Individual Assignment for International Business Course

1. 1
Assignment 2 –
Individual Report
R M I T I n t e r n a t i o n a l U n i v e r s i t y V i e t n a m
P H A M T R A M Y
S 3 3 5 7 6 5 5
B U S M 3 3 1 1 / G 2
4 / 1 6 / 2 0 1 4

2. Masan Consumer
and Hong Kong venture proposal

3. 3
Table of contents
I. BACKGROUND.............................................................................................................................8
1. The company - Masan Consumer..............................................................................................8
2. The country - Hong Kong..........................................................................................................9
3. The product - Chin-Su Nam Ngu clean fish sauce .......................................................................9
II. ANALYSIS..................................................................................................................................11
1. Target country.......................................................................................................................11
2. Target market and industry....................................................................................................18
2.1. Consumer purchasing power...........................................................................................18
2.2. Consumer purchasing habits...........................................................................................20
2.3. Competitor analysis........................................................................................................21
III. RECOMMENDATION..................................................................................................................24
1. Financial Projections (Appendix 2)..........................................................................................24
2. Strategy................................................................................................................................24
2.1. Justifications of strategy selection...................................................................................24
2.2. Collaboration - selecting the partner...............................................................................25
2.4. Collaboration adlegal issues...........................................................................................26
3. Objectives.............................................................................................................................27
4. Implementation.....................................................................................................................28
5. Performance indicators..........................................................................................................30
IV. CONCLUSION ............................................................................................................................31

4. 4
List of figures and tables
Figure 1. Masan Consumer's Financial Performance (VND bn). Reproduced from: MG 2012....................8
Figure 2. Chin-Su Nam Ngu clean fish sauce. Reproduced from: MG n.d................................................9
Figure 3. Fishsauce marketvalue data (2007-2017F). Reproducedfrom:Euromonitor2013, citedin MG
n.d...................................................................................................................................................10
Figure 4. Hong Kong Logistics Performance Index (LPI). Reproduced from: World Bank 2014 ................12
Figure 5. Sauce,dressingsandcondiments inHongKongbycategory:value 2007 - 2012 (HKD million).
Adapted from: Euromonitor 2013......................................................................................................18
Figure 6. Percapital annual disposable income,spendingandsavingsratio:2006 - 2020. Reproduced
from: Euromonitor 2013 ...................................................................................................................19
Figure 7. Real growthindex of consumerexpenditure byselectedcategory:2006 - 2020. Reproduced
from: Euromonitor 2013 ...................................................................................................................19
Figure 8. Table sauces brand shares 2012 (% retail value rsp). Adapted from: Euromonitor 2013. .........21
Figure 9. Marketing examples on Amoy’s homepage. Reproducedfrom: Amoy n.d..............................22
Figure 11. Amoy's premium light soy sauces.Adapted from Amoy n.d.................................................23
Figure 12. Amoy's products portfolio. Adapted from: Amoy n.d...........................................................23
Figure 13. Marketing examples on Lee Kum Kee'swebsite. Reproduced: Lee KumKee n.d....................27
Table 1. PEST analysis .......................................................................................................................13
Table 2. SWOT analysis .....................................................................................................................16
Table 3. Hong Kong consumer purchasing habits (table sauces category).............................................20
Table 4. The 6W and 1H questions.....................................................................................................28

5. 5
Abbreviations
APEC: Asia-Pacific Economic Co-operation
BEBA: Bureau of Economic and Business Affairs
CAGR: Compound annual growth rate
CAN: Clean Air Network
CGV: Consulate General of Vietnam
CTCS: The Canadian Trade Commissioner Service
FI: foreign investors
FMCG: Fast-moving consumer goods
GMP: Good manufacturing practice
HACCP: Hazard Analysis & Critical Control Points
HCNs: Host country nationals
HK: Hong Kong
HKCED: Customs and Excise Department
HKD: Hong Kong Dollar
HKG: Hong Kong government
HKTDC: Hong Kong Trade Development Council
ICSID: International Center for the Settlement of Investment Disputes
IPR: Intellectual property rights
IRD: Inland Revenue Department
LKK: Lee Kum Kee
LPI: Logistics Performance Index
MC: Masan Consumer
MG: Masan Group
MNCs: Multinational companies
PCNs: Parent country nationals
PEST: Political - Economical - Social - Technological

6. 6
SBUs: Special Business Units
SWOT: Strengths - Weaknesses - Opportunities - Threats
UNCITRAL: United Nations Commission on International Trade Law
UNDP: United Nations Development Programme
USD: U.S Dollar
VN: Vietnam
VNA: Vietnam News Agency
VOV: The Voice of Vietnam

7. 7
EXECUTIVE SUMMARY
The report looked into the possibility that Masan Consumer Vietnam could invest in
Hong Kong market. Masan, ranked 15th in 500 Vietnamese Largest Private Enterprises
(VNR500 2013), was considered to have sufficient financial, physical and human
resources. On the other hand, Hong Kong provides a favorable climate for foreign
investors, being ranked 2nd in “ease of doing business” Index (Doing business 2013).
This investment was triggered by the strong financial performance of the company in
the recent years, which generates great cash inflows, however, not suitable for staying
idle in the domestic market with decreasing interest rate.
The product of selection was Chin-Su Nam Ngu clean fish sauce, with domestic
market share of 76% (MG 2012). Further findings indicated that Chin-Su would provide
incentives for consumption in the target market: convenience and healthiness - which
are the top priorities of Hong Kong consumers.
However, the fact that Hong Kong’s fish sauce is a niche market implied both
opportunities and threats. Opportunities to be the first mover and face fewer
competitors, and threats of low demand due to local taste being in favor of soya sauce
(Euromonitor 2013). This suggested MC should collaborate with a local reputable
partner, for example: Lee Kum Kee, with over 100-year reputation, outstanding sales
performance in the sector, experience working with another Vietnamese company,
superior knowledge of local preferences and other value adding elements (Euromonitor
2013, HKTDC n.d). Further justifications of this decision were provided in the
Implementation part of the report.
Last but not least, the proposed initial investment was USD250,000. Financial
projections showed loss in first year of operation, which should be expected. In the next
two years, net incomes were forecasted to be positive and the payback period was
expected to be 2.82 years.

8. Masan Consumer and Hong Kong venture proposal
8
I. BACKGROUND
1. The company - Masan Consumer
Masan Consumer (or Masan Food Corporation) started operations in 2000, under
Masan Group (MG) – a leading Vietnam private sector company that focuses on the
consumption and resources areas (MG n.d). The product portfolio of Masan Consumer
(MC) includes fish sauce, soya sauce, chili sauce, convenient food, coffee and instant
cereals, targeting both high-end and mass markets (MG 2012) (Appendix 1). Some of
MC’s well-known brands are Chin-Su fish sauce, Omachi instant noodles and VinaCafé.
Recently, due to the company’s strong financial performance (figure 1) and lower
domestic interest rates (Nguyen 2014), the board of directors has considered investing
in the trade of MC’s fish sauce oversea. There are several justifications for this decision
as below.
Figure 1. Masan Consumer's Financial Performance (VND bn). Reproduced from: MG 2012
As can be seen from figure 1, the company has gained increasing sales and
performed relatively stable over the last 4 years. Moreover, ranked 15th in 500

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Vietnamese Largest Private Enterprises (VNR500 2013), MC is considered to have
sufficient capability for an international venture. In terms of capital resources, it has
been supported by reputable investors - KKR, J.P. Morgan, House Foods and strategic
stakeholders, among which are Goldman Sachs and IFC (MG 2012). As of physical
capacity, the firm currently owns 6 manufacturing facilities in Vietnam with constant
plans of renovation and expansion (MG 2012). Regarding human resources, the
company’s executive team has averagely 18 years of experience in the FMCG industry
with top-notch MNCs like P&G, Unilever, Nestle and Kimberly-Clark (MG 2012).
2. The country - Hong Kong
After looking at variable options, the leaders of MC have decided to expand the
business to Hong Kong. For starters, PEST analysis (Table 1, p.) shows that Hong
Kong has a favorable investment climate. While SWOT analysis (Table 2, p.) indicates
that with a reputable partner company and well-planned marketing programs, MC fish
sauces could survive and grow in Hong Kong’s competitive landscape.
3. The product - Chin-Su Nam Ngu clean fish sauce
Firstly, fish sauce represents a niche market in Hong Kong, whose
demand could be supported by the increasing need for convenience
among Hong Kong consumers (Euromonitor 2013). In order to satisfy the
demand of health-conscious Hong Kong consumers, Chin-Su Nam Ngu
clean fish sauce (figure 2) will be the product of consideration.
Secondly, fish sauce represents a competitive advantage of MC. The
company’s fish sauce lines dominated the domestic market with 76%
market share (Nielsen20 11, cited in MG 2012). Moreover, the market
value of MC’s fish sauce is witnessing positive growth over the year (figure
3).
Figure 2. Chin-Su Nam Ngu
clean fish sauce.
Reproduced from: MG n.d

10. Masan Consumer and Hong Kong venture proposal
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Figure 3. Fish sauce market value data (2007-2017F). Reproduced from: Euromonitor 2013, cited in MG n.d
Notably, in 2012, MC has upgraded Binh Duong facility with 3 fully automated fish
sauce lines, making it the first automated fish sauce facility in the world. Combined
capacity of production lines has risen to 25 million liters per month. Additionally, the
facility satisfies HACCP and GMP standards (MC 2012). This, again, confirms that the
company has the capacity and proven quality to venture oversea.
Further assessments will help clarify other uncertainties of this decision.

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II. ANALYSIS
1. Target country
Ranked 1st in Economic Freedom Index for 20 consecutive years (Heritage
Foundation 2014) and ranked 2nd in Ease of doing business Index (Doing business
2013), Hong Kong is a promising land for foreign investors. Below are some general
ideas.
Firstly, referring to Hong Kong’s controlled imports regulations (HKCED 2010), Chin-
Su Nam Ngu would not be prohibited in the local market, since it satisfied premium
quality standard. To be more specific, Nam Ngu clean fish sauce received the
Certificate of Food Hygiene and Safety (Vietnamese acronyms: VSATTP) from Vietnam
Ministry of Health (Masan Group 2008).
Secondly, by 2012, Hong Kong has been ranked 6th among foreign investors in
Vietnam (BEBA 2013). Between January and November 2013, two-way trade hit
US$11.2 billion with a year-on-year rise of 11.6% (Nguyen 2014, cited in VOV 2014).
The underlying reason for this is the Comprehensive Double Taxation Agreement
between Vietnam and Hong Kong, which took full effect in 2010 (CGV 2009). Broadly
speaking, these imply a strong tie between the two nations, which can support the
investment climate for Vietnam investors in Hong Kong.
Thirdly, Hong Kong’s proximity to Vietnam is convenient in terms of time (only 1 hour
difference) and transportation. More importantly, MC could benefit from HK’s high
logistics performance, especially timeliness, infrastructure, tracking and tracing (figure
4) (World Bank 2014).

12. Masan Consumer and Hong Kong venture proposal
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Figure 4. Hong Kong Logistics Performance Index (LPI). Reproduced from: World Bank 2014
However, as an essential part of Hong Kong’s food culture, soya sauce still enjoys
the highest consumption in the table sauces category, while demand for fish sauce
remains low. Furthermore, domestic companies are dominating the table sauce
category with superior understanding of traditional tastes and preferences of the locals
(Euromonitor 2013). As such, to better compete in Hong Kong market, MC could
consider collaborating with a local company. This suggestion calls for further research
into the target market and industry in the second part of the analysis.
Before coming to that part, PEST analysis (table 1, p.13) and SWOT analysis (table
2, p.16) will shed more light on the external and internal forces that affect the company
in this decision.

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Table 1. PEST analysis
Findings Analysis Implications
Political/Legal Politically stable
HKG’s general incentives:
o No discrimination between domestic and FI
o No quotas, bonds, deposits for FI
o No tax on capital gains and dividends
o No more estate duty
o Profits can be freely converted and remitted
o No tariffs on imported goods
HK adopted UNCITRAL and provides ICSID for
disputes resolution
Significant attention and resources are dedicated to
IPR enforcement
HK is an APEC member
Businesses operating in HK will not be affected by
political turbulence.
HK highly welcome foreign investment to support
the growth of the country.
No distinction between domestic and international
arbitration. Ensure fairness for all investors.
HK ensures healthy business competitions for
domestic and foreign investors.
Vietnam is also a member of APEC. This and the
long-lasting diplomat relations between HK and
Vietnam help facilitate trades between the two
nations.
The investors and the leaders of MC can be
assured about the security of the newly born
venture.
The start-up and operation costs will be lowered
due to HKG’s incentives. MC could use incremental
savings for marketing campaigns and other
operation expenses. Also, the flexibility in
transferring profits cans satisfy investors’
requirements. Therefore, the new venture could
receive strong financial support.
Even though fairness is highly protected by HKG,
MC should take time to study well about their
possible partners to avoid major disputes. Also, MC
should invest in the talents of legal department.
Since HK does not allow international companies to
hire local lawyers to advise for them.
Meanwhile, MC needs to register its trademark
before considering entering a joint venture.
MC should ensure the premium quality of its fish
sauce, according to HKG’s Food Law, to enjoy full
benefits of this advantage.
Economical Conversion and inward/outward transfers of funds for
any purpose are not restricted.
HKD is a freely convertible with low fluctuation. 1
USD = 7.75 - 7.85 HKD
HSBC and Standard Charter, HK branch rank 1st
and
4nd
respectively in HK’s 5 largest banks, both of
which are available in Vietnam
HKG ensures the flexibility in operation of foreign
companies. This associates with HK’s “freedom in
doing business” characteristic. Beside, local
economy is performing positively.
The transfer of money in the same banking
system will be easier for MC.
MC could use the easily transferable funds to
support business investments in home country,
especially in terms of R&D for Chin-Su Nam Ngu
fish sauce.
However, MC should keep track of HSBC’s and
Standard Charter’s interest rates, evaluate other
banks’ options to decide which bank to use.

14. Masan Consumer and Hong Kong venture proposal
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Unemployment rate: 3.4% (10/2012)
Minimum wage: 3.8 USD/hour (5/2013)
HK has low unemployment rate and the HKG pays
attention to the welfare of the workforce. The HKG
has revised the wage rate multiple times before
coming to this current rate.
This is about 2.7 times higher than minimum wage
rate of a Chinese worker and 5 times higher than
that of a Vietnamese worker (considering both in
urban areas).
Most of the workforce of MC’s SBU in HK should be
Vietnamese (PCNs) in the 1st
stage of the venture
to reduce costs of labors. For the same reason, the
SBU can also consider outsourcing some of its
projects to competent Chinese workers. China’s
proximity to HK also reduces the costs of relocating
these workers if needed. Plus, they could assist in
the understanding of Chinese dialects and culture in
business context.
Social HDI ranking: 13
Hofstede cultural dimensions: HK scores higher on
the scale on masculinity and scores much lower on
the scale of indulgence, comparing to VN.
Age distribution (2014):
46.9% between 25 - 54
14.4% age 65 and over
12.1% under age 15
More females than males in the older age group
HK scores high on 3 basic dimensions of HDI:
health, education and income
Main difference between the cultures of HK and
VN: HK is more competitive - success-oriented
and driven (masculine society). HK people
generally spend more hours at work. Moreover,
scoring very low compared to VN in terms of
indulgence, HK society is more restrained without
much emphasis on leisure time.
HK has an old population. Thus, health issues are
highly concerned in the society. This explains
HKG’s strict regulations regarding food quality,
especially when 90% of HK’s food requirements
are imported.
With the aging population, HK labor shortage will
also be a challenge.
High number of target consumers: working
women/wife - main decision-makers in buying
table sauces
If hiring HCNs, MC will need to invest a lot in
training and education for them. This will increase
costs for the company.
Human Resources team should have pre-departure
training for PCNs about the competitive culture of
HK and prepare them of possible culture shock.
Quality of the product should be the top priority of
MC.
This confirms the decisions of hiring mainly PCNs.
MC should do elaborate market researches about
target consumers lifestyle and purchasing habits,
for necessary adjustment of products and marketing
programs.
Technological Sophisticated infrastructure with development plans
in transportation and shipping facilities over the next
few years. LPI Ranking: 15th
(2014) and averagely 8th
(2007 - 2014)
High logistics performance, especially in terms of
timeliness and infrastructure
This could help increase the satisfaction of end
customers, reputation of a new firm in the market
and reduce transportation costs for MC.

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Technical skills:
According to Manpower Group’s survey (2013), 57%
of surveyed HK employers reported talent shortage,
with a year-on-year increase of 22%.
Because of pollution and education problems, HK is
losing professionals to countries like Singapore and
Tokyo, whose quality of living rank 1st
and 2nd
respectively in Asia.
In FMCG industry, sales and marketing top the
demand for professional skills
HK is facing the shortage of talents. In terms of
FMCG industry, HK workers lack the skills of
marketing and business development.
Besides, HK’s conditions of livings (lack of
international school for expatriates’ children, costly
housing and pollutions) might make some PCNs
workers unwilling to accept positions in HK.
MC needs the top PCNs marketing and sales
talents in HK. This might require more training or
hiring to meet the demand of the company.
MC might also need to raise the incentives for
PCNs to come work in HK. This could results in
higher salary expenses for PCNs. To avoid this, MC
should investigate the location to set up new office,
preferably in area with low air pollution index in HK.
For example: Tai Po, Tap Mun, Eastern
Source: BEBA 2013, CIA 2014, CTCS 2012, Deacons n.d, Jia 2012, Manpower Group 2013, Mercer 2014, Michael Page 2013, The Hofstede Centre n.d, UNDP 2012, Wage Indicator 2014, World Bank 2014

16. Masan Consumer and Hong Kong venture proposal
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Table 2. SWOT analysis
Strengths Weaknesses Opportunities Threats
Observations Description Implications Description Implications Description Implications Description Implications
1 MC is supported by
reputable investors (e.g.
KKR, J.P Morgan, House
Foods) and stakeholders
(e.g. Goldman Sachs,
IFC)
MC have sufficient
financial supports to
start an international
venture
MC can invest in
improving the
quality of its
product and
marketing
campaigns in a
new market
MC can be under
constant pressures
from investors to
make positive
returns
MC need a realistic
business plan,
inform the investors
of the right
expectations and
keep track of its
operation oversea
With stable
financial resources
and pressures from
the investors, MC
can invest more in
expansion and can
gain higher trust
from potential
partners
The company
should always
conduct in-depth
researches before
any business
decisions to make
sure the resources
are properly
allocated
The financial
strength could
attract unwanted
attention for
acquisition and/or
increase the
financial
dependence of the
partner on MC
MC should consult legal
department about
appropriate policies for
future collaborations, in
order to protect its own
interests.
2 MC has highly competent
executives team, whose
experiences in the FMCG
industry exceed 15 years.
Strong leadership
can guide the
company through
initial hardships of
the international
venture
The company
should always care
for the welfare of its
executives, i.e.
good compensation
packages
Leaders with strong
individual opinions
can cause internal
conflicts and affect
critical decision-
making processes
Human Resources
and Public
Relations team
should handle the
internal relations
effectively
Great leadership
can be transferred
to younger
generations of the
company, to
increase the
productivity of
workforce
Training workshops
of soft skills for
workforce should
be held monthly
Other competitors
may want to acquire
the company’s
talents and offer
more incentives e.g.
higher salary
Executives and staff of
MC should be well
educated of the core
values and culture of the
company. MC should
show its workforce how
much they are
respected and
appreciated.
3 Soya sauce remains the
most popular table sauce
in HK
MC’s fish sauces
can attack the
niche market
MC should apply
competitive pricing
strategies,
promotional plans
and programs to
raise awareness.
E.g: food festival,
intercultural
culinary programs
Demand might be
low for MC’s fish
sauce in HK’s
market
MC should expect
losses in the first year of
their operation and
prepare necessary
loans and funds to
compensate for the loss.
4 Short shelf life of products
in HK’s retail market
MC’s fish sauces
can stay longer on
the shelves of local
supermarkets
MC should
establish good
relationships with
local supermarkets
since they can be
HK retail shops have
limited space and
non-performing
products are quickly
replaced
o In-depth market
research is crucial
before launching the
product in a new
market.

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Source: CTCS 2012, Euromonitor 2013
potential strategic
partners
o Well-planned marketing
programs are essential
o MC’s logistics team
should consider the
suitable amount of
shipments to avoid
obsolete stock
o Shift focus to dealing
with HK supermarkets
5 Nutritional claims are
strictly regulated in HK
MC’s fish sauces
could set an
example for
Vietnamese
products by
meeting
international
standards. This
could increase
reputation for the
product and the
firm.
MC should
continuously invest
in R&D for its
product to raise its
quality and
standards.
For example: 0% in
the nutrition label
are regarded as a
content claim and
should only be used
if they meet with
HK’s nutrition
labeling
requirements
MC should consult their
HK partners about
nutrition labeling
requirements before
exporting

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2. Target market and industry
First of all, the sauces, dressings and condiments market in Hong Kong are
mostly made up of cooking sauces and table sauces (figure 5).
Figure 5. Sauce, dressings and condiments in Hong Kong by category: value 2007 - 2012 (HKD million).
Adapted from: Euromonitor 2013
In the table sauce category, soya sauce remains the most popular product type,
with 21.9% value growth from 2007 - 2012, compared to which, the growth in
demand of fish sauce in recent year is insignificant (Euromonitor 2013). However,
latest researches into Hong Kong consumers’ trends and lifestyles revealed the
opportunities for MC fish sauce to develop in the market. Main findings are
summarized below.Consumer purchasing power
Driven by positive economic performance of the country, Hong Kong consumers’
purchasing power is growing over the years (Figure 6). With increasing disposable
income, the consumers are shifting towards branded segment whose higher cost is
associated with higher quality (Euromonitor 2013). Moreover, spending on
household goods and service has witnessed the second fastest growth after
communications (figure 7). Thus, complementary food products such as table
sauces are forecasted to gain 2% CAGR volume growth and 0.5% CAGR constant
Sauces, dressings and condiments in Hong Kong
by category: value 2007 - 2012 (HKD million)
Cooking sauces
Table sauces
Others

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value growth from 2012 - 2017, higher than those of cooking sauces (Euromonitor
2013).
Figure 6. Per capital annual disposable income, spending and savings ratio: 2006 - 2020.
Reproduced from: Euromonitor 2013
Figure 7. Real growth index of consumer expenditure by selected category: 2006 - 2020.
Reproduced from: Euromonitor 2013

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2.2. Consumer purchasing habits
Table 3. Hong Kong consumer purchasing habits (table sauces category)
Who will buy? Age 30 - 34: young adults with busy lifestyle
Age 35 - 39: second highest income earners with demand
for family-related products
Age 40 - 44: highest income earners who care about health
and quality of life
Why do they buy? For convenience
Lack of time to prepare the meals
Young adults lack the cooking skills of elder generations
Large-scale marketing activities of branded products
Where do they buy? Supermarkets (66% value share)
Small grocery retailers (20.5% value share)
Independent small grocers (19% value share)
Which brands do
they buy from the
most?
Lee Kum Kee (Lee Kum Kee Hong Kong Foods Ltd)
Amoy (Amoy Food Ltd)
Kraft (Kraft Foods Hong Kong Ltd)
Unilever (Unilever Hong Kong Ltd)
Source: Euromonitor 2013
Referring to the table, for each group of target consumers, Chin-Su Nam Ngu
provides incentives for consumption. Busy young adults could use it to save time
preparing table sauces. It could also satisfy health-conscious consumers with
premium quality, being certified by Vietnam Ministry of Health as a clean fish sauce
(MG 2012). In order to reach the end-consumers, the major distribution network MC
should use is supermarket, as retail shops in Hong Kong have limited space and
allow short shelf-life for non-performing products (Table 2, p.16).
On the other hand, for a product of a different origin like Chin-Su to be
recognized in Hong Kong market, MC would need support from a local company.
Since Hong Kong culinary culture is already ingrained with soy based sauce.
However, which partner should MC select? Could it be among the top competitors?
To answer that question, the profiles of some biggest players in the sector were
brought into view.

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2.3. Competitor analysis
As summarized in table 3 above, major players in Hong Kong table sauce market
includes Lee Kum Kee, Amoy, Kraft and Unilever. Figure 8 below gives an overview
of the market shares of these brands, in terms of retail value.
Figure 8. Table sauces brand shares 2012 (% retail value rsp). Adapted from: Euromonitor 2013.
It is argued that domestic companies dominate the table sauces market with
competitive pricing strategies and in-depth knowledge of local consumers’ tastes and
preferences (Euromonitor 2013). Leading companies also invest heavily in marketing
activities. For example (figure 9): promoting recipes featuring specific products on
company websites, using third party endorsement from top Hong Kong gourmet
chefs (Euromonitor 2013).
To be more specific, the paper will analyze one major competitor: Amoy Food
Ltd. Since its establishment in 1908, Amoy has had over 100 years of experience in
producing sauces (Amoy n.d). From 2009 - 2012, both of Amoy’s company and
brand shares rank 3rd in Hong Kong sauce, dressings and condiments sector, in
terms of retail value (Euromonitor 2013).
Table sauces brand shares 2012
% retail value rsp
Lee Kum Kee (Lee Kum Kee HK Ltd)
Amoy (Amoy Food Ltd)
Kraft (Kraft Foods HK Ltd)
Colman's (Unilever HK Ltd)
Maggi (Nestlé HK Ltd)
Grey Poupon (Kraft Foods HK Ltd)
Kim Lan (Kim Lan Foods Co Ltd)
Others

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Figure 9. Marketing examples on Amoy’s homepage. Reproduced from: Amoy n.d

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Moreover, the company’s record has witnessed several acquisitions, according to
Amoy n.d and Ajinomoto 2006:
 1983: Half of Amoy’s shares were acquired by Pillsbury
 1991: Amoy was sold to French BSN Group (Former Danone Group)
 2006 - Present: Amoy was acquired by Ajinomoto Co. Inc.
This could possibly imply that the wealth of the company attracted foreign
investors or on the contrary, the manager might not have managed the company
well. Being sold three times over the period of 20 years could result in high staff
turnover rate and internal conflicts. If MC confirms the decision to expand to Hong
Kong, future investigations should be carried out to see if this is a competitor’s
weakness that the company could take advantage of.
Figure 11 shows Amoy’s products portfolio, whose features are mostly different
from that of MC’s (Appendix 1), except for soy sauce.
Figure 11. Amoy's products portfolio. Adapted from: Amoy n.d
To date, Amoy’s products have been available in 40 countries. Some of the
company’s major markets include Hong Kong, Shanghai, Japan, Australia, North
AmoyFood Ltd
Sauce
Soysauce
Oyster sauce
Convenience
sauce
Others
Frozen food
Dimsum
Wonton
Readymeal
Ajinomoto
Frozen food
Seasoningand
Amino Gear
Figure 10. Amoy's premium light soy
sauces. Adapted from Amoy n.d

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America and Europe (Amoy n.d). In Hong Kong, Amoy’s headquarter is located in
Tai Po, New Territories - one of the “greenest” districts with relatively low air pollution
index (Jia 2012). This location is favorable in terms of healthy environment, historic
culture and popular destinations for geo-tourism and eco-tourism (District Councils
2012), which could drive sales of FMCGs to serve hospitality industry. As such, MC
could consider this location for setting up regional business office.
Having discussed in detailed about the target country and market, the execution
of this business decision will be illustrated next.
III. RECOMMENDATION
1. Financial Projections (Appendix 2)
2. Strategy
2.1. Justifications of strategy selection
Corporate level strategy options:
Options Alert
Export fish sauce to Hong Kong market The market share could be eaten up by
local competitors
Low demand for fish sauce
Invest in R&D to attack the niche market
of fish sauce
Low brand awareness
Hard to change the local eating culture
which are intertwined with soya sauce
Profits couldn’t compensate for
marketing and R&D costs
Collaborate with a well-known local firm Losing IPR to the partner
After considering other options, it is recommended that MC should use
collaboration as the entry approach.

25. Pham T. My - s3357655 - G2
25
According to Hill (2008, p.409), a joint venture is a firm that is jointly owned by
two or more otherwise independent firms, with main advantages and disadvantages
as follows:
Pros Cons
o Local partner brings knowledge of
local culture, business practices,
political systems and competitive
conditions.
o Exchange of technical knowledge
o Sharing the development costs and
risks with the partner
o Lower risks of adverse government
interference
o Risk losing control over technology to
the partner
o Possible conflicts of interests due to
the shift in relative bargaining power of
the partners
In order to reduce the risks of the joint venture, a well-constructed legal
agreement must be established before the set-up of the business. In terms of IPR,
MC should register their fish sauce patent internationally before the joint venture.
However, this process may be time-consuming. During which, MC can do more
research about the potential partner (see Implementation). On the bright side, Phu
Quoc fish sauce from Vietnam has already received the EU certificate of Protected
Designation of Origin (MOIT 2013). Therefore, it would pave the way for other
prestigious fish sauce manufacturers such as MC.
2.2. Collaboration - selecting the partner
To be more specific, MC should establish a joint venture with Lee Kum Kee
(LKK), due the following reasons:
- Reputation: LKK was established in 1888. Until now, LKK is available in more
than 100 countries and regions over the world. It was the Official Food & Beverage
Supplier of Beijing Olympics 2008 (HKTDC n.d).
- Sales performance: from 2009 - 2012, rank 1st in brand shares and 2nd in
company shares (after Unilever HK Ltd) regarding retail value in sauces, dressings

26. Masan Consumer and Hong Kong venture proposal
26
and condiments sector. However, in the table sauce market, the major competitor of
LKK is Amoy (see Competitor Analysis, p.21).
- Value-adding elements: large number of consumers, collective marketing
activities, knowledge of local tastes, trust and preference of Hong Kong consumers
(Euromonitor 2013).
- Experience in dealing with another Vietnamese company: since 2008, LKK
has authorized Huong Thuy Corporation to distribute their products in Vietnam.
There has been no recording of disputes between both parties. (Huong Thuy n.d).
Apart from these, LKK also has a production plant in Tai Po industrial estate, Tai
Po, same with Amoy. However, different from Amoy, LKK has not been through any
acquisition over 125 years of operations (Lee Kum Kee 2013). The business has
been well managed by generations of Lee family (Lee Kum Kee 2013).
2.3. Collaboration - what is in it for both parties?
The collaboration model should be considered is 60-40 (60% of net profits go to
MC and 40% of net profits go to LKK). In order for that to be realistic, MC should
take charge of more business activities including: exporting Chin-Su to LKK,
repackaging, marketing and advertising while LKK could be responsible for local
transportation, telephone and communications.
Moreover, the currency should be used is HKD, since this currency is rather
stable (see Table 1, p.13) In case of currency fluctuation, if it exceeds more than 3%
both companies need to discuss the required rate of return again. This should be
stated clearly in the final agreement before the venture could proceed.
2.4. Collaboration ad legal issues
The pending concern of this entry mode is how to protect the parent company’s
IP in the international market? As analyzed in PEST analysis (Table 1, p.13), Hong
Kong intensively enforces the law to protect IP of foreign investors and illegal actions
against this would receive penalty. Nonetheless, it is MC’s right and obligation to
protect the products’ IP beforehand (as mentioned in 2.1, p.25). Since the fish sauce
production takes place in Vietnam, this would reduce the risks that the local partner
acquires production technology.

27. Pham T. My - s3357655 - G2
27
3. Objectives
For Chin Su Nam Ngu fish sauce to be available in 1 out of 10 households in
Hong Kong, at end of year 1’s collaboration with Lee Kum Kee.
Figure 12. Marketing examples on Lee Kum Kee's website. Reproduced: Lee Kum Kee n.d

28. Pham T. My - s3357655 - G2
28
4. Implementation
Table 4. The 6W and 1H questions
When Who To whom Where What Why How
Year 0 (starting point) MC Board of directors Register IP for Chin-Su
Nam Ngu
To protect the company’s
technology and interests
Year 0 Research team of 5 MC’s board of directors Vietnam Assess LKK
For example:
- Financial security?
- Credit issues?
- Already joint venture
with any other
businesses? What are the
results?
- Production, marketing
and workforce
performance
To assure LKK has the
resources and skills that
add value to the business
Based on secondary
researches and tertiary
researches
Year 0 + 1 month Market research team of 4 LKK Company Hong Kong On-site visit To evaluate the
leadership style and
workforce performance
To check the
suppliers and customers’
attitude about LKK
Create an informal
arrangement with LKK, with
support from MC CEO. Work
with LKK in a special
project/campaign for 3-5
months to learn of their
strengths and weaknesses
Based on market surveys and
other primary researches
Year 0 + 7 months Business development
consultants
MC’s board of directors Vietnam Review of joint venture
decision
To assure the viability of
the collaboration and
identify possible
opportunities and threats
o Look at other options again
o Look at other Vietnam
companies that applied
joint venture (successful
and unsuccessful ones)
o Estimate costs and benefits
o Consult legal department
Year 0 + 8 months MC’s CEO LKK’s CEO Hong Kong Letter of intent To explain in detail MC’s
intention to collaborate
with LKK
Elaborate the action plan
Include the specific terms of
the transactions
Year 0 + 8 months Business development
manager
MC’s board of directors 1 in Vietnam
1 in Hong Kong
Set up 2 SBUs to be in
charge of the joint venture
(fully function after the
final agreement of the two
companies).
To monitor the progress
and performance of the
joint venture
Based on quarterly reports

29. Pham T. My - s3357655 - G2
29
Year 0 + 9 months MC’s CEO LKK’s CEO Hong Kong Memorandum of
understanding
1st stage of the formation
of a formal contract
o Outline terms and details of
the agreement between the
2 parties.
o Include requirements and
responsibilities for each
party
Year 0 + 9.5 months MC’s executives LKK Company Hong Kong On-site visit Facilitate the signing of
the agreement
Establish good impression
with the potential partner
Year 0 + 10 months MC’s CEO LKK’s CEO Hong Kong Memorandum of
agreement
The final stage of the
formation of a formal
contract. Two parties are
now legally binding.
Both companies fully agree
on the terms of the
agreement.
Year 0 + 11-12 months SBUs in charge of the
joint venture
Other business units:
Finance, Production,
Logistics, Marketing
Vietnam Preparations for the
operations of SBU in
Hong Kong
Support the first stages of
the collaboration
o Consult legal department
about food and nutrition
requirement for the product
o Make logistics decisions
with LKK about the
distribution of the products
o Create marketing plans for
Chin-Su Nam Ngu in Hong
Kong
o Arrange accommodation
for MC’s SBU in Hong
Kong
o Post information regarding
hiring assistances in major
Chinese and Hong Kong
job-hunting websites
o Discuss with MC’s
executives and finance
department about possible
wage for host country
nationals
Year 1 SBU Hong Kong
(representative of MC
Vietnam)
Hong Kong Start the joint venture with
LKK

30. Pham T. My - s3357655 - G2
30
5. Performance indicators
Success criteria of an international joint venture can be financial-based, production-
based or relationship-based (Jain & Jain 2003, Frino, Hill & Chen 2009).
a. Financial-based: based on financial statements of both partners, revised by an
auditing agency.
For examples:
- Rate of return on capital investment
- Return on equity
- P/E ratio (the price the investors are willing to pay for every dollars of earnings
per share)
b. Production-based: based on financial statements of both partners, market
researches
For examples:
- Market share
- Capacity expansion
- Sales turnover
c. Relationship-based: based on qualitative surveys.
For examples:
- Partner satisfaction
- Partners’ harmony
Adapting the ideas of Rajan (2004), there could be surveys with the participation of
both companies’ executives and departmental heads. The surveys will include
questionnaires regarding incentives, fulfillment of control, behavioral aspects and
performance of the joint venture from both parties’ viewpoint. These surveys will be
carried out by MC’s SBU in Hong Kong, with support from human resources
department.

31. Pham T. My - s3357655 - G2
31
IV. CONCLUSION
In summary, the Hong Kong venture would expand MC’s market and revenue. Using
Chin-Su Nam Ngu clean fish sauce to target the table sauces market, which was
previously ingrained with soya sauce consumption, is risky. However, with support from
a reputable local partner such as LKK, Chin-Su could attack this niche market and
inspire the Hong Kong culinary culture with new taste. The collaboration with LKK is
highly advisable to reduce the risks that MC could possibly face in the new market and
bridge the gap between MC and Hong Kong consumers.

32. Masan Consumer and Hong Kong venture proposal
32
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38. Pham T. My - s3357655 - G2
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Appendix 1. Masan Consumer’s Product Portfolio
Mid-tier market
Source: MG 2012 High-end market
Masan Consumer
Fish sauce
Chin-Su
Chin-Su
Nam Ngu
Nam Ngu
De Nhi
Soya sauce
Chin-Su
Tam Thai
Tu
Chili sauce
Chin-Su
Rong Viet
Convenience food
Instant
noodles
Omachi
Sagami
Kokomi
B'Fast
Congee
Coffee
Vinacafé
Wake up
Phinn
Instant
cereal
Kachi
Mass market

39. Pham T. My - s3357655 - G2
39
Appendix 2. Financial projections
1. Projected income statement (3 years): Masan Consumer
Unit: USD
Year 1 Year 2 Year 3
Revenue 415,536 469,556 530,598
Cost of sales 66,108 74,702 84,413
Gross margin 349,428 394,854 446,185
Total salary and wages 139,263 143,231 147,318
Fixed business expenses:
Advertising
Car and Truck Expenses
Bank & Merchant Fees
Contract Labor
Conferences & Seminars
Customer Discounts and Refunds
Dues and Subscriptions
Miscellaneous
Insurance (Liability and Property)
Licenses/Fees/Permits
Legal and Professional Fees
Office Expenses & Supplies
Postage and Delivery
Sales & Marketing
Taxes-Other
Telephone and Communications
Travel
Utilities
Total fixed business expenses
14,400
5,040
7,680
6,480
5,760
10,440
6,240
5,880
15,480
6,000
8,400
3,720
3,360
13,440
13,200
11,040
9,600
8,400
154,560
14,832
5,191
7,910
6,674
5,933
10,753
6,427
6,056
15,944
6,180
8,652
3,832
3,461
13,843
13,596
11,371
9,888
8,652
159,197
15,277
5,347
8,148
6,875
6,111
11,076
6,620
6,238
16,423
6,365
8,912
3,947
3,565
14,258
14,004
11,712
10,185
8,912
163,973
Other expenses:
Amortized Start-up Expenses
Depreciation
Interest
Commercial Loan
Commercial Mortgage
Line of Credit
Taxes
Total other expenses
22,667
3,893
39,819
12,123
3,924
-
82,426
22,667
3,893
34,842
11,855
8,424
6,682
88,363
22,667
3,893
29,505
11,564
10,954
15,795
94,378
Net income (26,821) 4,063 40,515

40. Masan Consumer and Hong Kong venture proposal
40
2. Payback period analysis: Masan Consumer
Particulars
Year 1 Year 2 Year 3
Expected Revenue / Sales 415,536 469,556 530,598
Operational Expenses
Materials & Supplies
3,720 3,842 3,947
Direct Labor Costs
139,263 143,231 147,318
Other Factory Overheads
5,040 5,191 5,347
Sales & Marketing Expenses
13,440 13,843 14,258
General & Admin Overheads
39,600 40,788 42,776
Interest & Financial charges
51,942 46,697 41,069
Others
30,000 40,000 42,000
Total Operating Expenses
283,005 293,592 296,715 -
Profit before Depreciation &
Taxes 132,531 175,964 233,883 -
Less: Depreciation on Capital
Investment 3,893 3,893 3,893
Profit before Tax 128,638 172,071 229,990
-
Less: Taxes - - - -
Profit after Tax 128,638 172,071 229,990 -
Add: Depreciation on Capital
Investment 3,893 3,893 3,893 -
Less: Initial Capital Investment /
Cost 250,000 - -
Net Cash Flow (117,469) 175,964 233,883
-
Cumulative Net Cash Flow (117,469) 58,495 292,378 292,378
Payback Period 2.82 Years