Swelling disposable incomes, a discernible shift in taste and a company shake-up has left Vietnam's leading wine producer licking its lips in anticipation of an expected sales boom.
Since it first began specializing in making wine in 1993, the Hanoi-based Thang Long Co has seen its profits rise from around US$200,000 to a respectable US$1.3 million last year from revenue of US$4.25 million.
PHOTO: AFP
Ngan Pham-bang, the company's general director, expects profit margins to rise exponentially after its equitization or semi-privatization which began in 2000 but was only completed mid-way through last year.
It is just one of 861 companies from the more than 5,600 state-owned enterprises that have sold off stock in themselves in a bid to raise capital and improve efficiency since the equitization process kicked off in 1995.
In Thang Long's case, the government has retained a 40 percent stake, domestic investors have snapped up 20 percent, while its 300 staff and management hold the balance.
"This has had a big effect on the company now that everyone owes some capital because staff are more proactive," Ngan said. "Even I have to work harder and continually strive to improve the company's performance or else someone will replace me. I have to ensure that shareholder value grows."
Surprisingly, he says sales growth for the most bourgeois of tipples lies with Vietnam's lower-middle classes, despite GDP per capita in the communist-ruled country hovering at US$430.
"The upper-middle classes aspire to drink imported wine, but more and more people in the countryside and among the urban lower-middle classes are changing from drinking rice wine at weddings and other celebrations to fruit-based wine."
Ngan attributes the phenomenon to the ripple effects of Vietnam's gradual transition to a socialist-leaning market economy, which has boosted personal wealth levels in the major cities.
The wine's sweet, but highly palatable taste, and the fact that at less than one dollar a bottle, it costs almost the same as the best quality rice wine, are encouraging people to make the switch, he said.
However, unlike its French, Australian, Chilean or even Japanese elder cousins, the majority of Vietnamese wine is not made from grapes, though it is not for lack of trying. Strawberries, pineapples, apricots and a local speciality, tao meo or wild apples grown in isolated, mountainous northern areas, are the usual ingredients.
"The truth is, we really want to produce grape wine but Vietnam does not have the expertise nor grapes of sufficient quality to make it," Ngan said.
Less than three percent of the five million litres produced by the company last year was made from grapes grown in Ninh Thuan province, but even he admitted it was of poor quality.
"We also tried importing grapes from other countries, but because we are not suitably skilled and our equipment is not advanced enough the project was not a success."
In a bid to keep its neck out in front of the 20 or so other state-run producers, Thang Long has been buying vats of wine from overseas during the past year and bottling it for sale in the domestic market.
Ngan said he was in contact with Western producers for help in expanding production of grape-based wine, but added that no one has yet agreed to invest the time and money needed to take the company to the next stage level.
He maintains that producing exotic fruit wine has its merits.
"Our work has brought many benefits to the Vietnamese people because we are using domestic resources by buying fruits from farmers, especially from those in the poor mountainous regions in the north.
"We are helping the government in its poverty reduction policies and we are also raising cultural education levels in rural areas."
PATENTS: MediaTek Inc said it would not comment on ongoing legal cases, but does not expect the legal action by Huawei to affect its business operations Smartphone integrated chips designer MediaTek Inc (聯發科) on Friday said that a lawsuit filed by Chinese smartphone brand Huawei Technologies Co (華為) over alleged patent infringements would have little impact on its operations. In an announcement posted on the Taiwan Stock Exchange, MediaTek said that it would not comment on an ongoing legal case. However, the company said that Huawei’s legal action would have little impact on its operations. MediaTek’s statement came after China-based PRIP Research said on Thursday that Huawei filed a lawsuit with a Chinese district court claiming that MediaTek infringed on its patents. The infringement mentioned in the lawsuit likely involved
EXPECTATIONS: The firm, which is on track to outpace global foundry industry revenue growth, said it expects constrained advanced process capacity amid stronger AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday increased its projected revenue growth for this year to above 25 percent, as stronger-than-expected demand for premium smartphones and artificial intelligence (AI) devices are to drive greater utilization of cutting-edge 3-nanometer and 5-nanometer chips. In April TSMC estimated 21 to 24 percent annual growth. The firm’s revenue growth is on track to greatly outpace the global foundry industry, which is expected to rise about 10 percent this year. “Over the past three months, we have observed stronger AI and high-end smartphone demand from our customers, which is to boost the overall capacity utilization for our leading-edge
INVESTMENT: The company’s planned complex in Texas would be the first 12-inch silicon wafer fab built in the US in more than 20 years, a GlobalWafers official said GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said it secured up to US$400 million in direct funding from the US Department of Commerce under the CHIPS and Science Act for the construction of two new advanced fabs in the US. Its subsidiaries GlobalWafers America and MEMC LLC are to build a 12-inch silicon wafer fab in Sherman, Texas, and another one in Missouri to produce silicon-on-insulator (SOI) wafers used to make leading-edge chips. “With the support of the [US President Joe] Biden Administration, we are honored to be bringing to American shores the world’s most cutting-edge 12-inch semiconductor
Nikon Corp is fielding strong demand for its legacy chipmaking machines in China, which is mobilizing resources to build its own semiconductor supply chain. Inquiries for the Japanese precision maker’s lithography tools have surged in China, Nikon president Muneaki Tokunari said. The company is set to revamp a lithography machine geared for decades-old manufacturing processes. Its NSR-2205iL1, launching this summer, would serve the market for mature chip technology and Nikon expects to sell more than 10 units of the machine annually, said Tokunari, who is also chief operating officer and chief financial officer. New companies are sprouting up in China to make