Management Organization Model of Tea Industry After Renovation

Production and business of the Union, as well as of processing enterprises, are still under the subsidy - supply - delivery mechanism.

Thus , in the pre-renovation period, although there were many improvements and changes for the development of the tea industry, in general, the management of the tea industry was still in a state of confusion in management methods, cumbersome, overlapping in the management apparatus and there was no breakthrough solution to release production capacity and improve the efficiency of the whole industry. Specifically:

Regarding the management apparatus: Although there have been changes, the management apparatus in the tea industry is still cumbersome, with many intermediate levels. The functions and tasks of each agency and department as well as the relationships between them are not clear, management staff lack dynamism and are not proficient in business. Tea processing enterprises must be under the management of many different scattered focal points such as central and local ministries and branches such as: Ministry of Trade, Ministry of Commerce, Ministry of Light Industry, Ministry of Food and Foodstuffs, Ministry of Food Industry, Ministry of Agriculture and local departments and branches... Therefore, at the local level, a Department is also under the vertical direction of many corresponding ministries, causing overlap in management.

Regarding the management mechanism: The management mechanism during this period was heavily centralized and bureaucratic. Economic management was mainly carried out by administrative orders with a system of top-down legal indicators; state management agencies deeply intervened in the production and business activities of grassroots units but were not materially responsible for their decisions; grassroots economic units did not have autonomy and were not bound to be responsible for production and business results; command planning, not paying attention to commodity-currency relations and economic efficiency, mainly implementing the allocation and delivery regime based on in-kind relations...

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2. Tea industry management after renovation

This is the period of transformation of tea makers from the subsidized supply-delivery mechanism to the initial step of the production and business mechanism, self-financing, self-responsibility, self-reimbursement according to the spirit of innovation outlined by the Resolution of the 6th Congress (December 1986) and the following Central Conferences.

Decision 217 and Resolution 10 of the Politburo opened a new business direction for agriculture and state-owned economic units. However, in the tea industry, the transformation was initiated by Decision 220-CT dated July 6, 1987 of the Chairman of the Council of Ministers allowing 5 sectors of light industry, food industry and agriculture to be autonomous in the cooperation program with foreign countries.

2.1. Tea industry management organization

Before Decision 217 - HDBT, the following types of enterprise organizations existed in the tea industry:

 The agricultural-industrial enterprise includes a farm and a processing plant.

 Farms and factories under the Union.

 Large-scale industrial-agricultural joint venture (with 2 units) (located in Hoang Lien Son province (old) and Vinh Phuc province (old), with 5-7 member units which are merged farms and tea factories).

 Production and scientific and technical service units (tea mechanical factory, tea research institute, tea canning factory, tea technical worker school).

After Decision 217-HDBT, the Union has rearranged and reorganized to link the stages of the tea production process, reduce intermediaries, and create favorable conditions for production. From 47 direct

belonging to 23 farms, 18 processing factories, 2 industrial-agricultural enterprises, the tea industry has been adjusted into 29 production and service units, including 23 industrial-agricultural enterprises with the scale of merging 1 farm with 1 processing factory, and 6 service units including Import-Export and Development Investment Company, Production and Life Service Company, Tea Mechanical Factory, Product Quality Inspection Center, Construction Company, Tea Research Institute.

The scale of the enterprise after adjustment has an average area of 300 - 400 hectares, associated with a processing unit with a capacity of 13 - 16 tons of fresh buds/day. Enterprises with larger processing scale are organized in association with raw material areas to ensure full utilization of processing capacity. The essence of the above organizational rearrangement is to widely implement agro-industrial linkage in tea production. The agro-industrial tea enterprises here become the main economic units in a tea sub-region, the linkage center, the service center for tea production satellites: cooperatives and tea-growing households. With this linkage, the division of labor in each region is more reasonable, creating healthy competition, forcing state-owned tea enterprises to strive to maintain a leading role.

A notable thing in the two years 1987-1988 was that the policy of reducing the area, reducing the labor scale, reducing the management apparatus and "management level" was strongly implemented with the main intention that the area reduction must go hand in hand with increasing productivity per unit area (from 3-4 tons to 7-8 tons of fresh tea buds/ha) and associated with a processing line with a capacity of about 8-10 tons/day to create a volume of products of about 2,000 tons of fresh tea/year on that basis, forming an agricultural-industrial production model suitable to the management level at that time. At the same time, the new contracting mechanism , linked to individual responsibility and the experiment of expanding the forms of processing "at home, in the garden", created the ability to reduce the management apparatus of the team, of the

farms, of agricultural and industrial enterprises (about 1/2-1/3 compared to before). To gradually implement the above intention, the Union has carried out the following tasks: Putting into trial use 3 production lines of 8-10 tons/day manufactured by mechanical factories, the Tea Research Institute has implemented the project of designing and manufacturing small family-style equipment sets, producing 50 kg of fresh buds/day for common use in all tea-making households belonging to cooperatives in raw material areas that factories purchase. The Institute has also researched and designed a processing factory with a capacity of 8-10 tons/day in Ba Vi, Hanoi.

Thus , the reorganization of tea production has been carried out on the following issues: re-determining the product structure to facilitate the reassignment of production in member units of the Union; re-organizing production of member units (linking planting with processing), and re-organizing production in sub-regions and regions (through the division of production and economic linkage between state-owned enterprises - cooperatives - family tea producers); applying forms of economic linkage (in addition to organizing agro-industrial enterprises, there is product processing, processing in livestock farming, advance investment, development investment in the form of capital contribution...); developing services (State-owned enterprises and the Union of Vietnamese agro-industrial tea enterprises perform the function of "general service").

During this period, the tea industry was organized in the form of large-scale enterprises. In essence, it was a form of horizontal economic association of enterprises in an economic-technical sector, a form of accumulation and centralization of production to expand the scale of business in each economic unit as well as the entire sector under the online-functional organizational model , originating from the requirements of production organization, from the development level of production forces and the management level of cadres during this period. (see figure 2.3)

Figure 2.3: Management organization model of the tea industry after renovation

VIETNAM TEA ASSOCIATION

UNION OF VIETNAM TEA AGRICULTURAL INDUSTRY COMPANIES

COUNCIL OF SECRETS

Non-union units

Agricultural enterprises

career

Dry tea processing factories

Import export company

Construction company

General service company

KCS Center

Tea mechanical factory

Tea Research Institute

Source: [23]

With this model, the Vietnam Tea Industry and Agricultural Enterprises Union has gathered, on the basis of merging state-owned tea growing, processing, and tea import and export units from the central to local levels into a unified organization, in which the Union is the superior level of the enterprises, the intermediate management level between the Ministry and the enterprises, and the focal point to help the Ministry manage the industry. The grassroots units are concentrated into one organization, the Union, because: the enterprises themselves have close relationships with each other in the reproduction process and all find advantages when being in the Union (in terms of science and technology, market research, import and export, capital investment, etc.). The objective requirements of economic development require those units to establish linkages to fully exploit the potentials that each individual unit cannot do or if they do, the efficiency is low. However, it is necessary to clearly distinguish between the functions and tasks of the Union and the enterprises. The Union of Tea Agricultural and Industrial Enterprises only does things that the Ministry does not have the function of and things that the enterprises do not do effectively. For example: training activities for specialized technical staff, supply activities.

- domestic consumption, import-export activities, scientific and technical research and development activities, planning general development goals for the whole industry, harmonizing and coordinating all activities of the Union... These are

This is a task that only the Union is capable of undertaking and doing well. Thus, the existence of the Union is an objective requirement that has been recognized by practice and by its members.

Switching to a market mechanism, in addition to the function of managing enterprises, the production and business activities of the Union must be the main activity. However, the existence of the Union at this time is more of a production management level than a business one. Meanwhile, as a production and business entity, the transactional relations, foreign affairs, and cooperation at home and abroad are increasingly complicated. The Union of Tea Enterprises is not qualified to meet the requirements of new management practices, so a new form of management organization is needed to replace it, which is the Vietnam Tea Corporation (VINATEA). With the new model, the Vietnam Tea Corporation is still the superior management agency of state-owned tea processing and production enterprises, import-export companies, and tea production and processing services.

Regarding authority and responsibility: Vietnam Tea Corporation is responsible to the State for planning, plans, and tea development investment projects, receiving and providing capital to all invested entities, being the investor, and at the same time being fully responsible for investment consequences and repaying investment debts within the time limit as prescribed by law. The Corporation is allowed to have direct relations with foreign countries on the basis of the Investment Law; managing enterprises and companies in terms of development orientation, production organization, management apparatus organization, assignment of responsibilities, and deployment of technical and technological advances to employees.

Compared with the previous model of the Union of Tea Agricultural and Industrial Enterprises, the Corporation model has the following notable points:

Firstly , the functions and tasks of the Corporation are expanded more than before, especially service functions.

Second , the organizational model and management apparatus have become more streamlined. Previously, the model of the Vietnam Tea Enterprise Union was:

XNLH - Factory Farm - Team - Workers

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XNCNN - Team, group - Workers

is now replaced by the model of Corporation - Enterprise - Employee.

Third , the command-subsidy management method from top to bottom is replaced by the delegation of the right to organize production, manage personnel, and do business to enterprises, increasing the use of economic contracts, commercializing materials, and buying and selling materials and products on the basis of contracts, agreeing on prices, and taking into account the interests of both sides (the Corporation and its affiliated enterprises); using economic and accounting measures instead of command-based management and regulating products from one enterprise to another.

Fourthly , the Corporation includes joint ventures with foreign countries, joint ventures, and associations with domestic economic sectors. Doing business according to the market mechanism, inevitably there will be joint ventures at home and abroad, and joint stock companies. The birth of these enterprises marks a step in the development level of commodity production. These enterprises are more economically independent than 100% state-owned enterprises. The Vietnam Tea Corporation manages these enterprises in a specialized and development-oriented manner, in which the Corporation may be only a member or a shareholder.

Fifth , joining the Vietnam Tea Corporation is completely voluntary. Currently, most tea production and trading enterprises are in the Corporation because they realize the benefits that the Corporation brings. However, in the production and business process, if they find that operating independently and under the management of the ministry is more beneficial, they can apply to leave. In fact, the organization of the Corporation in the past

Last year, it met production and business requirements quite well, contributing to promoting production development of the whole industry.

2.2. Industry support organizations

2.2.1. Council of Secretaries

The Secretariat Council was established to implement the Party's leadership over the entire industry, to unify viewpoints and directions to demonstrate the Party's leadership over Party organizations of enterprises, and to link the Party's leadership at the local level with the industry. The Secretariat Council includes secretaries at grassroots Party organizations and units under the Union. The Secretariat Council meets, discusses and issues Resolutions on issues related to the development direction of the entire industry, ensuring the Party's leadership over the entire industry from the central to local levels and grassroots units, linking the Party's leadership with economic development issues, implementing Party leadership, State management, and people's mastery. The issues mentioned in the Resolutions are the political tasks of the tea industry.

2.2.2. Vietnam Tea Association

Vietnam Tea Association (Vitas) is a voluntary socio-economic organization of Vietnamese tea makers. Previously, in the tea industry organization, there was no Association. The Union itself was only a management level above the grassroots economic units. The development of the tea industry requires a professional representative organization of economic components to discuss, debate, and decide on socio-economic issues in general related to the tea industry, and the tea industry in particular. Vitas operates on the principles of voluntariness, equality and mutual benefit, is the common voice of tea makers to coordinate tea development activities in Vietnam, advise competent state agencies on development strategies, incentive policies, etc.

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