nutrient content andcreate a special flavor Korea has researched and used green coffee in the process of roasting andpreparing coffee.

Development of a taste analysis system: Korea has also developed a coffee taste analysis system,which helps to recognize the quality and freshness of the coffee This technology makes thecoffee production and distribution process more automated and optimized.

In short, Korea has introduced many diverse and unique coffee research technologies, helping to improvethe quality and value of coffee products like Vietnam

6 Regional economic integration

South Korea is a developed economy, with one of the highest levels of economic integration in the world.Here are some analyzes of Korea's economic integration:

Participating in free trade agreements: Korea has signed a number of free trade agreements (FTAs) withother countries and regions, including the United States, the European Union, ASEAN and Chile.Participating in these FTAs has helped Korea improve its export opportunities for products and services,and strengthen trade and investment relations with international partners.

On May 5, 2015, Vietnam and Korea officially signed a Free Trade Agreement (FTA).The Agreement brings Vietnam many benefits as well as development opportunities such as:

With commitments to open tariffs, Vietnam will have many opportunities to expand exportmarkets to Korea in the fields of agriculture, fisheries, textiles, furniture, and electronics,increasing the competitive advantage for Korea Vietnam's exports compared to other countries inthe region This commitment will be a catalyst for Trung Nguyen coffee in the Korean market tohave an opportunity for business and development.

The Vietnam - Korea FTA opens up opportunities to attract large investment flows from Korea toVietnam, especially capital flows that can be expected to flow into key sectors such as supportingindustries and industry This is also one of the basic benefits, a premise for the Government ofVietnam to decide to sign this agreement One of the great benefits that Vietnam has receivedfrom the FTA with Korea is to expand the export market to Korea; Vietnam's exports will havemany opportunities thanks to Korea's strong commitment to opening the market.

Increased trade: VKFTA has significantly boosted trade between Vietnam and Korea Accordingto South Korea's Ministry of Trade, Industry and Energy, two-way trade between the twocountries will reach $69.2 billion in 2020, up from $58.9 billion in 2019.

Tariff elimination: VKFTA has eliminated tariffs on most goods traded between the two countries.As a result, Vietnamese goods such as seafood, textiles and agricultural products have becomemore competitive in the Korean market, while Korean goods such as electronics, automobiles,and steel products have become more competitive more reasonable in Vietnam.

Investment promotion: VKFTA has encouraged Korean companies to invest in Vietnam,especially in industries such as electronics, textiles and footwear This has led to theestablishment of many joint ventures and expansion of existing Korean businesses in Vietnam,creating jobs and contributing to the country's economic growth.

Technology transfer: VKFTA has also facilitated the transfer of technology and expertise fromKorea to Vietnam, especially in the fields of information technology, electronics andmanufacturing This has contributed to improving the quality and productivity of Vietnameseenterprises and enhancing the competitiveness of the country's economy.

Cultural exchange: VKFTA has also promoted cultural exchanges between Vietnam and Korea,helping to strengthen the friendship and cooperation between the two countries This has led to anincrease in tourism, educational and cultural exchanges, and person-to-person contact.