The New “RUNWAY” of COFIDEC

 By DUONG LE - Photo QUY HOA   

2017: COFIDEC EXPECTS TO OBTAIN US$20 MILLION OF EXPORT TURNOVER

In addition to a competitive price policy, COFIDEC is carrying out a series of solutions to utilize the capacity growth effect of the new factory. The corporate leadership expects the productivity will increase 30% when its production lines achieve stable operations. The factory is projected to reach 70% of its designed capacity next year and 100% in 2019, equivalent to 8,000 tons of finished products with a 60:40 ratio between agricultural and fishery items.

For 2017, the export target set by COFIDEC is US$20 million, a rise of some 40% from this year (estimated at US$14 million). This figure is expected to shoot up to US$30 million in 2019, when the factory reaches its full capacity.

Mr. HO PHUOC HAI (Director of COFIDEC)

   Coastal Fisheries Development Corporation (COFIDEC), a branch of SATRA, is an export-oriented enterprise focusing on the Japanese market with three lines of frozen processed food: seafoods, vegetables and fruits. The many years’ experience in supplying to one of the world’s most demanding customer is a passport of quality for COFIDEC to expand its consumption markets. In August 2016, COFIDEC was handed over a new factory worth some VND400 billion developed by SATRA.Ÿ


  • TECHNOLOGY
    BREAKTHROUGH

   Like her colleagues, Dang Thi Thao Nguyen, from the second agricultural product group of the agricultural product department, is overjoyed with the changes in her working environment. With over 13 years working for and witnessing the ups and downs of this corporation, the female worker perfectly understands the value of this “new home.” For her, this modern premise is a sign of her company on the momentum of innovation and development.

   The COFIDEC factory for processing agricultural and fishery products is a key project of SATRA. Covering an area of 12,000 square meters over 25,000 square meters of Vinh Loc Industrial Park (Binh Chanh District), the facility is equipped with a system of modern new machinery, including five agricultural product lines (fruits, grilled items, steamed vegetables, machine-fried items, tempura), three fishery product lines (battered items, sushi, boiled items, mixed items) and especially a fluidized-bed freezer imported from Sweden, a machine considered the most advanced at present capable of freezing inputs of various sizes with a capacity of 1,000 kilograms per hour.

   The system of automatic sync conveyors delivers materials to each processing department. The new freezer helps reduce power consumption. Furthermore, the corporation, in collaboration with the project management board of SATRA, has conducted a survey to bring in more machines and equipment replacing manual laborers and reorganize the workforce for higher productivity, lower costs, better performance and greater competitiveness. In 2017, the corporate leadership expects the productivity will increase 30% when their production lines achieve stable operations. Also, the factory is projected to reach 70% of its designed capacity next year and 100% in 2019, equivalent to 8,000 tons of finished products with a 60:40 ratio between agricultural and fishery items.

   COFIDEC Director Ho Phuoc Hai said he had assumed the current position in 2014, when SATRA focused on speeding up the development of this factory. The maiden job for this new “captain” was very heavy. With the old factory in District 12 already handed over, the production schedule still had to be met as all activities were shifted to the Vietnam-Japan factory for processing agricultural and fishery products, a small-scale facility of about 4,500 square meters taken over by SATRA and given to COFIDEC for temporary production when the new factory was under construction. Since June 2016, COFIDEC has received parts of this factory and is now further perfecting it for operation.

   From a closed economy three decades ago, Vietnam has become one of the front-runners in international economic integration, taking part in almost every free trade agreement (FTA), especially in the past 10 years. It should be noted that as tariff barriers go down following the committed road map, technical barriers will be erected. Thus, the selection of technology for breakthrough is a wise decision, which not only improves competitiveness but also actively deals with non-tariff barriers. Japan is a member of the Trans-Pacific Partnership Agreement (TPP). If this FTA is concluded in 2018 as planned, COFIDEC will gain significant competitive advantages in this strategic market, as well as the other 10 regional nations. Processed shrimp, a major export product of COFIDEC, is on the list of 12 seafood items to become duty-free as soon as the TPP comes into force.Ÿ 

  • DOING BUSINESS WITH JAPAN

   “Tell me who your friends are and I’ll tell you who you are.” This proverb alone is not enough to describe the case of COFIDEC. The position of an export market is undeniably important. But what more important is which items are exports, crude or refined, with a high or low value-added content in each export unit. Japan is well known as a choosy customer with a series of stringent requirements, especially for food. The secure foothold in this market is a guaranty for the quality and safety of COFIDEC products. The price of this guaranty is persistent serious efforts for a long period.

   COFIDEC is an exporter with a rich history. Its precursor, Duyen Hai Seafoods Joint Venture Co., was set up in 1987, specializing in processed agricultural and fishery products for export. In 1991, COFIDEC built its first factory, becoming one of the 10 pioneers in HCMC to provide frozen processed seafood for export. In early 1993, COFIDEC changed its business model, transforming into a wholly State-owned enterprise under the umbrella of SATRA as decided by the HCMC People’s Committee. In the same year, its seafood products began to approach East Asian customers, South Korea and Japan, besides the U.S. market.

   While the U.S. mainly buys semi-processed frozen shrimp, customers from the land of the rising sun place an order for deep-processed shrimp with a high value-added content. The industrial lifestyle makes Japanese consumers increasingly busy. “They need ready-to-serve products that can be consumed after just a few minutes of microwaving,” Hai remarked. Currently, the shrimp dishes made by COFIDEC number more than 30, including batter-fried shrimp or shrimp rolled with vegetables… Before they make their way to the dining table of Japanese consumers, shrimp must go through a multitude of quality tests. First, it is the input. The non-centralized material zones scattering across the provinces of Soc Trang, Ben Tre, Long An and Khanh Hoa are certified by the National Agro-Forestry-Fisheries Quality Assurance Department. Diversification of supply sources helps the corporation minimize the risk of input shortage in case its material zones run into troubles. Good watch prevents misfortune, since industrial shrimp farming is vulnerable to diseases. “We make contracts with pond owners on a yearly basis. If they performed well in the previous year, we shall renew our contracts,” said Duong Minh Hien, head of the quality assurance department. She added that the corporation accompanies farmers to strictly monitor and control the use of forbidden substances throughout the growth of shrimp. On average, each raw shrimp must be tested for 10 kinds of antibiotic and microbial residues according to the list provided by partners before it gets into the factory for processing. In addition, when shipments arrive at the ports of the importing countries, they are examined by the local authorities before customs clearance. Apart from domestic sources, the corporate leadership informed a number of foreign vendors could offer raw materials at a competitive price.

   Seafood exports generated US$5 billion in the first nine months of 2016, up 5.7% over the same period last year, according to the General Statistics Office. The most surprising result is vegetables for the first time outdid both crude oil (US$1.7 billion) and rice (US$1.7 billion) to bring in US$1.8 billion. Though the lackluster performance of crude oil is ascribed to Vietnam’s voluntary output reduction as the world’s price has not escaped the bottom, it is undeniable that the growth of vegetables, 36.1% year-on-year, is the highest among all export items of Vietnam. The spectacular breakthrough of vegetables leaves a significant impact on the profile of export agricultural products, especially when rice, the major export item of Vietnam for years, is losing its ground to direct competitors in the international market. The positive market signals seem to be in favor of COFIDEC. Its frozen fresh  vegetables and fruits have made up 60% of the quantity, equivalent to 40% of the turnover for the past few years.

   COFIDEC started work on exporting agricultural products in 2000. The reputation established after more than seven years providing processed shrimp makes Japanese partners feel assured to request COFIDEC to add frozen fresh vegetables and fruits to its supply list. Okra and eggplant were the first pilot items. Mr. Nguyen Quoc Minh Ha, deputy head of the planning department, said its partners provided seeds and sent experts over to work with COFIDEC’s team of agricultural engineers and get into the fields with farmers. The trial period was full of hardships. The cultivation of okra had failed in Cu Chi, Tay Ninh and Soc Trang, before it bore the first fruit in Chau Phu, An Giang. Meanwhile, soil conditions in Don Duong, Lam Dong offer eggplant the best yield. During the harvest season, Japanese experts return to the company’s factory, select the input and guide workers on how to process. Besides the simple dishes like fried diced eggplant, fried bisected eggplant, grilled eggplant, unsliced or bisected okra, these two farm produce are paired with shrimp to create new products such as fried shrimp-stuffed eggplant or shrimp-stuffed okra tempura...

   Adopting the cultivation process of Japan, COFIDEC has joined hands with farmers to expand the list of agricultural products, including string bean, zucchini, winter melon, sweet potato, potato, corn and bitter melon, etc. Creative combinations between these farm produce and shrimp are further promoted, providing customers with a wider range of choice. Constant successes in the development of material zones for agricultural products are thanks to the significant contributions from the team of seasoned agricultural engineers and executives who are divided into two groups (seven members each), sticking with farmers in the two crucial material zones of An Giang and Lam Dong. Even so, foreign customers with an office in HCMC can still keep track of the entire production process of COFIDEC.

   Frozen ready-to-eat fruits are also receiving due attention. Apart from Cat Chu mango which has been developed since 2000, COFIDEC has made additions with papaya, pineapple, cherry, water melon, cantaloupe, honey melon, jackfruit and dragon fruit. Certainly, this list will go on. COFIDEC’s successes in sustainable material zone development open up opportunities for the vegetables industry to reduce its output dependence on China. On market breakdown, the neighboring country is now consuming 70% of Vietnamese exports, according to the Ministry of Industry and Trade.

   For 2017, the export target set by COFIDEC is US$20 million, a rise of some 40% from this year (estimated at US$14 million). This figure is expected to shoot up to US$30 million in 2019, when the factory reaches its full capacity.

   In addition to a competitive price policy, COFIDEC is carrying out a series of solutions to utilize the capacity growth effect of the new factory. On the one hand, the corporation is reinforcing and expanding the traditional market of Japan (currently taking up 70% of its export turnover) and South Korea (20%). On the other hand, it is investing in trade promotion, attending international trade fairs and deploying online marketing… in search for new customers in potential markets like the U.S., the EU, Australia and the Middle East, etc. At home, COFIDEC is developing new products to make use of the increasingly vast distribution network of SATRA, gradually raising its product revenue rate and promoting its image overseas.

   Modern technology, favorable market signals, a staff with extensive experience... form a runway for COFIDEC to take off! 

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An issue of great importance - also a challenge for COFIDEC to tackle - is market development, joining hands with strategic partners to expand the outlet and establish stable raw material sources to ensure maximal production so as to increase productivity and ensure revenue and profit.