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IP pioneer

16 Nov
VNRE – Ms Nguyet Thi Nguyet Huong, Chair and CEO of the VID Group, believes that ambition, standing on your own two feet and identifying appropriate solutions are the secrets to success.

Born in 1970 and growing up in Nam Dinh province, Nguyen Thi Nguyet Huong was always an excellent student during her years at high school. In 1984, at the age of 14, she won First Prize in a National Contest for Russian Language and Russian Literature. In 1987 she then won the Gold Medal at the Russian Language International Olympic Contest and received a scholarship to study Russian literature at Moscow University.

She arrived at Moscow airport on a cold winter night in 1987, surrounded by unfamiliar foreign faces. It seemed luck and timing may have been against her, because soon after the Soviet Union became mired in economic crisis. Her scholarship was small, given the cost of living in Moscow, and she was barely able to survive. She had to do extra jobs to earn some more money so that she could continue her studies.

Having graduated from Moscow University she first thought that back in Vietnam she would find the job of her dreams, relating to language teaching or the media, but her dreams never came true. She turned to the business world. She is now Chair and CEO of the Vietnam Investment Development Group (VID Group). “After the collapse of the Soviet Union not many people wanted to learn Russian anymore,” she remembers. “I also thought it would be hard to find a good job in the subject of my studies. So I had to make another choice.”

In 1996 she was back in Vietnam with a case full of books. As she expected, her command of the Russian language didn’t help her too much in finding a job, so she decided to apply for an accounting course at Hanoi University of Economics and an English language course, in the hope of getting a job as a company accountant. She finally secured a position with the Nam Thang shoe making company, and was later appointed as its Deputy General Director.

Having drawn a lot of experience from three years at Nam Thang, she decided to open a company of her own in the export garment business. Within just a short period of time she managed to recruit around 1,000 workers. The business grew rapidly and she wanted to expand, so applied for a bank loan to reach her ambitious business targets.

She submitted applications to relevant agencies in Hanoi for land to expand her business, but no reply came. Her application for a bank loan was also rejected, because as a private company she was required to have collateral. She experienced the common difficulties of private company owners.

But the company was still doing well, with its products being sold in more than 20 countries. Her clients wanted to place more orders, so she definitely needed more space to expand her business, but the cumbersome administrative procedures were a major obstacle. The business opportunity passed her by, so she sought land in the provinces near Hanoi to expand her business.

She began by leasing 7.5 ha of land in Hung Yen province. While preparing to build a factory she happened to know that the Lifan Motorbike Group from China was looking for space for their business, and they suggested they lease the infrastructure she had built. She accepted and the two sides signed a deal. If Vietnamese were facing problems in applying for space to expand their business, she wondered what was happening with foreign investors, especially given the language barrier.

In 2005 the Business Law was passed and facilitated all enterprises, including private ones. An idea sprang to mind: why can’t we build infrastructure ourselves and then lease it to foreign investors? Building the Nam Sach Industrial Park, on 63 ha, was next in her plans. Construction required a lot of money, and building industrial parks was then quite new in the northern provinces. Many domestic and foreign infrastructure developers had already failed.

She decided to make a trip to study industrial parks in Taiwan and South Korea, and she came to the conclusion that only when you have good infrastructure are you be able to lure foreign investment. With this experience, the Nam Sach Industrial Park was almost fully occupied within just a year. Her other industrial parks, such as Quang Minh, on 750 ha in Vinh Phuc province, Phuc Dien, on nearly 100 ha, and Tan Truong on 250 ha in Hai Duong province were also put into operation.

VID Group has now established eight industrial parks in six northern provinces, attracting almost 400 foreign investors from Japan, South Korea, Malaysia, China, Taiwan and elsewhere, with total capital of around $2.5 billion. The Group’s success helped attract even more foreign investors, creating jobs for tens of thousands of workers and contributing to socio-economic development and economic restructuring in a number of northern provinces.

Remarkable in Ms. Huong’s contribution in this regard was her idea to build residential quarters for workers near the industrial parks, which was then recognised as an appropriate model to be used throughout the country. “In order to attract foreign investors effectively, most important of all is to seek good locations, build good technical infrastructure, including transport networks, seaports and airports, and social infrastructure such as skilled local workforce associated with supporting services,” she said. “Your working style should be professional, scientific and efficient.

You should also help foreign investors identity solutions to overcome the difficulties or problems they may face. In so doing you need to have experienced and competent staff with a good command of English and a sound knowledge of State rules and the changing State policy, to provide foreign investors with timely advice.”

“It is not necessary to launch a range of investment promotion trips overseas,” she continued. “Just try to take good care of investors at the industrial parks, because they are the ones who best help us in our investment promotion scheme. Let’s provide them with the best services possible and take care of their inquiries, and they will then naturally present your performance to others.”

Apart from industrial parks, in 2005 she began to become involved in the banking business and is now Vice Chair of Maritime Bank.

Beyond business

Not only successful in business, Ms Huong is also known for her active involvement in social and political life. In 1999, at the age of 29 when she was Deputy General Director of Nam Thang, she was nominated by the Hanoi Entrepreneurs Association to run for the Hanoi People’s Committee, succeeding with a large number of votes, and in 2004 was re-elected for a second term. She has been elected to the National Assembly (NA) for two consecutive terms: 2007-2011 and the new 2011-2016 terms. She is now a member of the Central Committee of the Vietnam Fatherland Front.

As an entrepreneur involved in socio-political activities she expected to make a contribution to the country’s economic development in general and the development of the business community in particular. She recalled an interesting story about her campaign for a National Assembly seat in 2007. One day before the election, at around 10 o’clock at night, her phone rang. The caller turned out to be a retired doctorate holder, and he was keen to talk to her to confirm he would be making the right decision if he voted for her. Knowing she had graduated in the Soviet Union, he also tested her command of the Russian language.

Commenting on her NA involvement, she said she would try to play a role in changing and amending rules on land, finance and banking, as there was a gap between the reality and policy.

About her success, she says simply: “You must have ambition, and this should be what motivates you. Stand on your own two feet and find appropriate solutions. In doing business, you can’t wait for an opportunity to come to you automatically; you must seek it out or create it yourself instead. In terms of the NA involvement, voters expect you to be actively involved in boosting and creating change, not sitting around idly.”

Reported by Tran Thai | Vneconomy

Chairman of AA Corp: Global By Design

27 Oct
VNREVietnam can’t boast many companies that compete overseas. Nguyen Quoc Khanh started one 20 years ago, and he now wins contracts from New York to Kiev.

It had been years since Nguyen Quoc Khanh uttered a word of French. Although he studied the language as a schoolboy at the French lycée in Dalat, before the fall of Saigon, he never imagined he’d have much use for it under Vietnam’s socialist regime. But when an electrician friend told him about a French banker who insisted on finding a French-speaking architect to renovate his new offices, he gave it his best shot. “I understood most of what he said, but the words didn’t come to me easily, so I just kept saying ‘Oui, oui; non, non; c’est possible,'” recalls Khanh, founder and chairman of AA Corp., Vietnam’s largest high-end interior-design company and furniture retailer.
His language skills, or at least his willingness to try, impressed the banker enough to give him the job, the first of a long string of interior-design contracts with foreign companies that were entering the country after years of economic isolation. This was during the late 1980s and early 1990s era of doi moi, or “renovation,” when Vietnam’s more open economic policies were attracting more foreign investment. In lockstep with these changes, Khanh started a renovation movement of a more literal kind. He knew foreign investors and diplomats would need improvements to the dusty and mildewed villas available to them as homes and offices, and he quickly became their go-to guy for interior design. “It was a great time,” says Khanh, who now speaks fluent French and English and a smattering of Russian and Mandarin. “We were so busy, and we were learning so much.”
Today AA dominates the domestic market for high-end interior design, consistently nabbing 80% of the contracts for four- and five-star hotels around the country, says Khanh. Most corporate offices and up market residences, shops, restaurants and country clubs bear the AA stamp. Over the past five years AA has also pushed for more global business, making its mark on hotels, resorts and residences from the InterContinental in Kiev, Ukraine to the Trump SoHo in New York. Khanh’s firm has completed dozens of five-star hotel projects in the Americas, the Middle East and Europe, as well as in Asia.
Khanh, 50, doesn’t have to go far for the business. Hotel contractors around the world seek him out on his home turf in Vietnam. GER Architectural Manufacturing, the custom woodworking contractor that oversaw the interior design for Trump SoHo, was doing an Asia-wide search for a more nimble and less costly production partner and turned to Vietnam. AA tends to be the first name that comes up on a search for interior-design firms in Vietnam, partly by reputation but also because of its initials, which stand for Advanced Architecture. “We didn’t know much English at the time, but that was one of our best decisions,” says Khanh, who started the company in 1990 in Ho Chi Minh City with two fellow architecture students who have since been bought out.
The connection with GER put AA on the radar in New York and led to more hotel projects, including the Standard and the Royalton. AA now has three similar partnerships with contractors and has completed 19 luxury hotel projects in 12 cities in the U.S.
Despite Khanh’s international success, his company is still small, with $35 million in sales last year. Business was hit by the global recession, which saw hotel construction drop 25% from its peak in 2008 in Asia-Pacific (outside of India and China), Europe and the U.S., according to research firm Lodging Econometrics ( EOMT.PK – news – people ). Profits margins of only 5% to 10% have also held the company back. AA is able to prosper through low operating costs. Labor is extremely cheap in Vietnam: AA pays 1,400 of its 2,000 workers an average of $150 a month, which is still well above the minimum wage. Only three positions are filled by expatriates. His wife helps with the business (the couple has two sons), designing lamps, cushion covers and other furnishings.
AA was partly financed by private equity firm Indochina Capital, which owned a 20% stake. But the fund has had to liquidate and Khanh is buying back the shares. “The standout story about AA is how Khanh navigated his way through the economic downturn by taking quick action,” says Stanley Vukmer, the fund’s former managing director, who oversaw the investment. He cites the company’s decision to focus more on regional markets less affected by the hotel slump, such as Asia and the Middle East, as evidence of AA’s strong management.
The strategy is already paying off. Sales are on track to grow 30% to $45 million this year. Khanh plans to list the company on the Vietnam stock market early next year, “if the markets aren’t too volatile,” he says. He aims to raise enough capital to expand his production capacity and boost his retail furniture business. His factory in Long An Province, about 45 minutes from Ho Chi Minh City, uses only 60% of his land. He hopes more volume will bring bigger profit margins and turn AA into a $100 million company in the next three to four years.
Khanh is betting that much of that volume will come from the domestic market and that half of future revenue will come from furniture sales. It’s a gamble in such a small market, but urban Vietnam’s appetite for luxury goods is strong and growing. Retail sales rose 18.6% last year, to $65.7 billion, according to the government. Of course the pool of people able to afford big-ticket items is still limited. “Domestic consumption is a no-brainer here,” says Dominic Scriven, chief executive of Dragon Capital. “But then, most of the population still collects rubber bands.”
Still, says Khanh, the Vietnamese will always order their spending priorities around their homes. “People here dream of building a home and filling it with beautiful things.”
Khanh has a history of making the right decisions at the right time. When doi moi began many Vietnamese feared the economic freedom wouldn’t last and that starting a business would somehow make them a target. Friends and family warned him it would be a big risk. He thought otherwise. “I figured, ‘Why not?’ I had nothing to lose.”
As an architecture student the last thing he expected to become was an entrepreneur. His parents, who ran a bakery and a housing construction business, left their son in the care of relatives when they moved to Saigon. They didn’t want him to follow in their footsteps. They wanted him to have the best education that Dalat, a prestigious academic town, could offer. Back then a professional degree and a secure position in government or at a state-owned enterprise was the one sure path to security and financial stability.
He was still studying architecture when he spied his first moneymaking opportunities. Under the communist system university graduates were farmed out to the government corporations that needed them most, but Khanh could still freelance. On the side he built small factories, constructed trade show stalls and designed lacquerware shops for Ho Chi Minh City’s burgeoning tourist trade. He and his partners founded AA with dreams of building all the new offices and hotels that the country would need. Then, in 1991, he took a trip to Singapore, his first outside the country. After one look at all those skyscrapers, “I knew we couldn’t compete.” It was then he decided to focus on interiors.
But those interiors would be as international in design as anything you could find in a Milan showroom. Khanh regularly recounts his French banker story to teach staff that the more languages they know, the better. The same goes for the language of design. Unless it’s what a client specifically requests, he tries to get away from that “Indochine” look–French art deco with Asian flourishes. He sends his designers to study all the new trends in the U.S. and Italy. “Westerners make things with Asian accents, so why shouldn’t Vietnamese do contemporary? When it comes to craftsmanship and design, we can compete with anyone.”
Reported by Samantha Marshall | Forbes Asia Magazine dated August 09, 2010