It is very difficult for any enterprises, especially wood companies, to maintain production and stabilise living standards for employees. On the occasion of the Vietnam International Furniture & Home Accessories Fair (VIFA 2009), the Vietnam Business Forum Magazine had an exclusive interview with Mr. Vo Truong Thanh, General Director of Truong Thanh Furniture Corp, about difficulties and measures to stand firmly in this recession period.
Truong Thanh Furniture is a leading wood trading and processing company in Vietnam. Could you make brief introductions about notable achievements of your company?
At the end of 2008, after 15 years of operation, Truong Thanh has developed into a giant concern with 11 affiliated companies and more than 6,000 employees. In 2007, TTF’s revenue reached VND622 billion and net profit was VND52 billion. In 2008, although Truong Thanh also encountered difficulties as other enterprises, it still ensured good incomes for employees and made total revenues of VND681 and net profit of VND29.7 billion. In 2008, we developed several forest-growing companies, acquired 4,000 ha of forests with trees aged 4 – 7 years and planted 2,000 ha of new forest area to ensure timber supply in the coming time (at present, Vietnamese companies have to import up to 80 per cent of timbers from other nations).
The company expects to use most of this forest area to supply timbers for the domestic market and ensure 50 per cent for the company’s demand by 2010. Besides, Truong Thanh started operating the most modern wood processing factory in South East. The facility, which costs VND500 billion (US$28 million) and produces 3,000 containers per annum, covers 17 ha in Uyen Hung town, Tan Uyen district, Binh Duong province.
In December 2008, the factory operated at 50 per cent of its designed capacity. This is the Truong Thanh’s seventh factory and when it operates at full capacity, the annual output of Truong Thanh Group will reach 5,000 containers. Truong Thanh is now one of the biggest exporters in Vietnam. It has won many awards for its achievements like Platinum Award 2007 in France and Golden Quality Cup in Europe.
What are solutions and strategies to expand and enhance competitiveness of Truong Thanh?
To boost sales, especially in foreign markets, in the event of slumping demand due to economic recession, Truong Thanh will maintain its core values in wood production and processing and diversify new products at the same time. To develop its trademark, Truong Thanh has focusing on its long-term strategy like designing and retailing network expansion. In addition to supply wholesale and retailing cargo of products to customers in more than 30 nations in the world, Truong Thanh has also won the trust of Vietnamese consumers. The company has expanded its retail network to Hanoi, Ho Chi Minh City, Vung Tau, Lam Dong, Can Tho and other localities.
To boost sales, especially in foreign markets, in the event of slumping demand due to economic recession, Truong Thanh will maintain its core values in wood production and processing and diversify new products at the same time. To develop its trademark, Truong Thanh has focusing on its long-term strategy like designing and retailing network expansion. In addition to supply wholesale and retailing cargo of products to customers in more than 30 nations in the world, Truong Thanh has also won the trust of Vietnamese consumers. The company has expanded its retail network to Hanoi, Ho Chi Minh City, Vung Tau, Lam Dong, Can Tho and other localities.
What are your company’s advantages over its peers? Would you mind sharing your governance experience?
To have today’s achievements, in addition to constant effort of the entire company in all business fields, we also have our own advantages: having profound understanding in wood processing techniques, applying of international safety criteria to its production, applying and maintaining ISO9000:2000 quality management system and chain of custody (CoC) and combining the strong force of experienced designers, which can sell their designs to other units.
To have today’s achievements, in addition to constant effort of the entire company in all business fields, we also have our own advantages: having profound understanding in wood processing techniques, applying of international safety criteria to its production, applying and maintaining ISO9000:2000 quality management system and chain of custody (CoC) and combining the strong force of experienced designers, which can sell their designs to other units.
In addition, the group’s leaders, with 25-year experience, and sales workforce, with high levels of working professions and high command of communicative skills and foreign languages like English, French and Japanese, always work closely together for the development of the company. Many world-leading trademarks like Carrefour, Homebase, Lapeyre, Hatman, Alexanderose, Alinea, Tesco and Metro are the loyal customers of the company. Together with short-term strategies are long-term strategies like plantation of 50,000 ha of forests, which will be double to 100,000 ha by 2020. At that time, Truong Thanh will be one of three largest private forest managers in ASEAN.
Truong Thanh has grown up by the clear decentralisation of management authority. In addition to business administration training, Truong Thanh also opens wood processing training courses for its affiliated companies. Particularly, we have wood processing training school in Dak Lak province, which is 50 per cent funded by GTZ. This school was set up two years ago.
The Government is giving a helpful hand to enterprises timely, especially in terms of capital source. What do enterprises need to do to maintain and develop production?
Galloping inflation and volatile financial market left direct adverse impacts on Vietnamese wood companies in general and Truong Thanh Furniture in particular. Production and business of wood companies are affected by sliding demand on global markets. Most wood companies are operating for survival and waiting for a revival. Incapable concerns will go bankrupt and capable ones will have opportunities to develop when the economy recovers.
Galloping inflation and volatile financial market left direct adverse impacts on Vietnamese wood companies in general and Truong Thanh Furniture in particular. Production and business of wood companies are affected by sliding demand on global markets. Most wood companies are operating for survival and waiting for a revival. Incapable concerns will go bankrupt and capable ones will have opportunities to develop when the economy recovers.
However, toward the end of 2008, we had more orders from international customers who decided to quit the Chinese market. Thus, our operations are running well. This opportunity is thanks to the demand stimulus packages across the world.
On the other hand, from the third quarter of 2008, the Chinese Government applied an export tariff of 7 per cent and now 11 per cent - 13 per cent. Thus, the competitiveness of Chinese goods dropped and they lost customers. This is a chance for the Vietnamese wood industry to recover and develop.
Do you have any proposals for a better and more sustainable management of Vietnamese wood industry?I hope we will have a simpler administrative procedure to facilitate exporters. For example, the Ministry of Finance decided to impose 10 per cent export tax at the end of 2008 but was then adjusted because of many feedbacks. This action will take toll on enterprises. Besides, unsuitable tax refund and debt delay procedures also annoy enterprises. In my opinion, the administrative reform needs resolute actions to create a new locomotive momentum for the economic development. At this point of time, we must focus on stimulating demand to stave off recession.
Vietnamese
