FOREIGN DIRECT INVESTMENT

VINAMILK’S INVESTMENT IN NEW

ZEALAND
GROUP 11: TKB
 WHAT IS VINAMILK
(GENERAL INFORMATION)

Trading name: Vietnam Dairy Product JSC

Type: Joint-stock company

Industry: Dairy products, juice

Founded: 1976

Headquarter 10 Tan Tao, district 7, HCM city,

Viet Nam

Key people: Mai Kieu Lien – CEO

Products: Liquid milk, condensed milk,

powdered milk, probiotic, yogurt, ice cream,
soft drink
AREA SERVED: VIETNAM, MIDDLES EAST, AFRICA, ASIA, NEW
ZEALAND, EUROPE, NORTH AMERICA, AUSTRALIA
BRIEF ORIGIN AND ACHIEVEMENTS:
• 1976: Vinamilk was founded on 20/8/1976
• 1985: Received 3rd class labor order
• 1991: Received 2nd class labor order
• 1995: First dairy factory in Hanoi
• 1996: Received 1st class labor order
• 2000: Received hero of labor
• 2001: First dairy factory in Can Tho
• 2003: First dairy factory in Saigon and Binh Dinh
• 2005: First dairy factory in Nghe An, received 3rd class Independence order
• 2006: First cow farm in Tuyen Quang
• 2008: First dairy factory in Tien Son, 2nd dairy factory in Binh Dinh
• 2009: 3rd dairy factory in Nghe An
• 2010: 4th dairy factory in Thanh Hoa, 2nd class independence order, joint venture with
factories in New Zealand and other countries
BRIEF ORIGIN AND ACHIEVEMENTS:
• 2012: 5th dairy factory in Lam Dong
• 2013: Super dairy factory in Binh Duong with 100% automation, construction on cow farms in
Tay Ninh, Ha Tinh
• 2015: Construction on cow farm in Thong Nhat-Thanh Hoa, Vinamilk`s stocks in Mikata
company(New Zealand) increased from 19,3% to 22,8%
 PRODUCT

Currently, Vinamilk is the biggest

dairy company in Vietnam, Capable
of producing 570,402 ton of
milk/year. With more than 200
products including nutritious milk,
nutritious food, coffee and soft
drinks: condensed milk, yogurt,
raw milk, cheese, milk powder, ice
cream, soy milk, juice…
COMPETITORS:
MARKET SHARE:
KEY FINANCIAL INFORMATION 2013:
FDI strategy of Vinamilk
Backward integration
Source material is taken from 3 sources:
+ Fresh milk is purchased from farmers
+ Foreign sources: New Zealand, America, Europe
+ Vinamilk ’s own farms
Benefit of such strategy:
• By executing this strategy, Vinamilk can help its bottom line
• Cost can be controlled significantly from production through to the distribution process
• More control over their value chain, increasing efficiency, gaining direct access to materials
• Keeping competitors at bay by gaining access to certain markets and resources, including
technology and patents
Vinamilk ‘s investment in New
Zealand

11/9/2010: VNM received a license of

investment abroad to invest in Miraka in New
Zealand through owning 19.3% of shares

The processing plant is located at the centre in

the north island of New Zealand

It purchases fresh milk from farmers of Taupo

to produce high quality milk to sell in the global
market

The total invested capital is 121 million New

Zealand dollars, equivalent of 1623 billion VND.
The plant was designed with a capacity of 32000
tons of milk powder annually
 New Zealand’s Overview

Strong points:
● Stable and robust growth of 2.9% in 2017
(Coface, 2017)
● A stable and secure environment with
modern infrastructure in telecommunication
networks, roads, railways, sea and robust
and sophisticated energy networks
● A highly trained, flexible and versatile
workforce
● Ownership costs that are among the most
competitive in the Pacific region
● Free movement of capital
● A simple and attractive tax system for FDI:
for example 100% tax deductibility for
research and development for companies
● One of the lowest customs tariff rates in the
world
● Proximity to Asian markets
● Public finances are in order
 New Zealand’s Overview

Weak points::
● Geographical isolation and
vulnerability to natural disasters
● A limited domestic market (4 692
700 inhabitants in 2018, World
Bank, 2018) is further hampered by
a high level of household and
business indebtedness
● A shortage of skilled labor weakly
offset by immigration
● Increased dependence on exports
of the agricultural sector
● Low investments in research and
development
 ADVANTAGES AND DISADVANTAGES OF VINAMILK’S INVESTMENT IN NEW
ZEALAND:
Pros:
• New source of high quality milk
• A source of purebred A2 cow to import
• Actively stabilize the source material for milk production
• Expand the consumers choices
• Cater to consumers that favor foreign-made products
• Strengthen the brand name of Vinamilk to both local
consumers and foreign consumers

Cons:
• Hindrance to domestic investment
• Risk of political changes which can lead to expropriation
by foreign government
• Negative influence on exchange rates
• Difference in currency exchange rate leads to higher cost
for Vinamilk
Conclusion
Investing into another country’s economy, buying into a foreign company or otherwise
expanding your business abroad can be extremely financially rewarding and might
provide you with the boost needed to jump to a new level of success. However,
foreign direct investment also carries risks, and it is highly important for you to
evaluate the economic climate thoroughly before doing it
Reference list:
http://www.vinamilk.com.vn/en/lich-su-phat-trien
http://www.vinamilk.com.vn/en/ve-cong-ty
http://www.investvietnam.gov.vn/en/nghanh.nghd/27/dairy-industry.html
http://www.vinamilk.com.vn/en/bao-cao-thuong-nien
http://s.cafef.vn/vnm-120771/vinamilk-bat-ngo-voi-chien-luoc-nhap-khau-hang-tusan-xuat-o-new-zealand.chn
https://www.investopedia.com/terms/b/backwardintegration.asp
https://en.portal.santandertrade.com/establish-overseas/new-
zealand/investing?&actualiser_id_banque=oui&id_banque=0&memoriser_choix=memoriser
THANKS FOR YOUR
ATTENTION!