Ms. Mai Kieu Lien - General Director of Vinamilk: 'Internal strength must be strong before thinking about going far'

(Baonghean.vn) - According to Ms. Mai Kieu Lien, General Director of Vietnam Dairy Products Joint Stock Company (Vinamilk), a business that wants to reach international level must first have very strong internal strength and must build a solid foundation in the domestic market.

Ms. Mai Kieu Lien said that Vinamilk's development history is closely linked to the history of development and innovation of the country. Vinamilk's development to this day still surprises many people, including those who think that its success is due to being a state-owned company. In fact, Vinamilk is what it is today because it understands its customers, grows from the internal strength and creativity of a united collective.

Ms. Mai Kieu Lien - General Director of Vinamilk at Vinamilk's Vietnam super milk factory.

Having worked for Vinamilk for four decades and being the “captain” of Vinamilk for 26 years (nearly three decades), you must have a lot of experience to share with Vietnamese businesses on how to reach out to the world?

To go far, practice has shown me that I must become an expert in that field at the international level. To do so, knowledge is very important. Only then can we decide what to do, when to do it? How to "see" the future? Without knowledge, it will be very difficult, especially in the context of globalization that has opened all doors. I think that only Vietnamese enterprises with knowledge, who know how to creatively apply criteria suitable for themselves, will have a chance. That is also one of the six cultural principles of Vinamilk that the company requires each Vinamilk manager to think and act according to, which is "I am an international expert in my field" in their working environment.

Is it because of the concept of "becoming an expert" that Vinamilk is still quite cautious in investing abroad?

Vietnam's dairy industry is still very young while the world's has existed for hundreds of years. Vinamilk works, learns, and accumulates to improve the quality of domestically produced products to meet international standards. When the conditions are met, Vinamilk will consider investing abroad and must research very carefully before investing. Because investing abroad contains many risks in terms of geographical distance, culture, and management style. Moreover, Vinamilk must also invest according to a long-term strategy, not according to each company or each individual country.

We invested in a powdered milk factory in New Zealand because it is a source of raw milk for the whole world. With a stable supply, Vinamilk is more confident in implementing large-scale plans on a global scale. Meanwhile, the acquisition of the Driftwood factory in the US confirms to the world that a Vietnamese dairy corporation is present in a world milk production powerhouse with the most stringent requirements on quality and a fiercely competitive environment. Driftwood Dairy will be the bridge to bring dairy products produced in Vietnam to the US and also carry out the plan to bring specialized dairy products such as organic milk to Vietnam when domestic production conditions do not allow it.

While Vinamilk's office in Poland is a hub and transit station for the company to expand to the whole of Europe in the near future, the recently opened dairy factory in Cambodia is the result of a multi-year plan to bring products to this market. When consumers accept Vinamilk's products and the demand is large enough, we will build the factory.

In the coming time, Vinamilk will continue to plan to expand its influence on a global scale and the merger and acquisition strategy will be used by us to accelerate development.

There are many factors that make a business successful. But in your opinion, what is the most important factor that makes Vinamilk what it is today?

We took over Vinamilk in 1976. At that time, Vinamilk only had two factories producing condensed milk with illegal technology and very small sales. Since Vinamilk was equitized in 2003, its capitalization was only about 2,300 billion VND. By 2016, Vinamilk's market capitalization (according to data on August 15, 2016) was about 205,000 billion VND (equivalent to about 9.2 billion USD), an increase of 88 times compared to 2003 and is the listed company with the largest capitalization value on the Vietnamese stock market today.

Of which, the State capital right after equitization in 2003 was 80%, equivalent to 1,840 billion VND, then by 2016 the State was holding 44.73%, equivalent to about 91,500 billion VND, plus the amount of money the State received when selling shares and dividends received from 2004 to present is 14,000 billion, so now the company has increased the value of the State capital at Vinamilk up to 57 times compared to 2003. Vinamilk was able to do this because we set the biggest ambition to completely conquer the domestic market, then think about exporting.

In Vietnam, to conquer domestic consumers is an extremely difficult task, simply because we have no experience in milk production. All the conditions to be able to develop the dairy industry, from climate, raw material inputs, land... if compared to other countries, we almost do not have favorable factors. To do so, we must have our own characteristics, plus research by applying international technology in a very flexible way.

I remember when we restored the Dielac powdered milk factory in 1987, but in fact, for many years after that, we still could not convince domestic consumers to seek out our products, when imported powdered milk, with a brand name of hundreds of years, was always a very good guarantee for Vietnamese mothers. But everything changed when we were determined to achieve the goal of diversifying our products.

Later, not only children have separate products, but also sick people and the elderly have suitable products. In particular, all products launched by Vinamilk are based on international research, but still suitable for the physical condition of Vietnamese people. For example, for the powdered milk line for children, when put into production, we had a specific, very scientific study on 50,000 children in three regions of the country over a period of 5 years. Because the physical condition of children in each country is different, we must know what micronutrients Vietnamese children are lacking in order to have a suitable product research direction. Through research cooperation with the National Institute of Nutrition, we have produced products suitable for Vietnamese children.

Not only is it palatable but it also has full nutrition like other imported milk products, but the price is only 50%. Mothers with young children increasingly trust Vinamilk products when they see their children healthy and gaining weight steadily. This is the most meaningful and effective persuasion, not just empty words that it will improve the health of Vietnamese children. And from a market share of less than 8%, Vinamilk's powdered milk products for children have now reached more than 40%. We also learned something worth pondering: to change a habit, it takes time. And you have to be extremely persistent, persistent, especially patient with domestic consumers to get good results.

Giving milk to poor children in Ly Son island district, Quang Ngai in the program "Vietnam Grow Tall Milk Fund".

The dairy industry is one of the industries most negatively affected when Vietnam joins the TPP. Will Vinamilk's development plan be slowed down when this agreement takes effect in 2018 with foreign milk flooding into Vietnam?

It is true that there will be difficulties, but of course there are solutions to solve them. For example, in other countries, the cold, dry climate is very favorable for dairy cows, creating very good conditions for milk productivity. In Vietnam, it is the opposite: both hot and humid, not favorable for the physiological development of cows. Therefore, we are forced to apply new technology to change the unfavorable conditions. Of course, we must have strong financial potential to be able to invest in applying new technology. But in return, the capital recovery is also very fast because the productivity of cows raised at Vinamilk farms for milk is not inferior to that of foreign countries when applying advanced farming technology.

Another difficulty that needs to be solved is the problem of small-scale farming among farmers. In foreign countries, people raise 100 cows or more, but in Vietnam, each household still raises only 2-3 cows. We have worked very hard to manage this model, so we understand that we need to reform and change it. It is expected that by 2018, more than 8,000 households cooperating with Vinamilk will have the best quality cows, from technical support to providing breeding cows.

I hope that in the next 3 years, this plan will be implemented, and will completely eliminate the spontaneous development of low-yield herds in households for a long time. Not to mention, we have also built a plan to proactively supply raw materials by investing in a factory in New Zealand. Or invest in building new milk processing factories on a very large scale, using modern technology to reduce costs to the most reasonable level. And now, although we have exported to over 40 countries with a turnover of 250-270 million USD/year, I think Vinamilk needs to do better than what it has done if it wants to maintain the market, especially when TPP "runs" in only one way: quality must not be inferior, but prices must be competitive.

During the process of running Vinamilk, have you or the company's leaders ever made decisions that, when you think back, you still feel regretful about?

If we only talk about the dairy industry, no one would think that the strongest and fiercest competition takes place right in the Vietnamese market: all multinational corporations are present. Why are they present? Because the Vietnamese market has a huge demand, and has imported 100%, so multinational corporations all want to jump in here to exploit. When they come in, it is not easy for us to win and rise up immediately. We have also lost market share and failed. Yes! Many times. But each time like that, we have learned valuable experiences, quickly overcome and slowly conquer back the market milestones that we accidentally lost. And everything must be done very carefully, not hastily.

Although we have never made any wrong decisions that cost us “blood and tears”, or made mistakes that dragged our business down, or left serious consequences, perhaps in the past, we were wrong to invest in some industries that were not strong, such as beer and coffee. At the time of withdrawal, everyone told me that I was right. But now that I think back, I think it was probably a bit hasty. Who knows, in the next 5-10 years, Vinamilk will return, if it sees new opportunities. Because the trend of multinational food production corporations is not only milk, but also many other products. As for me, I always think of my old decision as a reminder of perseverance, as well as a lesson that never gets old: don’t be hasty. Because if you are a little more persistent, maybe you will succeed.

As Vinamilk grows stronger, in addition to joy, there is also concern about the possibility of Vinamilk being taken over by powerful multinational corporations. What is your opinion on this issue?

Vinamilk is a national brand, of which 49% is foreign, 6% is held by domestic organizations and individual investors, and 45% is managed by the State Capital Investment Corporation (SCIC). In the proportion of foreign shares holding Vinamilk, no one has a controlling percentage, but mainly belongs to investment funds. As for the proportion that SCIC is holding, it belongs to the State.

When the state divests, to whom, and how the state can achieve the largest budget revenue, while still ensuring Vinamilk's future development, the responsibility belongs to SCIC. Personally, I don't think that "someone" who wants to take over Vinamilk will intend to erase this brand. Currently, we are still building development plans for Vinamilk in the future, so we cannot provide any information yet. However, the core throughout Vinamilk's development must certainly be consistent with the goal that has been agreed upon from the beginning until now: to maintain and develop market share in all product lines that Vinamilk has entered the market. If we continue to do this well, there will be no problems.

PV