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zation: opportunities
and challenges
Vinamilk takes up to
50% dairy market
1/INTRODUCTION
Background
Vietnam Dairy Products Joint Stock Company (Vinamilk) is Vietnam's
largest food processor and deals in a wide variety of dairy products, including
milk and yogurt. In 2010, it is the first company in Vietnam to be included in
the Forbes Asia's 200 Best Under A Billion list that highlights 200 topperforming small- and mid-sized companies with annual revenue under US$1
billion. Moreover, in 2013 it also took over leading position in Forbes
VietNams Top 50 Vietnamese Best Listed Companies 2013.
The company was established in 1976 and went public on the Ho Chi Minh
Stock Exchange in 2006. The government holds 45.1% of the shares as of
late 2012. 6% are owned by other Vietnamese investors, of which 0.3% are
owned by CEO Mai Kieu Lien. Foreign investors hold just under 49% of the
shares. (Page 1)
2015
2014
Exceeding
target set
35.187
Growth
compared
with 2014
14%
Total
Revenue
Before tax
After tax
40.223
9.367
7.770
7,613
6.068
23%
28%
14%
14%
5%
revenue before tax increased 23% in comparison with that of the year 2014,
realizing 114% of the plan.
b) Research and development
2/ OVERSEAS EXPANSION
Strong brand identity in domestic market
According to Top 50 Vietnamese brands in 2015 which conducts
by Brand Finance (a brand valuation firm in UK), Vinamilk now is
the most valuable brand in Viet Nam. The total value of 50 largest
brand in Viet Nam was 5.5 billion USD, while only Vinamilk held
1,1 billion USD. Vinamilk brand value was evaluated about 1,137
billion USD while the company was 5.011 billion USD. Therefore,
Vinamilk brand value alone took up to 23% of the total value of
the company. Thanks to sustainable business strategy and
programs. The boom in convenience and mass retail stores in Asia will also
support access to dairy products and intensive demand.
Benefits from Regional Integration
a) Regional Trade Agreement
Vietnam has become increasingly involved in free trade agreements in
recent years after joining the ASEAN Free Trade Area (AFTA) in 1995. This
has mainly been through its ASEAN membership. Apart from AFTA,
Vietnam is now involved in Regional Comprehensive Economic Partnership
(RCEP), also known as ASEAN + 6 Agreement and the Agreement between
ASEAN and Hong Kong (China).
RTAs have brought many benefits to Vietnamese companies and especially
Vinamilk. Lower tariff and non-tariff trade barriers should increase trade
and enhance consumer choice in new products. In the case of ASEAN, the
immediate "trade creation" effects would mainly reflect the elimination of
administrative barriers as customs checks are removed from internal
borders (since most trade between the member countries was already
subject to zero customs duties). This is a huge advantage for Vinamilk to
promote their brand and bring their product lines toward local customers.
The ASEAN Free Trade Area (AFTA) is a trade bloc agreement set up by the Association of Southeast
Asian Nations to increase their export competitiveness. It was originally signed in 1992 by six countries
Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand and subsequently by Vietnam in
1995, Laos and Myanmar in 1997 and Cambodia in 1999.
AFTA's primary mechanism is the Common Effective Preferential Tariff (CEPT), which caps tariffs for
goods originating within ASEAN to between 0 and 5 per cent. Unlike the European Union, AFTA does not
apply a common external tariff to goods imported from outside the region. ASEAN's vision was to
leverage intra-regional division of labour and specialisation to encourage exports to the rest of the world
by eliminating tariff and non-tariff barriers to movement of goods along the supply chain within the region.
taking advantage of low tariff and non-tariff barriers within a union, and
then leveraging this capability to achieve competitive advantage in
exporting to other countries. South East Asia would be a perfect stepping
stone for Vinamilk to penetrate new potential market such as China, India,
Strengths
Weakness
+Dependence on imported
raw material source
Opportunities
+ Viet Nams participation in
Regional integration and WTO:
tariff reduction on both
imported material source and
products.
+ A high demand for dairy
market in Asian region
+ Potential SEA market
Threats
+ Intense competition with
local companies and
multinational companies.
+ Supply chain inefficiencies