In foreign investors’ view, Vietnam is considered as a key development country in the Southeast Asian region with a quite fast developing speed. Its flexible and open investment policies are creating great opportunities for foreign investors to enter into Vietnam, and one of the most successful companies is Vietnam Precision Industrial No.1 Co., Ltd (VPIC1). Vietnam Business Forum’s reporter Luu Hiep had an interview with Mr. CHAO WEN HSIANG (Jack), General Director, on investment environment and success of a foreign invested company in Vietnam.
Could you please give some comments on Vietnam’s investment environment with your long business and great success here?
From the view point of a Taiwanese investor as well as many foreign investors, I recognize that Vietnam has a favourable and stable investment environment. I mean that Vietnam investment environment is based on a stable government, good security and good labour forces.
I think these factors are initial criteria for investors to decide when and where they should invest their money for their long term business plan.
In 2001 During my working time in Jakarta,Indonesia. Unfortunately heard & witnessed many foreign companies were forced to shut down after series protracted illegal strike. Well known company such as Sony and AIWA were also decided to close their business, if I remember correctly.
That is why I believe POLITICAL STABILITY is so important to decide our investment strategy. I think Vietnam is one of the most stable country and good for future investment.
VPIC1 is a well-known FDI company specializing in precision industry. So, in your view, what is the core of the success?
We started business in 2001 at Khai Quang industrial Park (IP), in Vinh Phuc Province and specialize producing component parts for motorcycles and automobiles for Yamaha, Honda, Piaggo, Toyota and Ford for domestic market. We also produce medical equipments and bed for export to North America and Europe.
Every FDI company or every FDI investor has his own way to spend his capital to get a common share of profits and positive business results. So does VPIC1. The open investment policies of Vietnam, especially of Vinh Phuc province, have created favourable conditions for our company, which is remarked by not only VPIC1 but also many other FDI investors. Other elements of a key to success are the long-term investment plan and steps to realize the projects.
Good and stable labour force is of key importance in producing quality products. We have always been taking special care of our employees’ welfare and good working environments since we started our business here at Khai Quang Industrial zone. We always try our best to make improvements of our business management. The Board members always listen to our employees’ ideas and opinions to work out the best solutions. VPIC1 has an effective labour union which is the bridge between employees and the management in order to narrow the distance and harmonize the dual relation. Like this we make our best to foster the company’s stability and sustainable development.
How does the world economic crisis affect VPIC1’s business operations?
In the last months of 2008, many firms were affected by the world economic crisis and we were also stricken from October 2008 to March 2009 with falling revenue. However, we have recovered and gained positive good growth since April of 2009. Our company earned revenue of $50 million in 2008 and expects an on-year revenue growth of 10% and an on-year export increase of 30% this year.
We focus on improving product quality, on-time delivery, and developing new products, which are three main competitive points on the market.
Recently, many foreign customers have shown their interests in our company and they visited our factories. During their plant visit they appreciated our good management team. They accepted our good status of 5S at our each production process, our quality management system and cost competitiveness. The customers who visited our plant finally make up their mind to move to a next step. This will result in starting a new business. With our good management team and collaboration of our employees, I think, we could continue to increase our production and I am much pleased to note that VPIC1 are now expanding our business to North America, Europe and Japan.
In this period, despite worldwide economic recession, I see that Vietnam is making breakthrough economic development and I believe the economic recovery will have big impacts on corporate production activities.
Recognizing the economic recovery and the trend of increasing our business, we have recently decided to invest more into factory; modern machines and equipments , more importantly training for employees. I expect we can achieve the growth of 10% during this 2009 compared to last fiscal year.
What is your view on the trend of the precision industry in Vietnam?
As a FDI company specializing in producing motorbike and auto spare parts for our customers such as Yamaha, Honda, Piaggio, Toyota and Ford, we do realize the continuous bigger demand for motorcycles and automobiles for the next ten years in this market. Vietnam now has a population of around 87 million people. Although I hear that about 25 million units of motorbikes are registered in Vietnam, I think there are still many people who want to buy motorcycles, I believe motorcycle and scooter market show continuously increase. Therefore the precision industry of Vietnam as supporting industries of assembly makers continue to grow together with them and VPIC1 wants to keep up with them to gain a great chance for development.
As far as automobiles are concerned, there are 17 foreign base assembly manufactures in Vietnam. Size of auto market is still small and production quantity of each company is small. This will not accelerate increase local content at this stage. However like other foreign countries, demand for auto will be increasing soon or later. Once auto demand increasing, auto assembly makers will start to increase in local content, which will boost up the development of supporting industries.
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