G7 chapter of Trung Nguyen drama continues

June 27, 2018 | 21:56

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The Trung Nguyen drama continues, as the group accuses its own subsidiary of violating intellectual property rights by producing its G7 brand instant coffee, requesting authorities to stop the exports of affected products.

g7 chapter of trung nguyen drama continues

Trung Nguyen Corporation asked authorities to stop domestic sales of G7 products manufactured by Thao. Photo: vnexpress.net

Drama around G7 products

Several days ago, Trung Nguyen Corporation JSC asked the General Department of Vietnam Customs to temporarily halt the export of all G7 products manufactured by Trung Nguyen Instant Coffee JSC (Trung Nguyen JSC)’s Bac Giang branch (under Le Hoang Diep Thao, the wife of the chairman of Trung Nguyen JSC) due to violations of intellectual property rights.

In addition, Trung Nguyen Corporation JSC has also requested the market regulator to stop the domestic sales of G7 products manufactured by Thao.

On June 26, Thao responded Trung Nguyen’s accusations, asking why the parent company (Trung Nguyen Group) accuses its own subsidiary (Trung Nguyen IC) of violating intellectual property rights and why it has repeatedly requested the authorities to slow down the export of its products.

Thao said that the nonsensical accusations may destroy Trung Nguyen’s international distribution system developed over dozens of years.

Thao also stated that this is a violation of the joint ownership rights over her common assets with the group’s chairman. Accordingly, the common assets include 93 per cent of Trung Nguyen Group’s tangible and intangible assets, including subsidiary Trung Nguyen IC.

The dispute exploded in April 2015, when Vu suddenly dismissed Thao from her position as the group’s deputy general director. In a complaint sent to Binh Duong People’s Court in 2015, Thao said that in October of the same year Vu organised a board management meeting without her to dismiss her from her position as chairman of the Board of Management and deputy general director.

Previously, after Thao’s complaint in 2015, G7 coffee products were suddenly pulled from the market for “equipment maintenance.” Trung Nguyen announced resuming selling G7 products on December 12 the same year.

The risk of failed business in G7 products

The group has not announced its business results since the dispute between Trung Nguyen chairman Vu and his wife Thao started in 2015, hence the current market share of G7 products remains unknown.

However, according to data released by Euromonitor—a global market research company, in 2010-2015, Trung Nguyen only took up 4.7 per cent of the domestic instant coffee market, while its two competitors Vinacafé and Nescafé took 37.5 and 38.3 per cent.

Despite there being no information about G7’s market share in 2016 and 2017, it could be said that the long-term dispute has significantly impacted the corporation’s instant coffee business.

Temporarily halting exports and requiring the authorities to stop the domestic sales may sacrifice further market share, affecting Trung Nguyen’s revenue.

Furthermore, the dispute may also impact its expected export revenue of $1.6 billion in China, as the Vietnamese coffee giant last month announced entering an official co-operation with China-based Shanghai Qinzhou Trade Co., Ltd. to distribute G7 products in East China, including Shanghai, Hangzhou, Suzhou, and Nanjing.