Pivoting strategies to open new business space

Pivoting strategies to open new business space

More than 10 years ago, in a small office at the corner of the old Yen Ninh street in Hanoi, Traphaco JSC, one of the country’s leading pharmaceutical producers, decided to pursue its Green Plan by setting its herbal growing areas on a sustainable path to supply the production of oriental herbal medicines.

Since then, the company’s herbal plantations across the country have grown to more than 36,300 hectares, providing valuable material sources for the production of well-known oriental medicines such as liver tonic Boganic, brain tonic Cebraton, or Ampelop that are favoured by consumers around the country.

“Our Green Plan is linked closely to farmers throughout Vietnam. Farmers say they are happy to have embraced our project on growing herbal plants as each harvest brings them significant returns,” said a member of the Green Plan project team.

According to Vu Thi Thuan, chairwoman of Traphaco’s Board of Directors, sustainable development is a key element of the company’s development trajectory. At every project and every stage of the company’s development, Traphaco has focused on achieving high economic efficiency while living up to its social responsibilities and preserving the environment.

The company has been working towards its aspirations by establishing a compelling enterprise value chain, from setting up GACP-WHO-standard material areas and building state-of-the-art pharmaceutical plants to developing an expansive distribution system utilising modern IT applications.

Traphaco’s strategic development targets were built with the United Nations 17 Sustainable Development Goals (SDGs) in mind. This is attested by the company’s focus on research and development, particularly studies to utilise its knowledge of traditional medicine and high-quality herbal sources to create modern drugs for domestic and export markets.

The company has also built a cutting-edge smart drug production plant spreading across 46,000 square metres with a production capacity of 1.2 billion products per year. The plant, located in the northern province of Hung Yen, started commercial operations in November 2018.

Pharmaceutical producers like Traphaco have increasingly embraced SDGs through investing in the making of green products, as well as purchasing equipment and implementing more responsible manufacturing practices. Since launching the Green Plan, Traphaco’s brands have found a spot at consumers’ hearts. According to market research firm Nielsen’s latest survey, Traphaco’s brands took the lead in customer recognition, scoring far ahead of rivals.

Bandwagon on the roll

Minh Phu Seafood JSC, Vietnam’s largest shrimp exporter, has succeeded in establishing a responsible shrimp value chain, with breeding techniques maintaining the balance of the ecosystem, caring for the environment, and improving farmers’ lives.

To reach its sustainability goals, Minh Phu has been deploying virus-resistant shrimp farming models at mangrove forests or a combination of shrimp farming with rice cultivation that reports high productivity, helping local farmers to improve their living standards.

Additionally, the company has been introducing natural farming models using virus-resistant shrimp breeds. This method uses naturally fermented food to feed the shrimps, helping to conserve the ecosystem by reusing water.

Minh Phu has also established social enterprises to promote organic shrimp farming models to local farmers, helping farmer households to acquire diverse international certificates such as BAP (Best Aquaculture Practices), Global GAP (Good Agricultural Practices), Naturland, or BIO Suisse for their shrimp value chains.

Loc Troi Group, a leading local company in agricultural products and services provision, has announced completing their value chain that allows tracing product origin and ensures rice quality.

Why are Traphaco, Minh Phu, Loc Troi, and many other enterprises so interested in sustainable development? Industry analysts assume that consumers, particularly those in developed countries, now willingly pay more for products that are sustainable. Responsible farming and processing methods would surely impact consumer behaviour – and there is already mounting pressure from consumers encouraging businesses to change. Setting down the path to sustainable development will definitely bring returns to broad-minded businesses.

Looking farther ahead

In the past, businesses focused heavily on maximising profit, neglecting other stakeholders’ interests. Things have changed, and the relevant parties now have a much larger influence on businesses’ decisions. Therefore, to ensure long-term success, benefits to relevant stakeholders – such as labourers, customers, business partners, and society at large – need to be maximised.

A recent survey of PwC – a leading global professional services firm – shows that most CEOs consider global trends one of the factors driving business model transformation in the next five years. The CEOs believe it is a core task to balance the interest of stakeholder groups, and that it is crucial to meet social demands and protect the benefits of future generations.

The survey also indicates that 92 per cent of businesses know about the SDGs, and 71 per cent have mapped out related action plans. Meanwhile, 90 per cent of residents perceive it is important for businesses to implement the SDGs, and 78 per cent show a preference towards buying products from businesses that implement the SDGs.

In fact, intangibles like brand value, prestige, customer satisfaction, environmental performance, or social support now account for a growing share – amounting to nearly 65 per cent – of the market value of businesses in the S&P 500 basket.

Human resources at businesses also face big implications from sustainable development factors. Deloitte’s 2018 survey indicates that young people are disillusioned by the ethics and motivation of businesses, and now expect businesses to take strong action to propel change in the world. Social issues are now a priority for young employees – and if businesses do not pay due attention to their priorities, they risk having a gigantic blind spot in their HR strategy.

Businesses often parade around flaunting financial figures showing exponential growth to investors. However, Professor Phan Van Truong, commercial advisor to the French government, warns that if businesses get these numbers by squeezing out every last drop of energy from employees without prioritising HR and community development while hurting the environment, they will not stay in the green for long.