Tan Hiep Phat’s quest to reach the global market

His family has been the backbone of Tran Qui Thanh’s success

A distinct family story

In a recent meeting with 14 leading local private firms late last month, Prime Minister Nguyen Xuan Phuc expressed his appreciation for the private sector’s role in the country’s development.

The premier said that the private sector’s success today is remarkable compared to the past, and that the key to Vietnam’s economic growth can largely be found in the private sector.

The country’s top leader then called on private businesses to voice their problems. The government will then try to constitute an enabling regulatory framework and business environment to nourish the sector’s development, with the ultimate target of seeing more and more powerful private firms in Vietnam.

Tran Qui Thanh, founder of privately-held beverage producer Tan Hiep Phat Group, expressed his happiness with the premier’s message, as it reflects impartial assessments of the private sector’s role in the country’s development.

This is in contrast to developments in the past, when private firms faced much prejudice and were seen as being exploitative. This resulted in the fact that very few of them could grow into business groups with global recognition.

Business brands are a constituent factor of national brands. Globally, people associate the brand Coca-Cola with the US, Sony with Japan, and Samsung with South Korea.

The Vietnamese economy is different from other economies historically, so the country has yet to develop a brand with global influence. However, the current growth of local private business groups may sow the seeds for a brighter future.

In 2011, for the first time in Vietnam, 22 individual families with a track record in the commercial market were honoured for their entrepreneurial spirit, including the Tran family. Tran Qui Thanh is the successor to that family name, with a noble mission of continuing his parents’ entrepreneurial heritage.

Passionate for business and with aspirations to contribute to society’s development, the Tran family was acknowledged as having made gigantic efforts to the development of entrepreneurship.

Although he will reach the age of 64 this autumn, Thanh’s aspirations seem to never stop. He says that he does not feel pressure to work at Tan Hiep Phat, only passion and the commitment to moving forward.

After a 23-year development journey, Tan Hiep Phat has taken on nearly 10,000 labourers, with four major factories kitted out with state-of-the art technology across the country, with products available in about 20 countries worldwide.

“At the inception, it took us a year to produce about one million litres of product. Now that same volume could be produced and sold in just half a day,” Thanh said.

Wave of aspiration

After spending nearly VND2 trillion ($90.9 million) on a beverage factory in Chu Lai Economic Zone put into operation in March, which employs advanced aseptic technology, Tan Hiep Phat made another mark by releasing the book “The Story of Dr. Thanh’s Family” in June.

The book, according to author Tran Uyen Phuong, tells of the life of her father, Thanh, and is dedicated to her mother, an iron-willed woman and the bedrock of Thanh’s nearly 30-year journey. The book was warmly welcomed by the reading community, as more than 8,000 books were sold after six weeks, earning VND250 million ($11,360) which was later donated to a scholarship fund.

In the chapter “Nothing is impossible”, Phuong writes, “In 2012-2013, which was the time for investment funds to consider their investment portfolios and to decide on whether to stay or move out of Vietnam, more than 50,000 businesses were dismantled or stopped operation in Vietnam each year.

“The economy had yet to rebound. Thinking of profit, most businesses decided to retrench production due to the sales slump. But that was the time when we decided to go against the grain by expanding production with a commitment to sustainable development, bringing jobs to thousands of labourers.”

In 2014, when Tan Hiep Phat was in need of money to build a new factory, violations at the Vietnam Construction Bank – where the group had deposited nearly VND5 trillion ($227 million) – came to light. Tan Hiep Phat faced a crisis in its cash flow. At the same time, Thanh’s mother was diagnosed with a critical illness, putting the family in dire straits.

According to the court’s verdict, not the Vietnam Construction Bank itself, but bank executive Pham Cong Danh would bear the responsibility of paying back Tan Hiep Phat’s deposit, meaning the money was as good as lost.

At that time, Phuong’s mother came to her father’s side and said simply, “Don’t be sad. We will start again.”

And in fact, the group survived and continued its successful development path.

Endless vitality

On the occasion of its 23rd anniversary, Tan Hiep Phat hosted a special networking event attracting hundreds of customers and suppliers. The idea of hosting the gathering stemmed from the process of writing the book; in the process of collecting material, the author had learned from the group’s founder the philosophy of sharing opportunities and benefits with colleagues and partners.

Her father’s will is turning Tan Hiep Phat into a powerful group with global reach. Managing a business, particularly a family business, toward sustainable development has proven a hard task, even harder than managing a public company.

In Thanh’s mindset, Tan Hiep Phat must follow international management practice with a high level of professionalism, with no place for personal sentiment.

All company members must observe set principles and policies, as transparency should bring opportunities to everyone, and market rules will moderate resources and decide each product’s fate.

According to Thanh, transparency and competition are the very factors helping to protect the customers’ benefits. Therefore, at Tan Hiep Phat all the programmes valued at VND400 million ($18,000) or higher are up for open bidding to ensure transparency.

Commenting on the current startup boom, Thanh said a business needs multiple factors to reach success, such as capital, technology, equipment, and experience. If a firm only possesses one such factor, it’s important to create synergies and co-operate to reach success.

His friends and his wife are said to be the greatest sources of happiness in the life of Tran Qui Thanh, supporting him in realising the aspiration of growing a powerful family business ready to step into the global market. Tan Hiep Phat is set to best $1 billion in revenue by 2020, and $3 billion by 2027.

Spurring the private sector

In a recent interview with VIR, Thanh said, “Three weaknesses exist in the current business environment. They are the lack of orientation, lack of investment into research and innovation, and lack of tools to protect established brands.”

The right orientation, in his view, is to direct production and business activities that fit market rules. In fact, Vietnam is yet to establish specific markets of input production factors such as the land market or the capital market. The government is set on building these markets, as noted in recent government documents.

If these markets were established and were to operate efficiently, private sector growth could widen from the modest current number of about 100 major private businesses, Thanh said.

Thanh’s message to young startup entrepreneurs is the following: For a successful startup, you must have passion and an aspiration to create the best products at the most competitive prices. “Before asking, ‘Where’s the capital, the experience, or the personnel?’ you must ask yourself, ‘Where’s my will, my aspiration, and what must I do to stand apart?’ When your will and aspiration are big enough, you will find a way.”