VNSTEEL Attesting Pivotal Role in Vietnam Steel Industry

After more than 15 years of reshuffle, the Vietnam Steel Corporation (VNSTEEL) has witnessed remarkable achievements in human resources quality, sales, production and investment efficiency, thus reasserting its pivotal role in the Vietnamese steel industry. The Vietnam Business Forum Magazine has been granted a sole interview with Mr Nguyen Thanh Chuy, Deputy General Director of VNSTEEL, to provide a broader view of the corporation’s role in stabilising the market, controlling inflation and ensuring macroeconomic stability.

 

The Vietnam Steel Corporation officially transformed into a holding company in the middle of 2007. VNSTEEL has achieved the highest growth of over 15 percent a year during the five-year 2006-2010 5 period. In 2008 and 2009, adverse impacts of the global economic crisis dragged on business activities of VNSTEEL in particular and the Vietnamese steel industry in general. However, with the persevering effort of the entire corporation and active supports of the Government and ministries, VNSTEEL strived to maximise its internal resources to accomplish its business tasks. Particularly, VNSTEEL is always a decisive element in stabilising the steel market, a significant action to share the country’s effort to curb inflation, stabilise macro economy and ensure social security and sustainable growth.

 

In the 2007-2009 period, VNSTEEL achieved outstanding business results. Particularly, the industrial production value expanded 7.7 percent a year on average; steel billet production was maintained at as high as 11.4 percent a year, reflecting the corporation’s efforts in self-controlling input production; total steel output increased 7.3 percent a year; total long products reached more than 6 million tonnes, recording an average growth of 6.9 percent a year) and accounting for 44.6 percent of the country’s total rolled steel output.

 

As the steel industry sector has a close correlation with the economic evolution, the steel industry will develop in accordance with the economy. However, according to many forecasts, the domestic steel market will encounter more difficulties in 2010 because tightened credit policy and high lending rate will lead to more selective investment and development activities and reduce the steel demand. On the other hands, the competition amongst steelmakers is very high due to oversupply while more new steel mills continue to be put into production. The competing pressures from imported steel are increasing as Vietnam is expanding its regional and international economic cooperation. From 2010, several steel products will be no longer protected by preferential treatments and high import tariffs according to the WTO entry roadmap.

 

The Vietnamese steel industry wants to pursue sustainable development; it must manage to attain upstream development (producing steel billet from iron ores and scraps). Vietnam mainly develops downstream sources (rolling) because upstream production requires large investment but low rate of returns. In recent years, steel producers in the country have started to increase steel billet production from scraps although the scale is still small, unsustainable and dependent on imported steel scraps.

 

Therefore, Vietnam needs to focus on developing steel mill complexes to produce steel from iron ores. These large-scale projects require large capital and preferential mechanisms and policies respecting interest rate, tax, investment and input are crucially important.

 

In general, the fledgling steel industry of Vietnam needs State’s supports for mechanisms such as priority to foreign currency credits to expand production investments and to import raw materials (steel scraps, iron metallurgy, fat coal, coke, etc.) which local producers cannot meet. This will ensure enough raw materials for steel production to serve domestic consumption and export.

 

Each business has its own rules to build a successful brand. From our experience and lessons in brand development, after nearly 15 years of establishment, we always have to comply with all of the following important principles:

 

One: We have to create the customer trust, both domestically and internationally and always have to strengthen it. We never destroy our initial achievement by careless attitude, and bad quality of products and services.

 

Two: Modern technology plays an important role in building a successful brand of a company as well as of a nation in a wider scale. Technology helps improve business efficiency and exploit its own competitive advantages.

 

Three: We must manage our intellectual property well. Knowledge capital is the most important asset and it plays a decisive role in the business development.

Four: We need to build a professional company website. This is one of efficient, cost-effective and suitable channels to popularise our images in the time of IT boom.

Five: We need to make each staff member a company brand ambassador.

 

In recent years, although steel production has lower rate of returns while requiring huge investment and faces up with tough foreign competition, VNSTEEL is always very active in social security programmes. Every year, the corporation significantly donates charitable and social programmes and supports victims of natural disasters, etc.

 

In addition, VNSTEEL helped two poor districts of Van Canh (Binh Dinh province) and Bac Ha (Lao Cai province) in response to the government’s programme to support poor districts. So far, the corporation collaborated with these two districts to eradicate approximately 2,000 bad accommodations, build two new schools and disaster-reacting infrastructure, which is worth VND30 billion. At present, VNSTEEL is providing free training courses, inclusive of food and residence, for 117 poor people in Bac Ha to work in the steel plant in Lao Cai province, a modern facility with an annual output of 1 million tonnes).

 

In the coming time, VNSTEEL will carry out its commitment programmes and continue to respond to government-backed social security programmes to better perform its corporate social responsibility.