ENTREPRENEUR INTERVIEW 2010

TABLE OF CONTENTS
I. OVERVIEW ....................................................................................................................................... 2

II.

THE ENTREPRENEUR S BACKGROUND, MOTIVATIONS AND CHALLENGES IN GROWING THE

VENTURE ................................................................................................................................................. 2

III.

VALUE PROPOSITION OF THE FIRM .............................................................................................. 5

IV.

SUCCESSFUL REASONS ................................................................................................................. 6

V.

LESSONS DERIVED AND RECOMMENDATIONS .................................................................................. 7

VI.

REFERENCES ................................................................................................................................. 8

VII.

APPENDICES ................................................................................................................................. 9

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I. OVERVIEW
Awareness improvement of the society about food safety among the chaos of food, especially vegetable, poisoning cases happening almost everywhere from mid 90s; the gradual popularization of supermarket as a reliable retail channel in distributing fresh and safe food and vegetable in the beginning of the 20th century; in addition with the underlying long-nurtured dream of a man who wanted to contribute his knowledge and his love for a healthy life have created the first company ever in Vietnam that applied hydroponic system in growing vegetables and selling them- Vinh Phuc Company (Tan Viet & Thanh Nha, 2001). It has been providing green and clean leave-consuming vegetables for large supermarket chains in Ho Chi Minh City like Maxi Mart, Cong Quynh, Nhat Nam and Co. Op Mart for nearly ten years since its first establishment in 2000 as a family business. From the short interview conducted with Mr. Nguyen Huu Dung- an agricultural engineer and also the current owner of the company, the process of shaping this business idea has turned up clearly and will be discussed in detail in the next part. Coming up next will be the evaluation of the firms value proposition, the analysis of successful reasons and the lesson derived.

II.

THE ENTREPRENEURS BACKGROUND, MOTIVATIONS AND CHALLENGES IN GROWING THE VENTURE

Although having aced the entrance examination to Ho Chi Minh Cyclopedia University

after finished high school, he stopped to cross Vietnam border for the American dream just like many others at that time did hoping for a brighter future. Unluckily, the voyage did not succeed and he had to come back entering university- this time was Agriculture 4 School (today known as Nong Lam University). Being one of the first-class honored graduators after successfully defended their graduation project on fungal micro in 1992. Just after the year of graduation, he hired a piece of 500m2 land in Hoc Mon and started growing vegetable and sold to normal market but the profit earned was just merely met daily need (Phuong Tinh, 2000). The future road seemed to be paved for them when a French company agreed to sponsor the student group a fungal growing project in East Africa for five years. However, when the group almost finished their research after 2 years, a coupe staged in the country had led the project to zero effort. But still our entrepreneur paid attention to quite new technology the hydroponic- and dreamed of the day Dang_Binh_Phuong_Linh-s3210262 Page 2

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he can own his business applying that system- let say, around twenty years ago. Set aside the dreams, the team scattered and each one lived their own life since then. Our entrepreneur had been doing lots of works for a living and also once run a small garment workshop for a short time and went bankrupt. The current family economic condition was the first factor motivated him to do something to get out of the current crisis. Moreover, there was frustration in the society toward food poisoning for over a decade since mid 90s: 600 cases of pesticide poisoning allegedly due to eating contaminated vegetables were reported in 1993-1994 and it had come a deadly trend with increased cases of food poisoning which also led to 277 deaths in 2003- reported by Nguyen (Vien & Hoi, edited by Umegaki, Thiesmeyer & Watabe, 2009) that had become a warning to societys awareness of health and food safety, especially clean vegetable. From that fact, he felt an urge to bring his knowledge about agriculture from school; his interest in hydroponic system since 1993- a method of growing vegetable by nutrition water (Phuong Tinh, 2002) and experiences from works to build up the current vegetable sprout camp. This time, he took things slow to avoid prior failure with the garment workshop. He had investigated other clean vegetable growers in the city to see how they operate their business and figured out the reason for the disqualified products: it was not from the production but from the outsourced distribution process since the producers could not ensure the vegetables freshness when they reached consumers hands. They failed for losing consumers trust. He also went observing in supermarket chains to understand buying pattern of the consumers. Starting with those information and knowledge, he began to write a business plan, completed it with a financial plan, a long-prepared research on applying and experiment the hydroponic technique plan with a passion of building up a business type that he could effectively take charge from start to end. He chose to follow the direct supply without middlemen method and took supermarket chains as his customers since 90% of modern distribution outlets customers decided to shop for vegetables there for the safety of produce (Cadilhon, Moustier, Giac Tam & Fearne, 2006). The required initial capital was 15 million dong. Since he had carefully investigated consumers behavior and quite confident about the growing demand of the market, he presumed to borrow a hot loan (Phuong Tinh, 2002).

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The company was named after his son- Vinh Phuc. Since the very first start, things were not like a piece of cake. He used to ride his bicycle to small markets and supermarkets for selling Vinh Phuc vegetables every day. The current owner of Maxi Mart 3/2- Ms. Hong- finally allowed him to hire a small up-stair stand in the store and he started the business officially. To begin, he brought his products- not yet been harvested- to the shop, so call it, to directly show the consumers how the vegetables being planted and harvested. Finally, the consumers started to accept his price at 1.5 times higher than market vegetables. The consumption gradually increased from 10kg to 50kg per day after six months since the products first being introduced on the market (Phuong Tinh, 2002). The business method also changed since the supermarkets started to offer selling his products and receiving discounts. Real challenges began. Larger demand grew along with many other requirements to fulfill: more land, more employees and improved technology to increase the productivity. He hired workers, taught them the nurturing and harvesting technique, including a motorbike delivery team in charge of distributing vegetables to supermarkets every day before 6AM to avoid traffic congestion in the early morning. However, land is still a real tough challenge. Since the business nature is agriculture industry, the rate of return was not as high and profitable as manufacturing industry in many peoples perception. Therefore, borrowing land has become a matter. Including 500 m2 he already contracted, he has been able to use just around 1000m2 for cultivation, contracted annually until now (Thanh Dy, 2002). To handle the supply for larger demand with just a humble land area, he first continued to research to find the appropriate nutrition amount for planting different kinds of leave-consuming vegetables and improve the technology for shortening the reproductive cycle (now, sprouts have weekly reproductive cycle and that of rau muong (water spinach) is 15 days). However, the demand was too high for the firm and it had to regretly refuse some beneficial contracts with Metro Cash & Carry, Masan mart and an import-export unit (Thanh Dy, 2002). The firm currently provides only leave-consuming vegetables with the core product is water spinach. Mr. Dung is aiming to expand into tuber-consuming vegetables in the future through a series of researches he is experimenting and also to upgrade the current technology in growing current products, as he stated, to both producing the products more effectively by salvaging the materials to save costs and maintaining the stable price level. But at last, land is still the most concern.

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III. VALUE PROPOSITION OF THE FIRM
Gradually, the reputation of the firm has been upgraded to a new level: reporters from many newspapers (Nguoi Tieu Dung Newspaper, Tuoi Tre Newspaper and Sai Gon Tiep Thi Newspaper) (Appendix 2- Attached newspapers) sought to study about the firm; it was broadcast on television (VTV3) and the facilities it possesses were also approved by the Ho Chi Minh Plant Protection Branch. That has contributed to the upgraded living standard of a majority of vegetables market in Ho Chi Minh City. Hence, people start to know and confidently use its products. The market itself has been expanding from premium income housewives group to lower income housewives group in Ho Chi Minh City along with better economic condition and improved living standard. The firm has also gained customers trust and loyalty by focus on the important of the product characteristics to attract final consumers attention since it was opened to meet the urgent need of safe and clean vegetables. He said, at first, the consumers usually observed carefully before they picked one vegetable bundle but now they choose Vinh Phuc products as a habit (changed from limited decision making to habitual decision making process- Quester, Neal, Pettigrew, Grimmer, Davis & Hawkins, 2007) and that makes the owner feel happy. They also willingly pay higher price (about 30% to 40% higher) for fresher, safer Vinh Phucs vegetables (Figure 1).

Figure 1: Value Proposition Model (Adapted from Phillip, K 1994, Marketing management : analysis,

planning, implementation, and control).

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IV. SUCCESSFUL REASONS
Unlike the rivals, Vinh Phuc Co. has shown that they dare take responsibility toward their products by being the first business in vegetable industry to paste companys name, address and contacts in the packages; also, the self- delivery system helps ensure products quality and maintain good name for the firm. Moreover, although hydroponic system had been successfully researched, developed and widely used in many developed countries for a long time; it had been completed in many Universities and Research Centers in Vietnam twenty years ago, and the AVRDC (Asian Vegetable Research and Development Center) had passed the technology, it had not yet been applied on a large scale (Tan Viet & Thanh Nha, 2001). Being the first to apply the technology, Vinh Phuc Company has gained the very first attention of the market it targets. The excellent factor was the visibility of the service to the consumers while there was doubt in the market of vegetables growing process with pesticide overuse. According to Dao, 2002, the pesticides used per hectare on vegetables was 5.52kg- the highest among other cash crops (Duc Vien & Van Hoi, edited by Umegaki, Thiesmeyer & Watabe, 2009). The owner also directly takes charge the businesss whole value-chain: from the inbound to service of primary activities (buying seeds, growing vegetables, packaging, delivering , marketing and selling to customers service); enhancing the technology improvement of supportive actitiies as well (Figure 2).

Figure 2: The Generic Value Chain (Adapted from Porter, M 1998, Competitive Advantage: Creating and Sustaining Superior Performance).

The decisive element was his ability to see and catch the right opportunity through observing and appropriate concern and awareness about the society. He knew when he had to be quick and decisive and he had done it right. Dang_Binh_Phuong_Linh-s3210262 Page 6

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V. LESSONS DERIVED AND RECOMMENDATIONS
The interview was a valuable experience. To be successful, one should not be afraid of making mistakes and take them as failures but rather consider them as learning opportunities. The circumstances discouragement: sponsored projects broke and garment workshops failure were just obstacles that he had come over to this victory by leering them. His excellent patience was the most impressive: he has been waiting and preparing for almost ten years to achieve his dream. Despite many ups and downs in time, that desire just grew stronger. The passion to learn is necessary, he has learnt to be a scientist, a business man and a role model to the employees, colleagues and his children. Until now, at the age of over fifty, to enrich the knowledge, he still takes time studying English in order to read reference books in English while the majority at his age engaging in doing business and parenting alone. To come up with one simplified sentence that holds the whole story a special pocket experience: Luck will come sooner or later after a really good preparation. Last but not least of the good thing, the entrepreneur is the one that takes responsibility for ones own dream and the process of making it come true. Besides, there is one dangerous point need to be seriously considered: the sprout camp was in the temporary competitive stage at first for the valuable products it offered and the new technology it used . However, the availability of this method has been spreading, many other enterprises and industrial establishments has tested and applied it throughout the nation. That has resulted in the loose to its current competitive parity stage (Figure 3). Registering for technology patent or exclusive distribution right might help but only after land matter being solved which ( is currently out of his control) could be lossen by creating better relationship with the Community People's responsibles since Vietnam market, like many other relationshiporiented markets such as China or Spain, depends heavily on people's connection and benificial

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mutual relationship.

Figure 3: Criteria for Sustainable Competitive Advantage and Strategic Implications (Adapted from Gilbert, D & Tan, C 2009, BUSM4052 Applied Entrepreneurship).

VI.
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REFERENCES
Cadilhon, J, Moustier, P, Poole, Giac Tam, T & Fearne, A 2006, Traditional vs. Modern Food System? Insights from Vegetable Supply Chains to Ho Chi Minh City (Vietnam), Development Policy Review, 2006, vol. 24, no. 1, pp. 31-49. Gilbert, D & Tan, C 2009, BUSM4052 Applied Entrepreneurship, McGraw Hill, Australia.

Philip, K. 1994, Marketing management : analysis, planning, implementation, and control, 8th edn, Prentice Hall, U.S.A. Ph ng T nh 2002, Ng i tin phong trong cng ngh th y canh, Tu i Tr Newspaper, 24 January, Kh i s doanh nghi p. Porter, M 1998, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York, America. Quester, P, Neal, C, Pettigrew, S, Grimmer, M, Davis, T & Hawkins, D 2007, Consumer Behaviour Implications For Marketing Strategy, 5th edn, McGraw Hill, Australia. Tan Viet & Thanh Nha 2001, RAU S CH tr ng b ng ph Thanh Dy 2002, Rau an ton: khng 20, S Tay. Umegaki, M, Thiesmeyer, L & Watabe, A 2009, Human insecurity in East Asia, United Nation University Press, Tokyo, Japan. ng php th y canh, Ng i tiu dng Newspaper, 9 August, p. 10, Tiu dng mun m t. bn!, Si GnTi p Th Newspape, 25 April, p.

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VII.

APPENDICES
1. INTERVIEW TRANSCRIPT  Before Starting His Business

Educational background: Graduated as a agricultural engineer from Agriculture 4 University. . Did you ever have any plans or dreams about a career that you might want to work in? Was it different from what you are doing now? If it is different then why did you decide to change? Of course yes. When I was a student, I dreamt of a day I would start doing something of my own, not something big, something I can apply my knowledge and school projects that can contribute to current society. . Before starting the vegetable sprouts camp, did you have any work experience? Of course. I worked through a lot of careers before starting this sprout camp. For me, every little thing can be a lesson if you considered it properly. I took a lot of experiences from those temporary careers, some from working experiences and some from both failures and success. . Did you have any role models when growing up? Who are they and how they have influenced you? No.

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. As a youth, have you ever done entrepreneurial works? When we were at university, we had completed a school project of applying microorganism technology on growing vegetables. I did not know whether it was entrepreneurial thing. . When did you know you want to start a business? How? 10 years ago but I had dreamt of it since I just graduated from the uni. At that time, food poisoning happened a lot. A large quantity of pesticide was imported to Vietnam and the farmers just used them recklessly. I knew the society was just vulnerable and so was I, that worrisome thing made me think a lot: how could I do differently with normal farmers; how could I use my knowledge to do something. That was when I decided to take risk thanks to my family warms support since it was not so long after my garment workshop business failed; I decide to borrow money and started.  Entrepreneur At The Time He/She Started The Venture . What were the factors that led him/her to start the venture? 3 main factors:- economic- the most critical one; the concern about healthy life with so much dangerous food poisoning cases around and my familys encouragement. . Did you seek to establish a lifestyle business, a fast growth business, or what? Did their growth orientation change over time? I think this is a lifestyle business. It helps fulfill a society awareness of a healthier life, it meets the demand of green and clean vegetable consumption and it really does. . What sort of resources (not just financial) did you have when they started the venture? What resources did you not have and wished they had it? What source of network did you have? Were there any especially creative things you did to come up with the needed resources? A happy family was the main resource for me since they have encouraged me to continue my research and business idea whenever I was down. You know, any kind of technology experiments takes time and costs money. Without them I might be quit this job under much pressure. . Did you write the business plan? Dang_Binh_Phuong_Linh-s3210262 Page 10

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Of course yes. Im a cautious person. Carefully preparing things before doing is part of my personality. I wrote project business plan, financial plan and a plan of hydroponic technology application and improvement. . How did you research the market before starting the venture? Before starting this business, I went through a lot of researches: I saw how other sprout camps were doing, why they were not so successful, what were their main difficulties and I found out that most of them were fail just because they could not distribute their products directly to consumers but outsourced the distribution. Although the products they made were really in good quality, but they were not any more when they reach the final consumers. Besides, I went to the market so many times to observe how the housewives choosing and buying vegetables, understand their concern and buying behavior helped me a lot. . Did you feel prepared to start the venture at the time he/she started it? Everything I could, my knowledge, my experiences and the plans. . How long was a typical work day and work week when you first started the venture? This I could not tell because it has been much fluctuated. When I do research and experiment, time was very constraint, I have spent most of the day experimenting.  Entrepreneur As He/She Grow The Venture . How have your goals and values changed since starting the venture? They have been improved a lot. Since people start noticing and the business has to satisfy larger demand, I have to find a way to increase the produced quantity and reduce the unnecessary costs while still keep our products at stable and improved quality. That is when I do more experiments, more research both about technology and ways to run the business more effectively. . Did the typical work week change as the venture grew? (In terms of how much time the venture required and in terms of how the entrepreneur allocated his/her time)? This I cannot tell with the same reason. Usually, the typical work day begins at 3 AM when our harvesters collect the sprouts, pack them and by 5AM we deliver to supermarkets by motorbike Dang_Binh_Phuong_Linh-s3210262 Page 11

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groups for fast and easy transport (We do not use trucks since the city often gets crowded very soon, the trucks might get stuck and we cannot deliver our sprouts on time and ensure the freshness.) Then I come home, whether do paper works, receive orders through phones, do research and at times I do experiments to reduce time and improve the technology we applied in production. Usually we only have 5 days off a year when Lunar New Year comes officially. However, our family members still work during Tet holiday taking care of the sprouts since growing sprouts like this is a closed process requires us to work continuously on a daily basis. . Did you make assumptions when you first started out that subsequently proved to be wrong? What sorts of insights were gained? I sure did. I once thought that I would have receive many support for this idea since it benefits the society and meet current demand of clean and green vegetables. It has turned out totally wrong, I did not receive any support from the outsiders, and no one seemed interested in the plan. I have made any effort for borrowing land but no one helped. Till today, even when people are aware of our sprouts and we have made our name in newspaper (The Consumers, The Youth and The Saigon Giai Phong) and television (VTV 3), the land borrowing process is still a misery. . What key mistakes did you make along the way? What were some of the key lessons learned? I usually planned everything in advance; there are sure mistakes but not any kind of serious. I assumed to be helped by others with the business idea and I realized that I cannot rely on anyone but myself. Your plan, your dream is your responsibility.  ENTREPRENEUR TODAY AND TOMORROW . What would you do differently if you had it all to do over again? I think no. I will still go the same way as I did. . What key personal characteristics do you see in yourself that were especially critical for achieving success with this particular venture? The patience comes first and after that the eagerness to learn new things. I always try to learn as much as possible in order to find new way of doing things and learn to be creative.

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. What kind of leader do you think you are? Care for others, especially the youth. I appreciate anyone who has the will to learn and is not afraid of making mistakes. . What are your plans for the future in terms of the venture? I am working on how to apply current system to grow tuber-consuming vegetables in a productive and efficient way. I also experiment to lessen the reproductive cycle of current products in order to deal with lack of land problem. . What advice do you have for a student interested in starting a venture today? I have a lot to advice a young student in that but in brief I just want to say: First, be patient. Second, try to choose a career that related to what you have been taught in the university since many youth today have been wasting their time studying things that they are not going to apply. Finally, be creative. Learn as much as you can.  VALUE PROPOSITION Product/ Service . What products and/or services are provided? What are the major features? Currently we provide leave-consuming vegetables, the core one is water spinach. We apply the hydroponic system which uses nutrition water instead of land with fertilizer and pesticide to ensure the safety of the products and also save the water used we can save up to 1/3 water volume compare with traditional land growing crops- and selling vegetables by this method can have quicker rate of return since they possess short reproductive cycle. Also, the vegetables are planted in green house that help avoiding insects and dust from the wind and lessen the harm form ultraviolet rays of the sun. . How is the product/service produced and delivered? Our products reach the final consumes- the housewives in Ho Chi Minh City with average to premium income through supermarket retail channel. We have our own delivery team, using

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motorbikes to collect and deliver vegetables to supermarket in the very early morning, usually by 6AM. 2. ATTACHED NEWSPAPERS ( 3 pages) 3. CEO STATEMENT (1 page)

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