FU WANG FOODS
Executive summary:
The Agreement on Technical Barriers to Trade (TBT) and the Agreement on sanitary and Phytosanitary (SPS) standards is a means of communications. It represents objects or entity or instructions for example name of a product, production procedure, number, quantity or symbol. Standard in trade stand to conveys requirements of customer to supplier, define product or services and to verify or assess products. Standards in industry mean product or services specification for material components, defining processes and test or inspection methods. Fu wang food is the number one food producing industry in Bangladesh. In a developing country like Bangladesh where safety of foods and nutrition of food is not well concerned there Fu Wang food plays a vital role in The Agreement on Technical Barriers to Trade (TBT) and the Agreement on sanitary and Phytosanitary (SPS) measure which together cover issues relating to standards in the WTO
INTRODUCTION
The Agreement on Technical Barriers to Trade (TBT) and the Agreement on sanitary and Phytosanitary (SPS) Measure together cover issues relating to standards in the WTO. Standard is a means of communications. It represents an objects or entity or instructions for example name of a product, production procedure, number, quantity or symbol. Standard in trade stand to conveys requirements of customer to supplier, define product or services and to verify or assess products. Standards in industry mean product or services specification for material components, defining processes and test or inspection methods.
Government regulations or industry standards for goods can impact trade in at least three ways:
Firstly they can facilitate exchange by clearly defining products characteristics and improving compatibility and usability.
Secondly they also advance domestic social goal like public health by establishing minimum standards and prescriptioning safety requirement.
Thirdly they can hide protectionist policies. It represent an objects or entity or instructions for example name of a product, production procedure, number, quantity or symbol.
During the Urugian round of multilateral trade negotiation, members nations established the agreement on the application of sanitary and Phytosanitary Measure (SPS) and The Agreement on Technical Barriers to Trade (TBT) to address the debate over the standards of international trade. The Agreement on Technical Barriers to Trade (TBT) and the Agreement on sanitary and Phytosanitary (SPS) can be interpreted as an attempt to balance the application the application of the first two standards facilitate exchange by clearly defining products characteristics and improving compatibility and usability and advance domestic social goal like public health by establishing minimum standards and prescriptioning safety requirement and to minimize the third hide protectionist policies. It represents objects or entity or instructions for example name of a product, production procedure, number, quantity or symbol.
Types of Standards of TBT & SPS
The Agreement on Technical Barriers to Trade (TBT) and the Agreement on sanitary and Phytosanitary (SPS) standards is a means of communications. It to verify or assess products. Standards in industry mean product or services specification for material components, defining processes and test or inspection methods.
Standards that are maintained by TBT and SPS are given below:
Product Standard: Characteristics that a product possesses such as minimum nutritional content, maximum toxious or noxious emission.
Production standard: Condition under which products are made. represents objects or entity or instructions for example name of a product, production procedure, number, quantity or symbol. Standard in trade stand to conveys requirements of customer to supplier, define product or services and
Leveling standard: Informing the consumers about a products characteristics or its condition of production.
Measure of SPS
According to annex A of the SPS agreement an SPS measure is applied:
? To protect animal or plant life or health with in the territory of the member from risks arising from entry , establishing or spread of pests, disease , disease carrying organisms or disease causing organisms.
? To protect animal or human life or health with in the territory of the member from risks arising from additives , contaminations, disease causing organisms in foods, beverages or feedstuffs.
? To protect animal or human life or health with in the territory of the member from diseases carried by animals, plants or products, establishing of spread of pests.
? To protect animal or human life or health with in the territory of the member from establishing of spread of pests.
SPS measure can take many forms and include the following
? Requiring animals or animal’s products to come from disease free area.
? Inspection or products for microbiological contaminants.
? Mandating a fumigation treatment for products.
? Setting maximum allowable levels of pesticides residues in food.
Application of TBT
The Agreement on Technical Barriers to Trade (TBT) cover issues relating to standards in the WTO. Standard is a means of communications. It represents an objects or entity or instructions for example name of a product, production procedure, number, quantity or symbol. Standard in trade stand to conveys requirements of customer to supplier, define product or services and to verify or assess products. Standards in industry mean product or services specification for material components, defining processes and test or inspection methods.
Company Overview
Fu-wang Foods Limited, a public company limited by shares, was incorporated in Bangladesh on 27 June, 1997 under the Companies Act 1913. The company owns and operates a modern food factory and produces different kinds of biscuits and bread and sells the same in local market. It obtained the certificate of commencement of business from the registrar of joint stock companies on the same date. Its shares are listed on the Dhaka Stock Exchange and Chittagong Stock Exchange. Its authorized capital was Tk. 50,000,000, divided into 5,000,000 ordinary shares of Tk.10 each. It increased its authorized share capital to Tk. 500, 000, 00.ordinary shares of Tk. 10 each in the Extra Ordinary General Meeting held on 07 September, 2003. Its Head office is situated at 107, Motijheel C/A, Dhaka-1000, registered office is situated at A-1/6-Mohammadpur, Asad Avenue,Dhaka-1207 and the factories are located at Gorai,Tangail(Unit1&2) and Baimail,Gazipur(Unit2).
Mr. Hsu Chin Hua is the chairman and managing director of the Board of Directors.Dr. Reyan Anis Islam and Nafisa Islam acts as the Directors of the company. Composition of share holdings in 30th June, 2006 is Sponsors 39.17%,other than Sponsors 27.83% and others are held by CDS. Auditor of the company is Saha Mazumder & Co and Bankers are Dhaka Bank and Standard Bank Ltd.
Recent performances
During the year under review the turnover of the company was Tk. 850.60 million. The contribution made by batteries was Tk 395.94 million, breads (Tk 324.69 million, cakes Tk 2.40 million, against previous year’s turnover of Tk. 738.19 million contributed by biscuits Tk 365.63 million. breads Tk 270.24 million, cakes Tk 82.19 million and Lighter Tk. 15.10 million.
The above mentioned Turnover in value represent increase of turnover of biscuits by 8.30%, breads by 20.15% and cakes by 28.68% in comparison with the previous year’s value. But in terms of quantity these represent nil growth of biscuits 10.81% growth of biscuits, 9.59% growth in the turnover of Tin Plate in comparison with the previous year’s turnover.
Inlast year that sale of breads was declining due to the cumulative effect of Technological changes as well as diminishing purchasing power of the people due to economic recession in the country. But the management has been able to arrest the decline of turnover of breads and attained 10.81% growth in turnover of breads by increasing export as well as expanding its internal marketing network. The growth in turnover of cakes is the cumulative effect of changes in the inter unit transfer price as well as growth in sales of cakes. An imported cakes has been introduced during the year in the product portfolio to have clear idea about the size of market and we obtained positive response in this regard from the market.
It may be seen from the financial statement of the year under review that the gross margin on netturnover of the company has come down to 13.93% from the level of 18.82% of the year 2004-05–This is the effect of increase in production cost during the year to 86.07% of net turnover from 81.18% of net turnover during last year. Volatile price hike of raw materials in the international market and effects of devaluation of Taka against Dollar has resulted the increase of Raw material cost of Biscuit by about 42% and Cakes about 10%, which 28 could not be recovered by increasing selling price of our products. Despite minimization of Administrative Expenses and Selling & Distribution Expenses, the net profit before tax has come down to Tk. 1.86 million from the last year’s profit of Tk. 14.98 million.
Company had already set up a automatic bread making machine at Gazipur which was orating from 1st January 2008. Benefits from it will be added in the next financial year. Company is contemplating to produce more dry food in the recent future year.
Corporate Governance
Corporate governance is the system by which companies are directed and controlled . This system may be considered as most vital part of efficient management. This system ensures better transparency and presentation of acceptable financial information to the shareholders and others authorities concerned. The Board of Directors of the company comprised of 7 members, is the supreme authority to take all kind crucial decisions.
Corporate reporting of the company is as per requirement of the security exchange commission.
Standards of company product
Fu wang food is a food processing industry. It produces different kinds of biscuits, breads, cakes. Raw materials of production like wheat, sugars etc company try to collect from different selective zones. They instruct the producer to use low pesticides to produce goods. Their selected farmers try to produce as the instruction. To preserve the food safety natural fertilizers is used.
Raw materials are also imported from countries which maintain the guidelines of WHO. Mostly those are come from United states and Australia which are very conscious about WHO guidelines.
Company measure can take many forms and include the following
? Requiring animals or animal’s products to come from disease free area.
? Inspection or products for microbiological contaminants.
? Mandating a fumigation treatment for products.
? Setting maximum allowable levels of pesticides residues in food.
Those activity of the company helped the company to get ISO-9002 which achieved on 04 november, 1998.
Production Standards of the company
The company operates a sound production procedure to produce product.
According to annex A of the SPS agreement the company maintains:
? To protect animal or plant life or health with in the territory from risks arising from entry , establishing or spread of pests, disease , disease carrying organisms or disease causing organisms.
? To protect animal or human life or health with in the territory from risks arising from additives , contaminations, disease causing organisms in foods, beverages or feedstuffs.
? To protect animal or human life or health with in the territory from diseases carried by animals, plants or products, establishing of spread of pests.
? To protect animal or human life or health with in the territory from establishing of spread of pests.
The company operates a contributory provident fund for its employees. Provident fund is administrative by a board of trustees and is funded by contributions partly from the employee and partly from the company’s predetermined profit rate.
Leveling Standards of the company
Company has already set up Ink jet printers for date printing on food products in all its factory to conform to the requirements. On the above of every packet products components, existence of different nutrition component , date of manufactured, date of expired is given.
Conclusion
Fu wang food is the number one food producing industry in Bangladesh. In a developing country like Bangladesh where safety of foods and their nutrition of food is not well concerned there Fu Wang food plays a vital role in The Agreement on Technical Barriers to Trade (TBT) and the Agreement on sanitary and Phytosanitary (SPS) measure which together cover issues relating to standards in the WTO.