VINAMILK’S INVESTMENT PROJECT IN THE COMPANY MIRAKA LIMITED- NEWZEALANDI. Introduction about Vietnam Dairy Products Joint Stock Company –Vinamilk: Vinamilk is the enterprise in manufacturing milk and dairy products inVietnam. It is also the 15th largest company in Vietnam with 39% of the marketshare nationwide. The company has more than 220 distributors in the distribution system andover 140,000 outlets in Vietnam. In addition, products are sold in all systems ofsupermarkets nationwide. Besides, Vinamilk products are also exported to theMiddle East, USA, France, Canada, Cambodia, the Philippines and Australia… Over 30 years, Vinamilk has built 8 factories. Vinamilk has 200 items ofmilk and dairy products line.II. Introduction about Vinamilk’s investment project: On September 11th 2010, Vinamilk has received a license to invest in a high– quality milk processing factory, the NewZealand’s Miraka Company Limited. Ithas also been the Vinamilk’s first investment project overseas so far. The factorywas constructed in November 6th 2010 and officially went into operation in August2011. With this project, Vinamilk is gradually integrating into the internationalmarket. 1. Type of investment: This is the form of foreign direct investment Vinamilk: ●Based on the method of investment, this is a form of investment in building new manufacturing facilities.
●Based on the sector of investment, this is a form of investment in backward vertical FDI. 2. Purpose of this project: The purpose of this project is to find places to build factories which arenear suppliers of high-quality raw materials. So that the price will be cheaperwhen imported from abroad and producing high quality products to provide forinternational market. With this plan, the whole of milk powder produced will besold to customers in Asia and the Middle East. 3. Total investment capital: The plant is designed with a capacity of 32,000 tons of powdered milk ayear, with total investment of 90 million NewZealand dollars, equivalent to 74.5million ie 1.5496 billion Vietnam dong. The amount of 17.37 million dollarswhich vinamilk invested in NewZealand accounted for 19.3% of the stake of theproject.III. Advantages and disadvantages when investing in NewZealand 1. Advantages and reasons for choice When reading this investment project, we will think of the questions:Why in the first investment abroad, Vinamilk selected NewZealand? To becomeone of the choices of international investors, what factors are there inNewZealand? We will analyse these issues together ●With favorable geographical location and natural conditions, NewZealand is the supply of natural and rich inputs for the production of cheap and good quality milk, reduce price of the products. In addition, when investing in Miraka factory, the export of milk to other countries in the world is also more convenient due to cost of export saving.
●The topography is mainly fresh pastures and good prairies, NewZealand has a good basis of developing agriculture especially dairy farming. The number of cows in NewZealand is very large and milk quality has been highly appreciated. ●The political situation is stable in this country that create a safe investment environment, reduce the risks in investing activities of Vinamilk. ●NewZealand has a stable legal environment, which include a consistent system of policies, regulations, statutes…to ensure the interests of bussinessperson as well as investors like Vinamilk. ●NewZealand has been appreciated to be one of the countries which has a relatively stable investment environment. Some priority areas are being invested in NewZealand are agriculture, oil and gas, mining… ●NewZealand’s economy is stable and favorable for a long term international competition. ●NewZealand government has strongly supported investment environment to allow international investors moving more resources and cooperating with NewZealand companies. ●Abundant labor force with high skill is one of the advantages of NewZealand when receiving investment capital from abroad. So it’s easy for investors to search for supplies or moving more international staffs. Additionally, foreign companies invest in NewZealand because of thefollowing reasons: ●NewZealand is a great place for bussiness activities, is one of ten most prosperous countries in the world.
●It is a big consumption market and great place to test new products and services. ●NewZealand was highly ranked in competitiveness by the World Economic Forum (WEF) 2. Disadvantage: ●NewZealand’s economy was also heavily influenced by the world financial crisis, pushing the unemployment rate to 4.6% (highest since 2003). ●In 2010, World Dairy was expanded due to increasing demand in Asian countries and Russia. So in NewZealand, 90% of milk produced is exported to foreign countries. This resulted in having more milk processing plants here. From the analyses above, we can see the problems that Miraka are facing: ●Miraka is a newly established company, will not avoid competition from other dairy companies. Especially the companies have a foothold in both the domestic market and around the world ●The ongoing development of technology and the global economy requires company to invest and develop continuously ●Consumers become more aware of products and careful whening selecting the products. This requires process in generating customer’s trust. This is the first problem arising for a new established company like Miraka to overcome. Risk is unavoidable in investment. Therefore, the difficulties above areinevitable in the process of international integration in most countries. But withthe advantages that NewZealand has, Vinamilk saw the potentiality, possibilitiesof development that this project offering is large and worth exchanging thedifficulties to join the NewZealand dairy industry.
IV. Operational status and development potentiality: 1. Operational status : The project was constructed on 6/11/2010 - used 250 workers duringconstruction and was officially put into operation in August 2011. On 1/8/2011, the first bag of milk came out of production chains. This plantwill make whole milk powder (WMP) to provide for Vietnam and other Asiancountries. In the first year, Mikara milk powder plant operated at 80% designedcapacity 2. De’velopment potenti’alilty: Miraka Factory specializes in producing high quality milk powder productswith a capacity of 8 tons / hour and can be expanded in the future, e’quivalentto 32,000 tons / year, capable of processing 210 million liters of rawmilk annually, the equivalent of 55,000 milk cows, eight tons of milk powder perhour. In peak season, the plant can operate at full capacity and process 1.1 millionliters of milk per dayV. The influence of Vinamilk foreign-invested project on society: Vinamilk s construction investment project of high quality milk powderwith full dairy ice-cream factory has brought many benefits to themselves and tosociety in both Vietnam and NewZealand. 1. Impacting on Vinamilk and Viet Nam: Developing brand name: this project helps Vinamilk not only intergrateinto world market step by step but also enhance brand ‘value.
Avoiding the risk of exchange rate: compared with raw materials import,this project has provided a stable milk supply to Vinamilk, reduced/d/ cost risk andexchange rate fluctuations. Expanding business market and accessing world market: Milk productionwould be more convenient here because of solid and modern technologicalfacilities, international- standardized staffs and high quality of milk. The export ofmilk to other countries is more convenient due to export expenses saving, helpsVinamilk to expand its market to the world. Building consumer’s faith: The investment of milk factory in NewZealandwill set consumer’s mind at rest about milk quality. Con’tributing to increase ‘profit: This project will bring a significantrevenue stream for Vinamilk in the future. Reducing domestic shortage of milk: Miraka project helps allocatingVinamilk’s material source to produce milk in an effective way to meet domesticdemand. Factories in NZ will supply milk for both export and Vietnamese marketin order to avoid dairy import from China, Europe,… 2. Impacting on NewZealand Miraka project not only helps reducing unemployment rate in the region butalso enhances workforce quality by trainning professional skills. Facilitating ‘agriculture to de’velop more powerful, especially in dairyfarming, improve living condition and income, con’tribute to de’velopNewZealand economy.