Modelling vegetable marketing systems in South East Asia ...kmacd/IDSC10/Readings/research desig… · South East Asia: phenomenological insights from Vietnam ... review of the literature

Modelling vegetablemarketing systems inSouth East Asiaphenomenologicalinsights from Vietnam

Jean-Joseph CadilhonAndrew P FearnePaule Moustier andNigel D Poole

The authors

Jean-Joseph Cadilhon is based at the Centre for FoodChain Research Imperial College London andCIRAD-FLHOR MCR Imperial College LondonWye Ashford Kent UKAndrew P Fearne is based at the Centre for Food ChainResearch Imperial College London Wye Ashford Kent UKPaule Moustier is based at the CIRAD-FLHORCCC-CIRAD French Embassy Hanoi VietnamNigel D Poole is based at the Centre for Food ChainResearch Imperial College London Wye Ashford Kent UK

Keywords

Food industry Marketing systemsBuyer-seller relationships Supply chain managementVietnam Wholesaling

Abstract

This article presents a conceptual framework for the analysisof vegetable supply chains in a South East Asian context andthe role wholesale markets play in these chains Following areview of the literature on food marketing systems indeveloping countries and preliminary eldwork in SouthEast Asia a holistic framework is proposed including whatare perceived to be the critical factors in the development ofimproved fresh food marketing systems domestic legal andpolicy factors international trade policies and food marketshistory geography and cultural and social norms Theparticular role of trust and collaboration amongstakeholders in the Ho Chi Minh City vegetable marketingsystem is highlighted

Electronic access

The Emerald Research Register for this journal isavailable athttpwwwemeraldinsightcomresearchregister

The current issue and full text archive of this journal isavailable athttpwwwemeraldinsightcom1359-8546htm

Introduction

The aim of this article is to develop aconceptual framework for the study of freshvegetable supply chains in South East Asia inorder to assess the role of wholesale markets ina Vietnamese context[1] Studies onevolutionary trends in food marketingstructures are reviewed and differentframeworks of urban food systems arediscussed Insights from preliminary eldwork in South East Asia and Vietnamcomplement the literature review Aconceptual framework is proposed for thestudy of an urban fresh vegetable marketingsystem as it evolves in interaction with itsenvironment Among the critical factors thatwarrant further investigation the paperfocuses on social and cultural elements withinlocal institutions and their interactions withthe stakeholders within the marketing system

Food distribution in Vietnam rapidlychanging situations

Vietnam is a predominantly agriculturalcountry With an annual per capita income ofjust US$425 the World Bank[2] considersVietnam to belong to the low-income group ofdeveloping countries (per capita grossnational income under US$755) HoweverVietnam is not considered as a less developedcountry by the United Nations[3]

The country has experienced strongeconomic growth in recent years but unlikemany of its neighbours this has only beenslightly curbed by the Asian nancial crisis In2002 the countryrsquos gross domestic product(GDP) rose by 7 per cent What is morealthough the urban population in Vietnamonly constitutes 20 per cent of the totalpopulation this proportion is growing withstrong migration from the rural areas(Drakakis-Smith and Dixon 1997)Furthermore cities account for 70 per cent ofthe national GDP due to industrial andtrading activities This brings annual percapita GDP to US$1395 in the urban centresof the country Although Vietnam still relieson an agriculture-based economy and remainsa developing country if one only considers thecities economic indicators are more

Supply Chain Management An International JournalVolume 8 middot Number 5 middot 2003 middot pp 427-441q MCB UP Limited middot ISSN 1359-8546DOI 10110813598540310500268

The authors would like to thank two anonymousreviewers for their helpful and constructivecomments

427

representative of the middle-income group ofcountries in transition

Following this economic developmenthousehold revenues have increased andchanges in food consumption habits areappearing Families with growing incomes arebuying more food rather than producing itthemselves Fresh vegetable sales in Vietnamhave increased by 50 per cent between 1987and 1999 (Figuie and Bricas 2002)Vegetables are now staple foods in Ho ChiMinh City the largest city in Vietnam with anunof cial 8 million inhabitants According toa survey of city households 94 per cent of HoChi Minh City families consumed vegetableswith almost every meal (Potutan et al 1999)What is more 97 per cent of respondentsclaimed they normally purchased freshvegetables from the market on a daily basis

Nevertheless there has been a major shiftin the structure of food distribution in SouthEast Asia from small independent storessupplied by wholesale markets tosupermarkets supplied by contractedproducers and manufacturers (Department ofForeign Affairs and Trade 2002) Where newsupermarkets are aggressively promoting theirbusiness and building independent foodsupply chains the role of the wholesalemarket in the distribution of fresh food isgenerally declining

In parallel the Vietnamese government hasde nite plans to encourage economicdevelopment by liberalising domestic foodmarkets and international trade building newwholesale markets logistic centres andindustries to facilitate the marketing andprocessing of fresh foods and encouragingbigger stakeholders in the marketing channelsto develop (VNS 2001) Authorities are alsoencouraging fresh produce farmers to use lesschemical-intensive production methods toensure higher food safety standards

Fresh produce wholesale markets withinthe food marketing systemThough food marketing channels are rapidlyevolving in South East Asia from traditionalshops to supermarkets and hypermarkets thegreat majority of fresh food sold to the urbanconsumer still goes through a wholesalemarket (Department of Foreign Affairs andTrade 2002) We choose to de ne wholesalemarkets as a physical place where professionalagents congregate to buy and sell physicallypresent products fromto other professionals

This working de nition encompasses bothassembly and metropolitan wholesale marketsand insists on the presence of the productstraded by businesses to other businesses asopposed to trade with the nal consumerWholesale markets still play an important rolein Asian food marketing systems mostly dueto the current Asian preference for purchasingof fresh food from small neighbourhood retailmarkets and shops rather than supermarketsand self-service convenience stores (Yasmeen2001)

Facing the common belief fromadministrative stakeholders that thetraditional informal market in their country isinef cient through lack of organisation andcompetition some international developmentagencies (The World Bank FAO) haveproposed building terminal wholesale marketsto facilitate food marketing in themetropolitan centres (Tollens 1997Yasmeen 2001) What is more manydevelopment economists have advocated thebuilding of terminal wholesale markets inurban areas as a more ef cient system fordistributing fresh food in the developing citiesThese wholesale markets are seen as an idealmeeting point for supply and demand Theconcentration of traders is said to satisfy thecompetitive conditions necessary forestablishing a fair price for agriculturalproduce (Goosens et al 1994)

On the other hand research in Africa showsthat many wholesale markets have failed toencourage ef cient marketing practices(Paulais and Wilhelm 2000) On the otherhand interesting results have been achieved inTaiwan where government planning has led tothe construction of a successful network offresh food wholesale markets (Liu 1994)

Centralising distribution into a terminalwholesale market runs counter to the growingtrend to promote short and local food supplychains for cities in both the developed anddeveloping countries This latter approachadvocates direct links between producers andretailers and the development ofperi-urban[4] agricultural production andmarketing (Koc et al 1999 Midmore andJansen 2003) At the same timesupermarkets and the larger moresophisticated retailers are increasinglybuilding long-term contracts with smallfarmers or collectors in the vicinity of theirretail stores to reduce inventory levels andoperating costs especially for fresh produce

Modelling vegetable marketing systems in South East Asia

Jean-Joseph Cadilhon et al

Supply Chain Management An International Journal

Volume 8 middot Number 5 middot 2003 middot 427-441

428

(Kurnia and Johnston 2001) Thisintegration of supply chains by supermarketsis not limited to the industrialised countries asrecent research on Latin America has shown(Reardon and Berdegue 2002)

Local authorities in Ho Chi Minh City havesought to build wholesale markets in their cityto address alleged failures in the marketingsystem for fresh produce These projects havebeen planned without any consultation fromtraders or other stakeholders and could have amajor impact on the activities of the manywholesalers currently trading in existingmarkets

Rapid changes in the fresh producemarketing system in Ho Chi Minh City arehappening government policies in uence thedevelopment of food supply chainsstakeholder interactions and the role awholesale market would play Thus a moreholistic approach is the more relevant way tostudy the food marketing system because ittakes account of all possible environmentalinteractions with the stakeholders within thesystem

Methodology

A phenomenological approach toconceptual framework buildingThe model of a vegetable marketing systemproposed below is the result of aphenomenological approach whichsuccessively uses theory and eld work tobuild up the conceptual frameworkrepresenting the object of study (Sterns et al1998) The literature review encompassedtheoretical works in geography developmenteconomics and marketing Empirical reportsand case studies on food marketing systems inboth developed and developing countrycontexts were also examined

First the review of existing literatureresulted in a conceptual framework to modelthe fresh food marketing system in a SouthEast Asian context (Cadilhon et al 2002)Then eld trips to different wholesalemarkets around the world have shed light onhow different fresh food distribution systemshave evolved in different countries (for areview of European wholesale markets seeCadilhon et al 2003) Subsequently threemonths of preliminary eldwork in Hanoi andHo Chi Minh City Vietnam were spentobserving fresh food markets and interviewing

key stakeholders to check the relevance of theproposed conceptual framework Thechecklist used (see Appendix) was derivedfrom the marketing literature (Adcock et al2001) and management literature on complexproblems involving multiple agents (Montbelet al 1998) The stakeholders interviewedincluded wholesalers hauliers traditionalretailers modern food marketing sectormanagers input manufacturers governmentof cials and academics working on food andagricultural issues Unfortunately there wasno time to extend interviews to farmerscollectors or consumers but their viewpointwas provided through the secondary source ofacademics working on food issues and peasantlivelihoods Observations from the eld havecon rmed the relevance of the chosenconceptual framework and enabled itsadaptation as presented below

Differentiating sub-systems to takeaccount of product-speci ccharacter isticsA conceptual framework applicable to thestudy of food marketing systems was proposedby Fellows (2002) focusing on the differentfood supply chains to urban and ruralconsumers differentiating these supplychannels by product type Separating themarketing chains by product enabled theidenti cation of their speci c technicalcharacteristics For example wheat grain andmilk are two products that are distributed indifferent ways as the former is much lessperishable than the latter This differentiationby product type can also be applied within thevegetable sub-sector Braadbaart (1994)emphasised differentiated productcharacteristics to study chilli and cabbagemarketing in the central Java city of BandungBergeret and Ha (1997) separated pig andgarlic marketing chains in Vietnam whileLe Goulven (1999) extensively describedproduct credit and information ows withinthe pig marketing chains of North and SouthVietnam

Focusing on speci c product chains makesit possible to determine possible vertical co-ordination practices among stakeholders in agiven supply chain (Hobbs 1996) This alsoleads to a further examination of the place ofindividual stakeholders and their interactionswithin the marketing system Howeverempirical observation of the food marketingsystem in Ho Chi Minh City focusing on the





429

vegetable marketing sub-system showed thatthe product speci city of the stakeholders wasnot as pronounced as in the case studies fromthe literature review Stakeholders whospecialised in one or two products wereobserved but several stakeholders at eachlevel of the vegetable supply chain weregeneralists

Conceptualising food marketingsystems

The evolution of food marketing systemsAccording to Kaynak (1986 p 5 )

[the] food ldquomarketing systemrdquo is a primarymechanism for co-ordinating productiondistribution and consumption activities in thefood chain In this context marketing includesthe exchange activities associated with thetransfer of property rights to commodities thephysical handling of products and theinstitutional arrangements for facilitating theseactivities

Several authors have studied the structure offood marketing using a three-phasedevelopment model to describe the evolutionof the food marketing system over time(Kaynak 1999 Kobayashi 2000Mittendorf 1986) The role of foodmarketing in a developing country is expectedto change with its economic development(Kaynak 1999) As a country develops thestructure of its urban food marketing systemwill shift from the predominant role held bymany small scale traditional distributors(Phase I) to more well-established grocerystores and specialised shops as in manyEuropean cities of the mid-twentieth century(Phase II) to a market where highlydeveloped integrated food retail chains aredominant (Phase III)

Kobayashi (2000) extrapolated thisdevelopment pattern to form four groups ofcountries depending on the developmentstage of their fresh produce wholesalemarketing system and the degree ofgovernment intervention in marketing Thedeveloping phases were de ned by anincreasingly clear specialisation of wholesaleand retail activities and increasing integrationof supply chains by retailers In parallel ascountries went through this developmentprocess governments initially regulated anddirectly participated in the food marketingsystems to move subsequently into a phase ofmarket liberalisation

The question thus arises where shouldVietnam be placed in this developmentcontinuum The southern part of Vietnamhas gone through a turbulent history in thetwentieth century Enjoying a privateenterprise economy until 1975 all activitieswere either collectivised or nationalised whenthe country was reunited under communistrule Accordingly vegetable productionmarketing and input supply was undertakenby a farmersrsquo co-operative in every villageOne major drawback of this system was thelack of responsibility of the farmers in thedecision-making of the co-operatives whichwere run by management teams Theproduction decisions were often at odds withmarket conditions resulting in structuralmarket malfunction and high post-harvestlosses Finally little attention was given toproduce quality and quantity (Jansen et al1996)

De-collectivisation started in 1981 and afree-enterprise market for food wasprogressively introduced with the largereconomic reform policies of 1986 Recentstudies on vegetable marketing in Vietnamreport several coexisting types of foodmarketing organisations strong retail marketshare of both xed traders (with a stall on apermanent spot or market place) and itineranttraders (circulating on the streets with theirgoods) (Quang 1999) the spread of acatering industry also dependent on wholesalemarkets (Le et al 2000) and the strongdevelopment of integrated retailers for nicheproducts such as ldquosafe vegetablesrdquo which arevegetables grown with less chemical inputs(Gia 2000) Furthermore observation of theHo Chi Minh City marketing system forvegetables showed that the marketing chainsfor vegetables were numerous and competingwith one another Figure 1 portrays aconceptual framework of the vegetablemarketing chains in South Vietnam centredon the Ho Chi Minh City consumer marketThis type of model adapted fromDrakakis-Smith (2000) represents thepossible channels that distribute freshvegetables to the city It differentiatesstakeholders by their function and storelocation at the wholesaler and retailer levelswhere major differences can be observedThere is no available data on the number ofstakeholders working within each channelespecially at the retailer level as manybusinesses remain informal However





430

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re1

Coex

istin

gve

geta

ble

supp

lych

ains

toHo

ChiM

inh

City

(Vie

tnam

)





431

stakeholders in Ho Chi Minh City estimatethat the market share for fresh food sold fromthe wholesale markets and their retail andcatering customers exceeded 93 per cent in2002

Vegetable farmers get their agriculturalinputs from local input traders who can befound in most villages These input traders gettheir supplies from regional input wholesalerswho in turn source their products from themanufacturing rms Market gardening iscarried out by vast numbers of farmers inVietnam as it brings much higher grossincome per land area than rice productionIndeed incomes from market gardening are45 times higher than incomes from paddyfarms for a given land area (Cadilhon 2001)

The wide variety of regional agro-ecologicalconditions in the country enables certain areasto specialise in vegetable production whileperi-urban market gardeners can bene t frombeing very close to the consumer areas to growvery perishable items like aromatic herbs It isworth highlighting that collection andtransport is done here by the same agentStakeholder interviews and observation in the eld have shown that these mobile collectorswere not very numerous compared with thenumbers of other stakeholders and could actas a funnel in the supply chain Some of thelarger collector rms were former state-ownedmarketing boards which have had to give uptheir monopoly on horticultural exports andmarketing On the other hand wholesalerswere numerous small and stationarystakeholders The wholesale markets in HoChi Minh City are nightly gathering points forcollectors who sell vegetables in bulk to thewholesalers In turn the produce is sold bythe wholesalers to caterers either itinerant or xed who

prepare cooked food specialised vegetable retailers in both

formal and informal xed markets and hawkers who peddle their vegetables to

the nal consumer on the streets of thecity

In parallel other supply chains are directedtoward a cash-and-carry rm that hasdeveloped dedicated producers and collectorsto supply fresh vegetables to its stores andsupermarket chains that are also starting toexperiment with direct supply channels fromproducersof ldquosafe vegetablesrdquo The customersof the cash-and-carry rm are other foodbusinesses within the formal sector

(restaurants hotels) It is thus representedon alevel with the wholesale market traders inFigure 1 as it also acts as a wholesaler for otherbusinesses Only a few direct links betweenfarmers and retailers have been established inthe niche market for ldquosafe vegetablesrdquoCurrently there is no evidence of any directmarketing links between farmers and nalconsumers

To conclude it is dif cult to place the pastand current marketing structure for freshvegetables in Vietnam into one of the threedevelopment phases described by Kaynak(1986) There is evidence both in developing(Department of Foreign Affairs and Trade2002) and developed countries (Cadilhonet al 2003) that these different developmentphases coexist There is not necessarily aprogressive substitution of one by the other Inmore developed South East Asian countriessalesof freshproduce from the traditional retailmarkets (as opposed to supermarkets and self-service convenience stores) remain strong 65per cent in Thailand and 80 per cent in Taiwan(stakeholder interview) This coexistencere ects the need for supply chains to adapt todifferent consumer constraints and demandsover time Hence the evolutionary modelpresented above does not fully account for thecomplexity of existing fresh food marketingsystems in Vietnam To better conceptualisethe different stakeholders and theirinteractions in the existing marketing systemsthe followingsectionreviewsseveral alternativepropositions for modelling a market system

Stakeholder networks and relationshipsin food marketing systemsObservations in Ho Chi Minh City havefound that the connections betweenstakeholders within the vegetable marketingsystem cut across supply chains Businessesand individuals all compete and collaboratewithin a complex network of stakeholders tobring fresh vegetables to the end consumerTherefore it seems pertinent to use a networkframework to examine the current vegetablemarketing system in Ho Chi Minh City

The development of a network frameworkand the study of relationships between rms iscurrently experiencing renewed interestamong researchers and stakeholders in the eld of business management andorganisational science (Ford et al 1998Lambert and Pohlen 2001) A networkapproach not only considers the vertical links





432

between rms in a supply chain but also thehorizontal relationships built amongcompeting and collaborating rms theirsuppliers and customers (Lazzarini et al2001) These relationships are not onlyproduct marketing and procurement linksbut also encompass information sharing aboutmarket conditions joint planning andproblem solving and speci c transactioninvestments to better satisfy the speci c needsof the business counterparts All theseelements have been found to enhance goodinter- rm relationships which indirectlyincrease rm and supply chain performance(Ford et al 1998)

Therefore a network framework inserted inits broader systems environment context is themost appropriate representation of thevegetable marketing system in Ho Chi MinhCity

Integrating an interacting environmentaround the marketing systemIn Kaynakrsquos (1986) model the environment isrepresented by the economic and institutionalfactors and the technical legal and policyfactors Both the literature review andobservations from the eld have con rmedthe importance of environmental impacts onthe food marketing system

Domestic legal and policy factorsFirst government and city authorities andtheir decisions play a notable role in shapingmarketing systems Public decisions cancreate public goods or in uence the wayprivate rms operate in order to encouragepublic good objectives (Beguin and Derycke1994) This is particularly true for cityauthorities in the context of developing foodmarketing systems in the cities (Hubbard andOnumah 2000 Yasmeen 2001) In Vietnamthe state government and its representatives inthe city authorities are now inducing majorchanges in the structure of the fresh producemarkets by building new physical markets andencouraging traders to use them

Government intervention in markets andeconomic policies have had mixed effects inmany socialist countries but liberalisationpolicies have not proven to be the mostef cient remedy either (Thorbecke 1998)Authorities have a clear positive role to play indevising adequate legal (Cullinan 1997) andinstitutional frameworks (Liu 1994) to letprivate rms manage the marketing system In

Vietnam the economic reforms of 1986 haveled the way to a market economy where free-enterprise is now of cially recognised asenhancing economic development This hasenabled many small family rms to come outof the informal sector and has helped boosteconomic activity in the rural and urban areas

Agricultural policies have a profound rolein de ning the products one can nd inmarkets by providing incentives for theproduction of certain crops and animals whilediscouraging others (Bazin and Roudart2002) In Vietnam rice production used to becompulsory for all farmers cropping irrigatedlow-land areas to ful l food security objectives(Cadilhon 2001) After 2000 farmers wereallowed to choose the use of their land Thisliberalisation led to a major shift of land useout of rice production into horticultural cropsand export-oriented crops such as coffeeAgricultural extension services also helpeddirect the rural development process

HistoryThe historical context of a region can alsoexplain many aspects of present institutionaland organisational interactions Concepts ofpath dependency on economic developmentand institutions have been widely acclaimed(Currie 1968 North 1990 1994)

In Vietnam the path dependency ofeconomic development has been radicallydisrupted by the collectivisation process offarm production and the state planning of theeconomy One example of this was thedisruption brought to the fresh vegetabledistribution system by a Maoist policy ofautonomous provinces in the late 1970s(stakeholder interview) The high plateauregion of Da Lat located over 100km NorthEast of Ho Chi Minh City used to grow mostof the fresh vegetables for the former Saigonwhen Vietnam was still divided betweenNorth and South When the country wasreuni ed in 1975 the state imposed a strictautonomy policy on all provinces which meantthat Ho Chi Minh City had to produce andmarket its own vegetables Production in theDa Lat area decreased because of the loss ofthe Saigon market On the other hand peri-urban market gardening was not suf cient tosatisfy urban demand (Jansen et al 1996)When the food markets were returned to free-enterprise in 1986 production in the highplateau area resumed as well as the dailytransport of fresh vegetables to the city The





433

Da Lat area remains the major source of freshvegetables for Ho Chi Minh City

International trade policies and food marketsMoreover the interactions of internationalcommodity markets with national and evenlocal marketing systems must not beforgotten Unexpected uctuations incommodity markets have led several statesand farmer households who were dependenton these commodities to lose money What ismore multilateral agreements meant torestrain these uctuations have generallyfailed (Chalmin 2000) In Vietnam farmersare observed to be very receptive to marketchanges When world paddy prices were attheir lowest towards the end of the 1990sfarmers were encouraged to switch to morepro table crops like vegetables for the localmarket or tree crops (fruits coffee) Howeverthe area of land under vegetables has notablydecreased in 2002 compared with 2001 in thesouth of Vietnam This has been interpretedby an increase in world paddy prices whichmade farmers switch back to rice production(stakeholder interview)

Tariff liberalisation and free tradeagreements between countries have also hadmajor implications on how food markets maybe further regulated within nations (Son1999) Likewise opening of countries toexport markets with more stringent qualitystandards can modify the structure of primaryproduction and of supply chains toaccommodate these special standards (Dolanand Humphrey 2000) For example whilemany interviewed fruit traders complainedabout the dif culty of nding graded produceat the farm level that could be purchased forthe agro-industry sector or for exporting theproduction and marketing system for thedragon fruit or red pitaya (Hylocereus undatus)seems to be a notable exception in Vietnam Asubstantial part of the dragon fruit productionaround Phan Thiet City in Binh ThuanProvince is destined to export markets inChina Thailand Europe and North America(Cadilhon 2001) However customers inthese countries have differing tastes Whilemost of the dragon fruit producers do not takeparticular notice of these differences thecollectors who also act as wholesalers andexporters grade the dragon fruits to meetthese different requirements and bene t fromprice incentives in the various markets Thesecollectors-exporters are effectively the drivers

of change in the supply chain Only the biggerproducers who are informed of such marketdifferences can invest in new croppingpractices to try to make more of their harvestcorrespond to the various export standardswhich will bring a better price

GeographyFinally the local geographical context canhave clear impacts on the way production andmarketing of fresh produce is done Eachregion is endowed with speci c comparativeadvantages in terms of agro-ecosystems thatcan lead to regional specialisation of farmproduction (Capt and Schmidt 2000) InVietnam the high plateau area surroundingthe city of Da Lat has clear comparativeadvantages for growing all types of vegetablesthanks to its drier cooler climate Thisclimate enables growers to bene t from themore temperate growing conditions that arenecessary for lettuces to form a heart or foronions to form a bulb The drier environmentis also less favourable to disease thus enablingmarket gardeners to save on the use ofchemicals

The structure of primary production canalso have some impact on the capacity offarmers to enter markets Indeed Collins(1995) found that smaller farms in Brazil hadlittle accessibility to grape export marketsbecause they could not secure transport andmarketing services

Moreover good transport infrastructurehas been recognised as a fundamental elementof regional planning to ensure access betweenfarms and markets (Andan et al 1994)especially in the context of developingcountries (Dijkstra 1996) In Vietnam thegovernment is investing large amounts ofmoney into motorways to link the North andSouth and bridges to cross the Mekong deltato enable trucks to reach this region whereboats still remain the major mode of transportfor fresh produce (Lap and Taillard 1993)

Therefore a wider interpretation of amarketing environmenthelps integrate factorsthat all have repercussions on food marketing

Socio-cultural factors in vegetablemarketing systems do they matter

Among the conceptual frameworks reviewedabove only the network approach considerssome of the socio-cultural factors that may





434

in uence the day-to-day relationshipsbetween individuals and businessstakeholders in the marketing system DespiteBartels (1963) seeing ldquomarketing as a socialphenomenonrdquo (p 299) the food marketingsystems literature shows poor examination ofthe elements leading individuals to takedecisions for more successful inter- rmrelationships

Institutions and how they matterAs far as South East Asia and Vietnam areconcerned the role of institutions ineconomic activities must be considered(North 1994) Rules and laws are importantconstraints in Vietnam as it is still a highlypoliced and controlled state Howeverinformal constraints may also explain someaspects of economic activity in VietnamThese relationships have hitherto beengenerally overlooked by fresh food marketingstudies in South East Asia whereas they havebeen recognised as determinant factors inother sub-sectors for example the importanceof networks among ethnic Chinesebusinessmen in the Thai rice trade (Speeceand Igel 2000) and in business in general inthe region (Armstrong and Siew 2001Jesudason 1997 Trolliet 1999)

The impor tance of tr ust in buildinglasting marketing relationshipsIn the food markets of South East Asiacontracts between parties to securetransactions are rare and the courts wherethey exist are powerless to enforce existingagreements or are mistrusted As a protectionagainst risk and in an effort to reducetransaction costs stakeholders have createdmarketing networks based on trust cultureand sociological norms

Trust and relationship building in the literatureGranovetter (1985) Platteau (1994a b) andMoore (1994) looked at the relationshipsbetween markets trust among stakeholdersand social networks Particularly worthhighlighting is Platteaursquos (1994b) review ofgame theory Platteau (1994b) shows thatassuming trust as a generalised conductamong players can lead to sustained win-winsituations even with some occasionalcheating involved a much more optimisticview to market relations than that obtainedthrough the use of a prisonerrsquos dilemma model(Palmer 2002)

Creating and sustaining reputation andtrust between buyers and sellers is animportant strategy for attenuating transactioncosts (Batt and Parining 2002 Batt andRexha 1999 Fafchamps and Minten 1999Lyon 2000 Moustier 1996 Tuan et al1999) These authors show how relationshipsplay a wide variety of roles in agriculturaltrading businesses such as the provision ofcommercial advice information and risksharing credit provision smoothing supplyand demand uctuations and prevention ofcontractual breach Such relationships lead toef ciency-enhancing repeat transactions Alleffects result in reduced transaction costs andmore ef cient marketing thereby reducingpost-harvest losses and moderating marketdisequilibria

Observing trust and relationship building on the eldEvidence from preliminary eldwork in HoChi Minh City vegetable markets supportsthese empirical ndings In one wholesalemarket two traders reported that they tendedto purchase from the same collector agentsordering by telephone on a daily basis fordelivery the next day Prices were negotiatedbut in times of excess supply the buyer wouldldquosetrdquo the price while in times of shortage theseller would drive the price The wholesalerssaid they had built up relationships with theirrespected suppliers over many years andtreated them ldquobetterrdquo than the less regularones from whom they purchased whennecessary Clearly from the viewpoint of thewholesalers there was information sharingand collaboration between collectors and theirpreferred customers

On the other side of the relationship awholesaler in the central wholesale market ofthe city was seen sorting tomatoes into bagscontaining one or two kilograms She said shewas assembling produce for a vegetableretailer who had asked her to prepare bags ofgood quality tomatoes while she went on toshop for other goods in the market Theretailer would then come back to collect thetomatoes and would pay for the goods withoutchecking the quality of contents From theperspective of the retailer this was a strategyto diminish time spent looking for goodquality products and haggling for a suitableprice The retailer trusted the wholesaler topick out the tomatoes of adequate ripeness forher In exchange the wholesaler spent time





435

selecting the goods for the retailer trustingthat she would effectively come back to collectthe goods and settle the transaction Thewholesaler said she would provide this type ofservice to a customer coming on at least threeseparate occasions Trust and collaborationwas more quickly established here thanbetween wholesalers and collectors

Finally an interview with the foodpurchasing manager of a cash-and-carry rmin Ho Chi Minh City provided new evidenceof trust and collaboration in this particularsupply chain The cash-and-carry rm hadtargeted larger more sophisticated growersand set about signing them up through agroup of collectors Currently 35 collectorssourced from many more growers alldedicated to the cash-and-carry rm Thefood purchasing manager had used experts onvegetable production and marketing inexisting trading companies to establish thisnew supply chain These local experts hadlocal knowledge of the functioning andinef ciencies in existing supply chains Whatis more they also had their own networks ofrelations and contacts which greatly helped insetting up the dedicated supply chains for thecash-and-carry rm Grower meetings indifferent areas were held to inform producersthe offer was a guaranteed market withpayment guaranteed within seven days inreturn for consistently good quality suppliesCon dence building among the producerswas the paramount objective to achieve beforeany shop was opened Building trust withinthe supplier base took two and a half yearsConsequently waste in the supply chain wasreduced to 10 per cent by advance orderingThis meant growers harvested and collectorscollected what the cash-and-carry neededrather than whatever they chose to supplyOrders were faxed daily the cash-and-carry rm had purchased fax machines for their 35supply co-ordinators The cash-and-carry rm also had a policy of investing in theirsuppliers to build loyalty Hence integratedcrop management was the focus of investmentat the time of the eld trip ndash the answer of the rm to the growing urban demand for ldquosafevegetablesrdquo

The role of ethnicity in enhancing businessrelationshipsThe literature on trust has shown that trustbetween stakeholders was enhanced if allstakeholders belong to the same ethnic or

cultural body Attendance at social events wasimportant to develop trust amongstakeholders within the marketing system(Lyon 2000 Silin 1972) In the case ofSouth East Asia the alleged exploitative roleof the Chinese businessman has been de-mythicised More rational explanations oftheir strong economic in uence in the regionhave been formulated such as strong ethniccommunity ties sharing of informal creditand information banks less risk-aversion thanindigenouspeople to business (Gosling 1983Hafner 1983 Landa 1983 Rigg 1986)Nevertheless Chinese businessmen stillcontrol most of the fresh vegetable wholesaletrade in Malaysia (Mohtar 2000) and havedominated the trade in the past in Vietnam(Chin 2000)

However early eldwork showed no clearevidence of dominance of the ethnic Chineseminority in the vegetable marketing chains inSouth Vietnam Though most collectors andwholesalers in Vietnamese food supply chainshave some Chinese origin their dominance isnot as obvious as that mentioned by Chin(2000) A survey of 98 Ho Chi Minh Cityvegetable vendors found that only two of thesampled vendors identi ed themselves asbeing of Chinese ethnicity (Potutan et al1999) Furthermore the majority of tradersnow use the Vietnamese language tocommunicate with their local partners andEnglish to deal with foreign traders

Towards an integrated conceptualframework

The literature review and preliminary resultsfrom an earlier eld trip led to the proposal ofa framework to study the vegetable marketingsystem in Ho Chi Minh City (Figure 2)

This conceptual framework integrateselements from the urban food marketingsystems proposed by Kaynak (1986)Drakakis-Smith (2000) and Fellows (2002)with elements from the network framework tobetter describe what seems to be a complexsystem of interconnected stakeholdersevolving in a system that interacts with a moregeneral environmental context Theconceptualised complex system ofinterconnected individuals and rms build upthe core of the framework The links betweenstakeholders in the system can be productcredit money information and feedback





436

ows as well as more intangible elements ofrelationships (joint actions speci ctransaction investments trust) The factors ofthe environment which have an in uence onthe marketing system are represented aroundthe system frontier The cultural and socialfactors within the business networks are alsoaccounted for as components of theenvironment in uence the decisions ofindividual stakeholders and rms

Finally the trends in the development ofmarketing systems and the differentalternative organisations in the marketingchains with varying roles of plannedwholesale markets have to be assessed with amulti-dimensional approach to marketperformance which includes adjustment ofsupply and demand in quality quantity andprice employment and income distributionand exibility of supply to demand (Harrisonet al 1987 Moustier 1995)

Conclusions and discussion

This study has shown that it was dif cult totry to place a country and its food marketstructure in one of the development levelsproposed by the evolutionary approach tomarket studies Economic development in

Vietnam is happening fast and some freshfood market segments still use public retailmarkets and hawkers whereas some parts ofthe population shop in supermarkets sellingpackaged produce The place of the wholesalefunction in this diverse market is stilluncertain as some customers such astraditional retailers and caterers may heavilydepend on it whereas others (supermarketsspeciality shops) might prefer imports ordirect supply from the producer

However to understand the existingmarketing system and the viewpoint of all itsstakeholders this paper argues that a systemsapproach to the analysis of urban food supplyand distribution must be taken Variouselements of past research and insights fromsome preliminary eldwork in Vietnam havebeen integrated into a holistic conceptualframework Several important elementsappear to explain the functioning of thepresent marketing system fast economic development is rapidly

changing the structure of the system ofstakeholders who market food in Ho ChiMinh City

product technical speci city clari essome aspects of the marketing system

the environmental components (domesticlegal and policy factors internationaltrade policies and food markets historygeography and cultural and social norms)surrounding the marketing system arepotent explanatory factors inunderstanding the functioning of thesystem and

individual decisions of stakeholderswithin a complex network of collaboratingand competing rms and individuals arefashioned by the relationships they havebuilt with their counterparts to facilitatetrading in an imperfect market and legalenvironment

The conceptual framework thus recognisesthe different environmental impacts on thestakeholder interactions within the marketingsystem Such a conceptual framework can beused for further research in the study of thedifferent vegetable supply chains and thebusinesses within them It also acknowledgesthe impacts on the marketing system fromboth within it (interrm) and outside it(environmental impacts) In particular theanalysis of the justi cation for constructingmodern wholesale markets demanded by cityauthorities is important especially when

Figure 2 The vegetable marketing system in Ho Chi Minh City Vietnam ndash aholistic conceptual framework





437

bearing in mind previous projects that havefailed to bene t market stakeholders The

network effects on business-to-businessrelationships and supply chain performance in

the different vegetable supply chains can alsobe studied using this framework

One aspect of marketing systems this articlehas not tackled is the measure of their

performance and ef ciency The generation ofparticular performance and ef ciency

indicators should be the subject of furtherstudy once the focal domain of evaluation has

been chosen by the stakeholder sponsoringthe research or by the independent researcherIndeed indicators may be speci c in assessing

performance for rms (Spriggs 1994)business-to-business relationships (Reve and

Stern 1986) supply chains (Lambert andPohlen 2001) andor the entire marketing

system (Scarborough and Kydd 1992)From a managerial point of view the

conceptual framework described here canhelp stakeholders better understand how the

vegetable market system works in a SouthEast Asian context State policy and city

authorities could then better plan theinfrastructure and institutions necessary to

satisfy the demands of growing cities Foodmarketing businesses (processors

distributors exporters) could likewise betterevaluate possibilities of building dedicatedfresh produce supply chains in their own local

context by using the conceptual framework asa key to complex marketing systems already

embedded in their speci c socio-cultural andhistorical contexts

Notes

1 This work is part of a research project sponsored byCIRAD-MALICA (Markets and agriculture linkagesfor cities of Asia) and a PhD thesis supported by theFrench Ministry of Agriculture CIRAD and the BritishCouncil

2 The ldquoVietnam at a glancerdquo paper is available onlineat wwwworldbankorg

3 As reported by the French Trade CommissionNetwork Web site wwwdreeorg

4 Peri-urban agriculture is dened ldquoas agriculturelocated inside and around the city for which there isan alternative in the use of resources ndash oneagricultural and the other non-agriculturalrdquo (Mbayeand Moustier 2000 p 236)

References

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Andan O Faivre drsquoArcier B and Raux C (1994)ldquoMouvements deplacements transport la mobilitequotidiennerdquo in Auray J-P Bailly A Derycke P-Hand Huriot J-M (Eds) Encyclopedie drsquoeconomiespatiale Concepts - Comportements - OrganisationsEconomica Paris pp 247-53

Armstrong RW and Siew M (2001) ldquoDo Chinese trustChinese A study of Chinese sellers in MalaysiardquoJournal of International Marketing Vol 9 No 3pp 63-87

Bartels R (1963) ldquoConclusion amp outline for comparativemarketing analysisrdquo in Bartels R (Ed)Comparative Marketing Wholesaling in FifteenCountries Richard D Irwin Inc Homewood ILpp 285-308

Batt PJ and Parining N (2002) ldquoTrust building behaviourwithin the Balinese fresh produce industryrdquo in BattPJ (Ed) Culture and Collaboration in DistributionNetworks available at wwwimpgrouporgpapers

Batt PJ and Rexha N (1999) ldquoBuilding trust inagribusiness supply chains a conceptual model ofbuyer-seller relationships in the seed potato industryin Asiardquo Journal of International Food andAgribusiness Marketing Vol 11 No 1 pp 1-17

Bazin G and Roudart L (2002) ldquoPolitiques agricolesrdquo inMazoyer M (Ed) Larousse Agricole LarousseVUEFParis pp 689-99

Beguin H and Derycke P-H (1994) ldquoDecision publiqueet amenagement de lrsquoespacerdquo in Auray J-P BaillyA Derycke P-H and Huriot J-M (Eds)Encyclopedie drsquoeconomie spatiale Concepts -Comportements - Organisations Economica Parispp 263-8

Bergeret P and Ha PH (1997) ldquoDynamiques compareesde trois lieres dans le delta du euve Rouge rizporc ailrdquo Cahiers Agricultures Vol 6 No 5pp 337-43

Braadbaart O (1994) ldquoBusiness contracts in Javanesevegetable marketingrdquo Human Organization Vol 53No 2 pp 143-9

Cadilhon J-J (2001) ldquoAnalysis and diagnosis of theAgrarian system around Phan Thiet City Binh ThuanProvince Vietnamrdquo MSc thesis Institut NationalAgronomique Paris-Grignon Paris

Cadilhon J-J Fearne AP Moustier P and Poole ND(2002) ldquoChanges in the organisation of foodmarketing systems in South East Asia a preliminaryassessmentrdquo in Batt PJ (Ed) Culture andCollaboration in Distribution Networks available atwwwimpgrouporgpapers

Cadilhon J-J Fearne AP Hughes DR and Moustier P(2003) ldquoWholesale markets and food distribution inEurope new strategies for old functionsrdquo CFCRDiscussion Paper No 2 Centre for Food ChainResearch Imperial College London Wye availableat wwwwyeimperialacukCFCRDefaultasppage publicationsdiscussion

Capt D and Schmidt B (2000) ldquoEconomie spatiale etagriculture les dynamiques spatiales de lrsquoagriculturecontemporainerdquo Revue drsquoEconomie Regionale etUrbaine Vol 3 pp 385-406





438

Chalmin P (2000) ldquoGeopolitique des ressourcesnaturelles prospective 2020rdquo in Jacquet P andMontbrial TD (Eds) Ramses 2000 Lrsquoentree dans le21eme siecle Ifri - Dunod Paris pp 91-102

Chin U (2000) The Chinese of South-East Asia MinorityRights Group International London

Collins JL (1995) ldquoFarm size and non traditional exportsdeterminants of participation in world marketsrdquoWorld Development Vol 23 No 7 pp 1103-14

Cullinan C (1997) Legal Aspects of Urban Food Supplyand Distribution Food into Cities Collection No DT14-97 FAO Rome available at wwwfaoorgagagsAGSMSADASADAEHTM

Currie L (1968) ldquoMarketing organisation forunderdeveloped countriesrdquo in Moyer R andHollander SC (Eds) Markets and Marketing inDeveloping Economies Richard D Irwin IncHomewood IL pp 117-29

Department of Foreign Affairs and Trade (2002)Subsistence to Supermarket II AgrifoodGlobalisation and Asia Volume II ChangingAgrifood Distribution in Asia Department of ForeignAffairs and Trade Camberra

Dijkstra T (1996) ldquoFood assembly markets in Africalessons from the horticultural sector of KenyardquoBritish Food Journal Vol 98 No 9 pp 26-34

Dolan C and Humphrey J (2000) ldquoGovernance and tradein fresh vegetables the impact of UK supermarketson the African horticulture industryrdquo Journal ofDevelopment Studies Vol 37 No 2 pp 147-76

Drakakis-Smith DW (2000) Third World CitiesRoutledge London

Drakakis-Smith DW and Dixon C (1997) ldquoSustainableurbanisation in Vietnamrdquo Geoforum Vol 28 No 1pp 21-38

Fafchamps M and Minten B (1999) ldquoRelationships andtraders in Madagascarrdquo Journal of DevelopmentStudies Vol 35 No 6 pp 1-35

Fellows PJ (2002) ldquoFood safety in developing countriesThe food production-distribution chainrdquo Agriculture+ Rural Development Vol 9 No 1 pp 12-16

Figuie M and Bricas N (2002) ldquoLrsquoevolution de laconsommation alimentaire au Vietnam Etat deslieux prospectif et strategiquerdquo documentprovisoire CIRAD-Malica Hanoi

Ford D Gadde L-E Hakansson H Lundgren ASnehota I Turnbull PW and Wilson D (1998)Managing Business Relationships John Wiley ampSons Chichester

Gia BT (2000) ldquoProduction and marketing of safevegetables in Gia Lam District Hanoi Cityrdquo paperpresented at the Workshop on AgriculturalMarketing System and Traditional Rural IndustryDevelopment Hanoi Agricultural University andHAU-JICA ERCB Project Ofce Hanoi 26-28 June

Goosens F Minten B and Tollens E (1994) NourrirKinshasa Lrsquoapprovisionnement local drsquounemetropole africaine LrsquoHarmattan Paris

Gosling LAP (1983) ldquoChinese crop dealers in Malaysiaand Thailand the myth of the mercilessmonopsonistic middlemanrdquo in Lim LYC andGosling LAP (Eds) The Chinese in Southeast AsiaVolume 1 Ethnicity and Economic Activity MaruzenAsia Singapore pp 131-70

Granovetter M (1985) ldquoEconomic action and socialstructure the problem of embeddednessrdquo AmericanJournal of Sociology Vol 91 No 3 pp 481-510

Hafner JA (1983) ldquoMarket gardening in Thailand theorigins of an ethnic Chinese monopolyrdquo in LimLYC and Gosling LAP (Eds) The Chinese inSoutheast Asia Volume 1 Ethnicity and EconomicActivity Maruzen Asia Singapore pp 30-45

Harrison K Henley D Riley H and Shaffer JD (1987)Improving Food Marketing Systems in DevelopingCountries Experiences from Latin AmericaDepartment of Agricultural Economics MichiganState University East Lansing MI

Hobbs JE (1996) ldquoA transaction cost approach to supplychain managementrdquo Supply Chain ManagementAn International Journal Vol 1 No 2 pp 15-27

Hubbard M and Onumah GE (2000) Improving UrbanFood Supply and Distribution in DevelopingCountries the Role of City Authorities Food intoCities Collection No DT4199E Rome

Jansen HGP Midmore DJ Binh PT Valasayya S andTru LC (1996) ldquoProtability and sustainability ofperi-urban vegetable production systems inVietnamrdquo Netherlands Journal of AgriculturalScience Vol 44 No 2 pp 125-43

Jesudason JV (1997) ldquoChinese business and ethnicequilibrium in Malaysiardquo Development and ChangeVol 28 pp 119-41

Kaynak E (1986) ldquoWorld food marketing systemsintegrative statementrdquo in Kaynak E (Ed) WorldFood Marketing Systems Butterworths Londonpp 3-14

Kaynak E (1999) ldquoCross-national and cross-culturalissues in food marketing past present and futurerdquoJournal of International Food and AgribusinessMarketing Vol 10 No 4 pp 1-11

Kobayashi K (2000) ldquoDevelopment of wholesale marketsin Asian selected countries in view of internationalcomparison of wholesale marketing system for fruitand vegetablesrdquo paper presented at the Regionalseminar on Feeding Asian Cities FAO Bangkok 27-28 November available at wwwfaoorgagagsAGSMSADASADAEHTM

Koc M MacRae R Mougeot LJA and Welsh J (1999)For Hunger-Proof Cities Sustainable Urban FoodSystems IDRC Ottawa

Kurnia S and Johnston RB (2001) ldquoAdoption of efcientconsumer response the issue of mutualityrdquo SupplyChain Management An International Journal Vol 6No 5 pp 230-41

Lambert DM and Pohlen TL (2001) ldquoSupply chainmetricsrdquo The International Journal of LogisticsManagement Vol 12 No 1 pp 1-19

Landa JT (1983) ldquoThe political economy of the ethnicallyhomogeneous Chinese middleman group inSoutheast Asia ethnicity and entrepreneurship in aplural societyrdquo in Lim LYC and Gosling LAP(Eds) The Chinese in Southeast Asia Volume 1Ethnicity and Economic Activity Maruzen AsiaSingapore pp 86-116

Lap VT and Taillard C (1993) Atlas du Viet-Nam AtlatViet Nam An Atlas of Vietnam RECLUS-LaDocumentation Francaise Paris

Lazzarini SG Chaddad FR and Cook ML (2001)ldquoIntegrating supply chain and network analyses the





439

study of netchainsrdquo Chain and Network ScienceVol 1 No 1 pp 7-22

Le Goulven K (1999) ldquoInstitutions and price transmissionin the Vietnamese hog marketrdquo International Foodand Agribusiness Management Review Vol 2No 34 pp 375-90

Le DT Bricas N Le BM Maire B Dop M-C NguyenDC and Nguyen CK (2000) ldquoTrends in foodconsumption and in the nutritional status in urbanVietnamrdquo paper presented at the Regional seminaron Feeding Asian Cities FAO Bangkok27-28 November available at wwwfaoorgagagsAGSMSADASADAEHTM

Liu F (1994) Building an Agricultural Marketing System ina Developing Country The Taiwan Experience MawChang Book Company Taipei

Lyon F (2000) ldquoTrust networks and norms the creationof social capital in agricultural economies in GhanardquoWorld Development Vol 28 No 4 pp 663-81

Mbaye A and Moustier P (2000) ldquoMarket-orientedurban agricultural production in Dakarrdquo in BakkerN Dubbeling M Gundel S Sabel-Koschella Uand Zeeuw HD (Eds) Growing Cities GrowingFood Urban Agriculture on the Policy Agenda AReader on Urban Agriculture DSEZEL Feldangpp 235-56

Midmore DJ and Jansen HGP (2003) ldquoSupplyingvegetables to Asian cities is there a case forperi-urban productionrdquo Food Policy Vol 28 No 1pp 13-27

Mittendorf HJ (1986) ldquoRole of government in improvingfood market centres in less developed countriesrdquo inKaynak E (Ed) World Food Marketing SystemsButterworths London pp 54-72

Mohtar S (2000) ldquoThe operation of wholesale markets inMalaysiardquo paper presented at the Regional seminaron Feeding Asian Cities FAO Bangkok27-28 November available at wwwfaoorgagagsAGSMSADASADAEHTM

Montbel AD Ollagnon H and Viel J-M (1998) ldquoLrsquoauditpatrimonial un outil de comprehension et demobilisation des lsquocomplexes multi-acteursrsquo agissantsur un territoirerdquo in Ferrand N (Ed) Modeles etSystemes Multi-agents pour la Gestion delrsquoEnvironnement et des Territoires CemagrefEditions Clermont-Ferrand pp 255-60

Moore M (1994) ldquoHow difcult is it to construct marketrelations A commentary on platteaurdquo Journal ofDevelopment Studies Vol 30 No 4 pp 818-30

Moustier P (1995) ldquoOn performance of urban vegetablesupply in African countriesrdquo Acta HorticulturaeVol 340 pp 307-13

Moustier P (1996) ldquoOrganization in the Brazzavillianvegetable marketrdquo PhD thesis Wye CollegeUniversity of London London

North DC (1990) Institutions Institutional Change andEconomic Performance Cambridge University PressCambridge

North DC (1994) ldquoEconomic performance throughtimerdquo The American Economic ReviewVol 84 No 3pp 359-68

Palmer A (2002) ldquoThe role of selshness in buyer-sellerrelationshipsrdquo Marketing Intelligence amp PlanningVol 20 No 1 pp 22-7

Paulais T and Wilhelm L (2000) Marches drsquoAfriqueKarthala Paris

Platteau J-P (1994a) ldquoBehind the market stage wherereal societies exist ndash Part I the role of public andprivate order institutionsrdquo Journal of DevelopmentStudies Vol 30 No 3 pp 533-77

Platteau J-P (1994b) ldquoBehind the market stage wherereal societies exist ndash Part II the role of moralnormsrdquo Journal of Development Studies Vol 30No 4 pp 753-817

Potutan GE Bien PV Janubas LG Holmer RJ andSchnitzler WH (1999) The Status of VegetableConsumption Production and Marketing in Ho ChiMinh City South Vietnam nal report Urban andPeriurban Small and Medium-Sized EnterpriseDevelopment for Sustainable Vegetable Productionand Marketing Systems a project of the EuropeanCommission Ho Chi Minh City

Quang ND (1999) ldquoPre-case study of food supply anddistribution to Hanoirdquo paper presented at the FoodSupply and Distribution to Hanoi Workshop FAOHanoi 17-18 September available at wwwfaoorgagagsAGSMSADASADAEHTM

Reardon T and Berdegue JA (2002) ldquoThe rapid rise ofsupermarkets in Latin America challenges andopportunities for developmentrdquo Development PolicyReview Vol 20 No 4 pp 371-88

Reve T and Stern LW (1986) ldquoThe relationship betweeninterorganisational form transaction climate andeconomic performance in vertical interrm dyadsrdquoin Pellegrini L and Reddy SK (Eds) MarketingChannels Relationships and Performance LexingtonBooks Lexington MA pp 75-101

Rigg JD (1986) ldquoThe Chinese agricultural middleman inThailand efcient or exploitativerdquo SingaporeJournal of Tropical Geography Vol 7 No 1pp 68-79

Scarborough V and Kydd J (1992) Economic Analysis ofAgricultural Markets A Manual Natural ResourcesInstitute Chatham

Silin RH (1972) ldquoMarketing and credit in a Hong Kongwholesale marketrdquo in Willmott WE (Ed)Economic Organization in Chinese Society StanfordUniversity Press Stanford CA pp 327-52

Son DK (1999) ldquoAgriculture of Vietnam in the transitiontoward the international economic integrationrdquopaper presented at the Workshop on AgriculturalCo-operatives and Policy Issues in Japan andVietnam Hanoi Agricultural University and HAU-JICA ERCB Project Ofce Hanoi 25 October

Speece MW and Igel B (2000) ldquoEthnic change inmarketing channels Chinese middlemen inThailandrdquo Journal of Asian Business Vol 16 No 1pp 15-40

Spriggs MT (1994) ldquoA framework for more validmeasures of channel member performancerdquo Journalof Retailing Vol 70 No 4 pp 327-43

Sterns JA Schweikhardt DB and Peterson HC (1998)ldquoUsing case studies as an approach for conductingagribusiness researchrdquo International Food andAgribusiness Management Review Vol 1 No 3pp 311-27

Thorbecke E (1998) ldquoAgricultural markets beyondliberalization the role of the staterdquo in KuyvenhovenA Moll H and van Tilburg A (Eds) AgriculturalMarkets beyond Liberalization Proceedings of the57th Seminar of the European Association of





440

Agricultural Economists 23-26 SeptemberWageningen pp 21-38

Tollens E (1997) Improving Urban Food Supply andDistribution in Developing Countries The Role ofCity Authorities Food into Cities CollectionNo DT4199E FAO Rome

Trolliet P (1999) La Diaspora Chinoise PressesUniversitaires de France Paris

Tuan DT Thinh LD Thai BT Han TN and Chau DungLT (1999) ldquoStudy on commodity chain ofvegetables in the Red River Deltardquo paper presentedat the National Workshop on Safe and Year RoundVegetable Production in Peri-urban Areas RIFAV andCIRAD Hanoi 15-16 December

VNS (2001) ldquoHCM City ofcials fret as market placedevelopment gathers pacerdquo Vietnam News22 December

Yasmeen G (2001) ldquoFeeding Asian citiesrdquo inProceedings of the Regional Seminar BangkokThailand 27-28 November FAO Rome

Appendix Checklist of questions toinformed stakeholders to validate theproposed conceptual framework ofmarketing system

Identi cationWho is the interviewed informed stakeholderPerceived position within the marketingsystem

Diagnosis(1) Personal view point of the present

marketing system and the role ofwholesaling within it product diversity and quality information ows

credit system

legal environment and businessrelations

(2) Personal indicators of ef ciency of freshfood marketing system and wholesaling

(3) Why and how the marketing system hasevolved Place of the wholesale activity inthis evolution political changes consumersrsquo cultural changes economic development resistance of marketing institutions

organisations to historical changes

ProspectsProspective view of possible futuredevelopments of the marketing system and ofthe wholesaling institution different stakeholdersrsquo reactions to

changes as perceived by informedstakeholder

perceived view of informed stakeholderactivity within the evolving marketingsystem

perceived impacts of institutional changeson informed stakeholder activity and onmarketing system in general

ActionStakeholdersrsquo suggestions to enhancemarketing system ef ciency Who should intervene and how to

improve the marketing system Is the stakeholder ready to participate in

the process How





441

representative of the middle-income group ofcountries in transition

Following this economic developmenthousehold revenues have increased andchanges in food consumption habits areappearing Families with growing incomes arebuying more food rather than producing itthemselves Fresh vegetable sales in Vietnamhave increased by 50 per cent between 1987and 1999 (Figuie and Bricas 2002)Vegetables are now staple foods in Ho ChiMinh City the largest city in Vietnam with anunof cial 8 million inhabitants According toa survey of city households 94 per cent of HoChi Minh City families consumed vegetableswith almost every meal (Potutan et al 1999)What is more 97 per cent of respondentsclaimed they normally purchased freshvegetables from the market on a daily basis

Nevertheless there has been a major shiftin the structure of food distribution in SouthEast Asia from small independent storessupplied by wholesale markets tosupermarkets supplied by contractedproducers and manufacturers (Department ofForeign Affairs and Trade 2002) Where newsupermarkets are aggressively promoting theirbusiness and building independent foodsupply chains the role of the wholesalemarket in the distribution of fresh food isgenerally declining

In parallel the Vietnamese government hasde nite plans to encourage economicdevelopment by liberalising domestic foodmarkets and international trade building newwholesale markets logistic centres andindustries to facilitate the marketing andprocessing of fresh foods and encouragingbigger stakeholders in the marketing channelsto develop (VNS 2001) Authorities are alsoencouraging fresh produce farmers to use lesschemical-intensive production methods toensure higher food safety standards

Fresh produce wholesale markets withinthe food marketing systemThough food marketing channels are rapidlyevolving in South East Asia from traditionalshops to supermarkets and hypermarkets thegreat majority of fresh food sold to the urbanconsumer still goes through a wholesalemarket (Department of Foreign Affairs andTrade 2002) We choose to de ne wholesalemarkets as a physical place where professionalagents congregate to buy and sell physicallypresent products fromto other professionals

This working de nition encompasses bothassembly and metropolitan wholesale marketsand insists on the presence of the productstraded by businesses to other businesses asopposed to trade with the nal consumerWholesale markets still play an important rolein Asian food marketing systems mostly dueto the current Asian preference for purchasingof fresh food from small neighbourhood retailmarkets and shops rather than supermarketsand self-service convenience stores (Yasmeen2001)

Facing the common belief fromadministrative stakeholders that thetraditional informal market in their country isinef cient through lack of organisation andcompetition some international developmentagencies (The World Bank FAO) haveproposed building terminal wholesale marketsto facilitate food marketing in themetropolitan centres (Tollens 1997Yasmeen 2001) What is more manydevelopment economists have advocated thebuilding of terminal wholesale markets inurban areas as a more ef cient system fordistributing fresh food in the developing citiesThese wholesale markets are seen as an idealmeeting point for supply and demand Theconcentration of traders is said to satisfy thecompetitive conditions necessary forestablishing a fair price for agriculturalproduce (Goosens et al 1994)

On the other hand research in Africa showsthat many wholesale markets have failed toencourage ef cient marketing practices(Paulais and Wilhelm 2000) On the otherhand interesting results have been achieved inTaiwan where government planning has led tothe construction of a successful network offresh food wholesale markets (Liu 1994)

Centralising distribution into a terminalwholesale market runs counter to the growingtrend to promote short and local food supplychains for cities in both the developed anddeveloping countries This latter approachadvocates direct links between producers andretailers and the development ofperi-urban[4] agricultural production andmarketing (Koc et al 1999 Midmore andJansen 2003) At the same timesupermarkets and the larger moresophisticated retailers are increasinglybuilding long-term contracts with smallfarmers or collectors in the vicinity of theirretail stores to reduce inventory levels andoperating costs especially for fresh produce





428




Methodology










429













430

Figu

re1

Coex

istin

gve

geta

ble

supp

lych

ains

toHo

ChiM

inh

City

(Vie

tnam

)





431
















432














433















434












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441




Methodology










429













430

Figu

re1

Coex

istin

gve

geta

ble

supp

lych

ains

toHo

ChiM

inh

City

(Vie

tnam

)





431
















432














433















434












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441













430

Figu

re1

Coex

istin

gve

geta

ble

supp

lych

ains

toHo

ChiM

inh

City

(Vie

tnam

)





431
















432














433















434












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441

Figu

re1

Coex

istin

gve

geta

ble

supp

lych

ains

toHo

ChiM

inh

City

(Vie

tnam

)





431
















432














433















434












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441
















432














433















434












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441














433















434












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441















434












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441












435













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441













436

















437


















Notes





References



















438






































439




































440











credit system











the process How





441

















437


















Notes





References



















438






































439




































440











credit system











the process How





441


















Notes





References



















438






































439




































440











credit system











the process How





441






































439




































440











credit system











the process How





441




































440











credit system











the process How





441











credit system











the process How





441

Documents

Modelling vegetable marketing systems in South East Asia ...kmacd/IDSC10/Readings/research desig… · South East Asia: phenomenological insights from Vietnam ... review of the literature