Vinamilk Company AnalysisPhân Tích Công Ty Vinamilk

TRƯỜNG ĐẠI HỌC KINH TẾ - TÀI CHÍNH
KHOA: KINH TẾ

BÁO CÁO ĐỀ ÁN CUỐI KỲ
MÔN: QUẢN TRỊ MARKETING
Giảng viên:

Đỗ Thị Hoàng Mai

Section 1: Vinamilk Company Analysis


Section 1: Vinamilk Analysis


I. Company analysis:
1.1

INTRODUCTION
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Vietnam Dairy Products Joint Stock Company (Vinamilk)

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Founded: August 20th, 1976

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Headquarters: 10 Tan Trao, District 7, Ho Chi Minh City, Vietnam

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Area served: Vietnam, Middle East, Africa, Asia, Australia, New
Zealand, Europe, North America (Canada and the United States)

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Products: Liquid milk, condensed milk, powdered milk, yogurt, infant
cereals, special nutritional products for adults, beverages, ice-cream,
cheese Viet sugar, soymilk

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Website: />

1.2
1.2.1

DEVELOPMENT HISTORY

Development process

1976
Vinamilk was
founded on
August 20st , 1976

2003
Formally transformed
into a Joint Stock

Company and
renamed as Vietnam
Dairy Products Joint
Stock Company
(Vinamilk) with
charter capital of over
USD 100 million.

1988 – 1989
Successfully restored
the Dielac Powdered
Milk Factory.
Launched its first
batch of powdered
milk and nultritional
powder for children to
the Vietnam market
the first time.

2006
Vinamilk was
officically listed
on Ho Chi Minh
Stock Exchange
(HOSE) on 19th
January 2006.
Inaugurated its
first dairy farm
(in Tuyen Quang
Province).

1990 – 1991
Started the “White
revolution”.
Pioneered in
building fresh raw
milk area. First time
introduced UHT milk
products and yogurt
to the Vietnam
market.

2013
Inaugurated two megadairy factories with
large scale and applying
the most modern
technologies in Binh
Duong Province:
Vietnam Milk Factory
and Vietnam Milk
Factory (producing fluid
milk)

1997 – 1998

Exported its first
product batch of
powdered milk
and Dielac
nultrional powder

to Middle East
market.

2010
Vinamilk started
its strategy of
investment
overseas by
owning 22.8% of
shares at Miraka
Milk Factory in
New Zealand.


2014
The Dairy Farm in Nghe
An Province was the first
in Southeast Asia and one
of three farms in Asia to
qualify the the Global
G.A.P standard certificate.

1.2.2

Year

2016
Celebration for 40th anniversary of establishment
Continued the strategy to reach out the world market with the
inauguration of Angkor Milk Factory (Cambodia). Acquired 100%

stake in Driftwood Diary Holdings Corp (US) and exported
condensed milk product (with the Drifwood brand) to US market.
First time introduced Organic Fresh Milk product, which was
directly produced by Vinamilk in Vietnam qualifying EU Organic
standard and being certified by Control Union (Netherlands).

Event

Event

Analysis

2006
Vinamilk is officially In 2006, the company had the best business
listed on the Ho Chi result since equitization, earning after tax of
Minh Stock Exchange VND4,601 per share, worth VND10,000, up
20.6% from the same period last year. fiscal
year 2005
2007
Vinamilk currently has
10 farms including 7
farms following Global
G.A.P

Vinamilk has produced more than 50% of
raw material to serve their whole production
line. Thus, there is a reduction of importing
the raw materials for production.

2011
Vinamilk exports dairy
products
to
15
countries around the
world

1.2.3

Year
2007

In 2011, Vinamilk's revenue reached more
than US $ 1 billion, officially joining the
team of large enterprises in Asia-Pacific.
Revenue increased by 37.2% over 2010,
export turnover reached over 140 million US
dollars, up 67.4%

Crisis:

Problems
Detect
moistureresistant
powder and
suspect iron
filings in
dozens of
Dielac milk

cartons

Solution
- Zoning crisis to prevent
spreading risk
+ Recovery and verification of
suspected products.
- Clearly identify affected areas
and unaffected areas nationwide
+ The unaffected area organizes
a promotion program to maintain
the market in these provinces.
+ Affected area: diluting adverse
information by means of media
such as TV, Newspaper. Attempt
to trust Dielac faith and quality
by organizing reporters to visit
the factory.
- Public press conference of test
results are no impurities in
suspicious shipments.
- However, the aftershock of this
disaster is still smoldering,
seriously affecting the off-take of
Dielac, especially the Dielac
Alpha mainstream. Mothers with
young children in the provinces

Result
_In 2007, the growth rate

of Dielac revenue was
139% compared to 2006,
while the Vietnamese
powdered milk industry
was
15%.

_After the Dielac milk
scandal, many mothers
still believe in consuming
this item. This shows that


affected by this challenge have
expressed reluctance to choose
products
that
have
been
"published" and "may have
problems". The safe solution that
mothers give at that time is
simply to choose another milk
label for their child. So Vinamilk
implemented the "Mother's
Love" campaign to reposition
Dielac in July 2007.
Vinamilk
_ At the time of Fonterra's scandal
evaporated

of milk scandal, Vinamilk also
tens
of continuously informed consumers,
trillions
of including Fonterra's refusal to
dong on the supply materials to Vinamilk.
stock market
due to the
impact of the
Fonterra
scandal

2013

1.3
1.3.1

VISION, MISSION, CORE VALUES

Vision

Vinamilk has solved the
scandal very well.

_ Business results for the
first 6 months increased
by 22% in the same
period
(VND
3,355

billion), paid dividends
with 20% and paid
regularly, the profit fund
was not distributed at the
end of the second quarter,
more than 6,100 billion
dong.


To become a world grade brand in food and beverage industry, where people put all their
trust in nutrient and health products.
1.3.2

Mission

To deliver the valueable nutrition to community with our respect, love and responsibility.
1.3.3

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1.3.4

Core values

Integrity: Integrity and transparency in actions and transactions.
Respect:
● To have self-respect, to respect colleagues.
● To respect the Company and partners.

● To cooperate with respect.
Fairness: To be fair with employees, customers, suppliers and other parties.
Ethics: To respect the established ethical standards and act accordingly.
Compliance: To comply with legal regulations, the Company’s Code of Conduct,
and the Company’s procedures and policies.
Company Sustainable Strategy

Vinamilk’s sustainable developmet orientation focuses on the 5 following points:


1.3.4.1 Human nutrition

❖ Commitment
Indentifying food safety as top priority, Vinamilk commits that each of its products
is the result of a closed-loop production cycle which meets one of the most rigorous
requirements for the quality, including:

Reasearch and design for safe and nutritious products
Safe materials
Modern equipment and technologies

Management and Quality control in compliance with the ISO standard
Explicit and thorough information for consumers


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RESEARCH AND DESIGN FOR SAFE AND NUTRITIOUS
PRODUCTS
Vinamilk’s product development strategy aims at safety and health benefits for its

consumers, both intellectually and physically. Therefore, we have been extremely
careful in every production process, from establishing product formula, deciding
materials to packaging design, in order to ensure the safety for consumers.
Moreover, we absolutely say “no” to unhealthy ingredients that can result in
negative impacts on consumers’ health such as preservatives in all Vinamilk’s
present and future products.
- SAFE MATERIALS
Vinamilk Fresh milk 100% with immune system support is produced from farm
fresh milk mainly sourced from our dairy farms, strictly selected and controlled to
ensure food hygience and safety.
Imported raw materials are sourced from the prestigious suppliers of America,
Australia, New Zealand, France, etc.
- MODERN EQUIPMENT AND TECHNOLOGIES
To ensure the perfect quality of its products, Vinamilk has consistently been
researching and investing in modern equipment and technologies. We proudly own
one of the most advanced manufacturing chains that keep up with the world’s
leading milk production technologies.
- MANAGEMENT AND QUALITY CONTROL IN COMPLIANCE
WITH INTERNATIONAL STANDARDS.
Vinamilk has highly paid attention to product quality control and management. We
have therefore applied advanced management systems such as BRC and ISO 17025
to strictly and thoroughly manage all manufacturing stages including pre, mid and
post production in order to ensure the quality and safety of Vinamilk’s products. In
addition, a product tracking system has also been applied to the product recall and
the disposal process of faulty products in order to minimize the possible negative
impacts on consumers and society.
- EXPLICIT AND THOROUGH INFORMATION FOR CONSUMERS
Vinamilk commits to deliver explicit and thorough information about its products
including ingredients, nutritional values and preservation guidelines to help
consumers choose and use Vinamilk’s products that fit and satisfy their needs.

❖ Plan
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INCREASING SOURCE OF RAW
VINAMILK’S MAIN DAIRY FARMS

MATERIALS

FROM


Understanding the key importance of fresh materials in high–quality milk
production, in 2013, Vinamilk continued to promote the development of its modern
and large-scale dairy farms to boost the supply of safe and highly nutritious fresh
milk.
Vinamilk’s dairy farm system and its subsidiaries are currently running six
dairy cow farms in Tuyen Quang, Nghe An, Thanh Hoa, Lam Dong , Binh Dinh and
Ha Tinh provinces with the total herd size of about 10,000 dairy cows. In 2013,
Vinamilk implemented its investment in three more new dairy farms in Tay Ninh,
Thanh Hoa, which are expected to operate in the period 2015 – 2016.
Together with the development in scale, Vinamilk’s dairy farms have also promoted
to increase the quality of its business performances. Till September 2014, five dairy
farms of Vinamilk were verified to meet the ISO 9001:2008 by the Breau Veritas
organization and three farms were verified to have Global GAP by Control Union
organization.
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SAFE PRODUCTION
● Managing safe production
In 2013, Vinamilk was certified for obtaining the HACCP system with the new

version RVA5 (released in 2012). In 2014, Vinamilk was certified to Halal standard
(specified for Muslim food consumption). In the 3rd Quarter of 2014, five
manufacturing plants of Vinamilk continue to be certified to FSSC 22000 and the
remaining plants are expected to have certification in 2015. All international
standards prove that Vinamilk’s products meet severe requirement of all continents
in the world.
● Advanced production technologies and equipment
In 2013, Vinamilk began to put into operation two production plants with high
capacity and one of the world’s most modern milk production technologies,
Vietnam Children’s Powdered Milk Factory in Binh Duong and Vietnam Milk
Factory. The production lines used in these two plans have a high level of
automation and the products are produced under a closed-loop production cycle
which can minimize faults and external effects on products.
● Standardizing method and equipment for quality examination
In 2014, all laboratories at Vinamilk’s factories were granted ISO 17025
certification (standards for laboratory) and standardized all testing methods to meet
quality assurance and control in our laboratories.
- INCREASING PRODUCT VALUES FOR HUMAN HEALTH
Vinamilk continues to do research and put on the market more products of
increasing quality, applying the world’s latest state-of-the-art studies on nutrients


and bringing a wide range of healthy products that meet the nutrional requirements
of all customers.
1.3.4.2 Enviroment & Energy

❖ Commitment
Energy goals set for the period from 2012 to 2017
1. Saving energy by at least 3% after 5 years of implementation.
2. Minimizing the amount of CO2 emissions and waste that cause greenhouse

effect.
3. Building and applying energy management in compliance with the ISO
50001:2011 standard on Energy Management to all Vinamilk's factories.
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EFFICIENT ENERGY USE

Being aware that energy efficient has been one of the biggest concerns in recent
years and may also be in the future, Vinamilk has been in the process of achieving
its goals of energy efficiency by applying various measures, including:
● Improving management quality.
● Increasing the use of clean and renewable energy resources.
● Using energy saving equipment for lighting.
- EFFICIENT AND ECONOMICAL WATER USE
Water is an important natural resource, utilized in all Vinamilk’s production
processes. Being aware of the importance of water to human life, espeacially in the
context that groundwater has been depleted and polluted, Vinamilk commits to
effective and economical use of water by applying economical recycling solutions.
- EMISSION CONTROL AND TREATMENT
With its goals of minimizing negative impacts on the environment, Vinamilk has
approached the emission issues since the first stage of construction planning
procedures. As a result, during its operation process, Vinamilk has always strived
to strictly manage these issues. We are proud that Vinamilk has been operating the
management mechanism of waste and emission treatment to ensure the safety of the
environment by applying advanced standards to all Vinamilk’s activities and to
continuously improve in the future.
- OTHER COMMUNITY ACTIVITIES
Environmental activities call for the joint participation of the whole society.

Therefore, besides focusing on its own business activities, Vinamilk has also shows
interest in community activities that aim to promote the environmental awareness
and contributes to create a healthy living environment. “One million trees for
Vietnam” Fund is one of those activities that reflects this strategic orientation.
More details of “One million trees for Vietnam” Fund.
❖ Plan
- IMPROVING THE QUALITY OF MANAGEMENT
At present, all Vinamilk’s factories have been established and are operating the
energy management system pursuant to the ISO 50001:2011 standard. According to
its plan in 2014, Vinamilk will have an exterior audit conducted on its
implementation of this standard.
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PROGRAM TO REPLACE TRADITIONAL ENERGY WITH CLEAN
AND RENEWABLE ENERGY RESOURCES
As per the program’s orientation in protecting energy resources and reducing
greenhouse gas emissions, Vinamilk has transferred to the use of clean and
renewable energy resources such as CNG and BIOMASS to replace the traditional
FO and DO oils.
Vinamilk’s goal is to apply these energy resources to all its factories, in which:
● Biomass fuel is used in factories that meet the requirements of ground
area.
● CNG fuel is used in factories where ground area is limited.
- PROGRAM TO USE ENERGY SAVING LIGHTING EQUIPMENT
In 2013, Vinamilk completed a pilot project to increase the effectiveness of energy
consumption in lighting at Saigon Dairy Factory. This project included a design
adjustment to optimize capacity and the use of energy saving lighting devices such
as LED and and Compact T5-T8 lamps. This helped to save up to 70% of the energy
consumption in lighting compared with traditional high voltage lamps.
- ENVIRONMENTAL MANAGEMENT AND WASTE CONTROL

The most modern waste control system was first put into operation at the Vietnam
Milk Factory and Vietnam Powdered Milk Factory in 2013.
These two have been the biggest liquid and powdered milk factories of Vinamilk.
Due to their large scales, we have considered implementing the waste management
project at these two facilities from the design stage to meet our environmental
management target.
Waste treatment process at factories


● Solid waste
Solid waste is classified into two groups, hazardous and non-hazardous. Solid waste
is collected and stored in separate places. Hazardous solid waste and sludge will be
transferred to licensed waste treatment services which have the specialized
knowledge and competence to collect and process waste.
● Liquid waste
Sewage is disposed of during the production, equipment cleaning and other
activities at Vinamilk’s factories. Sewage will be collected and processed in the
sewage treatment system. Vinamilk commits to ensure that only treated water that
satisfies disposal standard can then be disposed to the general discharge system or
into the environment.
● Exhaust fumes
Exhaust fumes are produced from the fuel burning process in stream boilers and
treated with absorption towers.
Waste treatment process at farms
In 2013, Vinamilk continued investing in the sewage treatment system for a new
farm in Lam Dong and completed building the complete processing solutions for its
remaining farms. It is expected that the implementation of the treatment system will
start in mid-2014.
- ENVIRONMENTAL ACTIVITIES
The “One million trees for Vietnam” Fund launched in 2012 was a collaborative

activity of Vietnam Environment Association (VEA) and Vfresh beverages, a brand
of Vinamilk. The program aimed at improving the living environment for people in
urban areas by planting more trees. The program was extended to areas where trees
have practical benefits for the community such as residential areas, public areas,
central routes, and schools, etc. In big cities across the country.
In 2013, the Fund implemented the tree-planting program at two provinces, Hue and
Dalat. In Hue, the program planted twenty valuable species of trees including
Erythrophleum fordii, Michelia, Sindora siamensis, Wild almond, Baobab, etc. At
the Quang Trung Emperor memorial campus, a national historical monument on
Bân mountain, An Tay, Hue. In Dalat, the Fund contributed 2,700 woody
bougainvillea and golden wonder trees to Dalat University’s campus.
1.3.4.3 Local Economic Development

❖ Commitment

In all of its activities, Vinamilk always aims at connecting the company’s growth to
the common development of both local and national economies.


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FUNCTIONING IN COMPLIANCE WITH LAW
● Always complying with laws and regulations stipulated in where
Vinamilk has operation activities.
● Ensuring that all statistics and numeric data reported to the authority
agencies are precise, honest, complete and timely.
● Activity participating into programs launched by the Government to
stabilize and develop the national economy.
● Completely fulfilling tax duties and other obligations stipulated by the
law of the countries in which Vinamilk operates.

- DEVELOPING LOCAL ECONOMY
In the localities where Vinamilk has its business and production activities, the
company always aims at connecting its production scale expansion with the
development of local economy:
● Investing in facilities, contributing to the local infrastructure
development.
● Creating jobs and vocational training opportunities for local labour
force.
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DEVELOPING DAIRY INDUSTRY
● Applying the world’s advanced technologies in dairy cow breeding to
Vinamilk’s farms to contribute to the development of Vietnam’s dairy
cow breeding industry.
● Supporting farmers by providing them with finance, facilities,
techniques and technologies in breeding.
● Having policies in procurement of agricultural commodities to ensure
farmer’s benefit through the commitments of stable purchasing
quantities and competitive prices.

❖ Plan
- DEVELOP DAIRY COW BREEDING INDUSTRY
Establish farms and apply advanced breeding techniques
Vinamilk is proud to be one of the leading companies contributing to the
development of the dairy cow breeding industry with modern methods and effective
improvements to enhance product values for both Vinamilk and dairy cow breeding
households in Vietnam.
Till the end of 2013, Vinamilk owns five dairy cow breeding farms with stable
operations on total 170 hectares and total herd size of 8,800 dairy cows. The

consistent objective throughout the company’s strategy of developing material areas


is to always keep updates and be determined in investing and applying advanced
breeding technologies.
Develop along with dairy cow breeders
Apart from developing its large-scale farm model, Vinamilk has accompanied the
dairy cow breeders in developing material areas and improving operational
efficiency of breeding households.
● Creating stable output and reasonable purchasing prices for the
breeders.
● Supporting the breeders in production development and effective
improvements.
● Promoting the development of related agricultural products including
feed products for dairy cows (such as corn, King grass or fresh straw,
etc).
In 2013, Vinamilk promoted activities to encourage agricultural development, such
as training programs on breeding techniques to share with the farmers modern
techniques and technologies:
● Conducted 44 training courses “Instruction on dairy cow breeding
techniques” with the participation of 1,605 households across the
country.
In addition, to support breeding households for a warm traditional Tet (Lunar New
Year holidays), as well as to consolidate the relationship between Vinamilk and the
households, the company implemented a program named “Accumulate points with
Vinamilk for a warm and joyful Tet”. In this program, Vinamilk supported 4,724
households with over VND 18 billion, which is on average VND 3,8 million per
household.
- CREATE JOBS FOR LOCAL LABOUR FORCE
With the strategy of expanding dairy farm scales, Vinamilk started to implement its

investment in projects in Ha Tinh, Thanh Hoa and Tay Ninh in 2013. When these
projects come into operation in the period 2014 – 2015, Vinamilk will, in both direct
and indirect manner, contribute to create job opportunities for local people.
Moreover, by developing its product distribution network, Vinamilk has contributed
to establish a system with more than 250 enterprises and over 4,500 stable jobs in
different provinces and cities across the country.
- MARKET STABILIZATION PROGRAMS.
The market stabilization program for dairy products in Ho Chi Minh City is a
program which was launched and promulgated by the People’s Committee of Ho
Chi Minh City. It aimed at helping consumers to approach safe, high-quality and
nutritious dairy products at reasonable prices while contributing to social security.


Vinamilk has actively participated in this program since 2008, Accordingly,
Vinamilk commits to supply dairy products for the market at a stable and reasonable
are committed to supply commodities under the coordination of the City’s
Department of Industry and Trade.
1.3.4.4 Employees

❖ Commitment
- WORKPLACE SAFETY AND HEALTHCARE
The desire for working under safe conditions and good health care is a legitimate
aspiration of the workforce. Therefore, Vinamilk commits to:
● Fully provide employees with PPE – personal protective equipment and safety
measures to ensure the safety for employees during their working process.
● Organize annual safety guidelines and drilling programs for employees.
● Establish anti-fire systems at the headquarters and all working facilities and
ensure that 100% of employees are trained on fire prevention and suppression
once a year.
● Implement health care programs and provide employees with comprehensive

health and accident insurance, in addition to the health insurance coverage under
the provisions of Vietnam’s Law.
-

DEVELOP
A
DIVERSE
WORKFORCE,
RESPECTING
DIFFERENCES AND ANTI-DISCRIMINATION
With its current scale, Vinamilk is the workplace of approximately 5,000 employees
from various fields and industries who work in different conditions (offices,
manufacturing factories, farms, etc). Our desire is to create a cultural and civilized
working environment for our employees. To this end, we have always been
consistent with and encouraged our employees to follow the principles of respectful
and equal treatment to each other, regardless of their genders, regions and religions.
- EMPLOYEE’S RIGHTS UNDER VIETNAM’S LAW GUARANTEED
The relationship between the Vinamilk corporation and its employees is established
on a voluntary basis. Vinamilk commits that:
●
●
●
●

All employees rights under Labour Law are guaranteed.
Vinamilk absolutely does not use child labour and forced labour.
The collective labour agreement is applied to all employees.
Trade Union represents employees and protects their rights.

-

EMPLOYEES CONTRIBUTION RECOGNIZED AND PROPERLY
AWARDED


In recognition and appreciation towards employee efforts to contribute to
Vinamilk’s growth and success, we ensure that all of our employees receive what
they deserve. At Vinamilk, we have policies of pay transparency and equality to
ensure that employees salaries are in respect to their efforts and contribution. In
addition, Vinamilk offers its employees a portion of the company’s profits based on
the business’ annual performance in order to encourage their efforts.
- STAFF DEVELOPMENT
At Vinamilk, we are clearly aware of the importance of staff development in terms
of creating a positive and efficient working environment. A significant part of our
budget is thus allocated for annual staff training programs, both internally and
externally. Our desire is to create the best opportunities and conditions for our staff
to improve their knowledge and personal development and in turn, contribute to the
development of the company and community.
- EMPLOYEES OF PARTNERS IN VINAMILK'S SUPPLY CHAINS
In its viewpoint of employees, Vinamilk is concerned not only about its own
employees but also its partners’ who work in the supply chains.
Labour providers are supposed to follow Vinamilk's requirements:
● To sign labour contracts with employees who are going to work for
Vinamilk.
● To pay social insurance premiums, organize trade union activities and
implement other policies for employees in accordance with the
Labour Law.
● To provide 24/24 accident insurance for employees.
All these requirements are clearly indicated in the contracts between
Vinamilk and labour providers. We also agree to include all incurred charges

into our service costs.

Partners in the distribution chains
Ensuring the rights of employees is one of the most important criteria which
helps Vinamilk in selecting partners and maintaining a collaborative
relationship. During the cooperation, we always attempt to support our
partners in terms of ensuring the best benefits for their employees.

❖ Plan
- ACTIVITIES TO ENSURE EMPLOYEES’ SAFETY AND HEALTH
Activities on labour safety in the year 2013:


● Labour safety training for 100% of employees working in factories, plants
and farms.
● Fire training and fire drill for 100% of employees.
● Personal hygiene and safety network (ATVSV) set up at 13 factories and 02
warehouses. ATVSV teams take charge of checking labour hygiene and
safety at their workshops. This force is also in charge of propagandizing
knowledge of safety and hygiene to their group members. These in-charge
teams are frequently trained and make periodical reports.
-

Employees’ health care
Health care divisions set up at all Vinamilk's fields of operation.

● Annual check-ups for hundreds of employees as per the collective labour
agreement: once a year for male employees and twice a year for female.
● Anti-flu vaccination for all Vinamilk’s employees in the year of 2013.
● Accident and health insurance coverage provided in addition to the insurance

program under the provisions of Vietnam's law in order to bring a better
healthcare for all Vinamilk’s employees. This program has expanded for all
employees since 2014. The insurance limit includes:
+ 24/24 accident insurance for employees.
+ Overall health insurance coverage: employees will be insured for
both inpatient and outpatient treatment, maternity and dental care.
+ As for deaths or injuries caused by work-related accidents: the
value of insurance compensation is up to that of the least 30 monthly
salaries.
+ Health insurance coverage for relatives of the management board.
- GUARANTY FOR EMPLOYEES’ RIGHTS AND BENEFITS
A mechanism of receiving and solving employees' feedback and complaints has
been established and maintained. This includes:
● The Human Resource Department of the company and the
Administration - Human Resource Division at all of its operating units
● Local trade unions
● Direct channel to receive information:
Trade unions and youth unions at each operating unit organize after-work
entertainment activities for employees.
-

ACKNOWLEDGEMENT AND PROPER
EMPLOYEES’ CONTRIBUTIONS

REWARDS

FOR


Vinamilk's pay scale is built upon the Merce system. Vinamilk monthly conducts

employee evaluations based on the methods of Performance Appraisal and
Management by Objective. The evaluation results are the basis of the decisions
regarding annual salary increases and year-end bonuses.
In 2013, the average salary increase is 22.7%, higher than those of earlier years
(2012: 18.5%, 2011: 10%).
- EMPLOYEES’ TRAINING AND DEVELOPMENT
In 2013, Vinamilk spent VND 6.5 billion for the internal and external training
programs.
The successive staff promotion program was organized to develop potential staff to
fill the key positions in the company. This program brought opportunities for
employees to be trained, challenged and developed in their career for their
contributions towards the company. The program finished its 1st stage in 2013 and
continues in 2014.
- IMPACTS ON THE PARTNERS
Distributors
In 2013, Vinamilk started to support its distributors in purchasing the 24/24 accident
insurance coverage for their sales teams working at the distribution locations. It is
expected that in 2014, 100% of these distributors’ employees will be provided with
this accident insurance coverage.
1.3.4.5 Support & Community Development

❖ Commitment

- THE "STAND TALL VIETNAM” MILK FUND
There are currently many disadvantaged Vietnamese children who have not
received the right nutritional care, with diets that consist of little milk—or
sometimes they even have no idea of what milk is. This has led to a limitation of
physical and intellectual development in children. The Stand Tall Vietnam Milk
Fund was established in 2008 under the chairmanship of the National Fund for
Children of Vietnam - Ministry of Labour, Invalids and Social Affairs in

collaboration with Vinamilk. The fund aims to assist disadvantaged children all over
the country by a simple and practical act: providing cups of nutritious milk to
support their physical and mental development for a brighter future. The Milk
Fund’s 6-year journey is a significant humanitarian undertaking. The activity has
helped hundreds of thousands of children have the opportunity to drink milk more
frequently to improve their development, contributing significantly in reducing the
rate of malnourished Vietnamese children in recent years. Up to now, the Milk Fund


has provided milk to more than 310,000 disadvantaged children in Vietnam—
equivalent to 23 million glasses of milk, or about 84 billion VND. In 2010, the Stand
Tall Vietnam Milk Fund was honored as "1 of the 10 most prestigious programs in
Labour, Invalids and Social Affairs”.
THE "VINAMILK – NURTURING VIETNAMESE YOUNG
TALENT" SCHOLARSHIP FUND
Proposed by Vinamilk and approved and chaired by the Ministry of Education and
Training, the "VINAMILK – Nurturing Vietnamese Young Talents" Fund was
established in 2003. The program aims to encourage primary school pupils across
the country who have outstanding academic results and strong efforts in study. With
this activity, Vinamilk is proud to contribute towards education and was honored
the merit award "For the Development of Vietnam's Education” by the Ministry of
Education and Training.
-

- COMMUNITY SUPPORT ACTIVITIES
Vinamilk has been consistently promoting our Vietnamese traditional value "whole
leaves wrap torn leaves”, and identifying this as a guideline for all of our community
support activities. These activities, organized by Vinamilk’s Executive Board and
always received the positive support from all of the company’s employees, are for:
● Offering financial supports to people at different provinces and hospitals who

have illness, incurable diseases or life-threatening diseases.
● Supporting and offering gifts and milk for children with special situations at
orphanages and abandoned children at humanity centers.
● Supporting people experiencing natural disasters.
● Participating in blood donation programs.
❖ Plan
- "STAND TALL VIETNAM” MILK FUND
In the school year 2013-2014, the Fund donated 1.2 million glasses of milk to more
than 13,000 children in 57 provinces and cities nationwide.
Milk donation on the occasion of the inauguration ceremony of two new
factories.
At the inauguration ceremony of one of the Vietnam's largest dairy factories, and also on
the occasion of celebrating the 20th anniversary of the National Malnutrition Prevention
Program, Vinamilk and the "Stand Tall Vietnam” Milk Fund donated 150 thousand packs
of Vinamilk UHT 100% Fresh Milk "Immune system support" - which were the very first
ones produced by the factory's modern production line - to Vietnamese children in 10
provinces that had the highest percentage of malnutrition in children under 5, with total
value of VND 1 billion. On the opening day of the Vietnam Powdered Milk factory,


Vinamilk's General Director signed to donate "10,000 tins of Dielac Alpha (powdered milk
for young children)” at the value of VND 1 billion. These products which was also the very
first ones produced by the factory's modern production lines, to the poor and disabled
children via Vietnam Children Support Fund and Children Support Fund of Binh Duong
province.
-

THE "VINAMILK - NURTURING VIETNAMESE YOUNG
TALENTS" SCHOLARSHIP FUND
In the school year 2013, the program was implemented to:

● Grant 1,000 scholarships worth VND 1 billion.
● Celebrate the 10th anniversary of the "Vinamilk - Nurturing Vietnamese Young
Talents" Scholarship Fund in cooperation with the Ministry of Education and
Training, and organize the "Shining Vietnamese Talents" playground for primary
school pupils with the participation of more than 2,000 pupils.
- COMMUNITY SUPPORT ACTIVITIES
The implemented programs in the school year 2013 include:
Scholarship grants for poor students in Ben Tre province
Vinamilk cooperated with Vietnam Association for Victims of Agent Orange/Dioxin in
Ben Tre province to grant scholarships 180 million to 280 orphans, disabled and poor
students.
Vinamilk's support for flood victims in central Vietnam
In responding to the call of National Committee of Vietnam Fatherland Front towards the
northern central provinces affected by the typhoon No. 10 in 2013, during 12 th15th October, Vinamilk visited and presented gifts worth VND 2.3 billion in cash to those
severely suffered from the typhoon in the provinces of Quang Tri, Quang Binh, Nghe An
and Thanh Hoa. In December 2013, Vinamilk supported severely flooded areas in Quang
Ngai Province with the total value of VND 250 million for people to repair their homes
and stabilize their lives.
Participation in the "Pink blood" campaign
In 2013, Vinamilk's staff from 12 operating units participated in blood donation campaign,
with the total of 850 units of blood donated. At the same time, the trade unions at
Vinamilk's operating units also participated in financial supporting for the treatment of
disadvantaged people with illness, incurable diseases or fatal diseases at different locations
and hospitals with the total amount of VND 956 million, which was partially extracted
from Vinamilk's operational funds and partially from the contributions of all its officers
and employees. In addition, Vinamilk also participated in supporting the "The fishing nets
of love” Program for fishermen in Hoang Sa (Paracel) and Truong Sa (Spratly) islands with
the total amount of VND 300 million.

1.4

COMPANY COMPETITIVE ADVANTAGES

The competition in the market segment of fresh milk is increasingly fierce because there
are a lot of redoubtable rivals. Locally, the strongest rival of Vinamilk is none other than
Dutch Lady, followed by the Hanoi milk and TH True Milk are as new players in fresh
milk market for children segment, which seems like potential big rivals in recent years.
Besides, Vinamilk is also being challenged by imported products following WTO
accession commitments. Due to Dutch Lady is supported by capital inflows from its
holding company so it does not have the same need to maintain profitability. Therefore, its
competitive strangegy is more flexible than Vinamilk.
The first argument is in terms of the distribution channels; an extensive distribution channel
is an important growth aspect for companies to build a mojor barrier towards several new
entrances. In particular, Vinamilk has the largest distribution channel with approximately
250 exclusive distributors and more than 24,000 retailerss throughout the country, while
Dutch Lady builds the second largest dairy distribution network with 145 distributors and
Nestle with only around 95 distributors nationwide.
About the purchasing power in raw material inputs, Vinamilk is leading in buying raw milk
in the country, purchasing up to 50% of the total indigenous production, while Dutch Lady
is the second largest raw milk buyer with approximately 20% of local fresh milk. Nestle
and at least 17 other companies account for the remaining 30% of local fresh milk supply.
However, Vinamilk meets a serious problem the purchasing price of fresh milk from local
farmers. According to the article on The Saigon Times webpage, the original milk price of
Vinamilk is lower than Dutch Lady. Vinamilk’s buying price is only VND 7,000 per
kilogram at 50 cow-raising families in the country, while the current price offered by Dutch
Lady is VND7,500 per kilogram. Moreover, the commission or bonus for the farmer of
Vinamilk is quite low while the bonus policy of Dutch Lady is maintained frequently.
Dutch Lady takes care more beneficial to their farmers who are facing huge difficulties due
to the rising production cost, while Vinamilk tend to cut into farmers benefits and send

many farmers into hardship through purchasing fresh milk with the lower price.
Thirdly, the market share is the most important factor that decided the success of Vinamilk
today. As it requires no refrigeration and has a long shelflife, UHT milk is the dominate
product.

1.5

Year

COMPANY PARTNERSHIP ACTION SELECTION CRITERIA

Partner

Analysis of partner


13/9/2016 Swiss
corporation

DSM Strategic cooperation "International standard
nutrition application into Vinamilk powdered
milk products".
- Applying advanced and high-quality
nutritious micronutrients to Vinamilk's
products. In addition, it will support Vinamilk
in product research and development, clinical
trials to evaluate the effectiveness of use, as
well as support Vinamilk in nutrition training
and communication, aimed at bringing the best
for Vietnamese consumers.

21/9/2017 Danish Chr. Hansen Strategic
cooperation
"Pioneering
the
corporation
application of advanced Probiotic strains into
Vinamilk dairy products.
- Applying clinical and European-standard
probiotics for powdered milk, yogurt, drinking
yogurt and nutritious powder for children,
helping to support digestion, enhance
absorption, and strengthen resistance for
children and families.
22/3/2018 DHG Pharma Joint Strategic cooperation on product research and
Stock Company - development to meet the needs of health care
DHG Pharma
and create new living values for the community
and create new living values for the
community, towards a healthy and beautiful life
than.
* Hau Giang Pharmacy and Vinamilk signed
the Strategic Cooperation Agreement on key
issues:
- Build products with new brands or develop
from existing products to serve the needs of
community health care with many different
subjects;
- Coordinate the source of raw materials to put
into the production of functional products,

supplement and improve health;


- exploit the strengths of each party's specific
distribution resources, to help people easily
access and use nutrition and health care
products.

1.6

COMPANY FINANCIAL STATUS