VIETNAM: Politics and community awareness in recipe for Vinamilk success

Vinamilk, the Vietnam Milk Company, believes that its indomitable hold on the domestic dairy-farming sector is due in the main part to its politics and community awareness. Despite intense foreign competition, the five factories controlled by the company produced earnings that have soared from VND500m in 1986 to VND2 trillion last year.The company, which controls an 85% domestic market share, has recently attributed its success to its sensitivity to the local milk producers, who were initially at least ignored because they were deemed less hygienic than overseas suppliers. General director Mai Kieu Lien explained how, absorbing losses of nearly VND30bn a year, Vinamilk made the decision to equip the local sector and purchase milk from it directly. It provided 50 modern cold-storage tankers to cow-breeding regions and now plans to invest in fresh milk distribution stations. It also offers loans to farmers with preferential interest rates, so that they can afford to buy further equipment. In 1999, Vinamilk purchased 50000 tonnes of fresh milk from local farmers, up 22% from the previous year. By alleviating the losses of domestic farmers and reducing the stockpiling of milk products, the company's reputation increased with its hold on the domestic market.A sense of community responsibility extended to the distribution of free products via the relevant authorities in an attempt to combat malnutrition amongst children and the elderly. The company has recently extended worldwide, and its revenue from markets in the US, Western Europe and the Middle East has reached US$52m.