Bayer Group - Gaining the Trust of Farming Industry

Bayer Group - Gaining the Trust of Farming Industry

Bayer is concluding a major reorganisation and intends to focus in the future on the areas of health care, nutrition and high-tech materials. Bayer has placed its business into three subgroups supported by service companies: Bayer Health Care, Bayer Crop Science and Bayer Material Science. Operating in Vietnam since 2003, Bayer Vietnam Ltd now employs 330 Vietnamese with expected turnover of more than US$60 million in 2004.

On the occasion of the coming ASEM 5, VIB Forum interviewed Mr. Dominikus von Pescatore, Senior Bayer Representative for Country Group North Asia that includes Thailand, Vietnam, Myanmar, Cambodia and Laos.

Can you please give our readers an overview of Bayer Animal Health Division in Vietnam? What achievements have you made since establishment in Vietnam in 2003? 

Bayer Animal Health is producing and distributing nutrition premixes and animal health products to the local animal husbandry industry, namely pigs, poultry, shrimp, fish and feed mills. We are developing our business with an annual average growth rate of more than 20 per cent. We are one of the few global animal health-players in Vietnam and have transferred major technical know how as well as delivering high quality products of international standard.
Our other main businesses, Crop Protection and Material Science, have also had success in obtaining similar growth rates to our AH-business.

Bayer has invested approximately US$10 million in Vietnam, mainly in Crop Science. Our factories comply with international quality standard ISO 9001 and we were among the first in Vietnam to achieve the environmental standard 14001. Crop Science is now equal market leader in the Vietnam pesticide market. We sell directly to wholesalers due to our strong sales forces that have built up close relationships with wholesalers and retailers. In Crop Science we’ve also managed to promote local staff experience to higher levels, reducing the need for foreign expertise.

Bayer Material Science has no production facilities in Vietnam and is operating via a Representative Office. Our key technologies e.g. polycarbonates, polyurethanes and methylcellulose offer a broad product range, and upcoming industries in Vietnam like adhesive and coating producers, the building industry, the shoe and sports industry, mattress and furniture producers as well as compact disc-manufacturers expand their businesses using our materials.

Vietnam is an agricultural country in which there are a lot of companies operating in animal health care, farm hygiene, etc. What are the advantages of your products over the others on the market?

The animal health market is indeed very competitive. We have gained the trust of the farming industry because we have operated from the beginning with highly effective products accompanied by reliable distribution services, training and product stewardship. We have delivered this package at a constantly high level.

The Crop Protection market is split in Vietnam between those wanting low cost older products and those wanting high tech, high efficiency products. BCS is the leading R&D-based crop protection company in the world and delivering to farmers the latest technology in terms of effectiveness, environmental and operator safety. We assist Vietnamese farmers to compete globally in the rice, coffee, black pepper and other markets.

In the future, do you have any plans to develop your business network in Vietnam?

For our AH-products we have been able to establish our own wide distribution system in Vietnam, which covers all important regions.

Pharmaceuticals and OTC-products we are selling through a distribution partner.

Our crop protection products are not sold through distributors, but countrywide to wholesalers as explained.

For our Material Science products we operate directly and through distributors.

Investment in manufacturing of Material Science-products is a complex issue, often involving high capital in world class sites and requiring upstream petrochemicals. To keep up with market development in Asia Bayer has already invested on a larger scale in nearby Thailand (polycarbonates and polycarbonates-blends) and is now focusing on China (polycarbonates, polyisocyanates for coatings and polyurethanes).
Besides our sales activities we are also engaged in research programmes with Vietnamese partners, e.g. the Vietnamese Academy of Science and Technology (VAST) in Hanoi.

What advantages and disadvantages have you met with in your business in Vietnam? Do you have any proposals to make to the Vietnamese Government to facilitate your business in Vietnam? 

The advantages are clearly exceeding the disadvantages. Vietnam is a fast growing country, with a large young generation that is educated and motivated and sees a chance to build up something sustainable. There is a readiness to learn. We experience good loyalty from our customers who have their own properties and grow internally and also externally, favoured by an increasing number of FTAs. Costs of operation are relatively low.

As to disadvantages, we still see some bureaucracy. The local bank system also needs to continuously modernise.

To facilitate our business in Vietnam we would like to see effective protection of intellectual property and good sale practices. Further investments in infrastructure and logistics are also needed.

Based upon your experience, what advice can you give to German enterprises which are trying to penetrate the market in Vietnam? 

Advice is difficult because every business is different and must be considered on a case by case basis. Some considerations:

We decided to go with the right quality products (certificated) accompanied by permanent training and innovation. We found ways to distribute our products efficiently and safely.

Furthermore, corporate governance is fundamental, as well as legal assistance.

• Reported by Le Ha