1

VIETNAM TRADE PROMOTION AGENCY EXPORT PROMOTION CENTRE

======

REPORT ON TEA SECTOR IN VIETNAM

(Báo cáo ngành hàng Chè Việt Nam)

Đơn vị tư vấn: Trung tâm Đào tạo- Nghiên cứu Khoa học Tổ chức và Quản lý Địa chỉ: 126/68 Phan Kế Bính - Ba Đình- Hà Nội Điện thoại: 04-7624464; 04-7624911

Đơn vị thực hiện: Công ty Cổ phần Truyền thông Quốc tế IQ Địa chỉ: 88 Hàng Trống, Quận Hoàn Kiếm, Hà Nội Điện thoại: 04-8288406

- Hanoi, 2007 -

2

TABLE OF CONTENTS

I. Overview 3 1. Introduction to products mentioned in the report 3 2. General information of the sector 3

II. Production situation 4 1. Distribution of production location 4 2. Feratures, classification and product structure 4 3. Scale and capacity of production 5 4. Source of production materials 7 5. Production trend 8 6. Domestic and foreign famous trade names 8

III. Domestic consumption 9 1. Market features 9 2. Situation of domestic consumption 9 3. Consumption trend 10 4. Price 10 5. Distribution channel 11

IV. Export situation 12 1. Yield and turnover of export 12 Types 12 In 2006 12 2. Export market 15 4. Major exporters 17 5. Opportunities and strengths of export 19

V. Import situation 21 VI. Orientation and policies of developing tea export of Vietnam 22 VII. Useful addresses 24

3

I. Overview

1. Introduction to products mentioned in the report

This report is namely concerned with Vietnam tea for import and export, including input products which are materials used for the business and operation activities of the sector, and other key products such as green tea, black tea, oolong tea, etc

2. General information of the sector

Vietnam is not only famous as the home of rice but also known as one of the most ancient cradle of tea. Vietnamese people have planted tea for over three thousands years and nowadays, drinking tea has become a traditional habit of each family. Belongs to the South East of Asia, Vietnam has many natural advantages to cultivate and process tea, such as tropical climate, soil,... Therefore, the quality of Vietnam tea products is higher than other areas, especially some traditional specialty like Shan Tuyet, Suoi Giang,... According to a historian, these teas were only discovered in the Northern mountainous region of Vietnam. Most of them are long-standing trees with 6-8 meters of height. Tea plantations in Vietnam are concentrated in the north and middle, spread over some provinces like Tuyen Quang,Yen Bai, Phu Tho, Son La, Ha Giang, Lai Chau, Lao Cai, Thai Nguyen, Nghe An. Beside being one of the solutions to eliminating hunger and reducing poverty, tea plantations also help protect the environment and bring high income to the growers. Consequently, tea has become a high value product of Vietnam. In recent years, the area of tea cultivation and the number of manufacturers have increased rapidly. Particularly, from 5,400 hectares in 1975, the area of cultivation has reached to 125000 hectares in 2007. The raw output was about 40,000 tons in 1995, now stands at approximately 577,000 tons, of which export quantity rising from 17,500 tons to 105,000 tons. Labor productivity in tea has risen annually by 4% during the last ten years. Up to now, Vietnam tea products have made their presence in more than 107 countries world-wide. In 2000, about 1,500 tons of processed tea was exported to Russia, allowing Vietnam to rank sixth among the fifteen Asian countries exporting tea to that market. The Western European market, especially Britain, annually imported 2,000 tons of tea. At present, Vietnam is known as a high quality green tea exporter with potential clients like Pakistan, Taiwan, China, RussiaF In Asia, Taiwan and China are the biggest importers of Vietnam tea. Newly emerging markets like America, France and Australia also have high demands for Vietnam tea which need about 5,000-7,000 tons a year.

4

II. Production situation

1. Distribution of production location

Vietnam is known as the world’s cradle of tea. Almost nowhere in the world but Vietnam is given a favor, by nature, to be permissive to grow tea spreading in the whole country.

There are often two types of soil for growing tea in the North and the Central Vietnam. They are terra empelitis of stone and clay, and rich basalt. Hence, tea is grown namely in the central and mountainous provinces, or in three main regions: region lower than 300 m high, midland at 300 - 600 m high, highland (mountainous region) at 600 - 1.000 m high and higher.

• Mountainous region includes provinces of Ha Giang, Tuyen Quang, Lao Cai, and Son La. Tea variety grown in this region is called Shan (or named as snow tea) with high yield and good quality. In the Northern mountainous region is first place of developing tea on the largest area nationwide. Total regional area of tea in 2005 is around 90,800ha, covering 80.7% of the national tea area. Of which, Thai Nguyen is the tea largest area with 16,400 ha (18.1%).

• Midland region includes provinces of Vinh Phu, Bac Ninh, Bac Giang, Ha Tay, Hoa Binh, Bac Can and Thai Nguyen. These are provinces that produce most of tea with yield covering 70% of the total tea yield of the North. The main tea variety grown in this region is Trung Du (a variety from China and with big leaves) which has high yield and good quality. Main products are black tea and green tea for domestic consumption and export.

• The lower region where green tea is grown includes provinces in the Northern Delta and the former 4th region. The local people here have a habit of using tea for fresh drink (without processing it).

In the South, the tea is grown namely in Lam Dong and Gia Lai - Kon Tum. The Southern Highland (Lam Dong province) is a tropical area with altitude of 800 - 1.500 m above sea level, is thus appropriate for Shan tea. The Northern Highland is rather low (from 500 - 700m), and the climate is suitable for varieties Atxam and Trung Du tea. Areas for growing tea materials are also where tea processing unit and finished tea production units are located.

2. Feratures, classification and product structure

Vietnam tea is verified; beside traditional tea varieties, an amount of additional 40 new ones with high quality, good taste and aromatic flavor have been imported. Vietnam has processed 15 types of commercial tea. There are 6 types of tea for export, of which black tea, Jessamine tea and oolong tea are loved in many countries. Major types of Vietnam tea are as follows:

5

• Green tea: green tea with natural flavor and those with flowers such as Jessamine, lotus, etc.

• Oolong tea: with special tea types which are imported from China and Taiwan and experimented by growing in big deal in Moc Chau and Lam Dong highland; together with Oolong tea production line of Vietnam; this product of Vietnam has quality as good as Oolong tea made in China and Taiwan with special features of this tea type. Oolong tea is shining yellow in color, strong taste and special flavor.

• Black tea: with modern production lines, Vietnam can produce all types of this tea (Orthordox, CTC) with good quality and better and has exported to many markets in the world.

• Boiled tea: features: transparently green water, soft taste and tea’s special natural flavor; it may be embalmed or not. This product is consumed at home and in countries in East Asia.

• Fried tea: strong taste, can be used as materials for embalmed tea. This product is now consumed at the domestic market.

• Dries-boiled tea: in helical round shape, green water, strong taste and beloved to drink in the Asian market.

• Japanese green tea: produced by an automatic production line of Japan. Product is featured with green water, natural flavor. It is consumed at home and in Asian market.

• Beside above-mentioned teas, Vietnam also has other types including flavor tea, fresh flower tea, slender black tea, soluble tea, long leave tea, medicinal tea, bud tea, brown tea, etc.

3. Scale and capacity of production

Vietnam started production tea over 3000 years ago. After occupying the Indochina, the French colonialist brought tea trees in the end of 19th century. In 1885, France took the first survey on tea plantation in Vietnam and the first tea plantation was set up in the early 1890 in Tinh Cuong, Phu Tho (Zeiss and Den Braber, 2001). By 1938, area of growing tea was 13,405 ha, yield was 6,100 tons of dried tea. In the struggle for independence, most of tea plantations were left wild and thus the tea market was collapsed. By 1946, yield of tea was only 300 tons. After 1954, tea production was much developed. In 1958, area for growing tea was 30,000 ha and Vietnam had two tea processing factories located in Hanoi and Phu Tho with total capacity of 1,100 ton per annum. In 1977, tea area was expanded to 44,330 ha with yield of 18,000 ton dried tea, since the implementation of reform work, tea has been considered as a key goods, tea production has been more and more developed. By 2000, tea yield reached 35,000 tons with more than 600 enterprises and 10,000 peasants involved as household staffs. Vietnam yield of tea increased remarkably in the 1990s although it was for expanding tea area than growing capacity. During the phase of 1990 – 2003, tea field increased at rate of 7% per annum on average whilst area and

6

capacity was only 3,5% per annum and 3,1%/ per annum respectively. In 2003 the yield reduced much while the market collapsed due to the war in Iraq. Up to now, Vietnam tea is at 5th position of the world in term of area, and becomes key economic tree. Tea growing has been the traditional job of many villages. At present, 34 provinces and cities nationwide spend 125,000 ha of their cultivation area for growing tea, increasing 47,700 ha compared with that in 1999 (63,8%); of which area for finished tea products is 101,700 ha. For the phase 1996-2006 the average growth speed of tea was 6.2% per annum. In 20 provinces of national tea growing area, there are 240 industrial processing units, with total capacity of more than 3,100 ton fresh buds per diem (600,000 ton fresh buds per annum). By 2007, there have been 630 units and processing factories in 34 provinces and cities with capacity increasing by two times, reaching 50 tons per ha. Every year, the raw tea yield reaches 577 thousand tons. Area for multiplication of new tea varieties with high yield and good quality covers 32.5% of total area.

Area and yield of tea of Vietnam for the phase of 1995 - 2007

0

100

200

300

400

500

600

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

8 months 2007

020406080100120140

1000 tons 1000 ha

(Source: CIEM, 2007) Vietnam has a quite great tea gene bank with nearly 150 strains. During a recent time of investment and cooperation with foreign countries, Vietnam has created 50 new varieties, then studied and collected 8 new varieties permissible for spreading in provinces and cities nationwide, contributing to the increase of tea yield and capacity. At present, there are about 250 tea processing industrial units with capacity of about 70,000 tons per annum. Private tea production and processing units developed quickly, increasing at 3 times in term of amount and 2 times in term of capacity in comparison with those in 2000. Vietnam produces orthodox black tea (60%), CTC black tea (7%) and green tea (33%). Safety tea production is carried out in many places such as Thai Nguyen, Yen Bai, Moc Chau (Son La) by limiting the use of chemicals, strictly complying with principles once using herbicides.

7

Tea capacity of Vietnam depends much on tea varieties, care techniques and ecological conditions. On average, traditional tea varieties in the midland (Trung du tea) has capacity of 4 ton per ha, traditional highland tea varieties (Shan tea) reach 5,5 ton per ha, whilst improved tea varieties (PH1) give capacity of about 6,5 ton per ha. Of course, this also depends on land where tea is grown; normal capacity is often remarkably higher than average level in the highland where the geographical condition is suitable with tea.

4. Source of production materials

Vietnam finished tea types are mostly produced from domestic source of materials. To better meet the source of tea materials, Vietnam tea sector has planned to expand region of producing tea in many localities, as follows:

• In Ha Tay, with the target of building trade nam Ba Vi tea, the locality has set up policy of expanding the production region. To widen tea garden, it is planning Ba Trai tea production area in order to meet the demand of processing 2,700 ton of dried bud tea per annum. In addition, province also plans Minh Quang tea region, Khanh Thuong tea region which can produce from 1000 tons to 1200 ton of dried bud tea per annum; Van Hoa tea region, Yen Hoa, Viet-Mong farm have yield of fresh bud tea of 9000 tons, dried bud tea of 2000 tons per annum. Other hilly regions such as Thuy AN, Cam Thuong, Suoi Hai farm intend to produce from 2500 ton to 3000 ton of fresh bud tea, and 500 ton of dried bud tea per annum. In parallel with production expansion, advanced processing equipments are also applied. If former production method was by hands; now most of household growing tea use tea drying machine and tea rubbing machine with capacity at 5 -7 times higher than previously.

• Together Ha Tay, Nghe An province is also building a tea specializing area in Anh Son district for the purpose of poverty alleviation. Currently, Anh Son has totally 3.000 ha in 2010; the locality tries its best to grow 250-300 new ha of tea. To make this target come true, Anh Son district carries out policy of supporting peasants in term of variety investment.

• At present, Thai Nguyen province has more than 15,000 ha of tea for trade. Thanks to the application of science and technology advances into growing, caring, processing processes, capacity and quality of tea are more and more improved, meeting the current domestic and foreign consumption demand. Only for the first 6 months of year 2006, tea yield of the whole province reached 36,432 ton of fresh tea, equivalent to 7,286 tons of dried bud tea (about 70% yield was processed with industrial and exporting method). The fact that enterprises speed up tea export activity helps create good condition for the peasants in term of a stable market for tea consumption.

• In 2007, Phu Tho province continues to instruct tea companies and tea processing companies to apply method above and investment in depth into growing new tea. Province continues planning area for tea production, trying to reach 500 new production ha by the early 2007.

8

Now the municipal tea development program has two projects: AFD tea development project managed by the Municipal Department of Planning and Investment; and ABD tea project managed and developed by Municipal Department of Agriculture and Rural Development by deploying supporting information and techniques for the peasants, and lending for new growth, intensive cultivation and tea processing; increasing total tea area of province to 11,458 ha, 10800 ha of which give tea products.

5. Production trend

Vietnam is in the process of planning again system of tea processing. Government encourages tea processing units, and encourages all economic sectors to invest and modernize their units in direction of increasing proportion of refined tea products, applying new technologies of other countries. Incapable enterprises are not allowed to process tea. Beside processing tea, Vietnam tea sector is trying to invest and produce safety tea according to “safety food” standards, simultaneously changing the tea growing area into “ecological tourism”, and creating “tea ceremony” bars, etc Moreover, in order to provide clean material source to meet the domestic and foreign demand, many provinces have planned to expand area for producing tea and apply new method of harvesting. It is estimated that for the phase of 2010-2015, tea area shall be replaced at stable rate at about 140,000 ha, average capacity of 9-10 tons of buds per ha, and total yield of 1.2 – 1.4 million ton of fresh buds, equivalent to 240,000-280,000 tons of finished tea.

6. Domestic and foreign famous trade names

Vietnam has many key tea regions with fame of high quality such as Lam Dong, Lanf Son, Son La, Lao Cai, Cao Bang, etc At present, there are more than 2.000 Vietnamese famous trade names such as bat Tien, Kim Tuyen, Thuy Ngoc, Keo Am Tich, etc However, recently Vietnamese tea is known by the importer and exporter via signal of three-leave tea which is transaction-named as VINATEA With utmost on the way of integration of Vietnam tea sector, Logo "CheViet" is now registered according to Madrid Agreement with 73 countries and under current advertisement. Vietnam Association of Tea allows 6 domestic enterprises to label i "CheViet" on wrapping of 17 products for domestic consumption and export.

9

III. Domestic consumption

1. Market features

Drinking tea has been a longterm habit of Vietrnamese, and that becomes a fine traditional custom. Most of Vietnamese households use tea to treat their guests or just for their and their family’s demand. On average, a person consumes 0,2kg/month and 2,4kg tea per annum. With 85 million of population nationwide, domestic consumption demand is very great. Finished tea products though have not really met the taste of domestic consumers, they are accepted by most of them. They often buy tea in kg and manually produced. Others use tea according to their favorite taste, trade name and flavor. In general, state of the domestic consumers is not very high and they are not hard to choose their suitable tea type. In the future when tea drinking becomes an art, Vietnamese consumers shall be much stricter.

2. Situation of domestic consumption

Most of tea consumed at home is green tea with 90% yield of green tea. In come rural area, habit of drinking green tea is more popular; however, most of tea sold out are primarily processed. Black tea is only consumed in big cities, but only covering 1% total consumption level . But it is increasing in the urban, with a flavored tea introduced by Dilmah, company of Sri Lanka. It is estimated that Lipton and Dilmah take about 70% market shares in big cities and industrial areas. Other products processed from tea such as soft drink, candy, biscuit are not plenty in Vietnam. Tea grown in the Northern provinces like Thai Nguyen, Son La, Ha Giang and Yen Bai is quite popular in Hanoi and other northern big cities. While tea produce in Lam Dong are popular in HCMC and Southern provinces. Green tea with jasmine, lotus and other flower flavors are also popular, covering 20% domestic consumption. Although tea drinking habit has a long history; according to estmation of FAO, average tea consumption per Vietnamese capita in 1997 was only 260g, much lower than other Asian countries (Hong Kong 1400g; Taiwan 1300g; Japan 1050g; China 340g). However, from 2000 to 2005, average tea consumption per capita of Vietnam was 5% to 380g. Tea exported namely in form of raw or primarily process tea, and sold on the domestic market. Vietnam has many famous tea production areas like Thai Nguyen, Moc Chau and Kim Anh. Vietnamese consumers are often sensitive in tea quality. In the age of door open, domestic tea market becomes eventful, various in types, labels and wrappings, espcially developing tea in bag and flowered tea

10

(Jessamine, ), black tea, special tea, medicinal tea, .. Suitable for the market demand, facing the wave of foreign tea occupation. Recently, domestic tea consumption is increasing. The present demand for people nationwide covers about 30% total tea yield in the country, with average increase rate of 3 to 5%. Many domestic tea trade names are loved by people, such as Oolong Thuan Co., Ltd, Tam Chau Tea and Coffee Company, Lam Dong, Tri am Tea of Hoang Binh Co., Ltd, Thai Nguyen and Oolong tea of Cau Tre export and processing enterprise. In 2005, tea consumption amount at home is 35,000 ton.

3. Consumption trend

In general, safety tea shall beloved very much ( ISO - 9001: 2000 và HACCP ). Famous tea in domestic market and for export shall be very popular nationwide, especially at Lunar New Year, including:

• Fresh tea material inclusive of mature and young tea, small and large, green and not processed

• Bud tea: young tea harvested and exposed to the shadow • Brown tea in Ha Giang is traditional tea in the Northern mountainous

area, processing with two to three young leaves. • Oolonh tea was formerly grown in Chian. It has shining yellow water,

strong taste and special flavor. • Many other tea types

4. Price

Tea under trade names is often sold at high price: bud tea of VND 150 – 250 thousand per kg, first-class tea VND 70 - 80 thousand per kg, a kg of dried tea of 70,000 to 75,000 VND /kg, San Tuyet tea at VND 5.000 /kg for fresh and VND 70.000 per kg for dried. At highland district such as Hoang Su Phi price pf selling materials id from VND 2.400 to 2.000 per kg or A green tea from VND 35.000 to VND 40.000 per kg. In early 2007, tea price was kept stable thank to well control. Green tea of dried buds are often sold at price doubling other black tea of the same class. , retail price is often at VND 14.000 – 16.000 /kg for dried bud tea and VND 28.000 – 32.000 /kg for dried bud green tea. Fresh bud tea is popular at VND 2.000 – 3.000 /kg.Tea price in the middle of crop often increases to 30-50% compared with the same time last year.

11

Tea price in Lam Dong province

From January 4th to September 30th, 2007 (VND/kg)

2550

2600

2650

2700

2750

2800

2850

2900

2950

3000

3050

4/1 25/1 9/2 10/3 21/3 1/4 12/4 5/5 24/5 7/6 22/6 15/7 15/8 26/8 30/9

(Source: Information Center PT NNNT)

5. Distribution channel

Tea materials consumed at home is distributed by tea producers, wholesale and retail agents, especially system of selling tea in bags.

12

IV. Export situation

1. Yield and turnover of export

In 2005, Vietnam becomes the 7th greatest tea exporting country of the world with export amount of 80.000 ton. In 2006, Vietnam tea export reached more than 105 thousand ton, export turnover of 111,6 million USD. Yield increased by 20% and added value of 14% compared to that of 2005. At present, Vietnam process about 15 types of different tea types and exports 6 types of tea to the world, mostly oolong tea, black tea and jasmine tea. Only Ha Tay province produces more than 5.000 ton black tea to USA, India, Middle East, increasing nearly 800 ton; Tuyen Quang has Cong Lo Tea Company exports more than 718 ton, covering 84,4% of plan compared with that at the same time in 2005.

Export tea types in 2006

Types

In 2006

Quantity (ton) Value (USD)

Black tea 65.274 61.748.108

Green tea 27.003 32.837.517

Jassmine tea 3.776 3.866.452

Jassmine tea 970 1.388.949

Fermented tea 287 314.006

Oolong tea 228 845.286

Yellow tea 190 189.348

Lotus tea 21 37.716

(Source: General Department of Custom) National tea export in September 2007 reached 10.161 ton value 13,53

million USD, reducing 8,53% in term of quantity and 3% in term of price in

August 2007; reducing 10% in term of quantity but increasing 10,27% in term

of price compared with September 2006. Total amount of export tea in

September 2007 reached 80.813 ton with value 86,87 million USD, increasing

7% in term of quantity and increasing 9,96% in term of value compared with

that in 2006.

In term of type structure of export tea in September 2007, black and green tea was still main export tea of Vietnam. Specifically, in September amount of export black tea was 5.224 ton with value of 6,4 million USD, reducing 18,75% in term of quantity and reducing 7,95% in term o price; green tea reached 4.090 ton with value of 186 million USD, increasing 1,32% in term of quantity and increasing 9,27% in term of price compared with that in August 2007.

13

Types of export tea in September 2007

Types Market

Sep. 2007 Aug. 2007

Qty (ton)

Value(USD)

Qty (%)

Value (%)

Black tea

Russia, China, Arab Saudi, Taiwan, , Pakistan, Poland, Turkey, USA, Malaysia, Indonesia, UK, Sri Lanka, Ukraine, Lebanon, Holland, India, Finland Japan, Iran, Denmark, Latvia, Iraq, Italy, Canada, Israel, Belgium

5.224

6.403.461

-18,75

-7,95

Green tea

Pakistan, Afghanistan, China, Taiwan, Indonesia, Arab Saudi, India, Germany, Singapore, Russia, Poland, Holland, Japan, Iran, Philippines, Finland, Ukraine, South Africa, Sri Lanka, Latvia, republic of Czech

4.090

6.186.415

1,32 9,27

Dried tea China, Taiwan 662 490.131 * *

Jasmine tea

Taiwan, Indonesia 353 448.464 -

42,43 -

24,49

Other types

Taiwan, Pakistan, China, Mexico, Cambodia, Canada

142 225.354 -

37,84 -

40,62

Fermented tea

Taiwan 51 68.880 -

35,77 -

68,93

Yellow tea China, Hong Kong, Taiwan 22 32.547 333,00

152,77

Oolong tea Taiwan 14 48.825 -

61,25 -

62,47

(Source: Vinanet)

In October/2007, tea export of the whole country reaches 10,8 thousands tons with value USD 14,29 millions, a rise 6,46% in quantity and 5,6% in value in comparison with Deptember/2007; rise 6% in quantity and 29,9% in value on comparison with October/ 2006. Total tea volume exported in 10 months of 2007 reaches 91,6 thousands tons with value of USD 101,16 millions, a rise 6,9% in quantity and 12,21% in value in comparison with corresponding of preceding year.

14

Situation of tea export in 10 months of 2007

101.152

90.149

92

88

80

85

90

95

100

105

10 months 2007 11 months 2006

1000 Tons 1.000.000 USD

Source: Icard

Export tea volume in months (Unit: tons)

Tea export turnover in months (Unit: millions USD)

(Source: Trade information)

In 2007, Volume of export tea is estimated to reach 112 thousands tons with value of USD 130 millions, a rise 6,03% in quantity and 17,72% in value in comparison with corresponding of preceding year 2006; a rise 1,82% in quantity and 8,33% in value in comparison with plan of the whole year of 2007.

Estimated in the period 2010-2015, export tea volume of Vietnam will reach about 200.000 tons with structure of 50% black tea, 20% of new tea product is has high value and 30% of high qualitative green tea reaches approximately USD 300 millions

15

2. Export market

Before 1991, Vietnam mainly exported tea to Soviet Union and Eastern Europe. Export volume in the 80s reached 12.000 - 14.000 primarily treated tons per year. Import countries reprocessed and packaged tea before buying in the market. After Soviet Union disintegrated, export market of Vietnam was expanded. Until the beginning of 2004, Vietnam exported tea to 59 countries in the world, in which 80% of tea volume was exported to Iraq, Taiwan, India, Pakistan and Russia. While Iraq, Pakistan and India mainly bought black tea, Taiwan and Pakistan bought green tea (Accenture 2000). Iraq and Taiwan take 50% of exported volume of Vietnam. Recently, Vietnam has tried its best to expand and diversified tea export market. Until 2007, Vietnam tea has been exported to 107 markets in the world, in which 68 markets belong to member nations of World Trade Organization (WTO). Big export markets of Vietnam are Taiwan, Russia, German, China, Pakistan, Indonesia, Poland, UAE, England and Holland.

Major export markets of Vietnam in December, 2006

Name of country December, 2006 12 months, 2006

Volume (tons)

Unit price (USD)

Volume (tons)

Unit price (USD)

Poland 305 237.857 11.074 8.203.748

Finland 310 300.413 2.664 2.356.080

UAE 211 314.799 1.106 1.429.490

Taiwan 1.808 1.108.362 18.459 19.454.279

Federal Republic of Germany

409 529.674 3.445 3.996.993

Holland 240 279.756 2.231 2.499.876

Indonesia 784 491.898 2.467 1.697.287

Iraq 3.312 4.525.779

Malaysia 306 209.784 2.419 1.181.938

US 325 246.866 2.087 1.584.995

Russian Federation 1.412 1.373.693 10.364 10.142.726

Japan 35 56.076 435 1.084.457

Philippines 65 186.472 508 1.426.814

Singapore 42 54.075 931 1.232.392

Turkey 91 126.376 1.260 1.690.906

China 610 632.487 7.622 7.615.725

Ukraine 144 124.075 673 603.230

(Source: Customs Head Office) In October, 2007, the main market of Vietnam’s black tea consumption is Russia (967 tons), China (961 tons), Arab Saudi (711 tons) and Taiwan (449 tons). Pakistan is the main market for Vietnam’s green tea consumption with 2.253 tons (gains 55% of exported green tea volume in September, 2007).

16

Besides, in October, 2007 Vietnam also exported 662 tons of primarily treated dry tea with the value of 490.131 USD to China and Taiwan. The following is information about some main export markets of Vietnam: Taiwan market: Taiwan annually imports tea with relative big volume from countries and the region. Taiwan not only consumpes tea in the country but also imports for processing and exporting to other countries. According to statistic figures of Taiwan Customs Head Office in 2003, Taiwan imported USD 18,385,467, a rise in comparison with the previous year 8,229%; In 2004, imported USD 19,889,492, a rise in comparison with the previous year 8,181%; in 2005 imported USD 22,815,832 more than the previous year of 14,713%. Export tea volume of Vietnam always stands at the top of this market. In 2004, Vietnam exports tea to Taiwan market about USD 12,373,334 which keeps 62,210% tea export turnover of the whole year of Taiwan. In 2005, Vietnam exports tea to Taiwan market about USD 13,968,121, a rise in comparison with 2004 is 12,889%, keeping 61,221% tea export turnover of the whole year of Taiwan. Beginning three months of 2006, Vietnam was still the biggest tea export market of Taiwan, Vietnam exported tea to Taiwan which reached USD 3,132,756, a rise 1,009% in comparison with the corresponding period of preceding year, keeping 73,873% tea export turnover of beginning three months of Taiwan. In term of product category, Taiwan market strongly consumpes oolong tea with high quality of Vietnam. In term of price, in 2004 Taiwan imported tea of Vietnam under average price of USD 0,770/kgm; in 2005, average price is USD 0,866/kgm and beginning three months of 2006 with average price of USD 1,009/kgm, export tea price, in which Tainwan imports from Vietnam is usually lower than countries and the area. Russia market: Tea is the only imported goods which Russia government inserts into list of estential goods. Annually, Russian consumes approximately 1,5 billions USD from tea, on average 1,1kg tea /person/year, about 3,5 tea cup /person/day. Russia is the third market in the world after India and England; however, due to unsuitable climate, ability of Russia’s tea self-production is very low; the majority is exported. Main tea export markets of Russia are India, Sri Lanka, China, Indonesia and Vietnam. Before the 1990s, Vietnam exported 13.000-15.000 tons/year into Russia. After a long time, tea volume of Vietnam exported to Russia is only about 1.000 tons/year; in 2001, it rised 800 tons, in2002 over 3.600 tons. In January/2007, tea volume exported to Russia rached approximately 1100 tons, value was over USD 1 million, a decrease 24,2% quantity and 22% value in comparison with December/2006, a rise 73% and 63% value in comparison with the corresponding period of preceding year 2006. In 2006, Russia is the second tea import market of Vietnam about export turnover. Until October/2007, Russia market keeps 11,6% in total export volume of Vietnam. China market: China is the cradle of tea industry known as tea brand name (danh tra), which is famous in the world and in vocational training relating to

17

tea. Although China has firm tea industry, its consumption is strongly increasing annually. So, China still has to import a relative big volume, in which Vietnam is the familiar partner. In 2006, China is the fourth tea import country of Vietnam. In June, at the beginning of 2007, tea volume imported by China keeps 14% in total output of Vietnam’s export tea, after Taiwan. US market: American, the eighth country in the world about tea consumption with 84% is black tea, the remain is green tea and other kinds of tea. However, tea belongs to a group of goods which is difficult to import to this country and it is strictly inspected by US Pharmaceutical and Food Management Office. American is the potential market for Vietnam’s tea. Vietnam’s tea output exported to this country reaches high growth rate, keeping 7,1% in total output of exported tea, a rise 5% in comparison with 2006. The current advantage of Vietnam is that price of green tea exported to US is much lower than that of other countries. However, Vietnamese exporters must highly concern on quality of tea exported to US because this market is prissy particularly in problem of food safety. EU market: In EU, German is the country importing the greatest tea volume of Vietnam, but Vietnam only exports about 2-3 thousands tons in total amount of 21 thousands tons per year. This market now tends to reduce exported tea volume because recently, German has sent back Vietnam some tea kinds plus requirements for re-check because quality is not guaranteed. Other markets such as England, Poland, French, etc also reduce a remarkable export volume.

Tea export volume of Vietnam in beginning eight months of 2007 in some EU countries

Countries Volume (Tons) Price (thousands USD)

Russia 7.260 7.444

Poland 2.270 2.102

German 1.226 1.412

England 941 1.085

Holland 1.104 1.230

French 67 172

(Source: Customs Head Office)

4. Major exporters

In 2006, enterprises have great tea export turnover of Vietnam including Hong Tra Tourism and Trade Company, The He Moi Company Limited, Tea Head Company, Casa Company Limited and Dong Thanh Company.

Reference of output and export turnover of some tea enterprises in September/2007

18

Name of export enterprises

September/2007 In comparison with August

2007

Volume (tons)

Unit Price (USD)

Volume (%)

Value (%)

The Hệ Moi Company Limited, Vinh Phuc

631 869.538 -35,85 -14,74

Tin Dat Tea Export-Import Joint Stock Company

503 326.950 * *

Tan Phong Joint Stock Company 444 667.359 163,65 168,80

Brach of Lam Dong Company, Ho Chi Minh city

443 383.053 20,83 17,57

Phu Ben Tea Company 398 504.326 -24,57 -26,81

Finlay Company Limited, Vietnam 305 463.919 43,53 58,49

Sai Gon Tea Company 282 346.281 1,08 10,54

Kien and Kien Company Limited 275 272.066 61,15 36,00

Nghe An Tea Development –Investment Company

273 327.312 8,33 8,56

Hong Tra Tourism and Trade Company 241 391.158 4,17 12,14

Vietnam Tea Head Company 232 287.101 -58,39 -64,18

Rong Vang Tea Joint Stock Company 228 177.013 -4,69 21,54

Ha long Trade Factory 216 171.589 254,45 245,16

Thang Long Tea Trade Production Company Limited

208 275.644 -50,85 -52,68

Branch of Swiss Singapore Overseas Enterprises Pte. Co., Ltd in Viet Nam

199 392.522 130,53 334,74

Minh Anh Company Limited 192 285.255 27,93 62,76

Tan Trao Tea Company 181 284.590 79,29 85,75

Dai Loi Trade Company Limited 178 280.534 75,31 91,37

Thai Hoa Tea Company Limited 158 145.685 -63,20 -70,66

Phu Ben Tea 1 TV Company Limited 152 202.858 * *

Huong Tra Trade Company 137 186.443 19,41 9,82

Bach Thuan Company Limited 132 206.446 -23,73 -21,02

Thai Nguyen Export-Import Joint-Stock Company

126 155.728 -24,10 -35,90

Nam San Joint Stock 125 147.395 -39,02 -9,00

My Lam Tea 113 168.249 167,53 161,36

Cuoc song moi Company Limited 111 192.941 -4,11 -3,72

YI JIIN Tea Processing and Export Enterprise

109 90.204 -24,06 -26,43

Hai Đang Service – Trade – Production 106 12.672 112,00 114,64

19

– Company Limited

TDK Trade Integration Company Limited

104 196.572 -14,75 -0,83

Hiep Khanh Company Limited 99 158.567 148,44 154,45

Hoai Trung Tea Company Limited 97 147.659 56,13 103,04

Đong Thanh Joint Stock Company, Ha Noi

96 150.060 57,95 112,16

Dai Loc Company Limited 95 123.818 13,10 24,91

Xuan Viet Trade Company Limited 95 152.600 -5,94 53,09

Song Lo Tea Company, Tuyen Quang 89 116.798 -36,59 -45,24

International Marketing and Trade Company Limited

87 106.283 14,47 14,41

Ha Tinh Tea Joint Stock Company 83 133.693 102,44 131,36

Hiep Thanh Company Limited 82 130.684 -50,40 -50,46

Phuong Nam Food - Agricultural Product Export Company Limited

81 108.306 4,76 0,51

Ha Noi Trade Head Company 80 134.167 100,00 87,27

Thanh Ha Export-Import Production Joint Stock Company

79 121.491 29,55 34,35

Khanh Hoa Company Limited 77 147.442 -36,91 -21,75

(Source: Vietnam trade information)

5. Opportunities and strengths of export

After Vietnam has entered World Trade Organization (WTO), ability of market expansion of tea industry has many advantages. Before situation of reducing market share in EU, Vietnam Tea Industry is expanding market to some Asia and Middle East countries. These are countries with great export demands but requirement is not too high, mainly kinds of tea with average quality like China. In 2007, area of new multiplication and high productivity, good quality reaches 32,5% in total area. Tea gene hospital, in the country and local import has about 150 kinds. Only in short time, because of investment expansion, cooperation with other countries, Vietnam has imported over 50 new genders, in which 8 new genders are allowed for multiplication in development projects in provinces, cities in order to advance tea productivity and quality. Besides, Vietnam has long coast which is suitable for goods transport by waterway to other countries. Specially, tea price of Vietnam only is equal to 70% in comparison with the same tea price of other countries so that this is favorable competitive factor in international market.

20

Vietnamese government has right development strategy, and Vietnam tea industry has many prospects and being one of important exchange source for national economic, plus coffee, rice, rubber,cocoa, cotton and pepper.

21

V. Import situation Characteristics of Vietnam tea production industry mainly services for export targets, therefore, tea import volume into Vietnam is very few. Majority of local consumption is mainly handmade tea kinds without clear trade name and almost all is to directly retail to consumers, the remain is local kinds of tea with familiar brand names of Vietnam such as Kim Anh, Thai Nguyen tea etc One more factor which makes tea volume imported Vietnam few is that taste of local tea consumption is not high.

22

VI. Orientation and policies of developing tea export of Vietnam Tea is one of strategic exported agricultural products. Decree No 43/1999 QD-TTG dated March/1999 on approving program of developing tea industry in the period 2005-2010. It sets up 4 targets for tea industry from now to 2010 as follow:

• Productivity increases 1,7 times in the country • Output increases from approximately 60.000 tons to 214.000 tons • Fresh tea increases 2,4 times equivalent to 150.000 tons of tea shoot. • Export increases 3 times which reaches 110.000 tons until 2010 with

total value USD 210 millions. • Creating more jobs for approximately one million people.

Apart from this, in 9 provinces belonging to concentrated development policies of the government, there are 5 provinces of black tea production (Tuyen Quang, Yen Bai, Phu Tho, Son La, Nghe An) and 4 provinces of green tea production (Ha Giang, Lai Chau, Lao Cai and Thai Nguyen). Ministry of Agricultural and Rural Development has given 5 main solutions to develop tea industry in next time, including: implementing planning and tea development; promoting technological science and technical transfer in tea production and processing; strengthening international cooperation, trade promotion; expanding market of tea consumption; encouraging all economic factors to develop industrial bases and tea processing ones according to planning, and gradually modernizing these bases according to direction which makes rate of refined tea products, guaranteeing enough capacity to process with high quality and product diversification; finally, it needs to reorganize production of tea industry. Ministry of Agricultural and Rural Development appoints VinaTea and Agricultural Design & Planning Institute to construct planning of production development and tea processing on the scope of the country next years; optimal suitable area must be identified for each region, province. Besides, guiding provinces to plan concentrated tea areas in combination with processing industrial establishments, creating qualitative material resource for plants. Tea Research Institute needs to study and select suitable gene for each ecological area plus high productivity and quality; researching advance about growing skill, balanced fertilization, synthetic prevention, limit of chemical use, humidity, process of harvest. Development of tea production in following years must be reorganized according to direction: households produce bud tea, enterprises focus on processing industry and consumption. The government needs to create favorable conditions and aid for highland farmers in order for tea intensive farming and manufacture; encouraging households which have capital, labors, experiences and confidence towards tea industry to expand scale of tea farms.

23

Currently, countries which import Vietnam tea are trying to apply technical barriers to protect consumers and public health. Therefore, it requires high quality of exported tea. In 2015, Global Food Standard (ISO 2015) will be issued. Vietnam manufacturers must concern on this thing to avoid danger of losing export market because of non-execution of laws of some enterprises. Ministry of Agricultural and Rural Development has given regulations of production management, processing and safe tea certificate (No 43/2007/QD-BNN, dated 16/5/2007); organizations, individuals participating in production, processing tea in Vietnam must sufficiently implement regulations of production conditions, safe tea processing and certificate; Next, the Ministry has had the program of tea industry modernization with investment expenditure over VND 420 billions which is focused for tea industry and construction of tea processing models with high quality. Doctor Tran Van Gia highly evaluates this policy and he proposes regions to implement this way. (source: Vinanet). Apart from this, activities of local production are relatively cũng khá active with plans of tea production expansion at many regions; development of tea brand name and seeking a market for tea products are also strengthened. Moreover, development of tera brand name and output for tea products now is not only role of Tea Association in private but also target of regions. It needs to have combination between the government, regions and privately-own companies etc. This is a right guideline – policy.

24

VII. Useful addresses Information about Vietnam agricultural product http://www.agroviet.gov.vn Ministry of Agricultural and Rural Development http://www.moi.gov.vn/News/Main.asp Vietnam Tea Asociation http://hiephoichevietnam.org/