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Last updated: Monday, July 16, 2018

 

I.D.I and “not putting all your eggs in one basket” Strategy

Posted: Tuesday, April 10, 2018


2017 was a year that Vietnam’s pangasius export processing industry faced numerous challenges when it had to overcome barriers to trade from importing countries, including major markets such as the United States and the European Union. But, by effective tackling obstacles, the country’s pangasius exports still reached nearly US$1.8 billion, representing a growth of 4.3 per cent over the previous year. This resulted from great efforts of enterprises. The below success story of I.D.I International Development and Investment Corporation (I.D.I), a member of Sao Mai Group, is an example of the company's efforts to move forward and its quickness and activeness in market expansion.
 
In business, “putting all your eggs in one basket” or in other words relying too much on a single market is very dangerous. The erection of more trade barriers by imposing high anti-dumping tariffs and the recent media-based distortion of Vietnamese pangasius in the European Union added more warnings to Vietnamese companies currently depending too much on one market.

Spectacular breakthrough

I.D.I is a success story as it has made a strong breakthrough in recent years, especially in 2017 when pangasius export began to show signs of going back to its “golden age.”

Entering the market about 10 years ago, I.D.I was at that time a toddler in comparison with many others in the industry. However, surprisingly, I.D.I quickly rose to be the best-performing seafood companies in Vietnam.

I.D.I’s business results surprised many industry insiders and investors. In 2017, its export turnover grossed US$102 million, an increase of 63 per cent over 2016. Its consolidated revenue reached VND5,332 billion and its profit after tax was nearly VND350 billion in the year. With these results, the upcoming Annual General Meeting of Shareholders of I.D.I is expected to approve the 2018 business plan, featured VND6,500 billion of revenue and VND580 billion of after tax profit.

According to an official from Sao Mai Group, the parent company of I.D.I, that impressive business result comes from the “not putting all your eggs in one basket” strategy when the company actively diversifies the market, especially new potential markets. I.D.I, not any other else, blazed the trail into the Chinese market in 2010. The firm is also holding the largest market share in China - Hong Kong with 13.5 per cent.

In 2017, its exports to China - Hong Kong approximated US$55 million, an increase of more than 60 per cent over 2016. With a large, stable and expanding customer base, the company’s exports to in China - Hong Kong will continue to grow strongly.

IDI's exports to other ASEAN countries also expanded robustly, with shipments to Thailand rising by 230 per cent, to Singapore by 70 per cent, to the Philippines by 31 per cent and to Malaysia by 19 per cent.

In addition, the firm recorded impressive growth of shipments to other Asian countries like India (jumping 700 per cent) and Taiwan (up 54 per cent).

With a share of 64 per cent, Asia is the largest market of I.D.I, not America or Europe. This is a great advantage for I.D.I as Asia is expected to be a major destination for the Vietnam pangasius industry in the future.

In South America, IDI also has the largest market share of 13.5 per cent in Mexico with more than US$14 million of sales in 2016, up 44.5 per cent from 2016. IDI accounted for 12.2 per cent of market share in Colombia and 4 per cent in Brazil.

I.D.I free from DOC's “POR 13”

In the notoriously strict European market, Vietnam’s exported pangasius is facing a lot of difficulty but I.D.I’s earnings here still nearly doubled 2016 to over US$5.6 million in 2017. In 2018, IDI plans to seek more customers in potential countries such as the Netherlands, the United Kingdom and Germany to increase the export value to Europe to US$10 million.

The United States Department of Commerce (DOC) recently issued the final decision in the 13th administrative review (POR 13), raising the anti-dumping duty from US$2.39-7 per kilogramme on Vietnamese pangasius fillets. This is obviously a barrier that Vietnamese companies pangasius exporters will find it more difficult to enter the US market. Meanwhile, I.D.I exports only products not subject to anti-dumping duty, including whole fish and sliced fish and its export and business plans will not be affected as a result.

Needless to say, despite enjoying zero tax on exports to the US market, I.D.I still actively opens other markets. This reaffirms the company’s vision of not putting all eggs in one basket that its peers should take into account when working out their marketing development strategies.

Quoc Hung









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