40 years of Vietnam Dairy Products Joint Stock Company - Vinamilk: Internal force must be strong to branch out
Updated at Friday, 30 Dec 2016, 13:31
The Hanoitimes - That is the sharing of Ms. Mai Kieu Lien - General Director of Vinamilk when talking about the ambition to help the company branch out in the globe and become one of the top 50 dairy companies in the next three years.
Ms. Mai Kieu Lien said the history of Vinamilk is attached to the history of development and renovation of the country after the reunion day. The development of Vinamilk to date still surprises many people. There is also opinion that the success of the enterprise is thanks to the State.
Ms. Mai Kieu Lien is the "captain" of Vinamilk for up to 26 years.
Working for Vinamilk for four decades and is the "captain" of Vinamilk for up to 26 years, you may have a lot of experience to share with Vietnamese enterprises about how to branch out to the world?
- To branch out, the reality has showed me that we need to become an expert in that sector in the international scale. To realize it, the knowledge is very important. At that time, we can decide what we should do and when will we do it? How we can “envisage" the future? If we do not have knowledge, it will be very difficult, especially in the current context of the globalization. I think that Vietnamese enterprises who have knowledge and know how to creatively apply it in accordance with their criteria will have opportunities. It is also one of the 6 cultural principles of Vinamilk that the company requires every manager to think and act in accordance with it: “I am an international expert in my field” in my working environment.
Is it due to the perspective "becoming an expert" that Vinamilk still invests overseas quite prudently?
- The dairy sector of Vietnam is still young while the world's dairy sector has existed for hundreds of years. Vinamilk is implementing the investment while accumulating experience to improve the quality of the products to satisfy the international standards. When being qualified, Vinamilk will take into account the investment overseas and will study carefully before making the investment. Because the investment overseas contains a lot of risks due to the geographical location, culture and management style. Moreover, Vinamilk also needs to invest in accordance with a long-term strategy and does not in accordance with each single company or country.
We invest in the powder manufacturing plant in New Zealand because this is the material supply for the world. When having a stable supply, Vinamilk will feel more secured when implementing the big plan on the global scale. Meanwhile, the acquisition of Driftwood Plant in the United States shows that a dairy enterprise of Vietnam has appeared at the world's dairy power with the strict requirements on quality and fierce competition environment. Driftwood Dairy will be a bridge to bring Vietnamese dairy products into the United States, at the same time, implement the plan on bring specialized and organic dairy products to Vietnam when the domestic production conditions have not allowed. If Vinamilk's office in Poland is a focal point and transshipping station for the company to branch out in Europe in the coming time, the Plant in Cambodia which has been inaugurated recently is the result of the plan for introducing products in this market for many years.
In the coming time, Vinamilk will continue its plan to expand the influence on the global scale and the merger & acquisition plan will be employed by us to accelerate the development.
The success of an enterprise is attributed to many factors; However, in your opinion, which is the important factor which make Vinamilk today?
- We took over Vinamilk from 1976. At that time, Vinamilk had only two condensed milk manufacturing plants with backward technology and very low sales. Since Vinamilk was equitized in 2003, the capitalization level was just about VND 2,300, by 2016, the market capitalization level of Vinamilk (according to the data on August 15, 2016) of nearly VND 205,000 billion (equivalent to about US$ 9.2 billion), up by 88 times compared to 2003 and was the listed company with the highest capitalization value in the securities market of Vietnam at present. In which, the State's capital immediately after the equalization in 2003 was 80%, equivalent to VND 1,840 billion.
In 2016, the State holds 44.73%, equivalent to about VND 91,500 billion. Plus the amount that the State gains after selling shares and dividends received from 2004 to present of VND 14,000 billion, the company has raised the State capital at Vinamilk by as much as 57 times compared to 2003. Vinamilk has been able to do this because we put a greatest ambition of completely conquering the domestic market and then thinks about exports.
In Vietnam, it is very difficult to conquer domestic consumers, simply due to we have no experience on dairy production. All the conditions to develop the dairy sector, from the climate, inputs of materials, land, etc. of Vietnam are almost unfavorable compared to other countries. Therefore, we must have particularities and study by applying international technologies in a very flexible manner.
I remember that after re-establishing Dielac Powder Milk Plant in 1987, we were actually unable to persuade domestic consumers to use our products when imported powder milk, with the brands' age for hundreds of year are the best proof for Vietnamese mothers. However, everything has changed we we determine to realize the target of diversifying our products. Later on, not only, Vietnamese children have separate products, sick people and old people also have appropriate products.
Especially, all products of Vinamilk are based on international reaches while are still suitable with the body of Vietnamese people. For example, for powder milk product line for children, when being put into production, we conducted a specific and scientific research on over 50,000 children in all the three regions of Vietnam for 5 years. Because the body of children in each country is different, we must know what nutrients are lacked by the body of Vietnamese children to study appropriate products.
hrough the cooperation with the National Institute of Nutrition, we have created suitable products. These products are not only suitable with the taste, but also contain sufficient nutrients like other imported dairy products, but the prices are just equal to 50%.
Mothers raising small children have more and more trusted Vinamilk products when seeing that their children are healthy and gain weight steadily. This is the most meaningful and effective proof rather than the saying of improving the body for Vietnamese children only. And from the market share of less than 8%, to date, the power milk products for children of Vinamilk has reached over 40%.
We have drawn on very meaningful lessons: It takes time to change a habit. You must be very persistent, and especially patient with domestic consumers to obtain good results.
The dairy sector is one of the most negatively affected sectors when Vietnam joins TPP. Whether Vinamilk's plan slows down when this agreement takes effect in 2018 with the exodus of foreign dairy products into the domestic market?
- There will be certainly difficulties, but we still have solutions to tackle them. For example, countries with cold and dry weather are very favorable for milk cows and provide the best conditions for the milk productivity. Meanwhile, everything is contrast in Vietnam: The weather is hot and humid which are not favorable for the physical development of cows. Consequently, we are compelled to apply new technologies to change these conditions. Of course, we must have strong financial capacity to invest in the application of new technologies. In returns, the capital recovery is also very quick because the productivity of milk cows raised at Vinamilk's farms is not less than other countries when we apply the advanced farming technologies.
Another problem that we need to solve is the scattered farming in households. In foreign countries, households raise 100 cows or more while households in Vietnam only raise 2-3 cows. We have been very hard to manage this model, so we understand that we need to upgrade and change it.
It is expected that by 2018, over 8,000 households who are cooperating with Vinamilk will have cow herds with the best quality and support from the farming techniques to the supply of cow breeds. I hope that in the next 3 years, this plan will be implemented and completely remove the simultaneous cow herd development with low productivity which has existed in farming households for long.
Meanwhile, we have also invested in developing a plan to be proactive in the material supply by investing in a plant in New Zealand. Or we have also invested in constructing new and large-scaled dairy processing plants with modern technologies to reduce the pries to the most reasonable level. At present, we have been able to export dairy products to over 40 countries with the export value of US$ 250 - 270 million/year, but I think that Vinamilk needs to be able to do it better so as to retain our foothold in the market. Especially, after Vietnam has joined TPP, the only way is: The quality must not be lower, but the price must be competitive.
When Vinamilk grows stronger, in addition to the joy, the concern about the probability that Vinamilk will be acquired by strong multi-national groups also appears. What is your opinion on this issue?
- Vinamilk is a national brand in which 49% are foreign investors; 6% are domestic organizations and individual investors; 45% is managed by the State Capital Investment Corporation (SCIC). Of the capital managed by the foreign investors, no one has enough dominant share and there is mainly the participation of investment funds. Meanwhile, the proportion hold by SCIC belongs to the State.
When the State divests, who will receive and how to implement so that the State gains the highest budget revenue while still assuring the later development of Vinamilk, the responsibility will belong to SCIC. Meanwhile, I do not think "someone" who wants to acquire Vinamilk will want to abolish this brand.
At present, we are still preparing development plan for Vinamilk in the future, so we cannot provide any further information. However, the core for the development of Vinamilk must certainly be the persistence on the objectives agreed from the beginning to present: We must be able to retain the market share and develop market shares in all the sectors in which Vinamilk has participated. If we can still implement this task well, there will be no problem.
Thank you very much!
Translated by Anh Dat
Source:Tran Vu Nghi -Tran Manh