20 December, 2013

General Director of Kinh Do, Mr. Tran Le Nguyen, shared his ambitions in the new development cycle is to grow using the enterprise core competence. The company aspires to become the leading food corporations in Vietnam as well as the region.

- What was the path that leads you to the confectionery industry?

- Confectionery is the traditional business of the family. Me and my brother (Mr. Tran Kim Thanh - Chairman of Kinh Do) took over and manage Kinh Do at a very young age. There are always certain advantages and disadvantages at any profession. What important is that we have enough enthusiasm, and passion for this job as well as the perseverance to endure difficulties, and the daring, and determination needed to seize opportunity to achieve successes using Kinh Do core business.

- How did you see your family business transform through the management of the brothers during the past two decades?

- We have gone from a small confectionery factory to a food group listed on the stock market accounting for over 30% of total market share. We also have many products are currently the market leader accounting for the major market share in the same segment. Through many period of divestment, opening new company, listing in the stock market, mergers and acquisitions, Kinh Do in 2013 possessed and controlled 4 plants, 5 food companies, 300 distributors, 200,000 points of sale and more than 7,000 retail workers. Products of the company have been able to penetrate over 30 international market and key local markets.

There are many things to remember after the last development stage, however, what I am most proud of is the two landmark achievements. The first is the mooncake launching in 1998. Shortly after the product launch, our company mooncake was able to occupy over 70% market share of Vietnam. Second is the acquisition of Walls’ ice cream brand from Unilever and established KIDO Ice Cream Corporation in 2003. With the development of the two brands Merino and Celano ice cream, we have been able to have an annual growth rate of over 20%. These events were business breakthroughs of Vietnam corporations at that time.

In addition, I was also impressed with the period when Kinh Do was first listed on the stock exchange in 2005. The listed of Kinh Do shares led to many great changes. Kinh Do continuously received large investments from both domestic and foreign investment funds. I am proud that by owning KDC shares many officers and employees of Kinh Do improved their quality of life.

We also brushed aside concerns of being acquired and instead turn to be more active in conducting many merger and acquisition deals. In 2005, Kinh Do Corporation invested into Saigon Beverages Company - Tribeco. Two years later, Kinh Do Group and Export Import Bank of Vietnam - Eximbank signed a strategic cooperation agreement. At that time, our company and Dong Tam Nutrition Food Corporation (Nutifood) also signed a comprehensive strategic cooperation alliance. Afterwards, Kinh Do invested in Vinabico.

In 2010, Kinh Do Corporation merged with North Kinh Do (NKD) and Kido Company to Kinh Do Corporation (KDC) as of today. That was the first step in the long-term development strategy helping Kinh Do to become the leading food conglomerate in the country and region. In 2011, we signed a strategic partnership agreement with the Ezaki Glico Company (a food company from Japan). In 2012, we continued with the merger of Vinabico into KDC, which helped to increase the efficiency of the company overall.

- Can you share the most memorable experience that your company overcame?

There are many challenges but the greatest is to constantly move forward and expand further. Growth pressure always haunted and posed great difficulty. There are periods when Kinh Do invested in non-core businesses and faced with many obstacles. During 2007-2008, our financial and investment suffered losses and the company seriously drawed lessons from such experiences.

We also established a real estate company in 2004. To date, the company still has landbank but it has not planned any additional investment since real estate market remains feeble. In additional, our shareholders do not agree for us to inject more capital into real estate projects at the moment.  Furthermore, Kinh Do also possesses a complex project at downtown Ho Chi Minh City with land value of hundreds of billion VND. However, due to unfavorable market environment, there is not any specific plan. Fundamentally, we already withdrew from this investment channel. Kinh Do learned that returning to our core competencies of manufacturing in the food industry is absolutely the right decision.

- What was Kinh Do lesson in making investments in non-core businesses?

- During the years of 2007 - 2008, following the general trend of the market, we also made investment into real estates and financial markets. These investments used to bring great profit and efficiency for Kinh Do. However, when the market turned sour, we quickly restructured these financial investments as well as promptly withdrew from real estate project to focus on core business. Our experience is that in business a good manager would not regret the past, and ready to divest out of inefficient operations to return to core values. Thanked to the aggressive, decisive, and timely decision to restructure, we were able to maintain the growth momentum amidst difficult macro conditions.

- As a blue-chip in the stock market, how have the economic difficulties during the past impacted Kinh Do’s business?

- Since 2008 when economic crisis began, our growth decelerated while exported also negatively affected. During the past few years, the domestic economy has not been stable with slow growth affecting virtually all industries. Capital flow in the market stalled which negatively affected production and the growth of consumer goods. Consumers tended to reduce spending and focused mostly on necessities items. These trends created a challenge for Kinh Do to seek new directions to stimulate growth through the “Food and essential products” strategy.

In addition, when Vietnam opened to the ASEAN community, removed tariff barriers, the domestic market will become increasingly difficult. Thus, at this point, we are taking the opportunity to seek for merger and acquisition, and new partnerships in order to increase the number companion while reducing the number of competitors.

During the past two years, we actively restructured our product portfolio focusing on flagship products, and maximized economies of scale, and management capability to control costs. In particular, an important milestone of the company is change in the way company operated. The company became more market oriented to be able to anticipate and exploit consumption trends. That way, it will help us to adapt promptly and take all opportunities to increase efficiency overall.

When temporarily unable to push the domestic market quickly since the purchasing power of consumers is still limited, the company will focus more on exploiting opportunities in foreign markets and will use that as a leverage to accelerate the growth of Kinh Do as a next step posted the 20 years landmark. Thus, aside from project aiming to expand product portfolio towards essential products including instant noodles, spices, we will continue to promote cooperation plans with foreign partners.

- You repeatedly mentioned that Vietnam confectionary market has saturated whereas foreign product continued to enter the market. How does Kinh Do plan to resolve this issue to maintain its leading position?

- First, we understand the consumers and produce the right product to meet consumer needs at a reasonable price. In addition, we constantly invested in new technology and resources to innovate new products with a wide range of variety and distinctive tastes that meet the needs of consumers. Currently, there are hundreds of Kinh Do products serving consumers; out of which, many products have led the market with a large market share in the same segment such as Kinh Do mooncakes, AFC cracker, Cosy, SOLITE, fresh bread, ice cream ... In addition, we also focus on building a strong distribution network with 300 distributors, and 200,000 point of sale to ensure that Kinh Do products are always ready to serve consumers nationwide from urban to rural areas.

- What are Kinh Do aspirations and strategies in the next journey?

- We will continue to grow stronger for the next 20 years expanding towards international markets while acquiring new technology and developing our strength in the domestic market. We are also willing to cooperate with major international brand to bring Kinh Do products further. We aim to position ourselves as the leading food corporations in both Vietnam and the region.

From 2014 onwards, Kinh Do will start to produce essential daily products alongside with our traditional confectionery products. We will add new products to our portfolio including instant noodles and spices.

The Group will boost its M&A activities in the food industry to make use of our strong brand, professional sales team, modern management, and nationwide distribution. The investment and acquisition of plants for production of food products will be particularly emphasized.

Kinh Do will also consider expanding towards foreign markets. Kinh Do strategy is to develop domestic market while actively seeking opportunities to exploit foreign markets to accelerate growth. We will not make any investment into financial instruments, or real estate projects and only focus on the core business of food industry.

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