The bright future – equitization of enterprises - Part 3: Vinamilk: Taking off “tight clothes” to become the business with the largest brand value in

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In the development strategy until 2021, Vinamilk said it would take the leading position in Vietnam's dairy industry.

Reaching out to the world

In the process of development of Vinamilk, we must mention basic developments such as investing in material areas early (in the early 1990s), restructuring and equitizing in 2003, listing on Vietnam's stock market in 2006, investing and stopping investing in the field of beer and coffee (period from 2005-2010).

With these strategic changes, from an enterprise with a capital of VND1,590 billion, up to now, after 18 years of capitalization, it has reached VND202,907 billion (an increase of more than 200 times), of which equity is VND29,731 billion, while share capital isVND17,417 billion.

The largest shareholder is the State Capital Investment Corporation - limited liability company, with 36 percent stake and more than 9,000 employees across the country.Vinamilk is a testament to the outstanding success of a company after equitization.

Financial statements of this enterprise in 2019 show a positive picture with a total revenue of VND56,400 billion, profit before tax of VND12,796 billion and profit after tax of VND10,554 billion. Also, in 2019, the lowest share price of Vinamilk reached VND115,100 per share and the highest level of VND146,100 per share; The total number of outstanding shares is VND1,741,377,694.

Talking about the scale of the enterprise, the Vinamilk representative said that their products received the trust of most Vietnamese people, reaching every corner across the country and the total number of retail outlets nationwide was 251,000 establishments and 12 farms meeting Global Gap standards, with 130,000 cows.

Not only does Vinamilk reach the goal of conquering the domestic market, the process of reaching out to the world of the dairy firm is also very convenient. Mr. Nguyen QuocKhanh, Executive Director of Research and Development (R&D) of Vinamilk, said that the company’s productshave been exported to 53 countries and territories.

Vinamilk has gradually affirmed its brand in China – a potential but also very difficult market. In particular, since September 2018, overcoming many challenges, Vinamilk's yogurt products have officially launched on Hema – an Alibaba's smart supermarket system in China.

According to Ms. Mai Kieu Lien, CEO of Vinamilk, the success of the company is itsfinancial autonomy after equitization. Thanks to that, the shareholders must be responsible for their capital and will have good strategies and decisions to promote the development of enterprises.

“Removing the mechanisms is the most important thing when equitizing, enterprises are proactively implementing business plans, they are deciding and responsible for that decision within the law. In particular, the equitizing process also helps businesses receive new knowledge and new management,”Ms. Lien said.

In another aspect, although Vinamilk is considered to be the most dynamic enterprise since the Subsidy Period, Ms. Lien said that the biggest challenge after equitizationis to change the old mindset. Vinamilk did not change personnel much after equitization, but the way of working changed a lot, of which the biggest challenge was to solve inertia.

Balance benefits

Equitization has helped many State-owned enterprises, including Vinamilk, "change blood" with surprising business results, gradually asserting its position not only in the country but also reaching out to the world, contributing to the overall growth of the economy and creating many jobs for domestic workers.

Although it has overcome difficulties and became a billion-dollar enterprise thanks to equitization, according to the Vinamilk's leader, in order to continue growing strongly in the future, the goal that Vinamilk pursues and maintains is to harmonize interests and responsibilities among shareholders, suppliers, distributors and workers.

In addition, paying attention to human factors, caring, developing, training and retraining employees is the major concern of Vinamilk’s development. The Executive Director of Human Resources of Vinamilk, Ms. Bui ThiHuong, said the Board of Directors always determines the people as the decisive factor for all success. Therefore, the current action plan on human resources of Vinamilk is to train and develop a contingent of employees who are willing to dedicate to the growth of the company. In the future, the company aims to be in the top 30 largest dairy companies in the world.

Vinamilk's view is that salaries, bonuses and remuneration must be suitable to attract and retain employees as well as the leadership. One of the determinants of salary is based on the performance of the company in general and the individual in particular. According to Vinamilk's statistics, the company's salary and bonus are increasing every year.

Vinamilk's view is that salaries, bonuses and remuneration must be suitable to attract and retain employees as well as the leadership. One of the determinants of salary is based on the performance of the company in general and the individual in particular. According to Vinamilk's statistics, the company's salary and bonus increase every year.

Vinamilk always listens to the opinions and aspirations of employees. Therefore, it has actively implemented and implemented appropriate internal development policies to create opportunities for capacity development and increase incomes for workers. At the same time, it creates opportunities for managers and employees to build good relationships through training.

According to some employees working at Vinamilk, the employees’health and spirithave always been maintained and improved by Vinamilk over the years. The company provides employees with outstanding benefits, such as the Health Insurance program for employees and their relatives, constructing facilities to support the learning and working conditions of its staff; focusing on building facilities such as gym, yoga, swimming pool and creative space to take care of health and create conditions for employees to work more effectively.

In the development strategy until 2021, Vinamilk's General Director said that the company would take the leading position in Vietnam's dairy industry by focusing on exploiting the domestic market, especially focusing on developing the rural market.

“The company will focus on mid-range and high-end products with more added value in urban areas, continue to penetrate and cover rural areas with popular product lines. We are also ready for merger and acquisition activities, with priority given to dairy companies in other countries with the purpose of expanding the market and increasing sales,” Ms. Mai Kieu Lien said.