Ms Nguyen Thi Tra My - General Director, Vice Chairman of PAN Group Board (The PAN Group)
My is leading the PAN Group, and has set the goal to become a top company operating in the field of food and agriculture, aiming to meet the standards of the most demanding markets in the world.
Its M&A strategy has resulted in the PAN Group holding the Vietnam National Seed Group Joint Stock Company (Vinaseed Group - NSC), Bibica Joint Stock Company (BBC), Long An Food Processing Export Joint Stock Company (Lafooco - LAF), Ben Tre Aquaproduct Import and Export Joint Stock Company (Aquatex Ben Tre - ABT), Sao Ta Foods Joint Stock Company (Fimex VN - FMC), ... thereby gradually improving the closed value chain according to the Farm - Food - Family model. Expectations are that by 2022 the group’s revenue will be $ 1 billion. Ms. My shared how sustainable growth is possible through the PAN Group even though they have been in the agricultural sector only a short time.
Why does PAN Group develop businesses in agriculture and food industry with a M&A strategy, instead of building from scratch?
It would take a long time for a company to build to a significant size in the food and agricultural industry if it were starting from nothing. For example, building a seed company from the beginning, to get good breeds, there is a need for investment in research and development, along with forming a highly qualified workforce, with a laboratory and access to field experimentation and a distribution system too, this can take many years. Therefore, through M&A deals the PAN Group has bought established companies which already have good human resources and connections to large markets.
That foundation has helped the PAN Group, in a short time, build a value chain and create products that meet international standards, and establish a solid foundation in the food and agriculture industry.
Has the PAN Group been "quite clever" by mainly using M&A to build up a portfolio of leading companies in the market?
It’s true that the businesses that the PAN Group acquires through M&A are in the top of the market, strong in products, brands, and distribution systems. However, the PAN Group’s aim with their M&A is not focused entirely on the assets and cash flow, but also on acquiring and improving human resources to the best of our ability. It is the people that are the prerequisite to promote rapid business growth of businesses when they become a member of the the PAN Group.
Another advantage of the PAN Group in the M&A process of leading companies was the timing, not many investors were interested in the agricultural sector, and PAN chose the right time to pour capital in to accumulate a platform from which to expand. For example, in the same field, the PAN Group owns two leading companies: NCS and SSC. In the food industry, the PAN Group holds the right to dominate by owning BBC, LAF, ABT, FMC. In the current market it would be much more difficult to implement M&A deals for these companies.
Post M&A is never simple. How do you, as the head of the organisation, get the cooperation and acceptance from companies that have been acquired without encountering "barriers" or negative reactions?
The common challenge of a M&A deal is the conflict between old people and new people. Buying a successful company is difficult, corporate governance after M&A is not easy. This conflict is easy to understand because people are worried about the changing business strategy, personnel, and company culture, including the possibility of losing personal benefits they previously had.
However, with the PAN Group, when choosing M&A we’ve always aimed at transparent companies. The leader of the company has to be mindful, capable, willing to cooperate, and able to change business practices in order to grow to new heights.
In fact, after becoming the dominant partner the PAN Group does not change the personnel structure of the companies it owns, we rely on on-site forces. Adding more people to the board to support management system upgrades, planning business strategies and pulling capital from investment companies to improve financial capacity, and competitiveness to exploit the potential of the old company.
The PAN Group’s mechanism after M&A is to improve the company’s flexibility and to maximize its internal resources by helping its employees to be motivated to contribute to the sustainable development of the business which will in turn benefit themselves. With the goal that people are the most valuable capital, all conflicts or barriers of M&A are easily resolved.
Another special feature is that our growth and desire is to build the Group to become the leading enterprise in the field of food and agriculture.
At this point, we agree that after all the companies we’ve brought into the PAN Group everything is growing at a pace we are happy with.
The PAN Group is making great efforts to invest in agriculture, especially high-tech agriculture, while investing in this field is not simple, what are your strategies?
The agricultural sector is making strong changes towards high-tech applications and changing production methods to create quality products. In order to create an effective agricultural sector, there are many factors, such as investment capacity, investment efficiency, and quality human resources. We only identify enterprises that are able to develop a closed supply chain to be able to keep long-term growth and national brands able to compete with other businesses in this region and the world. The PAN Group’s agricultural approach is to ensure quality consumers expect and to step by step develop to a larger scale and promote the groups brands.
High-tech agriculture in particularly seems to grow at a slow pace, how do you plan on improving this?
In agriculture, especially high-tech agriculture change cannot occur overnight. The PAN Group’s agricultural products are mainly exported to developed markets with high levels of quality control, so they have to be very careful in farming techniques, because with just one miss-step products will be of an insufficient quality and returned immediately. It is imperative that standards are rigorously maintained in order to not lose credibility and customers.
We also want to expand our areas of cultivation into flowers and melons etc. To increase production of these products requires well-trained manpower and a high level of technical investment. This is not a small undertaking and investment must allow for production efficiency to remain unaffected by the pressures involved. Therefore, it must be slow and reliable growth to ensure that it does not face undue risks.
The PAN Group accepts these demands for high quality products and is aware that sales will grow steadily.
Recently, the Sojitz Group of Japan has invested US $ 35 million to buy 10% of the PAN Group's shares, what advantage will this corporation bring to the group?
To arrive at the handshake between the two companies Sojitz spent nearly 2 years learning about PAN before deciding to invest. However, this is not a story of a foreign company investing purely financially, but a business relationship where working together will raise the quality of Vietnamese agricultural products. With Japanese knowledge, technology and the owning of a global business network Sojitz will support the PAN group to improve crop and livestock productivity, establish value food chains, develop value-added products, and improve the distribution system. This means that the PAN group will be able to sell products to the international market through Sojitz’s distribution system. The added revenue and profit will be key to show the company’s effectiveness. What we want to build is a Vietnamese brand for Vietnamese agricultural products and foods, based on cooperation with Sojitz.
Can you explain what the PAN Group's business strategy is for the future?
The market drives the PAN Group’s product development decisions, and by being aware of changing trends we maneuver to meet the markets new areas of growth. Our aim is to anticipate trends, deliver high quality healthy foods, and to get them to market in a way that attracts new customers.
We continue the plan to buy shares in companies that dominate in their respective fields and to promote the value chain by producing many key commodities from Vietnam's food and agricultural industry.
On this basis, the PAN Group expects revenue to reach 1 billion USD and pre-tax profits of 95-100 million USD by 2022 at the latest.
Phương Minh, HCMC Law