Rags to riches: Communist Vietnam’s dairy giant on privatisation drive

By Tan Qiuyi,  [http://www.channelnewsasia.com/]
Vietnam’s government will sell a 9 per cent stake in its prized dairy producer Vinamilk on the Ho Chi Minh Stock Exchange on Monday. In an interview with Channel NewsAsia, CEO Mai Kieu Lien talks about privatisation, going organic and how to build up a dairy industry from nothing.

HO CHI MINH CITY: 40 years ago, Mai Kieu Lien was a young Soviet-educated engineer at a condensed milk factory in crisis. Vietnam had just ended a bloody war with America. Newly nationalised by the communist government, its tiny dairy sector was running out of an essential raw material: Imported milk powder.

Now, Lien is the CEO of the Vietnam government’s prized dairy producer Vietnam Dairy Products JSC (Vinamilk).

“Workers had nothing to do,” she said, recalling how the factory had to switch to making biscuits and candy to avoid layoffs. She spent the next ten years focused on sourcing raw material and getting hold of the foreign currency needed to import it; and over the next thirty years, built a milk empire.

Now 63, Mai Kieu Lien is one of Asia’s top woman CEOs at the helm of Vietnam’s prized dairy cow, Vinamilk. (Photo: Do Khuong Duy)

Vinamilk’s factories churn out more than 200 products, from milk and cheese to yoghurt, soy milk and juices that line grocery shelves up and down the long country.

In 2015, the company’s revenue jumped 14 per cent year-on-year to US$1.7 billion. Of that, exports made up 13 per cent – no mean feat in a country that, up until the 1990s, imported nearly all its milk.

“We couldn’t imagine that we would one day export milk,” Lien told Channel NewsAsia at her office in Ho Chi Minh City’s district 7. “But Vinamilk did it.”

Born in Paris in 1953, Lien was four when her family moved to Hanoi where she grew up. At 17, she was sent to study milk processing in Russia by the communist government.

“I didn’t think about what I would achieve or where I would go,” Lien said. “For our generation, it was wartime and we had simple thinking.”


Vinamilk’s success story is rare in a country where bloated state-owned enterprises (SOEs) are known for institutionalising graft and chalking up bad debt.

One of the first SOEs to go private, Vinamilk was able to ditch the state’s lengthy approval procedures, follow private sector principles and move fast on business opportunities, said Oliver Massmann, a partner at Duane Morris.

Vinamilk was the first Vietnamese dairy to produce yoghurt for the domestic market in the 1980s. (Photo: Do Khuong Duy)

Its transparency and corporate governance also stand out in a country ruled by opaque state-owned giants.

Take the Vinamilk website, available in both Vietnamese and English. The English version is not just a ghostly cousin with most links going back to the Vietnamese site. English language financial reports and updates are available for download, along with biographies and smiling pictures of company leaders. This is in contrast to the vast majority of Vietnam’s faceless corporate homepages, which are in Vietnamese only.

“The fact (is) that they have an international relations department … and have had foreign investors with them for years. They understand how it has to be done,” said Marc Djandji, head of institutional sales at the Ho Chi Minh City-based RongViet Securities.


Vinamilk’s international outlook comes in handy at a time when foreign investors are getting closer than ever.

On Dec 12, Vietnam’s government will put up 9 per cent of its Vinamilk stakes for auction on the Ho Chi Minh City Stock Exchange at a minimum price of 144,000 VND (US$6.34) per share. In July, authorities scrapped the company’s foreign ownership cap, opening up the possibility of a 100 per cent foreign-owned Vinamilk, although no timeline has been given.

All this is part of a pick-up in the country’s privatisation moves this year, said Sebastian Eckardt, a lead economist at World Bank Vietnam.

Vinamilk is one of ten state firms Prime Minister Nguyen Xuan Phuc has named for divestments in a bid to boost the country’s dangerously high public debt. Official data shows public debt at the end of 2015 reached nearly US$120 billion, equivalent to 62.2 per cent of GDP.

Vinamilk produces more than 200 types of products, from milk and cheese to yoghurt and juices that line up grocery shelves across the country. (Photo: Do Khuong Duy)

Private and foreign investors looking to buy into the dairy giant’s profits are watching the December auction, but more eyes are on the government’s remaining 36 per cent stake.

Investors may not get the opportunity to buy big into Vinamilk, however. The biggest foreign shareholder, Singapore-listed F&N Dairy Investment, holds an 11 per cent stake and no foreign investor has a decisive say in the company today, a situation Lien hinted she was happy with.

“I think we’ll discuss changing our charter, to make sure the company does not fall into any controlling power,” she said.


Under Lien, the dairy firm is now poised to milk Vietnam’s growing middle-class demand for safe food. Consumer distrust of food products in Vietnam is at an all-time high after years of scandals rocking the agricultural sector across the board – from fake rice, vegetables laced with pesticide, to meat and fish injected with toxic chemicals. The result is more consumers willing to fork out for what they believe is clean food.

Vinamilk’s USDA-certified organic UHT milk launched in June this year. (Photo: Do Khuong Duy)

In June, Vinamilk launched its first made-in-America USDA-certified organic UHT milk. Milk from its first organic farm in Da Lat is expected to hit the shelves by the end of the year. Next year, it plans to invest in a second organic farm in Thanh Hoa.

The price point of organic Vinamilk is about 50 per cent higher than its non-organic range, a difference Lien believes consumers can accept. Production volumes will start small but Lien is confident about future demand.

“The earlier we are, the bigger market share we can get,” she said.


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