Vietnam - a case study
NaFoods: Vietnam SMEs Pushing to Expand in 2012
NaFoods: Vietnam SMEs Pushing to Expand in 2012
 Picture above: The author and the staff of Nghe An Foodstuffs Jointstock Corporation outside their factory offices Two-Thousand and Eleven (2011) was not an easy year for SMEs in Vietnam. In addition to major slowdowns in the economies of the U.S., Europe and Japan, all companies in Vietnam were burdened with a devalued currency, high inflation, higher bank interest rates and rising raw material costs as despite the global slowdown energy and other raw materials continued to be relatively high in cost in 2011. Further, many of the commodities that Vietnamese companies process for export and for local sales also saw erratic and in some cases highly hard to predict price increases.
 Pictures: (top left) Nghe An province's capital, Vinh. (top right and lower) Nghe An Foodstuffs Jointstock Corporation, or NaFoods, office and factory. Nghe An province is one of the two or three poorest provinces in Vietnam. Its’ capital Vinh, sits in upper central Vietnam and is about a 6 hour drive South of Hanoi. Nghe An has a population of nearly 3.5 million people with about 500,000 people living in the province capital of Vinh which was recently upgraded to a Class 1 City (the country’s fourth after Haiphong, Danang and Hue). The service sector comprises the largest part of Vinh’s economy, with around 55% of the working population being employed in this area. The industrial sector comprises around 30% and the agriculture, forestry, and fishing sectors is around 15%. Vinh is an important transportation hub, having a key position on the route between the north and south of the country, and it also maintains a large port that serves the region.     Pictures: (top left) Sweet Corn in the company's test garden. (Top right and lower) Gac fruit (Momordica Cochinchinensis) - sometimes called Spiny Bittergourd - Gac fruit contains the highest content of beta-carotene(Vitamin A) of any known fruit or vegetable. The oil also includes high levels of Vitamin E and high levels of Lycopene, 70 times the amount of Lycopene as compared to the level found in tomatoes and 10 times the amount of beta-carotene as found in carrots or sweet potatoes. The seeds of Gac Fruit are dried, husked and ground and used in Chinese and Vietnamese traditional medicine. Nafoods specializes in growing and processing fruit like pineapple, passion fruit, other tropical fruits like Lichee, etc. and most recently Gac fruit into concentrate which is then sold to juice processing companies internationally. Nafoods has done this for 10 years and in 2010 reached sales of over US12 million dollars.     Pictures: (top left) Processed juice extract awaiting shipment; (top right and lower) Nafoods modern and sanitary fruit processing machinery is made by well known German and Italian food processing equipment companies As Tet 2012 approached, I visited Nghe An to meet with Nafoods and to learn more of their story. Chairman and General Director Nguyen Manh Hung met me at Vinh airport and took me to their Vinh office. Over tea he discussed business and the Nafoods story. According to Mr. Hung, NgheAn FoodStuff Joint Stock Company (Nafoods) was officially established on December 5th, 2000 and has been in business for over 11 years. It was granted the ownership of export pineapple processing factory with an initial capital of VND74 billions by Nghe An People’s Committee in the same year. The factory was decided to be located close to the company owned growing fields in the factory site in Quynh Chau Village, Quynh Luu District, Nghe An Province and the factory became operational on June 10th, 2003, with a production capacity of 5,000 tons of concentrated pineapple juice. By importing technology from Bertuzzi and Flottwegh – two of the biggest, most well-known juice machine producers in Italy and Germany – Nafoods’ attained and quickly mastered the highest level of processing equipment to produce in a sanitary closed process which maintains the natural flavor and high nutritional content of the juice.Nafoods maintains the highest level of quality control procedures based on US, European and Japanese Standards. Nafoods was among the very first Vietnamese companies to become an official member of SGF, one of the leading juice quality control and food sanitation organizations. Nafoods’ experts and according to Mr. Hung SGF’s international specialists routinely visit to carefully test input factors such as seeds, ground samples, reaping time, water resources as well as manufacturing, packaging and preserving phases. Mr. Hung showed me the certificates certifying that Nafoods has met ISO, Halal, Kosher and other food control standards and he and the company pride themselves on all aspects of the food control and processing procedures followed. That night we had dinner that included provincial officials that pointed out to me that Nghe An is one of the poorest provinces in Vietnam and highly dependent on agriculture. As Vietnam has progressed over the last ten years in terms of its industrialization millions of Vietnamese have raised their living standards and millions are no longer classified as poor by international standards. Despite this, the officials noted that Vietnam and Nghe An both have a long way to go in terms of development. Also that many rural areas and particularly those containing minorities which are often based in the mountainous areas, still have very low family incomes below the poverty level. The officials stated that in terms of agriculture, Nghe An is one of the few provinces where agro-food businesses can still acquire relatively large plots of land for mechanized processing and that they hoped to utilize this advantage to further attract new business and expand existing companies like Mr. Hungs’ Also at the dinner, Mr. Hung introduced me to his Ho Chi Minh City and Vinh team which includes a mix of Vietnamese and foreign educated talent. All of the group is young and seemed highly motivated. Most speak English and several have MBAs or business degrees from major international institutions. The next morning we took the nearly two hour drive to the processing factory. Here I met most of the over 110 employees that work for the company and toured the facility. As Mr. Hung had told me, the equipment is indeed state-of-the-art and from Italy and Germany. Most of it is stainless steel and cleanliness was very high. The facility was getting ready to process a run of Gac Fruit which I believe is found in very few places other than Vietnam. Gac Fruit looks like a melon and grows on trellises similar to passion fruit. The melon is opened exposing a bright red soft flesh in the center which is processed to remove the seeds. The red soft flesh is then turned into a concentrate which has been tested and is high in Vitamin C, Beta-Carotene, Vitamin E, Lycopene and a variety of nutrients, including vitamins, trace minerals, and dietary fiber, and many other classes of biologically active compounds. The seeds which are flat and large are dried and used to produce traditional medicine used for improving joint pain and flexibility according to Nguyen Van Be who is considered a national treasure in Vietnam for his work in preserving traditional medicine and in protecting scarce trees and plants and protecting the environment. (Please see our article: Traditional Medicine With a More Scientific Basis Continues To Prosper in Vietnam)     Pictures: (top left) Pineapple in one of Nafoods growing fields. (top right and lower) Modern processing equipment is a hallmark of Nafoods operations which are expanding. Mr. Hung was very proud to show me the company’s fields of pineapple that surrounded the production facility and to make sure I saw the water treatment facilities that allow his company to claim that water leaving the facility is fully processed and leaves cleaner than it enters. A large lake and test facilities for corn and other potential future crops and the site for the new IQF frozen food facility was also a part of our tour including a test pineapple grow facility that his company is running with the largest company in the world in terms of pineapple raising. Mr. Hung also noted his company’s micro-credit projects which are helping farmers in the area who lease their own fields to buy higher quality seed and fertilizer at lower costs and expand their profits. We met with a young Vietnamese woman and her young son who has taken advantage of these efforts and moved from a very primitive condition into relative prosperity with a highly diverse and sustainable mix of pineapple, fruit trees, chicken and pig raising plus vegetable growing all with help of the company.       Pictures above: Mr. Hung and Nafoods staff celebrate the approach of Lunar New Year by a traditional menu and song and dance. At top, workers and staff are honored for their performance duing the year. That afternoon Mr. Hung was kind enough to invite me to observe the yearly recognition and awards ceremony where many of the company’s young and enthusiastic staff received monetary awards and certificates for suggestions, innovations and their hard work throughout the year. That night was the annual company Tet celebration and as the sales and marketing staff served as MCs in both Vietnamese and English, Vietnamese staff entertained us all with traditional dances, popular songs and other entertainment. Even Mr. Hung who I hadn’t realized had such a good singing voice gave us a rendition of several popular Vietnamese songs. Nafoods faces 2012 with a sense of anticipation and an energy that you can see on the faces of its young and hard working staff. In talking with them, I know they see many challenges but I also came away with a sense of optimism that the better SMEs in Vietnam will have their challenges but also have big plans for improvements in 2012 and that the best companies aren’t resting on their laurels but are rapidly now improving operations further so that they can better compete with other SE Asian companies in the run up to 2015 when the Asia Economic Community (AEC) will come into full force. |
