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Time for nation to show competitive streak

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Time for nation to show competitive streak

Nguyen Thanh | vir.com.vn | May 30, 2011 07:16 am

Vietnam’s ever-deeper global economic integration has prompted local enterprises to promote their brand names  and to boost their competitiveness. However, much remains for them to do to establish sustainable big brand names.

 

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Firms can employ a range of factors to put a positive spin

“Why have Piaggio Vietnam Company’s Vespa LX scooters managed, over the past three years, to successfully make people believe that only swanky people use them, though everyone complains they are expensive, difficult to ride and guzzle too much petrol?” said Nguyen Dinh Thanh, head of Public Relations Division of locally-owned Le Bros, one of Vietnam’s leaders in brand development, public relations (PR) and event organisation.

He said when made-in-Vietnam Vespa initially appeared in Vietnam in 2009, they didn’t grab many headlines. “But what makes them successful today consists in Piaggio’s branding promotion campaigns,” said Thanh, who is a branding expert.

Piaggio resorted to the help of Le Bros and local famous painters to turn Vespa scooters into works or art which were then showcased at big fashion shows and exhibitions. They are now sold as luxury vehicles for high-income people and art lovers, and as scooters with lasting value. Moreover, celebrities’ photos with Vespas at parties and events are also showcased.

Piaggio recently said it planned to triple its production from the 100,000 bikes they produce now by mid-2012.

Like Piaggio, Japanese-backed Honda Vietnam is also a master of branding. After 13 years of operating in Vietnam, made-in-Vietnam Honda motorbikes have a more than 50 per cent of Vietnam’s motorbike market. Honda Vietnam said it was expanding its second factory in northern Vinh Phuc province in 2011’s second half to boost annual manufacturing of two million motorbikes from the current 1.5 million units.

The $70 million factory expansion plan, which would be completed in mid 2011, and would employ 2,000 new workers, raising Honda Vietnam’s total workforce to 8,000, according to the company.

“However, not many local Vietnamese enterprises can do branding as well as Piaggio Vietnam and Honda Vietnam as they lack methodical branding strategies,” Thanh said.

A lack of branding strategies

Nguyen Bach Duong, marketing manager of Italian-backed Eviva Tour Vietnam Company, underlined that many Vietnamese products had some disadvantages compared to those of other countries because of branding-related issues.

“Many enterprises in Vietnam remain laid-back and give inadequate attention to investing in their brand names,” she said.

She cited a survey recently released by the Institute of Business Administration, which is managed by Vietnam’s FPT University and US’s Hawaii’s Shidler College of Business, as saying that over 80 per cent of Vietnam’s [over 450,000] small- and medium-sized enterprises did not have a branding development strategy although branding was one of five most important competitiveness factors, besides finance, management capacity, policy and PR.

Echoing Duong’s view, Pham Thanh Tung, managing director of Hanoi-based Max Group which specialises in PR, branding development and event organisation, said most Vietnamese enterprises spent money on tangible assets such as factories, land and workshops, but neglected intangible assets such as intellectual property, technology and product ownership. Branding, in particular, wasn’t paid much heed.

Le Quang Vinh, a registered patent and trademark attorney and director of Intellectual Property Department at the law firm Bross & Partners, said Vietnam-based foreign enterprises were ready to spend a great deal of money promoting their products and coining their brand names, which had become an integrated part of their business strategy in Vietnam.

Meanwhile, many local enterprises have often belittled branding development or have been hesitant to spend money on this necessity.

Vinh explained that branding development meant “spending money”, not “selling goods” to see revenue growth.

“But, though branding cannot immediately give you revenue, it can, in the long term, benefit your company with new customers,” he noted.

However, Nguyen Ngoc Thuyen, director of Hanoi-based Nhat Anh Joint-Stock Company, which produces Petal-branded hygienic paper, said his company, like thousands of others in Vietnam, was small and always cash-strapped.

“All companies want to invest more to have a good brand name. So do we. But what should you do now when you are finding it hard to get bank loans?” Chuyen said.

Pham Thi Thu Hang, director of the Vietnam Chamber of Commerce and Industry’s Small and Medium Enterprise Promotion Centre, said 74.4 per cent of local enterprises wanted bank loans. But a very proportion of them could be given such loans because of too complicated procedures or too high lending rates at 21-22 per cent per annum.

“Capital shortages are one of the major hurdles preventing enterprises from branding development,” Hang said.

Heading for big brand names

But Eviva’s Duong said some companies were hot on branding both through their online and offline marketing strategies, such as Pho 24, Vinamilk and Trung Nguyen.

Cowan Australia Group’s director Vo Van Quang, a well-known branding expert, said from 2000 to 2005, few Vietnamese enterprises put stock in branding development in their business strategies. But this has since changed quickly.

Many other brand names, such as Minh Long ceramics and Kymdan latex mattresses, have gradually been developing their brand names both domestically and globally and expanding their distribution networks.

Quang believed that local brands like Vinamit, Vinacafe, Trung Nguyen, Pho 24, Vera, Vissan and Sabeco became “big” brand names in Vietnam as they had developed using the “ideas” of Doublemint, Pringles and McDonalds.

Quang saw Diana, a leading company in health care products for children and women in Vietnam, as a typical case of a successful brand name in Vietnam.

Established in 1999 as a small company, Diana’s high-quality products currently hold a 30 per cent share in Vietnam’s sanitary napkins market and are marketed in Thailand, Malaysia, the Philippines and Cambodia. Diana is the first and only Vietnam’s manufacturer of sanitary napkins to be approved with the ISO 9001:2000 international certificate by the UK’s SGS.

In another case, Quang cited mobile operator Viettel as one of the good examples of successful branding of Vietnam. In 2004, Viettel selected JWT, a foreign company, to design its new image with the impressive message “Say it your way”.

“I think Viettel will take the lead in Vietnam’s globalisation branding strategy. It has expanded footprints in many countries in the world,” Quang said.

Branding and CSR

However, according to Thanh from Le Bros, a sustainable brand name must be combined with corporate social responsibility (CSR).

He said not many local enterprises knew how to build their brand names professionally and systematically.

“Enterprises’ logos or slogans are not sufficient. A brand name needs more than that. It must include enterprises’ responsibilities to the society,” Thanh emphasised.

He said many local enterprises were involved in CSR activities, but such activities were not very professional and sporadic.

“It is because nearly all of them have no CSR divisions which can help them strengthen their branding everywhere and all the time,” he said.

For example, InnovGreen Group, which is Vietnam’s biggest foreign-backed forestry firm, has spent over $10 million over the past few years helping poor people in those areas where the group planted its afforestation projects. However, InnovGreen has done this good deed without trumpeting its CSR activities.

Meanwhile, Honda Vietnam, Samsung Vietnam and Canon Vietnam are using their CSR activities to embed their image in Vietnamese consumers’ minds.

Honda Vietnam, which has its own CSR division, has since August 2003 been running its “I love Vietnam” campaign to reduce traffic violations and environmental pollution, which are thorny issues here. Moreover, Honda Vietnam also has spent a lot of money helping local farmers and underprivileged students.

In another case, Samsung’s fund for support talented Vietnamese students is reported to help many students with their studies. Canon’s “For the future generation” campaign has also helped many underprivileged children in rural areas.

“The improvement of enterprises’ prestige largely results from its CSR activities. That means CSR can greatly benefit enterprises. Good deed brings good returns,” said Max Group’s managing director Pham Thanh Tung.

According to Marc Gough, chairman of Ho Chi Minh City-based Red Brand Builders company, branding would continue to grow in importance in Vietnam as enterprises realised the return on investment branding could bring.

He said Cola was not Coca-Cola, a Daewoo was not a BMW and in each case at least a 25 per cent “intangible” gain was made in the price consumers were willing to pay for the product.

“Sure, some of the price gain can be attributed to improvements in quality, but over and above that are significant price gains attributed to brand alone,” he said.

 

http://www.vir.com.vn/news/features/time-for-nation-to-show-competitive--streak.html

http://vics.vn/vics-news/economic-investment/48962/time-for-nation-to-show-competitive-streak.aspx

 

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