Professional Documents
Culture Documents
MID-TERM REPORT
Member's name:
TABLE OF CONTENTS
I. COMPANY INTRODUCTION ............................................................... 6
1. Company information ............................................................................ 6
2. The process of formation and development of the company ................ 6
3. Vision, mission, and core values of the company .................................. 7
4. History formed through stages .............................................................. 8
5. Products of Hoa Phat Group ............................................................... 11
6. Organizational structure...................................................................... 12
II. ANALYSIS OF HOA PHAT'S PESTEL MODEL ............................... 14
1. Economic .............................................................................................. 14
2. Political and Legal ............................................................................... 21
3. Social .................................................................................................... 24
4. Technological ....................................................................................... 25
5. Environment ......................................................................................... 27
III. MARKET ANALYSIS .......................................................................... 28
1. Market Size ........................................................................................... 28
2. Market Growth .................................................................................... 30
3. Market Share....................................................................................... 32
4. Market Brand ...................................................................................... 33
5. Market Need ......................................................................................... 36
6. Market Demand ................................................................................... 37
IV. COMPANY ANALYSIS ........................................................................ 38
1. Analysis of 5M ...................................................................................... 38
1.1 Money ............................................................................................. 38
1.2 Manpower ...................................................................................... 39
1.3 Material .......................................................................................... 41
1.4 Machine .......................................................................................... 45
1.5 Method............................................................................................ 48
2. Analyze the CANVAS business model of Hoa Phat ............................ 48
V. ANALYSIS 5 FORCE ............................................................................ 55
1. Rivalry among existing competitors .................................................... 55
4
3. Place ..........................................................................................................
4. Promotion .................................................................................................
5. Conclusion ................................................................................................
REFERENCES .................................................................................................
6
Figure 13.4: Construction steel sales market share in the first 7 months of 2022..
...........................................................................................................................
Figure 14.1: Types of certificates Hoa Phat has achieved. ...................................
Figure 14.2: Signs to identify Hoa Phat Steel ......................................................
Figure 14.3: Image of Hoa Phat's burning steel billet ..........................................
Figure 14.4: Pictures of Hoa Phat Steel Coil .......................................................
Figure 14.5: Pictures of Hoa Phat's rebar ............................................................
Figure 14.6: Photo of Hoa Phat's hot rolled coil ..................................................
Figure 14.7: Picture of Hoa Phat's Black Box Steel.............................................
Figure 14.8: Pictures of Hoa Phat's galvanized steel box .....................................
Figure 14.9: Hoa Phat's black pipe image ...........................................................
Figure 14.10: Pictures of Hoa Phat's galvanized corrugated iron pipe .................
Figure 14.11: Picture of Hoa Phat's hot-dip galvanized steel pipe .......................
Figure 14.12: Image of the Group being awarded a letter of commendation........
Figure 14.13: Products printed with logo by Hoa Phat ........................................
Figure 14.14: Image of Hoa Phat's identification ................................................
Figure 14.15: Identification image on steel of Hoa Phat ......................................
Figure 14.16: Image of pipe stopper....................................................................
Figure 14.17: Picture of packing with blue wire ..................................................
Figure 14.18: Distribution channel structure diagram of Hoa Phat Steel .............
Figure 14.19: Structure diagram of other distribution channels of Hoa Phat Steel
...........................................................................................................................
Figure 14.20: Hoa Phat freezer on Dien May Xanh's online sales channel ..........
Figure 14.21: Pictures of orders on Hoa Phat's website .......................................
Figure 14.22: Image of 3 cargo ships Kamsarmax owned by Hoa Phat ..............
Figure 14.23: Image of Hoa Phat's logistics vehicle system ................................
Figure 14.24: Image of Hoa Phat's website .........................................................
Figure 14.25: Pictures of newspaper pages written about Hoa Phat .....................
Figure 14.26: The image of Hoa Phat's TVC is recorded.....................................
Figure 14.27: Picture of Hoa Phat's 30th anniversary TVC .................................
Figure 14.28: Hoa Phat's giant signs ...................................................................
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Figure 14.29: Hoa Phat employees are displaying products at the exhibition ......
Figure 14.30: Hoa Phat logo appears on television as a sponsor ..........................
Figure 14.31: Hoa Phat beds for students ............................................................
Figure 14.32: Hoa Phat's staff distributes gifts to people .....................................
Figure 14.33: The ceremony to donate facilities and equipment to the school in
Binh Dong commune ..........................................................................................
Figure 14.34: Process of Personal Offer ..............................................................
Figure 14.35: Pictures of Hoa Phat's catalogue ...................................................
I. COMPANY INTRODUCTION
1. Company information
Detail
Company name HOA PHAT GROUP JOINT STOCK COMPANY
Trading name HOA PHAT GROUP JOINT STOCK COMPANY
Abbreviations HPG
Company Type Joint Stock Company
Address 39 – Nguyen Dinh Chieu – Le Dai Hanh – Hai Ba Trung
District – Hanoi
Chairman of the board Mr. Tran Dinh Long
Phone 04.62833456
Stock code HPG
Certificate of business 0900189284
registration
Field Basic ingredients
Website http://www.hoaphat.com.vn
Table 1.1: General information about the company
2. The process of formation and development of the company
Hoa Phat Group Joint Stock Company is a leading industrial production group
in Vietnam. Starting from a company specializing in trading construction machines
since August 1922, Hoa Phat in turn expanded into other fields such as furniture,
construction steel pipes, refrigeration, real estate, and agriculture. On November
15, 2007, Hoa Phat was officially listed to share the s on the Vietnam stock market
with the stock code HPG.
Currently, the Group operates in 5 fields: Iron and steel (construction steel, hot
rolled steel) - Steel products (including steel pipes, galvanized steel, drawn steel,
and prestressed steel) - Agriculture - Real estate – Household appliances. Steel
production is the core business, accounting for 90% of the Group's revenue and
profit. With a capacity of 8 million tons of crude steel per year, Hoa Phat is the
largest steel producer in Southeast Asia. Hoa Phat Group is in the Top 10 largest
private enterprises in Viet Nam, Top 10 best profitable enterprises. The company
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is the largest producer of construction steel and steel pipes in Vietnam with a
market share of 32.5% and 31.7%, respectively.
Top 5 listed companies with the largest charter capital in the Viet Nam stock
market. HPG's market capitalization reached 11 billion USD, among the top 15
steel companies with the largest market capitalization in the world steel industry.
Hoa Phat Group has 11 member companies with 25,424 officers and employees
operating nationwide and 1 office in Singapore. Steel production is the core field
accounting for more than 80% of the Group's revenue and profit. With the
business philosophy of "Harmony for development", Hoa Phat spends hundreds
of billions of dong per year to fulfill its responsibilities. A corporate society with
the community.
Company logo: After nearly 30 years, Hoa Phat Group has 2 times changed to
receive electricity:
+ Old logos and slogans identified before November 2017.
+ New logos and slogans are identified after November 2017.
Figure 1.1: Hoa Phat's logo before and after waiting for renovation.
(Source: Google)
3. Vision, mission, and core values of the company
3.1 Vision
Become a leading steel distributor in Vietnam, a strategic partner of steel
manufacturers, large domestic and foreign contractors. And become an industrial
production group with leading quality, in which Steel is the core area.
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3.2 Mission
Providing leading products, contributing to improving the quality of life, and
gaining the trust of customers. And bring to customers the most suitable products,
the best quality, and the most perfect service.
3.3 Core values
The core value of Hoa Phat Group is the philosophy of Harmony and
Development. This is demonstrated in the following ways:
Vertical development orientation, creating strong growth momentum,
diversifying business activities
Solidarity, cooperation in work, high discipline, and industrial style is the
core value and cultural tradition of Hoa Phat Group.
Scale and closed production processes create competitive advantages
Research and development is the foundation for sustainable development,
always creating quality products and the best services to meet customers'
requirements.
Profit is the main reason for the existence and growth of Hoa Phat Group.
Building the image of Hoa Phat joining hands with the community -
dedicated to charity activities.
Ensure harmonization of interests of stakeholders on the same boat, towards
sustainable development.
4. History formed through stages
+ The period from 1992 to 2013:
In 1992: Established Hoa Phat Equipment & Parts Co., Ltd. - The first
company bearing the brand name Hoa Phat.
In 1995: Established Hoa Phat Furniture Joint Stock Company.
In 1996: Established Hoa Phat Steel Pipe Co., Ltd.
In 2000: Established Hoa Phat Steel Joint Stock Company, now Hoa Phat
Hung Yen Steel One Member Limited Company.
July 2001: Established Hoa Phat Refrigeration Co., Ltd.
September 2001: Established Hoa Phat Urban Development and
Construction Joint Stock Company.
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February 2017: Established Hoa Phat Dung Quat Steel Joint Stock
Company, deployed Hoa Phat Dung Quat Iron and Steel Complex in Quang
Ngai Province, with a scale of 4 million tons/year with a total investment of
VND 52,000 billion. marks a new development milestone of Hoa Phat
Group.
August 2017: August 20th, 2017 is a very special milestone because Hoa
Phat Group officially celebrates 25 years of construction and development.
On this occasion, the group also had many welcoming activities such as a
cultural performance called "Brighting talent", football tournaments, photo
contests, etc.
+ The period from 2018 to 2021:
April 2018: Ton Hoa Phat Co., Ltd. officially introduced to the market a line
of high-quality color-coated corrugated iron products. In the third quarter,
Hoa Phat Steel Pipe Co., Ltd. decided to invest in the construction and
installation of a large steel pipe production line at the factory in Hung Yen.
In October, for the first time, the consumption volume of Construction Steel
reached a record of 250,000 tons.
September 2019: Hoa Phat Equipment & Parts Co., Ltd officially changed
the name of Hoa Phat Metal Manufacturing Company Limited.
November 2019: Hoa Phat Steel first hit 300,000 tons in November, and the
steel market share exceeded 26%.
November 2020: Hoa Phat Group started to supply commercial hot-rolled
coil products to the market. The product helps to optimize the Hoa Phat steel
ecosystem.
December 2020: Hoa Phat Group restructured its operating model with the
establishment of Corporations in charge of each field of operation of the
Group. Accordingly, 4 corporations under the group were established,
including: Iron and Steel Corporation, Steel Products Corporation, Real
Estate Corporation, and Agriculture Corporation.
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6. Organizational structure
Figure 1.2: Operation model of Hoa Phat Group. (Source: Hoa Phat Group)
The Board of Directors of Hoa Phat Group decided to restructure the
organizational model with corporations in charge of each field of operation of the
Group. Accordingly, there will be 5 corporations under the Group restructured,
including: Iron and Steel Corporation, Steel Production Corporation, Agriculture
Corporation, Real Estate Corporation and Corporation to home appliances.
More specifically, the Iron and Steel Corporation will manage the following
companies: Hoa Phat Hung Yen Steel Company Limited, Hoa Phat Hai Duong
Steel Joint Stock Company, Hoa Phat Dung Quat Steel Joint Stock Company,
Mineral Investment Joint Stock Company An Thong, Hoa Phat Shipping Joint
Stock Company. Northern Australia Minerals Joint Stock Company.
The Agricultural Corporation will manage the following companies: Hoa Phat
Hung Yen Animal Feed Co., Ltd., Hoa Phat Livestock Development JSC, Hoa
Phat Trading Co., Ltd., Hoa Phat Poultry Co., Ltd.
Steel Products Corporation will manage the following companies: Hoa Phat
Steel Pipe Co., Ltd, Hoa Phat Ton Co., Ltd., Hoa Phat Metal Fabrication Co., Ltd.,
Hoa Phat Container Production Joint Stock Company.
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Real Estate Corporation will manage the following companies: Hoa Phat
Construction and Urban Development Joint Stock Company, Hoa Phat Hanoi Real
Estate Joint Stock Company, Hoa Phat Saigon Real Estate Joint Stock Company.
The General Meeting of Shareholders is the highest authority of Hoa Phat
Group Joint Stock Company. The Annual General Meeting of Shareholders is held
once a year and must be held annually within four months from the end of the fiscal
year. The Annual General Meeting of Shareholders decides on issues in
accordance with the law and the Company's Charter, especially through the annual
financial statements and the financial budget for the next fiscal year.
The Board of Directors is the management agency of Hoa Phat, has full
authority to exercise all rights on behalf of the Hoa Phat Group Joint Stock
Company, except for those belonging to the General Meeting of Shareholders:
Responsible for supervising the Director or CEO and other managers.
Decide the annual production and business development plan and budget.
Identify operational objectives on the strategy approved by the General
Meeting of Shareholders.
Appointing and dismissing company managers at the request of the CEO
and deciding their salary
The Supervisory Board is the body elected by the General Meeting of
Shareholders, on behalf of the shareholders to control, evaluate independently,
objectively and honestly all business activities, administration and management of
Hoa Phat, financial status of Hoa Phat and take responsibility before the General
Meeting of Shareholders in performing assigned tasks.
The Board of Directors is the person who manages the daily activities of Hoa
Phat. Responsible for planning, coordinating, delegating, coordinating the human
resources team, making decisions.
Member companies carry out production and business lines within the scope of
the company's business fields such as steel pipes, furniture, mining... These
companies are under the direct management of the company. Hoa Phat Group Joint
Stock Company, implementing assigned business plans.
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December 2021 and equal to the same period in 2021. Steel consumption reached
1,052,270 tons, an increase of 1.55% over the previous month and an increase of
27.8% over the same period in 2021. Meanwhile, hot rolled coil output in January
2022 reached nearly 499,943 tons, down 13.83% compared to December 2021 and
down 10.5% over the same period in 2021. Sales reached 558,218 tons, down
7.78% from the previous month and down 16.7% over the same period in 2021.
For cold rolled steel, domestic consumption by members of the Vietnam Steel
Association reached 326,916 tons, down 13.43% over the same period in 2021.
Welded steel pipes reached 207,203 tons, down 5.4% from the previous month
but equal to the same period in 2021. Sales reached 211,517 tons, down 6.59%
from the previous month, but up 15.7% over the same period last year. Welded
steel pipe exports reached 21,466 tons, up 3.89% compared to December 2021 but
down 17.7% over the same period in 2020.
Production of finished steel products reached 2,564 million tons, down 5.5%
compared to December 2021 and 8.8% over the same period in 2021. Sales of all
kinds of steel reached 2,443 million tons, down 2.34% from the previous month
but an 8.5% increase, in the same time period.
T1: High rate of competition in the industry.
T2: The steel industry shows signs of recession.
Economic growth rate
August 8, 2022 — Vietnam's economic recovery has accelerated over the past
six months, helped by a resilient manufacturing sector and a strong recovery in
service sectors. GDP growth is forecast to increase sharply from 2.6% in 2021 to
7.5% in 2022, while inflation is forecast to increase by an average of 3.8% this
year, according to the World Bank's updated report on Vietnam's economic
situation. announced today.
Vietnam's financial market has many fluctuations, in case Hoa Phat sets up
investment projects and intends to finance these projects through a plan to raise
capital on the stock market when there are fluctuations, the Group will Hoa Phat
will find it difficult to raise capital to implement the project.
O1: The economy develops stably.
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exchange rate, it will affect the process of ensuring raw materials for the
production process. business. Member companies of the enterprise participate as
distribution agents for foreign firms such as Hoa Phat Equipment and Parts Co.,
Ltd., which distributes Mikasa construction machines, Vito concrete mixers, etc.
Therefore, when the exchange rate fluctuates, it will affect the revenue and sales
of member companies in general and the Group in particular.
T5: Raw material price fluctuates.
Unemployment
Vietnam is a country with a young population and abundant labor, but the
unemployment and underemployment rates decreased compared to the previous
quarter and the same period last year. In the first nine months of 2022, the
unemployment rate of working-age workers is 2.35%. In which, the
unemployment rate in urban areas is 2.88% and in rural areas is 2.02%.
O2: Abundant labor resources.
The Russian-Ukrainian conflict is complicated, causing the price of coke
to increase by 100-200 USD/ton.
The main reason affecting the difficulty of the steel industry, according to
economic experts, is due to the influence of the Russia-Ukraine tension, so the
global fuel price crisis has increased. In particular, fluctuations in the price of coal
- one of the main raw materials for the production of iron and steel by blast furnace
technology continuously increased, leading to a sharp increase in the production
cost of steel products.
For enterprises using steel scrap, scrap prices also tend to increase continuously,
currently scrap prices are fluctuating around 600 USD/ton. Over the past 3 months,
steel prices have continuously decreased with the highest price reduction of up to
5 million/ton, depending on the brand, steel type, and region. The selling price of
finished steel in the southern region is trading at only about 15-16 million
VND/ton, and in the North about 14-15 million VND/ton. Thus, the difference in
the price of raw materials for the rake head is larger than the price of finished steel,
causing a sharp drop in the profit of the business.
21
The reason for the continuous decline in steel prices in recent times is due to
the sharp drop in the price of input materials, along with abundant supply and large
inventories, forcing businesses to lower product prices to stimulate consumer
demand, and push inventory. Many experts believe that the domestic construction
steel price will continuously decrease from now until the end of the year.
In addition, large domestic construction projects are facing many difficulties
due to a lack of capital due to the impact of higher raw material prices than initially
anticipated, along with the slow disbursement of investment capital. tighten
lending. These basic factors lead to a decrease in the demand for "stop" output,
which affects not only the steel industry but also the whole economy.
T6: The cost of input materials increased but the price of finished products
decreased, affecting the profit of the enterprise.
T7: Industry investment capital decreases.
China's Zero Covid policy causes steel demand and steel production to
decrease.
In the context of China still pursuing the Zero Covid policy, many cities were
blocked, causing construction activities to be paralyzed, and steel consumption
demand to plummet. A gloomy atmosphere prevailed, and steel mills could barely
make a profit.
The disruption of economic activities because of Covid-19 caused an
oversupply in the steel market, and a large volume of raw materials had to be left
empty. Consumption demand fell sharply, causing both steel and iron ore prices to
plunge.
China Iron and Steel Association confirmed that in May China's daily output of
crude and finished steel products increased by 1-3%. Supply starts to increase
while demand remains down.
The challenge is if foreign and domestic enterprises simultaneously
increase production capacity until supply exceeds demand, leading to a rather
intense battle for market share.
T8: Supply-demand gap.
Overview of capital flows in the domestic financial market
22
Stock market: has been plunging both in price and liquidity in most groups of
securities. In which, many securities codes were priced close to par value, even
some stocks were lower than the asking price. The reason for this downward trend
in our country focuses on a number of main reasons such as:
+ Regarding international factors: Inflation from the US increased (CPI in
August 2022) and continued to remain at a high level, up to 8.3% over the same
period last year), the US Federal Reserve Bank (Fed) has to continuously raise
interest rates to attract money, which has a direct impact on the reduction of cash
flows into the domestic and foreign stock markets, the energy crisis caused by the
conflict between the EU and Russia over Ukraine, and the resulting crisis. crisis of
economic instability and inflation in the EU.
+ About the internal factors of our economy: Cash flow out of the stock market
is very strong due to the continuous decline in stock prices following the decline
of world stocks and because foreign investors accelerated capital withdrawal. Both
domestic enterprises, as well as FDI enterprises, are doing well with high profits,
but the stock price is still falling sharply. Investors' confidence in the market
declined, although many businesses wanted to attract capital through this channel.
Money market: In the past time, cash has been attracted to commercial banks
and state-owned banks at the same time. It has been quite large: State banks have
attracted domestic currency cash through net selling of foreign currencies to
commercial banks, while at commercial banks, payment deposits and total means
of payment (term deposits of businesses and individuals) both increased strongly
for both reasons: the proportion of non-cash payments increased. high and money
"waiting" for investment opportunities of individuals and businesses increase
sharply.
On the other hand, many credit institutions have a sudden lack of liquidity due
to the expiration of USD sales contracts, causing a correspondingly large amount
of VND to be withdrawn from the system, and pushing the interbank interest rate
level. There were times when the interbank interest rate spiked to 7.5 %/year, the
highest level since 2012 to get money to pay for mature domestic currency periods
or due credit dongs to settle. echo. In such situations, the State Bank promptly used
23
open market operations to support the interbank market through the purchase of
foreign currency forwards to supplement cash for commercial banks and reduce
pressure to increase interest rates in the interbank market.
In the money market from the beginning of 2022 to the present, the state bank
has always played the role of "musician" in directing capital flows from
commercial banks, first of all from large commercial banks, into the fields of
priority areas, strictly control investment credit in risky areas as well as regulate
cash flow through interest rates and detailed mechanism of credit room for each
commercial bank to control inflation target. Up to now, the State Bank has
introduced a credit control mechanism for the whole economy through credit
targets oriented for the whole year and adjusted according to the actual situation
of each group, even The credit control mechanism of the State bank for each
commercial bank is not to allocate the same quota, but the State bank has
considered and separately informed the credit limit to each commercial bank.
These mechanisms have effectively contributed to credit control of the whole
industry, control of economic inflation, and stabilized the market. currency and
foreign exchange in the context of the world economy have had many unstable
movements during the past several months.
T9: Investment capital decreases, the state bank tightens monetary policy.
Import situation
September 2022: Vietnam's finished steel imports reached 743 million tons
with a turnover of 710 million USD, down 5.32% in volume and 16.32% in value
compared to the previous month, down 11.79% in volume and down 24.73% in
value over the same period in 2021.
Generally, in the first 9 months of 2022, imports of finished steel products of
all kinds to Vietnam were about 8.93 million tons with a value of more than
US$9.56 billion, down 8.3% in volume but up 9.9% in value over the same period
in 2021.
The main steel-supplying countries for Vietnam include China (44.68%), Japan
(15.46%), Korea (11.14%), Taiwan (9.64%), and India Degree (7.93%).
24
T10: The supply of raw materials decreased and was too dependent on
input materials due to large imports.
Export situation
In September 2022, Vietnam's exports of finished steel products reached 533
thousand tons, up 3.8% over the previous month but down 60,635 compared to the
same period in 2021. Export value reached US$429 million, down 6.17% over the
same period. August 2022 and down 68,325 over the same period in 2021.
In the first September of 2022, Vietnam exported about 6.46 million tons of
steel, down 34.38% over the same period last year. Export value reached 6.5 billion
USD, down 22.65% over the same period in 2021.
The main export markets of Vietnam are the ASEAN region (41.47%), the EU
region (16.57%), the United States (8%), South Korea (6.03%), and Hong Kong
(China - 5.56%).
T11: The export market decreased.
2. Political and Legal
The Ministry of Industry and Trade has just submitted a report proposing to
develop the "Strategy to develop Vietnam's steel industry to 2030, with a vision to
2050". This agency believes that it is necessary to have specific policies to help
further develop the steel industry.
+ The content includes the importance of Vietnam's steel industry, focusing on
research, building strategies, planning, and government strong enough
synchronously and feasible to realize the development goals of the steel industry,
creating money. for the process of industrialization and modernization of the
country.
+ Focus on developing the mining and ore processing industry and forming a
healthy steel raw material market.
+ The Steel Association must rise to the role of "midwife" for domestic steel
production enterprises, and at the same time play the role of an arbitrator to
contribute to stabilizing the steel market, ensuring the interests of three parties: the
State, enterprises and enterprises. industry and consumers.
25
O6: The State creates favorable conditions for enterprises in the field of
development and investment encouragement.
Countries often have protectionist policies in the domestic steel industry even
though they have joined the WTO. In the coming time, the protection policy will
be considered and put into effect by the Vietnamese government, and Vietnamese
steel enterprises will gain more competitive advantages at home. However, the
competitive advantage is strong or weak depending on the way the protection
policy of the Vietnamese government is built.
The Vietnamese government has always given priority to solving pressing
environmental problems. Importing scrap steel is considered a high risk of
polluting the living environment, and policies to limit the import of scrap steel are
applied. Difficulties for enterprises operating in the steel industry when they want
to import steel scrap for domestic recycling to save costs and enhance initiative in
production and business activities.
T12: The source of production materials is limited.
Policy of tax
The basic taxes of the steel industry are import and export taxes. However, the
tax policy related to steel changes constantly, sometimes increasing and
decreasing. This creates instability, bringing many concerns to production and
business enterprises in the industry.
T13: Continuous fluctuations in taxes.
Vietnam has a stable political and security background. Enterprises operating
in the territory of Vietnam do not bear the risk of political and security instability.
The Enterprise Law took effect in 2005, creating fairness in the business
environment among all economic sectors, and promoting the general development
of Vietnam's industries in general and the Steel industry in particular.
O7: Political stability.
3. Social
+ Urbanization rate:
In Vietnam, in the past 10 years, we have witnessed a very strong urbanization
process in big cities such as Hanoi, Ho Chi Minh City, and Da Nang. has created
28
a positive effect promoting rapid urbanization spreading across the country. There
are quite a few large urban areas, new urban areas are formed, and many urban
areas are also renovated and upgraded infrastructure... The fastest urban growth
rate is in two big cities, Hanoi and Ho Chi Minh City. Ho Chi Minh City, then to
the provinces of Hai Phong, Da Nang, and Can Tho.
The young population structure, and fast growth rate leads to a large demand
for housing construction.
Vietnam is one of the countries with a long tradition of culture and customs.
These have some influence on trade customs. However, this custom has also partly
changed before the process of economic integration. The level of education in
Vietnam is gradually increasing, cheap resources are gradually no longer a strength
to attract foreign investment in Vietnam.
In the world, there are many modern products with high production technology,
satisfying customer needs better, leading to this being a challenge for businesses.
T14: Tendency to trust foreign goods.
+ People's living standards increase, and demand for furniture, refrigeration
products, demand for steel, products used for the construction industry to invest in
production and civil construction, and houses to rent land to build factories.
enterprises increase, thereby promoting the consumption of different products in
the industry.
T15: Consumer aesthetic trends and tastes change.
+ Diversifying mass media channels such as television stations, or on social
networks, besides that, people are increasingly accessing gameshow television
programs, so promoting images by advertising on the Internet. Television
participation in sponsoring gameshow programs of enterprises takes place more
effectively.
O8: Reach customers faster through social media.
4. Technological
Technology 4.0 and digital transformation
The digital technology industry is and will be integrated into all different
industries and fields. In the current context, the digital technology industry has
29
affirmed its role, its position as the foundation and infrastructure to promote the
development of industries and fields, and will continue to play a leading role,
creating a foundation for the future. rapid and sustainable development of different
industries. Especially in the coming period, in order to successfully carry out the
comprehensive national argument transformation guided by the Resolution, the
Party and State's program on the digital technology industry needs to develop
rapidly, and must be one step ahead. In order to concretize the policies and
orientations of the Party and State into solutions to promote the development of
the digital technology industry, it is necessary to clearly identify opportunities for
this technology industry.
Vietnam has the potential to explode in the domestic digital technology
application market: With nearly 100 million people, in which the young population
and smart mobile users account for a high proportion. The national information
and communication infrastructure system continue to be modern and widespread.
The Government has strongly innovated working methods associated with digital
technology applications to build e-government (e-Government), nation-centered
digital transformation, creating a foundation to promote digital economic growth
forming a digital government and a digital society. Vietnam's technology human
resources have good knowledge of technology. In Vietnam, every year, nearly
50,000 students graduate in Information Technology or related fields.
O9: Abundant technology human resources.
The 4.0 technology revolution is not far away for Vietnamese businesses any
more, many businesses have used robots in their production lines. Previously, only
foreign-invested enterprises (FDI) such as Korea, Malaysia, and Japan invested in
robots in production chains in the plastic industry, automobile assembly
technology, etc., but now, many enterprises have invested in robots. Vietnamese
enterprises also see benefits and invest in and many businesses install automatic
lines and modern robots.
O10: Technology is gradually being perfected and improved.
Ecommerce
30
application has also brought Vietnam many advantages and tremendous growth in
recent years. In particular, regarding the big data problem Big Data, Vietnam needs
to share more with the community, even other countries, the reason is that data
should not only be said in a closed room but also in a common plane. to spread and
countries to share.
The process of buying, selling, and exchanging technology between enterprises
and domestic and foreign partners is easy, helping businesses always have the
opportunity to modernize their technology lines.
O16: Access to partner's modern technology.
5. Environment
Vietnam has a unique geological and geographical position, is the intersection
of the two largest mineralogy belts in the Pacific Ocean and the Mediterranean
Sea. into minerals. Through 65 years of basic investigation and mineral
prospecting by Vietnamese geologists along with research results of French
geologists from before the August Revolution up to now, our country has
thousands of mines and deposits of more than 60 different types of minerals from
energy minerals, metals to industrial minerals and construction materials.
The humid tropical monsoon climate also partly affects the preservation of iron
and steel.
Energy minerals include petroleum, mineral coal, uranium, and geothermal.
Among the metal products, there are precious metals with world-class reserves
such as bauxite (aluminum ore), rare earths, titanium, tungsten, and chromium.
Industrial minerals in Vietnam have been evaluated and many have been exploited
for agricultural and industrial sectors. Notable large deposits are apatite, baryte and
graphite. Construction material mines have been exploited to serve the
construction and economic development of the country, so the cost of the industry
is relatively stable.
O17: Abundant natural resources.
Production mode: when production activities increase, it will lead to
environmental pollution. Therefore, it is required that businesses always innovate
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production methods and technologies to reduce waste in order to protect the natural
environment.
III. MARKET ANALYSIS
1. Market Size
According to the latest report just released by the Vietnam Steel Association
(VSA), in the first 5 months of 2022, crude steel production was nearly 9.6 million
tons, down slightly over the same period.
In September 2022, finished steel production reached 2,446 million tons, an
increase of 23.41 compared to August 2022 and an increase of 1.7% over the same
period in 2021, steel consumption of all kinds reached 1,998 million tons, down
7.19% compared to the same period of the previous month. before and decreased
by 9.9% over the same period in 2021.
In the first nine months of 2022, finished steel production reached 20,808
million tons, down 5.8% over the same period in 2021, finished steel consumption
reached 19,261 million tons, down 1.6% over the same period in 2021.
In the first 8 months of 2022, Vietnam exported about 5.92 million tons of steel,
down 30.27% over the same period last year. Export value reached $6.08 billion,
down 13.35% over the same period in 2021.
Figure 3.2: Evolution of steel export volume and price of Vietnam in 2022.
(Source: VITIC calculated from the data of General Department of Customs, VSA)
The main export markets of Vietnam are the ASEAN region (35.33%), the EU
region (19.68%), the United States (10.84%), South Korea (6.36%) and Hong
Kong (China-437%).
In contrast, in August, 2022, imports of finished steel into Vietnam reached 785
thousand tons with a turnover of 848.9 million USD, down 13.65% in volume and
17.76% in value compared to the previous month, over the same period last year.
last year decreased by 8.94% in volume and 11.29% in value.
In the first eight months of 2022, imports of finished steel products of all kinds
to Vietnam were about 8.18 million tons with a value of more than $8.8 billion,
down 7.97% in volume, but up 14.11% in value over the same period in 2021.
The main steel supplying countries for Vietnam include: China (46.01%), Japan
(15.67%), Korea (11.12%), Taiwan (9.09%) and India (7.22%).
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Figure 3.3: Evolution of steel import volume and price into Vietnam in 2022.
(Source: Google)
Commenting on the domestic steel market from now to the end of the year, the
Vietnam Steel Association (VSA) believes that in the fourth quarter of 2022, it will
be possible to prosper, because it is customary that this is the period when the
demand for steel increases when the steel industry increases. construction work
hastened to speed up progress. However, whether the demand increases or not
depends on many factors, especially when the inventories of enterprises are still
high, it takes time to process. Moreover, the current disbursement rate of public
investment is still quite slow. In addition, the world's demand is still at the lowest
level, so even if Europe and China are reducing production, Vietnam cannot boost
exports to these markets.
2. Market Growth
Support measures from the Government that have been implemented recently,
along with the volatility of the world steel market, are creating new growth drivers
for steel enterprises in 2022 when the economy gradually recovers. after the Covid-
19 pandemic. Since then, steel enterprises have more opportunities to promote
production, consumption and export to the world market.
Entering 2022, when the economic stimulus package 2022-2023 is approved, it
will quickly help the domestic market recover. Besides, the infrastructure
construction investment package worth 150 trillion dong, plus the existing 530
trillion dong, will increase public spending by about 38%. Adjustments to the Law
on Construction, Investment and Real Estate will help undo the bottlenecks that
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have prevented the development of the real estate industry in recent years.
Maybank Kim Eng Securities Company (MBKE) has said that these factors will
help the domestic steel market to recover, growing from 15% to 20%.
The growth of Vietnam's steel industry in recent years has been at a double-
digit rate with a total product of about 30 million tons by 2021. Besides output, the
diversity in product categories also helps Vietnam's steel industry to supplement
provide a wide range of products that are currently lacking.
compared to 9 months of 2021. HRC downstream products are pipes. steel reached
more than 2 million tons, up 16%.
3. Market Share
According to the Vietnam Steel Association, the total construction steel
consumption of the whole market in the first month of the year reached over 1
million tons, up 1.55% over the previous month and 27.8% over the same period
in 2021. Exports of this item in January reached 231,829 tons, double that of the
same period in 2021.
In the first month of the year, Hoa Phat construction steel production increased
sharply in the domestic market due to increased demand for civil construction and
projects before the Lunar New Year. The South and Central regions had the
strongest growth, 2 and 3 times respectively over the same period.
While the output of the whole industry is flat, in 2022, Hoa Phat will continue
to expand production with the Dung Quat 2 steel plant project. Also in Hoa Phat's
July 2022 production and business report, the enterprise said The consumption of
steel products reached 526,000 tons, equivalent to the same period in 2021.
Figure 3.6: Construction steel consumption market share in the first 6 months of
2022. (Source: Google)
Hoa Phat said it produced 540000 tons of crude steel in September. Total sales
of construction steel, hot-rolled coil, and billet reached 555,000 tons. Hoa Phat
said that the general market demand in September was relatively low, and in
addition to the complicated changes of storms, the consumption of construction
steel was quite difficult. Construction steel recorded 318,000 tons, down 3% year-
on-year and the lowest level since April this year.
4. Market Brand
Hoa Phat Group is a leading corporation in industrial production in Vietnam.
Established in August 1992, after nearly 30 years of development, Hoa Phat has
made its mark on the market in the fields of steel pipes, refrigeration, construction
steel, real estate, agriculture... Up to now, Hoa Phat Group has a total of 11 member
companies, more than 30,000 employees, with a wide range of activities in the
country and a representative office located in Singapore. The Group has affirmed
its position with many prestigious domestic and international awards. Besides
business, Hoa Phat is also one of the corporations that are active in implementing
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+ Internal customers: these are member companies of Hoa Phat group such as steel
companies, equipment parts companies, refrigeration companies, and furniture
company.
Although in number, internal customers cannot compare with external customers,
but this is the middle audience.
Customer Need
+ Reasonable price: Thanks to the production scale and synchronization
system from input materials to finished products, Hoa Phat steel ensures price
competitiveness compared to other iron and steel brands. Therefore, the use of this
steel will help you save a lot of costs and ensure the quality of the work.
+ High durability over time: This is an important factor that customers always
pay attention to, when there is a need to buy and use steel materials with their own
works. Because of that, Hoa Phat always improves technology and strictly
complies with industry standards and regulations. From there, producing good
products, high durability, high endurance and toughness, ensuring quality and
longevity for the project.
+ Diverse types of steel: to meet the increasing demand of consumers, Hoa Phat
steel provides the market with a variety of different types of steel, including:
o Rebar steel: diameter from phi 8- phi 10.
o Rebar: diameter from phi 10 to phi 40.
o Plain rolled steel: phi 6, phi 8, phi 10.
o ………
+ Production on modern lines: Hoa Phat Steel is manufactured on a closed and
synchronous technological line, using modern machines and the world's most
advanced production processes. Specifically, the Italian Danieli steel rolling line
has a process that increases mechanical properties and weldability, helps to
optimize flexural strength, and reduces rust.
6. Market Demand
Customer demand for this item often changes, especially for customers who use
the product for construction purposes. Due to Vietnam's climatic conditions,
households usually start construction of houses in the period from January to July
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before the rainy season. Therefore, during this time, steel consumption increased
rapidly, but at the end of the construction season, consumption decreased. The
market demand for steel products is growing, increasingly diversified in terms of
products, both in terms of quantity and quality. That requires Hoa Phat to grasp the
needs of the market, make efforts to improve the old model, launch new products,
diversify product categories, meet the diverse needs of the market school.
Currently, Hoa Phat has been providing a lot of steel products with a variety of
types, with creative designs and models, suitable for the consumption needs of
customers. That is a huge advantage compared to competitors with Hoa Phat. Hoa
Phat has a wide range of products, so it can reach more customers, thereby
improving the competitiveness of steel products of the enterprise.
Next, keeping the reputation of product quality - Hoa Phat's steel quality has
been confirmed in the market, in order to maintain and improve the
competitiveness of its steel products, the commitment to product quality in the
market must be the top priority. Hoa Phat has a board of inspection and supervision
of production activities, the board has worked very effectively, maintaining more
effective and active work is necessary to ensure the reputation of quality, Hoa
Phat's product brand with customers and people, especially in the context of the
market increasingly attaches importance to products with high quality and
beautiful designs.
Third, take measures to lower the price of products more competitively to
dominate the market in new markets, as well as increase market share in existing
markets and take advantage of the advantages of scale and production costs. For
customers who are regular customers who have a long-term relationship and often
buy in volume, the company should set a lower price.
IV. COMPANY ANALYSIS
1. Analysis of 5M
1.1 Money
As of September 2022, Hoa Phat's revenue is 116,559 billion VND, and profit
after tax in the same month is 10,443 billion VND. Total assets in September 2022
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is 183,805 billion VND. And paid the budget of 9,381 billion VND in the same
month.
Hoa Phat's equity at the end of last year was 90,780 billion dong,
unprecedentedly high and accounted for 51% of total capital. Hoa Phat's equity
increased sharply thanks to positive business results in 2021 when both steel price
and consumption volume went up. This is the first time since the end of 2018, Hoa
Phat's equity exceeds liabilities.
Hoa Phat has maintained a stable steel output, continues to hold the number one
position in Vietnam in terms of market share of construction steel (accounting for
36.2% of the market share), steel pipes (28.8%) - according to statistics from the
Vietnam Steel Association. In the first half of this year, the output of main products
such as crude steel, construction steel, billet and HRC all grew over the same
period, only steel and galvanized steel reached the same level as the same period
in 2021, according to information given by Hoa Phat.
1.2 Manpower
Steel industry workers with technical labor characteristics are mainly.
Therefore, it is required that workers have professional and technical qualifications
to meet the job requirements. It is this requirement that has made the quality of
human resources in the Steel industry for many years always focused right from
the selection of input human resources for production.
Hoa Phat considers people as the central factor for success, always focusing on
training, and improving professional qualifications and skills for employees.
The demand for unskilled labor accounts for a small proportion, but still mainly
for qualified workers. Most of Hoa Phat's leaders highly appreciate the factors that
reflect the quality of human resources such as:
+ About knowledge: general knowledge of steel, metallurgy, and specific
expertise.
+ About skills/ability: some skills are required such as decision-making,
problem-solving, data collection, and processing, ability to work independently,
communication skills.
+ About attitude: positive and enthusiastic, behave ethically, responsibly and
have self-control towards the assigned work.
The member companies continuously organize specialized training classes,
work closely with universities, colleges, vocational training schools in mechanics
and engineering in training and recruitment to attract human resources. qualified
to meet the requirements of production and business development. The policy on
human resource development in terms of quantity and quality has always been
uniformly implemented. Hoa Phat has implemented a personnel rank assessment
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1.3 Material
Raw materials for iron and steel production are types of iron ore, auxiliary
materials - crushed - dried - crushed, calculated and mixed through sintering and
pelletizing stages to shape and prepare materials with properties. mechanical -
physical - chemical substances meet technical requirements.
The liquid iron in the containers is loaded into the blast furnace with a certain
amount of scrap steel. Compounds such as ferrite (which is pure iron, soft and
malleable), cementite which is a compound of iron carbide (Fe3C) - quite hard and
brittle. There is also scrap iron, oxygen gas.
Currently, the group operates in 05 fields: Iron and steel (construction steel, hot-
rolled steel coil) - Steel products (including steel pipes, galvanized steel, wire-
drawn steel, and pre-stressed steel) - Agriculture - Real estate products –
Household appliances.
Besides, it also produces and wholesales coke, mines metal ores, trades in
metal, metal ore scrap iron and steel, smelting iron, cast iron, iron, and steel.
Production, sales, installation, installation, repair and warranty of electrical goods,
refrigeration, civil electricity, and air conditioners. Invest in and build synchronous
infrastructure and techniques of industrial parks and urban areas. Producing and
trading in livestock feed, raising poultry, processing meat and products from meat,
eggs, chicken... Inland waterway transportation.
1.4 Machine
Hoa Phat Group said that Hoa Phat's equipment and spare parts manufacturing
unit specializes in manufacturing tower demand equipment, stone crushers, ore
crushing and refining equipment, scaffolding, and steel construction columns,
concrete mixers... are imported electronic motors from DASU (China).
Hoa Phat Dung Quat Steel Joint Stock Company held a signing ceremony with a
joint venture of SMS Metallurgy Group (Germany) and Trung Da Phuong Nam
Engineering Company Limited (Wisdri) of China to provide equipment for the
construction industry. steelmaking equipment for Hoa Phat Dung Quat Iron and
Steel Complex project in Quang Ngai.
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Producing steel from iron ore according to 100% closed circulating blast furnace
technology and modern equipment lines of G7 countries.
+ Installing a system of concrete protection rails and steel rails and trucks to
help concrete longevity and stable operation of the system. Thereby, increasing
production output by reducing downtime for the work of replacing and repairing
rusty rails and steel cars when problems occur.
+ Mixing low quality coal with stable coal used for sintering on conveyor belt
in port 8 and used as fuel for sintering line. Bringing a new and effective solution
for the same quality and productivity as using standard coal, contributing to
diversifying fuel coal sources and reducing finished product prices.
+ Mixing DRI materials on the fine crushing line to use for the pelleting line,
helping to diversify the source of raw materials, find cheap environmentally
friendly ore sources to replace a part of the high-priced pellet concentrate.
+ Always put yourself in the position of the customer to make the most
reasonable decisions. Hoa Phat has spent 20-30% of the total fixed capital for
Vietnam's current environmental treatment item, towards green steel production,
reducing greenhouse gas emissions.
+ Using total production technology: Hoa Phat Iron and Steel Production Complex
is produced by investment method of deep processing from iron ore with the
technological flow: (Sintering + Pellet + Coke) -> Blast furnace -> Blowing
furnace -> Casting billet -> Rolled steel. All stages apply new technology,
advanced production equipment, high degree of automation and ensure regulations
on environmental protection.
+ Always put credibility first, not for profit but to deceive and deceive
customers.
2. Analyze the CANVAS business model of Hoa Phat
1. Customer Segment 2. Value Propositions 3. Distribution Channels
- External customers: Steel - Using solid and - Advertising on social networks
manufacturers, billets, reputable building (Facebook, Youtube ...)
household goods, shipyards, materials - Website, mobile app (company
irrigation, and road - Experience modern website, news website ...)
construction units, and household electrical - On the e-commerce platform
construction contractors. appliances imported - At store
- Internal customers: These from abroad - Hotline
are member companies of - The interior is - Distributor system
the Hoa Phat group such as exquisitely crafted - Retailers
steel companies, from wood - Agents
euipmcompanent and spare - Using quality and
part companies, refrigeration reputable agricultural
companies, and furniture foods.
companies. - Modern wire
manufacturers produce
very high-quality
construction steel.
- Reduces rust on
products
- Diversified encoding,
high speed, cost-
effective
4. Customer Relationships 5. Revenues Stream 6. Key Activities
- The core value of Hoa Phat - Production and sale of - Investment, production, and
Group is the philosophy of construction steel and trading of construction steel
Harmony and Development. ancillary activities. and ancillary activities.
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- Suppliers (equipment
and machinery):
+ SMS Metallurgical
Group (Germany).
+ Trung Da Phuong Nam
Wisdri Engineering Co.,
Ltd.
+ DESU (TQ)
electromagnetic motor.
- Network of
distribution.
- Social Media.
- Technology providers.
- Other manufacturers.
- Part and components
suppliers.
- Raw material
providers.
- Resellers.
Table 4.1: CANVAS business model of Hoa Phat.
2.1 Customer Segments
+ Domestic customers: Outside are enterprises producing steel, billet,
household goods, shipyards, scale construction units, roads, contractors,
construction, ... Each unit goods in bulk. Therefore, this group of customers
requires high standards of size and volume. Besides, internal customers are
member companies of Hoa Phat group such as steel company, appliance
company, spare parts, refrigeration company. Although the number of internal
customers cannot be compared with external customers, they are loyal customers
who use the company's products for a long time.
+ Export customers: focusing on customers exporting to major countries in the
world, and Hoa Phat Group has exported to customer countries more than 14
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countries around the world, including fastidious customers such as USA, New
Zealand, Korea, Brunei, Canada...
2.2 Value Propositions
Hoa Phat uses high-quality coiled steel as a source of raw materials for the
production of wire drawing, prestressing, welding rod cores, etc. HRC is the source
of raw materials for Steel Pipes, Galvanized Steel Sheets. Steel and corrugated iron
pipes are used in the manufacture of refrigeration interior products.
Through the 30-year journey, Hoa Phat has been known with the most modern
production technology, Hoa Phat's steel products can compete directly with
Chinese steel.
Autonomy in HRC production technology is the perfect piece that creates a
solid foundation for the ecosystem of other high-quality steel products that Hoa
Phat can produce such as mechanical steel, empty container shells, etc. Hoa Phat's
production chain is extended and optimized, bringing the highest value to
customers, shareholders and society.
Thanks to being produced from iron ore with a closed process, Hoa Phat steel
has outstanding features, is deeply cleaned of impurities and fully meets the needs
of customers.
With a variety of types, Hoa Phat is a leading enterprise in steel production in
Vietnam with a modern environmentally friendly blast furnace steel production
process.
2.3 Distribution Channels
The official website of Hoa Phat Group is http://www/hoaphat.com.vn , where
the company updates all data, sales as well as the latest news in the company.
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+ Hoa Phat is a very big name in Vietnam, the coverage of the group is always
very high and customers trust the products from this brand.
+ With more than 1000 products with diverse designs and rich in furniture types,
Hoa Phat is proud to meet the increasing demands of customers.
+ Research very carefully on consumer psychology to choose the colors that are
suitable for the customer's aesthetic, ensuring the needs of the customer.
+ Implemented many promotions and customer care programs to agents
nationwide. Giving, unique gifts to regular guests, valued guests, and members of
the company. Intimate connection with customers.
+ Delicately organize and give meaningful gifts to customers on special holidays
such as Tet, March 8, Christmas...
Besides, it also builds a sustainable, long-term, trusting partnership like a
family with agents who have accompanied the whole group.
2.5 Revenue Streams
In the third quarter of 2022, Hoa Phat achieved revenue of 34,441 billion VND,
down 12% compared to the same period in 2021. Meanwhile, COGS increased by
6,290 billion VND, equivalent to 23.5%.
Revenue decreased while the Cost of goods sold (COGS) increased, making
Hoa Phat's gross profit only 1,001 billion dongs, and gross profit margin decreased
to 2.9%.
As a result, Hoa Phat's third-quarter after-tax profit recorded a negative VND
1,786 billion, down 117% over the same period last year. In 9 months, Hoa Phat
achieved 116,559 billion dongs in business and 10,443 billion dongs in profit after
tax, reaching 76% and 39% of the year plan, respectively.
By the end of the third quarter of 2020, Hoa Phat's total assets reached VND
183,805 billion, a slight increase of 3% compared to the beginning of the year. In
which, cash and cash equivalents decreased by half compared to the beginning of
the year, to just over 11,881 billion VND.
In addition, in the third quarter of 2022, revenue from agriculture increased by
10%, profit increased by 32% compared to the same period in the third quarter of
2021. Generally, in 9 months, this real estate segment was profitable again in the
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third quarter of 2022, Hoa Phat's real estate sales and rental revenue decreased by
87% over the same period last year, reaching 63 billion dong. The real estate
business brought in after-tax profit of 54 billion dong in this quarter, while the steel
business suffered a loss of 2,555 billion dong.
2.6 Key Activities
Production activities:
Established in 1922, the Group has now become a prestigious brand, gaining
the trust of customers with leading product quality. For many years in a row, the
Group is in the top 10 largest private enterprises in Vietnam, leading the list of
reputable construction materials trading companies in Vietnam.
Hoa Phat Group operates mainly in the following fields: Iron and steel
(construction steel, hot rolled coil) - Steel products (including steel pipes,
galvanized steel, wire drawing, prestressed steel) - Agriculture - Real Estate –
Appliances. The steel sector plays a key role, accounting for 90% of the Group's
total revenue. Construction steel and Hoa Phat steel pipe continuously maintained
the No. 1 market share in the No. 1 market in the market at 33% and 25%
respectively.
Commercial business:
Hoa Phat has the goal of becoming the top 3 largest real estate companies in
Vietnam. The Real Estate segment is also determined to bring revenue and profit
to the group.
Hoa Phat has been involved in real estate for about 20 years with two main
fields of real estate in industrial zones (IZs) and urban real estate. However, the
industrial zone real estate segment has recorded many impressions with projects
being exploited such as Pho Noi A Industrial Park (600 ha), My Yen II Industrial
Park (phase 1: 97.5 ha) - Hung Yen Province…
Hoa Phat Appliance Appliance Company, formerly known as Hoa Phat
Refrigeration Company, was established in 2001 and has 20 years of experience
in developing and manufacturing refrigerators, freezers, and cabinets. Air
conditioners are branded Hoa Phat and Funiki.
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The company's entire production and assembly lines and equipment are
imported from famous brands in the world, current and fully automated, increasing
labor productivity, and products are reasonably priced. reasonable, stable quality,
durable.
Hoa Phat Iron and Steel Complex has closed production from iron ore
processing, coking coal, iron refining to finished products, finished billet and
construction steel, becoming a special competitive advantage of Hoa Phat taking
advantage of Abundant source of iron material in the country reduces
intermediaries, reduces the cost of production stages. As a leading enterprise in
investment, methodical and thorough calculation, the complex soon helped Hoa
Phat steel products to be competitive with other enterprises. In addition, the
advantage of the complex also creates coke coal that can not only meet demand
but also be used for export, helping to reduce import costs and increase foreign
currency revenue for the group, helping Hoa Phat to be proactive in power source
for the company. production and reduce costs when electricity prices are
increasing.
2.7 Key Resources
Finance
Total assets of the Group at the end of the second quarter of 2022 reached VND
183,805 billion. The scale of total assets tripled after only 4 years, from the
beginning of investment in the construction of Hoa Phat Dung Quat Iron and Steel
Production Complex in 2017. In the steel sector, Hoa Phat not only holds the No.
1 market share. Vietnam in the fields of construction steel, steel pipes, is the Top
5 steel enterprises but also holds the No. 1 market share in supplying Australian
beef in Vietnam and leads the North in the production of clean chicken eggs.
In the first 9 months of 2022, Hoa Phat recorded 116,559 billion dong in
revenue and 10,443 billion dong in after-tax profit, thereby completing 76% and
39% of the year plan, respectively. Steel and related manufacturing sectors
contribute over 90% of the Group's revenue and profit. Accumulated in the first 9
months of the year, Hoa Phat has produced 6 million tons of crude steel, equivalent
to the same period in 2021. Sales of construction steel products, HRC and steel
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fuels and input materials have been high in recent times, directly affecting the
production and business situation of enterprises, making output prices limited
because of the lack of supply. redundant. These factors increase the pressure on
the business performance of enterprises, especially those that produce steel billet,
rolled steel, etc.
Number and size of firms in the industry
According to the announcement of the Vietnam Steel Association, the
Association currently has 103 members, divided into 4 main specialties:
o Producing Construction Steel: 36 members.
o Steel pipe production: 11 members.
o Producing metal-plated and color-coated corrugated iron: 18 members.
o Commercial enterprises & guests: 38 members.
Members of the Vietnam Steel Association include all economic sectors: State-
owned enterprises; Joint venture; Joint stock and private companies; Companies
with 100% foreign capital. Currently, the steel industry has large segments such as
construction steel, steel pipe and galvanized sheet... In the steel segment, Hoa Phat
currently occupies the largest market share and has a large capital scale that is
superior to that of companies with market capitalization. The second largest is
Pomina nearly 24 times. Therefore, in the steel segment, other enterprises can
hardly compete.
High competitive strength in the industry.
S1: Maintaining the top 1 market share in construction steel and steel
pipes.
Industry growth and speed
Vietnam's steel industry is still growing at a double-digit rate, steel production
and consumption in October 2022 continued to move in a downward direction,
decreasing by 16.38% and 29.4% respectively over the same period last year. . The
latest report of the Vietnam Steel Association (VSA) announced that in October
2022, finished steel production reached 2,046 million tons, down 16.38%
compared to September 2022 and down 28.7% over the same period in 2021. Steel
61
consumption of all kinds reached 1,888 million tons, down 5.53% and 29.4%
respectively.
With the current export momentum, in 2022, steel exports are expected to reach
the finish line only at $7.7-1.9 billion. Meanwhile, iron and steel exports in 2021
reached 13.1 million tons, worth 11.8 billion USD, up 32.9% in volume and
124.3% in value compared to 2020.
The steel industry currently has many problems and inadequacies, first of all,
the difference between supply and demand when domestic consumption is only 9
The level of application of science and technology in the industry is still low:
30% of steel factories are small-scale and use outdated technology, 40% of which
are of medium-level technology. With outdated and average production
technology, the steel industry has had a great impact on the environment. On the
other hand, the production costs are high, making domestic steel products very
competitive and often "threatened" by foreign steel. However, some businesses
have made improvements in science and technology and invested in technology.
And Hoa Phat is an example that is the only construction steel enterprise in
Vietnam that succeeds with closed-loop blast furnace technology from iron ore to
finished steel, also known as upstream steel.
S2: Self-mastery with modern technology.
Level of determination to succeed of businesses in the industry
Industry representatives have great determination to succeed in this industry.
These determinations are reflected in actions: The Ministry of Industry and Trade
has just decided to apply a relative measure of 23.3% for billet and 14.2% for long
steel, the entrepreneurial spirit and determination of the people. leadership in the
steel industry and leadership plays an extremely important role. And the
mechanism to move out of the mechanism of 100% state capital into multi-
ownership of shareholders' capital is gradually being implemented. Through the
reports of leading enterprises in the industry, it shows that enterprises focus on
business goals and are determined to achieve leading positions in the industry.
In addition, Vietnam's steel industry is the majority of small-scale
manufacturing enterprises, production technology is only average compared to the
world, and the majority only participate in the near end of the value chain. .
Therefore, the added value is low, leading to low revenue and profit. On the other
hand, these enterprises depend mainly on semi-finished materials, which are
imported steel billets, for production, so their profit margins are heavily influenced
by world price fluctuations.
High competitive rate.
Competitive advantage over competitors
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About brand Hoa Phat has made a great impression in the perception of
customers, creating a great competitive advantage for HPG.
S3: Brand with a long-standing reputation.
+ Having close relationships with agencies, ministries, localities and
contractors, construction companies.
+ Hoa Phat has a steel billet factory, providing most of the input billets for the
Company's production process.
+ Having the advantage of upstream raw materials (owning large iron ore and
coal mines), so the production cost is low.
+ Having a favorable geographical position, close to the port and close to
developed industrial cities (such as Hai Phong, Hanoi and Quang Ninh).
+ New factories output with modern technological line system, producing a
wide range of products.
+ Hoa Phat has a quite professional sales and marketing team, flexible sales
policy.
Due to the above advantages, in a short time, Hoa Phat has had a very good
growth in consumption volume and is gradually taking over the market share of
other steel manufacturers. But Hoa Phat's system of distributors and retailers has
just been built, so it is not stable and the cohesion is not high.
Competitors of Hoa Phat Group can be seen in the steel industry, such as
VNSteel, Vina Kyoei, Pomina, PY Vina, Hoa Sen Group, Thai Nguyen-Tisco, Viet
Steel JSC. Those are enterprises with similar capabilities and business lines,
financial capacity and equipment that are highly competitive with the Group.
These competitors are all traditional enterprises in the steel industry. In recent
years, with the characteristics of Vietnam's economy, these enterprises have
focused on improving their competitiveness by: expanding the scale of operations.
Increase investment in equipment, increase training, improve business
administration efficiency for the purpose of: reducing finished product prices,
ensuring progress and quality of construction products, and at the same time
enhancing follow-up work. Marketing, advertising, brand promotion of their
business, at the same time is also very proactive in initiatives and improvements
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Pomina is the first steel factory in the South region to achieve environmental
protection certification.
S5: Hoa Phat's modern production technology is better than competitors.
1.1.3 Distribution Channels
Pomina Steel Joint Stock Company, formerly Pomina 1 Steel Factory,
established more affiliated companies: Pomina Steel 2 Joint Stock Company and
Pomina Steel Billet Factory 3 with the purpose of increasing steel production
capacity. , the company is also planning to target the wider development of the
company's name to neighboring provinces/cities and then to the whole country of
Vietnam.
S6: The distribution channel is large, diversified and stretches
throughout Vietnam.
At the same time, more widely spread about product quality as well as strict
product policy to create optimal quality steel products. This has spread widely to
consumers, especially big guests who are construction development companies
with wide names in the Vietnamese and international markets such as Vingroup,
Hoa Binh, Phu My. Hung… has trusted to use Pomina's steel products in today's
famous architectural works.
Investment - sponsoring programs to support disadvantaged people through the
programs "Building a dream", "Never had a separation" are the proud
achievements of the Company. The company's ethical actions shown throughout
television have touched the hearts and trust of small consumers and also large
consumers/groups/consumers.
However, the company still lacks more mass marketing and brand promotion
methods on social networking sites where people use the most.
S7: Communication and promotion of strong brands.
1.1.4 Customer Relationships
+ Regularly exchange, capture and respond to customer needs about services
and products of Pomina Steel.
+ Resolve inadequacies in the purchasing process as well as complaints about
service quality.
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Figure 5.2: Pomina's profit after tax in the third quarter of 2022.
(Source: Google)
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Accumulated in the first 9 months, Pomina net loss is 708 billion dong, while
the same period's profit is 206 billion dong. Pomina fell into difficulty when the
conflict between Russia and Ukraine pushed the price of oil and commodities to
escalate, especially the price of input materials of the factory had increased sharply
while the consequences of the epidemic had not been overcome.
Long-term assets fell 13% to VND 5,378 billion, fixed assets decreased by 43%
to VND 1,685 billion.
Figure 5.3: Pomina's net profit and net revenue after 9 months of 2022.
(Source: Google)
As of September 30, 2022, the total assets of Pomina Steel stood at VND 11,726
billion, down nearly 22% compared to the beginning of the year. In which, short-
term receivables decreased by 14% to VND 2,256 billion, inventories decreased to
VND 3,085 billion.
1.1.6 Key Activities
Pomina is a chain of three construction steel mills and steel mills, one of the
largest and most successful construction steel manufacturers in Vietnam.
Specializing in the production of steel coils with diameters of 6mm, 8mm, and
10mm, the steel line has a long and smooth shape; rebar has the shape of large
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round bar with external ribbing, diameter from phi 10 to phi 32, all according to
TCVN 1651 – 1:2008.
With a capacity of 1.5 million tons per year, Pomina orients sustainable
development on the basis of investment in modern, green and environmentally
friendly technology. In particular, Pomina Steel is the only enterprise in Vietnam
operating a steelmaking system that combines a blast furnace and an electric arc
furnace Consteel from Europe, with the ability to be proactive in choosing flexible
production between iron ore. and scrap to always adapt to market changes.
Pomina can manufacture all standards and types of construction steel from D14
and above, in addition, produce steel sections such as U, I, V, H.
Besides, Pomina also recycles metal scrap operating at the branch (steel billet
factory), not at the head office.
S8: Synchronously closed line saves materials.
1.1.7 Key Resources
+ Capital:
On October 29, Pomina Steel Joint Stock Company announced its consolidated
financial statements for the third quarter of 2022, in which net revenue reached
nearly VND 2,978 billion, down 4% over the same period. Financial income of
Pomina Steel is almost flat around 17 billion dong. Previously, Pomina Steel was
also forced to stop blast furnace production from September 23, 2022 and at the
same time cut some employees to ensure business situation. Results Pomia Steel
recorded a loss of 714.8 billion dong and 715.6 billion dong before tax and after
tax, while in the same period last year, there was a profit of 3.5 billion dong after
tax.
+ Labor resources:
The total number of employees of the Company as of March 31, 2022 is 1,625
people. The team of technical experts are good engineers, trained in Europe with
a high sense of discipline and professionalism, ensuring the operation of the entire
production line in accordance with the strict standards set by the supplier.
regulated. All employees working at the company have specialized degrees. In
addition, every year the company also creates conditions for its staff to have time
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to be trained and improve their skills, This helps each person working in the
company to have high expertise.
S9: Abundant and numerous human resources.
+ Technology:
Established in February 2012, POMINA 1 steel factory inherits the entire
production line system from Pomina Steel Joint Stock Company, including 2
production lines, each with a capacity of 300 thousand tons of steel. built/year,
equipped with modern technology of Vai-Pomini (Italy) and Simac (Germany).
In 2005, Pomina invested in POMINA 2 Steel Joint Stock Company in Phu My
Industrial Park, Ba Ria - Vung Tau province, with a capacity of 500 thousand tons
of construction steel and 500 thousand tons of billet per year.
Pomina's steel rolling mill uses Germany's Vai Siemens technology. The billet
smelting plant uses Italy's leading Consteel Techint technology. The system of
machines and production lines are completely closed, controlled by automation
and energy-saving systems. The products are manufactured to ensure uniform,
stable quality and without any technical errors. Has 12 years of experience in the
iron and steel market.
1.1.8 Key Partners
Pomina Steel has always been trusted and used by partners who are leading
construction companies such as Vingroup, Phu My Hung, Dai Quang Minh,
Coteccons, Hoa Binh, in large projects and key projects such as Lanmark 81,
Vincom, Sala Dai Quang Minh Urban Area, Ben Luc - Long Thanh Expressway,
the national key project Thu Thiem Bridge 2... and other high-quality projects at
home and abroad.
Besides, there are partners in Cambodia and specializes in exporting there.
Pomina is a pioneer manufacturer in investing in the world's most modern
production lines and technology from leading equipment suppliers such as Techint,
SMS Concast, Tenova, Simemes.
1.1.9 Cost Structure
Pomina's financial expense in the period was 119 billion dong, up 42% over the
same period, mainly in interest.
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Selling and administrative expenses both decreased, to only 5 billion and 22.5
billion dong, respectively 67% and 31%.
Results Pomina Steel recorded a loss of 714.8 billion dong and 715.6 billion
dong before tax and after tax, while in the same period last year, a profit of 3.5
billion dong after tax.
Liabilities accounted for 8,725.1 billion VND, equivalent to 74.3% of the asset
structure, loans and short-term financial leases accounted for 5,525.5 billion VND.
Conclusion: Pomina's strongest competitive advantage compared to Hoa Phat
is cost. With its recycling and waste treatment technology, Pomina has been able
to save costs in production, thereby having competitive prices and guaranteed
quality. Despite the cost advantage, Pomina has not yet fully shown its advantage,
the revenue is continuously decreasing, which proves that Pomina's strategies are
not flexible enough, with little experience in operating in the leading market.
recession when faced with market fluctuations.
1.2 Competitive competitor VNSteel
1. Customer Segment 2. Value Propositions 3. Distribution Channels
- Enterprise producing - Providing high-quality - Social media advertising
steel, steel billet steel products, meeting (Facebook, Youtube, ect.)
- Construction unit the needs for the - Website, mobile app
(shipbuilding, railway …) development of (company website, news
- Architecturalnstruction infrastructure and the website …)
works country’s economy. - Sign.
- Always innovate to - Hotline
maximize company
value, toward satisfying
customers’ requirements
in terms of price, product
quality, and service
excellence.
- Build an effective and
dynamic.
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steel production technology in Southeast Asia (G7 Technology). At the same time,
steel company VN Steel is one of the leading enterprises in production associated
with environmental protection.
S12: More modern production technology than competitors.
+ Capital: in terms of cash flow, in the first 9 months of the year, VN Steel
recorded a negative business cash flow of 172.2 billion dong compared to the same
period of negative 961.1 billion dong. In addition, investment cash flow was
negative 233.1 billion dong and financial cash flow was negative 572.4 billion
dong. As of September 30, 2022, total assets of VN Steel decreased by 6.3%
compared to the beginning of the year to VND 25,672 billion. In which, the main
assets are long-term unfinished assets reaching VND 6,243 billion, accounting for
VND 24.3 billion of assets.
+ Labor resources: with more than 11,481 employees, VN Steel builds human
resources with high technical expertise, reasonable structure, access to advanced
management methods and skills, towards the goal of development. Development
of the Corporation: “Consolidate and maintain its position as one of the leading
steel manufacturers in Vietnam, pioneer in innovation and creativity, towards
sustainable development and international standards. VN Steel encourages and
creates the best conditions for employees to participate in training programs to
improve their professional qualifications and skills, and to have a professional,
proactive and creative working style.
Focus on building and developing a team of good experts in a number of key
fields, giving priority to training senior human resources to improve corporate
governance capacity.
S13: Stronger and more stable financial resources than competitors.
1.2.8 Key Partners
VN Steel has partnerships with many metallurgical manufacturers and steel
traders from leading countries in the world such as Japan, Russia, Korea, India,
etc., creating opportunities to exchange experiences. production as well as the
latest technology.
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which shows that VN Steel's strategies are not really suitable. in line with the
company's financial situation, leading to inefficiencies in business operations.
2. Bargaining power of suppliers
Heavy industry such as Vietnam's iron and steel products cannot provide 100%
of alloy steel by itself. A large amount of iron and steel as well as semi-finished
products (alloys) are still imported from China, Japan, and Russia. Due to hunger,
any change in the global economy could severely affect the Vietnamese steel
industry in general and Hoa Phat Group in particular. With the initiative, Hoa Phat
has obtained about 60-70% of alloy materials, with the reverse integration strategy,
Hoa Phat has two subsidiaries, An Thong Mining Investment Joint Stock Company
and Hoa Phat Mining Joint Stock Company with the function of: The main
function is exploration, exploitation, smelting, processing and trading of iron ore
in Ha Giang and Yen Bai provinces.
S15: Autonomy of alloy materials.
The input materials of the steel industry have almost no substitute products, so
they play an important role in the steel industry. Although the main source of
supply is from China, at present Hoa Phat company does not completely depend
on one or a few suppliers. Moreover, the supplier's products are uniform, there are
no major differences between suppliers, so they do not cause large switching costs.
And above all, this source of scrap, ore, iron ingot can only be sold to the steel
industry. The choice of customers depends mainly on the price, brand and
reputation of the business.
S16: Low bargaining power of suppliers.
Vietnam imports from many countries in many different continents both raw
materials (steel scrap), semi-finished products (steel billets) to finished products
(hot rolled steel, construction steel, section steel, galvanized steel sheet) color…)
but mostly raw materials and semi-finished products.
Hoa Phat can take the initiative in 80% of steel billets for the production
process, the remaining 20% depends on imported sources. However, Hoa Phat has
built a long-term business relationship with a supplier of billet and its member
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companies also have a good relationship with raw material suppliers. Raw
materials will be guaranteed in terms of quality and reasonable price.
S17: Convenient, uninterrupted supply.
For Hoa Phat Group, which reduces the competition of suppliers by "closed
production scale and process", the output products of one industry in the group are
the input products of the other industry. However, with the instability of foreign
currencies, especially the renminbi, USD and bank interest rates on local
currencies also affected some of the Group's domestic and foreign suppliers,
causing the most difficulties in this period. current paragraph. The output is very
high, but Hoa Phat's business results depend a lot on the price of input materials
and the selling price of output products, factors on which Hoa Phat completely
depends on the market.
W5: Underlying business performance.
In the third quarter, the price of iron ore has been increasing strongly due to the
strong demand for steel production in the Chinese market, along with a temporary
shortage in supply due to the temporary closure of many iron mines in Brazil due
to the impact of the pandemic. Covid-19 epidemic. Meanwhile, coking coking coal
prices remained low, due to trade tensions between China and Australia, the
world's largest coal exporter.
Suppliers of steel and raw materials for the steel industry are distributed in
many countries around the world, so the concentration of suppliers is low,
moreover, there is no single enterprise holding a monopoly in this field, so there is
no situation. read rights to sell. Steel and raw materials for the steel industry are
not special goods, so buyers can choose one or more input suppliers for production.
However, with 50% of embryos imported, the ability to negotiate on prices of
Vietnamese enterprises is also low, almost completely subject to fluctuations in
world market prices. Thus, it can be seen that the pressure from suppliers on
enterprises in Vietnam's steel industry is at an average level.
W6: Passive on price.
W7: Input affected by import.
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projects such as shelters for earthquake victims in Nepal, temporary shelters for
refugees in Thailand or flood-proof houses in Vietnam.
Polymer fiber reinforced bar (PCS) material with tensile strength many times
higher than steel, lightweight and non-corrosive, is about to appear in Vietnam to
replace a part of steel in reinforced concrete structures for the construction
industry, will bring great benefits to Vietnam. PCS material has stable properties
in the environment of salt, acid and other corrosive substances, has higher bearing
capacity than steel, is easy to shape, so it has been introduced to Vietnam for about
15 years.
For Vietnam, the production of PCS applications will have more advantages
than other countries. Vietnam has a source of high quality white sand, very large
volume, widely distributed in Quang Ninh and Central provinces, this is an
important source of materials accounting for over 70% in volume to produce PCS.
Electric glass factories in Vietnam have been able to produce liquid glass from
white sand and limestone, soda, and can now switch to fiberglass production to
supply PCS factories. Thus, investing in production from white sand into PCS
products in Vietnam has many net benefits. The technology is quite familiar, easy
to master and much less good or worse than steel production, which starts mining
ferritic ore to make cast iron and then casts billets with the capacity of the current
Vietnamese economy. PCS factories do not require high technology, do not need
a large area and do not pollute the environment like steel mills.
The substitute products here are imported steel from China, Malaysia, Japan,
Korea, Taiwan, and for steel products, there are almost no competitive products
because they occupy the number one market share in terms of content. Furniture,
construction machinery, especially for refrigeration, although there are many big
names in the world, competitive advanced skills, in return, Hoa Phat refrigeration
has a high rate of interiorization because it is affordable for consumers. middle
level.
And in cases where instead of using steel for construction, iron can also be used
instead, aluminum sheet can replace steel plate in some cases. Instead of using air
conditioners, customers can use ice fans, ordinary electric fans instead.
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Technology and production scale in the industry is generally small and has not
improved much in recent years: according to the calculation, 30% of steel factories
are small-scale and use outdated technology, 40 % use technology with average
level.
According to economic experts, one of the industries that will be under great
pressure when the Free Trade Agreements (FTAs) come into effect is Vietnam's
steel industry. Many years ago and up to now, Vietnamese steel is still being
"underdog" day by day before massively imported Chinese steel at low prices. The
risk of difficulty in competing with imported steel increases when a series of Free
Trade Agreements (FTAs) are signed. Vietnam's steel industry is facing major
barriers in terms of scale and internal capacity, reducing competitiveness and
holding back businesses. The weakness of both capital and human resources makes
Vietnam's steel enterprises unable to invest in modern technology in production.
Outdated production technology is just one of a series of problems facing the steel
industry today.
Barrier to scale high.
+ Capital requirements
Steel production is a heavy industry that requires a large amount of capital to
invest in production technology, labor force, credit sales activities for customers,
inventory storage or cover losses when starting a business… capital requirements
for high fixed costs. Even if capital is available in the financial markets, entering
this industry carries the risk of losing capital which will subject the entrants to
higher interest rates.
High capital barrier.
+ Cost
The liquidation of machinery of enterprises in the industry does not bring much
economic value, this makes many enterprises forced to stay in the industry even
though their operation is not as efficient as before, increasing competition in the
industry.
High set-up costs: Many of these costs are irrecoverable sunk costs leaving the
market or leaving barriers to entry, such as advertising and marketing costs and
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fixed costs. other determination. Advertising: This is one of the sunk costs. The
higher the amount of money spent by companies and businesses, the greater the
barriers and barriers to market entry of new entrants. Research and development
costs: When companies spend large amounts of money on research and
development, it is often a signal to new entrants that they have large financial
reserves. To compete, new entrants will also have to spend an amount that matches
or exceeds this spending. Switching costs: These are the costs that customers incur
when trying to switch suppliers. It involves the cost of acquiring new equipment,
loss of service during a changeover, the efforts involved in finding a new supplier
or learning a new system. These are exploited to a large extent by the supplier to
discourage potential customers from entering the market.
High cost barrier
+ Fierce competition
With the general forecast of positive growth, of course domestic competition
will also increase significantly. The gradual increase in output, along with new
production projects coming into operation this year is expected to further
strengthen the oversupply situation. Market demand expanded at 10 million
tons/year while output increased to 30 million tons. The competition for market
share is getting fiercer and fiercer. Not to mention with the situation of China's
steel trade deficit, with low prices and large outputs being fiercely competitive, a
growth forecast cannot guarantee domestic steel enterprises peace of mind. In
addition, the policies on importing scrap iron and steel in Vietnam are not
beneficial for businesses, increasing competition when they have to compete to
buy domestic materials to make up for the shortage of imported materials.
High barriers to competition.
S20: Not threatened by potential opponents.
Trade defense
In addition to having to compete with cheap imported steel, the steel industry
also has a "headache" to deal with trade remedies lawsuits abroad. In the past
September, the steel industry has been sued against dumping by the country's
authorities three times, and if counted since joining the export, this number is up
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focus on expanding the production scale, it may cause Hoa Phat to fall into a
situation of oversupply. In fact, the current market demand for construction steel
is about 10 million tons/year. However, when the Dung Quat project comes into
operation, the company can completely supply about half of the current
consumption to the market. The amount of supply is too much, making the market
unable to adapt and consume, leading to overproduction.
W10: Oversupply.
+ Corporate customers often have a lot of information about prices and product
quality, so the ability to negotiate prices is high, as well as to choose and change
suppliers easily.
+ The large volume of orders and the signing of long-term supply contracts with
customers bring many benefits to businesses.
Thus, it can be seen that the strength of this customer group is quite high, which
puts pressure on businesses to improve advanced technology, which puts pressure
on businesses to improve technology, improve improve product quality, lower
selling prices to be able to attract and retain large and traditional customers,
increase the competitiveness of enterprises with competitors. Competitive pressure
from potential competitors is very high, the possibility of entering the steel
industry of potential competitors is high due to the policy of attracting investment
capital of the State and the laxity of Vietnam's legal regulations. The reception of
investment projects implemented by localities is not possible to assess capital
capacity as well as clear regulations on technology and environmental
commitments to projects. This increases the number of firms in the industry,
increasing the volume of products and the competitiveness of the industry. Later
entrants can compete with the old ones in terms of price and quality due to the
advantages of large capital and technology. Competitive pressure from substitute
products is not high, Steel is considered the food of all industries. Currently, there
are not many resources or other materials to replace steel in construction, industrial
machinery manufacturing or in defense.
W11: Difficult to capture new consumer behavior.
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Internal customers of Hoa Phat Group are member companies, Hoa Phat gives
priority to supplying raw materials to member companies, so Hoa Phat does not
have to bear much pressure from this group of customers.
The rest of Hoa Phat's customers are individual customers, so switching from
Hoa Phat's products to other products does not take much time and costs. Product
characteristics and conversion costs in the process of using steel products (mainly
construction steel) are highly standardized, so the conversion fee when buyers do
not want to use our products It is very high for other industries to switch to products
such as wood, plastic, etc., because steel is often the main material, the mainstay
of construction works, so the conversion requires a lot of time and money. cost.
While the tendency of customers also does not like to change habits for fear of
losing time and effort.
Customers have more and more products to choose from in terms of price,
quality, design, sales service as well as other better conditions. But for the group's
products with widespread and regular coverage, it is still well received by
customers and the competition is not high.
S22: Diversity of products and designs.
VI. SWOT ANALYSIS
1. Strengths
Through analyzing the canvas model and the 5 forces model, the team has
inferred 22 strengths about Hoa Phat Group:
S1: Maintaining the top 1 market share in construction steel and steel
pipes.
S2: Self-mastery with modern technology.
S3: Brand with a long-standing reputation.
S4: Hoa Phat has a stronger export market than its competitors.
S5: Hoa Phat's modern production technology is better than competitors.
S6: The distribution channel is large, diversified and stretches throughout
Vietnam.
S7: Communication and promotion of strong brands.
S8: Synchronously closed line saves materials.
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Through analysis of the macro environment as well as PESTEL, the team has
drawn 17 opportunities of Hoa Phat Group:
O1: The economy develops stably.
O2: Abundant labor resources.
O3: The Ministry of Industry and Trade focuses on developing the steel
industry.
O4: Unrestricted export in WTO.
O5: Importing modern machinery and equipment.
O6: The State creates favorable conditions for enterprises in the field of
development and investment encouragement.
O7: Political stability.
O8: Reach customers faster through social media.
O9: Abundant technology human resources.
O10: Technology is gradually being perfected and improved.
O11: E-commerce develops, and expands sales scale.
O12: Receiving advanced technology transfer from abroad.
O13: Technology applied in transportation development.
O14: Technology and steel production line developed.
O15: Applying AI technology to labor – supporting mineral mining,
transportation in hazardous environments.
O16: Access to partner's modern technology.
O17: Abundant natural resources.
4. Threats
Through analysis of the macro environment as well as PESTEL, the team has
drawn out 15 threats of Hoa Phat Group:
T1: High rate of competition in the industry.
T2: The steel industry shows signs of recession.
T3: Declining consumer demand.
T4: The lending bank has not met the demand.
T5: Raw material price fluctuates.
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T6: The cost of input materials increased but the price of finished products
decreased, affecting the profit of the enterprise.
T7: Industry investment capital decreases.
T8: Supply-demand gap.
T9: Investment capital decreases, the state bank tightens monetary policy.
T10: The supply of raw materials decreased and was too dependent on input
materials due to large imports.
T11: The export market decreased.
T12: The source of production materials is limited.
T13: Continuous fluctuations in taxes.
T14: Tendency to trust foreign goods.
T15: Consumer aesthetic trends and tastes change.
5. Analysis gives strategy
SWOT Opportunities (O) Threats (T)
O1: The economy develops T1: High rate of competition
stably. in the industry.
O2: Abundant labor T2: The steel industry shows
resources. signs of recession.
O4: Unrestricted export in T3: Declining consumer
WTO. demand.
O5: Importing modern T5: Raw material price
machinery and equipment. fluctuates.
O6: The State creates T8: Supply-demand gap.
favorable conditions for T9: Investment capital
enterprises in the field of decreases, the state bank
development and investment tightens monetary policy.
encouragement. T10: The supply of raw
O7: Political stability. materials decreased and was
O8: Reach customers faster too dependent on input
through social media.
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Reason: The most urgent strategy in the current economic situation. With the
situation of the State bank tightening credit, the capital source of enterprises is
limited because it is difficult to get bank loans, besides controlling of inflation and
exchange rate, the high-interest rate makes it difficult to get a loan. For the interest
expense in the business to increase, the demand in the market decreased. Predicting
the future financial situation is very difficult. Therefore, the company needs to take
measures to cut costs, close old factories and old machinery and equipment, and
cut down on inefficient products and industries to reserve finance for the company.
Company to cope with the expected difficult economic situation in the future.
VII. QUESTIONNAIRE
1. WHO
Gender?
Both Male and Female but mostly Male.
Age?
Ranging from 25 to 50 years old.
Job?
Freelancers, public employees, construction contractors …
Income?
From 10 million or more.
Marital status?
Single or married.
Who is the buyer and who is the payer?
In the case of a wife, the buyer is the husband and the payer is the wife.
People who directly influence purchasing decisions?
Family who have used the product.
2. WHAT
How do customers like the product?
Eye-catching design, light, compact, in shape, durable, stainless …
What do customers usually care about the most? (price, quality,
promotion…)
Affordable price, good product quality.
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Through Hoa Phat steel dealers, through social networking sites (Hoa Phat's
homepage), through online and outdoor advertisements, customers have
experienced shared products. Through the recommendation of friends,
surfing the web, seeing advertisements introducing products, seeing outdoor
billboards, news from the radio.
7. HOW MUCH/ HOW MANY
How many products do customers buy in 1 time?
Depending on the purpose of purchase, customers will buy enough steel in
one purchase.
How much customers are willing to buy, how much are they willing to pay
for a product?
For home repair, it fluctuates around 50-60 thousand/product. For
construction, it ranges from 60-100 thousand /product.
How much customers are willing to pay for 1 purchase?
In the case of building a house: depending on the scale of house construction,
the cost of steel will range from VND 30 million or more. In the case of home
repair: depending on the level of repair, it ranges from 15 to 20 million VND
or more.
How many products do customers buy during their lifetime with the
company.
Customers buy from 1 to 4 times: buy when building a house when getting
married, building a house for parents, building a house for children, repairing
or expanding the house size.
VIII. CUSTOMER ANALYSIS
Customer analysis is an important part of a company's business or marketing
plan. It identifies target customers, identifies the needs of these customers, and
then specifies how the product meets these needs.
To be able to analyze in the most detail about the psychology and behavior of
customers when choosing and using construction iron and steel products, we have
conducted a survey of 614 people. Then, analyzing and studying the responses, we
summarized the information in the following summary.
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1. Survey on a total of 614 people about the demand for using Steel
1.1 About gender
Total: 614 people, including:
+ There are 486 men, accounting for 79.15%.
+ And 128 are female, accounting for 20.85%.
+ The age group over 45 years old: there are 4 people who read close to 0.65%,
8 people who are married account for 1.3%, 3 people who have been divorced
account for 0.49%.
Figure 8.9: Graph showing age and marital status. (Source: SPSS)
Out of 614 people surveyed, more than 60% are the target customers that Hoa
Phat is targeting, nearly 40% of the remaining customers are those who are
mainly aged from 25 to 35 and are single. Hoa Phat's potential.
1.3 By occupation and income
+ Construction contractors: there are 44 people with incomes over 30 million
VND, accounting for 7.17%, 30 people with incomes from 10 to 30 million VND,
accounting for 4.89%, 7 people with incomes under 10 million VND accounting
for 1.14%
+ Other freelance work: there are 29 people with income over 30 million VND,
accounting for 4.72%, there are 135 people with income from 10 to 30 million
VND, accounting for 21.99%, there are 71 people with income under 10 million
VND accounts for 11.56%.
+ Workers and officials: there are 38 people with income over 30 million VND,
accounting for 6.19%, there are 215 people with income from 10 to 30 million
VND, accounting for 35.02% and 45 people with income under 10 million VND,
accounting for 35.02%. 7.33%.
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More than 70% of people with incomes over 10 million VND have targeted
customers, of which the most are employees with more than 35%.
1.4 By the period of the year
+ There are 74 people who want to receive goods at the beginning of the year
from January to April, accounting for 12.09%, these customers may be in the file
of customers having problems to repair their houses at the beginning of the year or
unfinished projects from the previous year.
+ There are 366 people who want to receive goods in the middle of the year
from May to July, this customer file is said to be people who want to build a new
house to prepare for construction at the beginning of the new year with the concept
of bringing good luck.
+ There are 172 people who want to receive goods in the year-end period from
August to December, which can be identified as unfinished house builders, home
remodeling to welcome the new year.
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Figure 8.11: The chart shows the month of building a house. (Source: SPSS)
Cheap
High Quality
Good durability
Eye-catching
design
(Source: SPSS)
Through the survey data, it can be seen that the quality and durability factors
are most concerned by customers, possibly because Hoa Phat's main product
is construction steel, so quality and durability are focused on. more attention
because it is related to the security of the architecture and the level of life
safety.
3. Factors that motivate customers to buy faster
+ Price is cheaper than expected: 330 people are interested out of 614 people,
accounting for 53.7%, when buying, all customers have learned and are willing to
pay for a certain price range, the price lower to help customers make decisions
faster.
+ Good customer care service: 407 people are interested out of 614 people,
accounting for 66.3%, good customer care service will give customers a good
impression of the brand as well as a good understanding of the product. products
make customers not confused when choosing products.
+ Big and reputable brands in the market: 372 people are interested out of 614
people, accounting for 60.6%, it can be seen that big brands help customers trust
the product, not worry about fake goods, Poor quality products when buying
products increase the purchase decision of customers.
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(Source: SPSS)
Through the survey data, it can be seen that the above 3 factors are the most
interested in the factors, which have a strong impact on the purchase decision
of customers.
4. Satisfaction survey
Unsatisfied
+ There are 10 customers who leave and do not buy the product again,
accounting for 1.66%.
+ There are 16 customers who will consider buying the product again,
accounting for 2.66%.
+ There are 17 customers who will definitely buy again, accounting for 2.83%.
In the file of customers who are not satisfied with the company's products,
there are 43 dissatisfied people, up to 17 customers will definitely buy again,
proving that the prestige, brand as well as good communication have left a
good impression in the hearts of customers.
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Figure 8.14: The chart shows the level of satisfaction and repurchase.
(Source: SPSS)
Extremely satisfied
+ There are 3 customers who leave and do not buy the product again, accounting
for 0.5%.
+ There are 139 customers considering to buy the product again, accounting for
23.13%.
+ There are 416 customers who will definitely buy the product again,
accounting for 69.22%.
With the premise that customers are very satisfied with the product but still
choose to leave or consider buying the product again, it proves that there are
policies that are still not attractive enough to entice customers such as
discounts, rewards, etc. Besides, during the business period Hoa Phat has
more than 60% loyal customers in the customer file, which is an advantage
and needs customer retention policies or commends these loyal customers.
IX. CUSTOMERS PORTRAIT
1. Customer portrait
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X. CUSTOMER SEGMENTATION
Geography
Country They are born and live in Vietnam. They can be the expats who live
in Vietnam, mostly from Asia areas, Europe and America living in
Vietnam.
City size Over 1,200,000 people
Density They live in the urban areas such as Ho Chi Minh City, Hanoi, Hai
Phong, Da Nang…
Demographic
Age Adult group Middle-aged
25-35 years old 36-50 years old
Gender All sex
Income From 10 million VND or more.
Education Normal, college, graduate, advanced degree…
Occupation Farmers, workers - officials, Farmers, workers - officials,
construction contractors… construction contractors, retired.
Nationality Mostly Vietnamese, Asian (Korean, Japanese, Chinese, Taiwanese,
Thailand, Singaporean, etc.) and European, American.
Family size 1-2, 3-4, 5+
Family life Young, single Middle-aged, raising parents.
cycle Young, married Middle-aged, raise children to
Young, married, have children grow up, get married for
Young, divorced children.
Young, divorced, have children
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Psychographic
Social class The lower, middle, and upper classes
Lifestyle Love family, modern style, active Love family, old-fashioned way
lifestyle, liberal and love modern of life, loyal to long-term
innovation, busy with work, products, know knowledge about
caring, loyal, have social building materials, have social
relationships. relationships.
Personality Love modern innovation, loyal, Fastidious, demanding high
outgoing, sociable, friendly with quality products, loyal,
people around, dynamic, explore introverted, compliant, gentle,
new things. careful, meticulous, detailed in
work.
Behaviral
Occasion + Before and after getting + Move to a new place or a new
married, they want to have a city.
common house for husband and + Want to repair your home when
wife to live in. it is damaged, due to the weather
+ Move to a new place or a new or the house is too old.
city. + When the house has a new
+ Want to repair your home when member, I want to expand the
it is damaged, due to the weather house to be bigger and wider.
or the house is too old. Building a new house for parents
+ When the house has a new to rest in old age
member, I want to expand the + Build a house for your children
house to be bigger and wider. when they are away from their
husband/wife and live separately.
Benefit Price and quality: Young people For middle-aged and more
who have just gotten married will demanding customers, they will
often reach the top price because demand top quality, such as long
the amount of money they have steel life, no acid corrosion, no
currently is not much, so they will rust, etc. to be able to ensure
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consider the price, how much will make sure their house when built
buy enough quantity, then the can be sturdy and use for a long
quality. Durable, less prone to time.
rust.
User status Unused: First time using: Customers use
+ People who build a house for the the products for the first time,
first time (adult age from 25 - 30 change their buying behavior
years old) do not know much from competitors to Hoa Phat,
about construction iron and steel buy because of many promotions,
products. buy to experience the product, or
+ Customers who have been using are introduced to the product by
competitors' iron and steel friends.
products or substitute products. Usually use: Home construction
Potential users: When having a contractors, as loyal customers,
bad experience with another always choose Hoa Phat steel
company's iron and steel products products first. Or parents who
that are not good. And was used to use it and now buy it to
introduced to Hoa Phat's iron and build a house for their children.
steel products by friends or
family, and wanted to buy and
use.
Usage rate: The rate is mainly used in medium and heavy, depending on the
purpose of the customer's needs, the customer will buy more or less.
And most of the time when building or repairing a house, customers
buy in large quantities, avoiding interruption during construction due
to lack of materials.
Buyer The aware stage: After getting Desire stage: In terms of parents,
readiness married or reaching the age to instead of buying a house for
stage build a house, men will often their children, they will build a
realize what it takes to build a house to show their affection or
house. when they have a desire to
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XI. TARGETING
Target customers: are men aged 25-45, married,
have a job and stable income of 10 million or more,
Variables
and are living in big city areas such as HCM,
Hanoi.
Vietnam is a country with a very high
population compared to the territorial area and is
increasing every year, especially concentrated in
big cities such as HCM, and Hanoi, ... People living
in this area mostly have high incomes because the
standard of living in urban areas is quite high and
developing, the area is limited but the population
density is high, making the demand for building
and repairing houses increase. In addition, houses
in big city areas are old, with high living standards,
Segment size and growth
the trend of building new houses and remodeling
houses will increase. In particular, when building
high-rise buildings to meet the needs of people,
safety is the top priority, with which the use of
quality construction steel is higher than before.
Besides, men older than 25 years old tend to live
independently or get married will have the need to
build their own houses, middle-aged people tend to
build houses for nursing parents as well as build
houses to take care of children.
Vietnam has 49.3% of the population aged 25-
45. In addition, the young generation of Gen Z
Structural attractiveness today tends to be actionable, married and
independent from a very early age, increasing the
demand for construction iron and steel in this
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XII. POSITIONING
1. Competitive advantages
As a multi-industry enterprise
Besides steel, which is currently the core business, contributing about 78% of
the Group's total revenue and profit. There are also agriculture (eggs, Australian
beef) and real estate companions that become a solid tripod for Hoa Phat to rise to
become a multi-industry private corporation.
Actively source raw materials and find cheap raw materials: helping Hoa Phat's
production cost to be at least 5% lower than competitors according to CIMB
Securities Company.
Hoa Phat has the initiative to source raw materials, which are hot rolled steel
coils, products of Hoa Phat Dung Quat Iron and Steel Production Complex,
completely originating from Vietnam. This is a great advantage, ensuring quality
and competitiveness for Hoa Phat steel pipe products in the international market.
Has different modern technology (blast furnace technology)
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Hoa Phat has pioneered the application of blast furnace technology in Vietnam,
which uses iron ore input materials instead of scrap steel as the old technology.
Compared to the market size of about 5 million tons of steel a year in Vietnam, the
reserve of 1.3 billion tons of iron ore is considerable.
In addition, blast furnace technology that uses less electricity will further
strengthen Hoa Phap's competitive position, as the advantage of cheaper electricity
prices compared to Vietnam's region may disappear in the future.
Lower production costs than competitors
According to the assessment of CIMB Securities Company, combining the blast
furnace technology of the new factory with cheap input ore sources, Hoa Phat's
billet production cost can be at least 10% lower than that of other factories. Other
domestic companies use electric furnace technology. In addition, compared to
imported billet, Hoa Phat's products are also about 16% cheaper.
This advantage is thanks to Hoa Phat's production using BOF blast furnace
technology, with input materials mainly consisting of iron ore and coke for much
lower production costs than production using EAF technology. with input
materials are scrap steel and electricity. Besides, the advantage of large scale
compared to other steel manufacturers has helped Hoa Phat reduce the cost of
transporting materials and the proportion of fixed costs per product unit.
Strong financials
In terms of capital, the common point of enterprises in the steel industry is that
they all need a huge amount of capital to invest in factories. Most of this capital
has to be borrowed, so the average debt-to-equity ratio of steel companies on the
floor is now about 2.7 times. Meanwhile, Hoa Phat's debt is only 0.8 times equity.
This is a huge advantage for Hoa Phat in maintaining profits. Without interest rate
pressure as well as financial pressure compared to rival companies, especially in
the situation of monetary tightening, the state tries to increase interest rates to
minimize inflation, the credit debt will put pressure on the economy huge force for
companies with weak financial resources and large loans.
There is the close companion and cooperation of customers, agents, and
suppliers’
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In the spirit of "Harmony and development", Hoa Phat Steel Pipe has built a
network of 500 large and small agents across the country, creating a close, organic
relationship between manufacturers, customers, and distributors. Many agents
have been with Hoa Phat since the first years such as Phuc Ha Company, Ha Dung
Company, Cuc Phuong, Huyen Vinh, Khanh Duy, Van Con, Trieu Tham, etc.
Ms. Pham Thi Phuong Dung - Director of Ha Dung Trading Co., Ltd., said:
“We are one of the distributors of Hoa Phat steel pipe products from the very
beginning. In the process of cooperation, we always receive listening, market
demand and timely support on products and after-sales services from Hoa Phat,
through which customers increasingly trust in using Hoa Phat steel pipes."
Agreeing with this point of view, Mr. Nguyen Ngoc Vinh – Director of Huyen
Vinh Company added: “In business, there are good times and difficult times. I
consider the Hoa Phat brothers as family members, but as a family, there is
nothing to hide. To tell the truth, to tell the truth. Willing to give sincere
suggestions for the common good, what is not okay, we will solve it together, not
letting problems drag on. That way it's easier to do, and it's more durable."
Product development strategy
The strategy of Hoa Phat enterprise in the construction steel industry is to race
to invest as soon as possible, produce the product as soon as possible and thereby,
recover capital earlier than competitors, thereby creating an increasingly cost
advantage lower costs compared to steel complexes that come into operation later.
Therefore, Hoa Phat will create a strategic advantage if it can put Dung Quat steel
complex into operation many years earlier than Hoa Sen Group's construction steel
complex.
To implement this plan, Hoa Phat implemented 2 strategic solutions: (1)
implement as quickly as possible and put into operation as soon as possible the
Dung Quat Grand Project and (2) prevent Hoa Sen Group from doing so. can
accumulate strong financial resources to penetrate the construction steel industry
to implement a large steel project in the southern market. How to slow down Hoa
Sen Group's penetration into the construction steel industry as much as possible.
Digital technology transformation
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Right from the end of 2020, Hoa Phat Group signed a strategic cooperation
agreement with CMC technology group to build a comprehensive digital
transformation roadmap. CMC is a reputable partner and implements many IT
projects for Hoa Phat. CMC has spent a lot of time learning about Hoa Phat's
business, operations and IT systems and has received trust from the Group's
leaders. Besides, the fact that CMC provides a variety of service solutions: from
infrastructure, security, applications to new technologies (Big data, IoT,
automation, ERP, supply chain management, ...) meeting the transformation needs
of Hoa Phat in terms of operation, administration and business. CMC is also a
senior partner in Vietnam of many big technology firms such as IBM, Microsoft,
Oracle, SAP..., CMC ensures to support customers to access the most advanced
technology solutions.
2. Positioning map
In the maps, Hoa Phat has quite high quality compared to other competitors,
but in terms of price, it is at a moderate price but still higher than its competitors.
But it is not because of the price that Hoa Phat has lost its position, with good
quality, Hoa Phat has always kept the No. 1 market share in Vietnam in terms of
steel quality. This is considered a strong advantage that cannot be compared to
other competitors. No competitor can compare.
In the maps, Hoa Phat has quite high quality compared to its competitors, but
the price is moderate but still higher than the competition. But not because of the
price that Hoa Phat loses its position, with good quality Hoa Phat always keeps the
No. 1 market share in Vietnam in terms of steel quality. This is considered a strong
advantage that other competitors cannot compare. No competitor can compare.
Looking at the map we can see the different positions of famous brands in the
steel industry, each with a different attraction and business strategy. Hoa Phat
follows the path of improving product quality and segmenting customers with
higher prices than competitors, but in recent times, Hoa Phat has tended to
gradually reduce selling prices to increase competitiveness and lock in market
share. of opponents. Besides, we can see that other competitors such as Pomina,
Vnsteel, Vn Kyoei are growing in pursuit of product quality but are still inferior to
Hoa Phat. Although these brands have nearly the same product quality, with
different advanced technologies and different strategic business strategies, the
products of these brands are aimed at different segments such as Vnsteel. targeting
the mid-range price segment, Pomina has a lower price than Vnsteel.
Besides, it can be seen that Hoa Phat is pursuing product quality and the price
segment is quite high and tends to change the price segment. Despite the high price,
it still maintains its leading position in the industry because Hoa Phat has improved
a number of technologies in the production system, creating a long-standing
prestigious brand in the market along with product quality that has never been a
customer. Dissatisfied products, so Hoa Phat has won the trust of consumers right
from the first use. Along with its business development strategies, Hoa Phat has
always kept the leading position even though the price is somewhat higher than
the competition. To do this, Hoa Phat always has to improve technology,
implement customer care programs, build privileges for VIP customers (according
to levels).
XIII. MAKETING OBJECTIVES
1. Market coverage
Hoa Phat is a leading industrial production group in Vietnam. Starting from a
company specializing in trading construction machines since August 1992, Hoa
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Phat in turn expanded into other fields such as steel pipes, construction steel,
refrigeration, real estate and agriculture. Currently, the Group operates in 05 fields:
Iron and steel (construction steel, hot rolled coil) - Steel products (including steel
pipes, galvanized steel, wire drawing, prestressed steel) - Agriculture - Real estate
– Household appliances.
Hoa Phat Group holds the No. 1 market share in Vietnam for construction steel,
steel pipes and Australian beef. Currently, Hoa Phat Group is in the Top 10 largest
private enterprises in Vietnam, Top 10 best profit enterprises, Top 5 listed
companies with the largest charter capital in Vietnam stock market. HPG's market
capitalization reached 11 billion USD, among the top 15 steel companies with the
largest market capitalization in the world steel industry.
Currently, the group has a production system with dozens of factories and a
network of product distribution agents throughout Vietnam. As of 2022, Hoa Phat
Group has more than 30,000 employees, the scale of operations is spread across
the country, and has a representative office in Singapore and Australia.
Hoa Phat has 13 affiliated companies nationwide, more than 13 factories spread
across the country such as Hanoi, Ho Chi Minh City, Hung Yen, Da Nang...
Hoa Phat's upcoming goals:
+ Expanding more fields: building a container factory:
Hoa Phat's container factory project is located in Ba Ria - Vung Tau province,
with a capacity of 500,000 TEU/year, focusing on popular container products, with
a length of 20 feet and 40 feet. In which, phase 1 has a capacity of 200,000
TEU/year. The group is expected to test run in the third quarter and deliver the first
container product in the fourth quarter of 2022.
Also in 2022, Hoa Phat is expected to invest in building a factory specializing
in manufacturing metal accessories for construction, bridges, and container corners
for Hoa Phat container factory. The factory is located right next to the Hoa Phat
container project in Ba Ria - Vung Tau province.
+ Expanded scale: Hoa Phat Dung Quat Complex 2:
Hoa Phat strives in 2022 to complete the legal documents and invest in partial
construction for the Dung Quat Iron and Steel Complex Project phase 2. Chairman
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In the first 3 months of 2022, Hoa Phat Group achieved VND 44,400 billion in
revenue, up 41% and profit after tax reached VND 8,200 billion, up 17% compared
to the first quarter of 2021 with iron and steel production and steel products.
contributed 90% to the Group's overall results.
Hoa Phat Group has a crude steel capacity of over 8 million tons/year,
equivalent to about 700,000 tons/month. Hoa Phat said that in the first quarter of
2022, the Covid-19 epidemic was still complicated, the prices of input materials
for steel production such as coke refining coal and iron ore increased. However,
Hoa Phat's factories always operate at full capacity to meet market demand. Hoa
Phat has produced 2.16 million tons of crude steel, up 8% over the same period.
Sales of finished construction steel, billet and hot rolled coil reached 2.17
million tons, up 12% compared to the first quarter of 2021 - of which, finished
construction steel was 1.34 million tons, up 57%.
Hoa Phat Group's hot-rolled coil in the first 3 months of the year reached
763,000 tons, up 15% over the same period in 2021. HRC downstream products
such as steel pipes and galvanized steel were 207,000 tons and 105,000 tons,
respectively. an increase of 13% and 43% over the same period in
2021.Accumulated in the first half of 2022, Hoa Phat's revenue reached VND
82,118 billion and net profit of 12,229 billion of profit after tax, up 23% and down
27% respectively over the same period last year. With this result, Hoa Phat
achieved 51% of the revenue plan (VND 160,000 billion) and about 41% of the
profit plan (VND 30,000 billion).
In the second quarter business results report, Hoa Phat said that the price of
HCC coal continuously peaked in the first 6 months of 2022, reaching USD 670,
up 96% compared to December 2021 as the main reason leading to production
costs. Hoa Phat's exports increased sharply. Hoa Phat's COGS in this quarter
increased by 31% compared to the second quarter of 2021 while revenue increased
by only 6%. Sanctions imposed by Europe and the United States on Russia
disrupted global supply chains and high gasoline prices increased transportation
costs. Hoa Phat's transportation and export charges this quarter increased by 205
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Figure 13.3: Hoa Phat's net profit margin from 2019 to the second quarter of
2022. (Source: Google)
According to the financial report of the third quarter of 2022, Hoa Phat Group
Joint Stock Company, stock code HPG listed on the Ho Chi Minh Stock Exchange.
Ho Chi Minh City (HOSE), reached 34,441 billion dong in revenue, negative after-
tax profit of 1,786 billion dong, down 12% and 117% respectively over the same
period last year. Accumulated in 9 months of 2022, HPG achieved 116,559 billion
dong in revenue and 10,443 billion dong in profit after tax, reaching 76% and 39%
of the year plan, respectively.
Hoa Phat has produced more than 6 million tons of crude steel in the first 9
months of 2022, equivalent to the same period in 2021. Sales volume of
construction steel products, HRC and billet reached 5.7 million tons, a slight
increase of 3%. compared to the first 9 months of 2021. In the first 9 months of
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this year, with hot rolled coil products, the Group has supplied more than 2 million
tons to domestic and foreign markets, up 5% compared to 9 months of 2021. Lower
products HRC source is steel pipe reaching 577 thousand tons, up 16%; coated
steel sheet of all kinds recorded 249 thousand tons, slightly down compared to the
same period last year.
According to a recent report, SSI Securities Company - SSI Research has
adjusted its forecast of after-tax profit in 2022 of Hoa Phat Group Joint Stock
Company (code HPG) to VND 10,200 billion, down 70% compared to 2021. Thus,
according to SSI Securities Company's estimate, Hoa Phat will record a net loss of
270 billion dong in the fourth quarter of 2022. Previously, SSI Securities Company
also forecasted that Hoa Phat's profit after tax in the third quarter of 2022 could
reach VND 2,100 billion, but the reality is far different from the above figure when
the leading enterprise in the steel industry for the first time has suffered a loss since
Q4/2018 with a net loss of VND 1,786 billion. The combination of many negative
factors including falling steel prices, high inventory prices and the impact of
exchange rate losses was the main reason for Hoa Phat's loss in the third quarter.
Figure 13.4: Hoa Phat's net profit until the third quarter of 2022.
(Source: Google)
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In January 2022, Hoa Phat construction steel achieved sales volume of nearly
382,000 tons, twice as much as January 2021. In which, the export volume of
construction steel in January reached 116,000 tons, 3 times higher than the same
period in 2021 and accounting for 50% of Vietnam's total export of construction
steel. Hoa Phat construction steel market share in Vietnam reached 36.3%, an
increase of nearly 6% compared to the end of 202.
According to the Vietnam Steel Association, the total construction steel
consumption of the whole market in the first month of the year reached over 1
million tons, up 1.55% over the previous month and up 27.8% over the same period
in 2021. Exports of this item in January reached 231,892 tons, doubled over the
same period in 2021.
In the first month of the year, Hoa Phat construction steel production increased
sharply in the domestic market due to increased demand for civil construction and
projects before the Lunar New Year. The South and Central regions had the
strongest growth, 2 and 3 times respectively over the same period.
By meeting the strict standards of UK Cares, JIS (Japan), ASTM (USA), BS
(UK), Hoa Phat high quality construction steel continuously receives large orders
in the market. international. Main export markets include Singapore, Hong Kong,
Canada, Japan, Korea, Cambodia.
According to Mr. Kieu Chi Cong - Director of Hoa Phat Hung Yen Steel Co.,
Ltd., steel demand in the coming months in the domestic market and export is still
high. The company has received maximum export orders for factories in Hai
Duong and Quang Ngai until April. With this number of orders, factories must
always operate at full capacity to serve market demand. The exploitation of export
markets aims to diversify consumption markets, and at the same time contribute to
foreign currency collection and balance of trade balance of Vietnam.
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Figure 13.3: Construction steel market share in January 2022. (Source: VSA)
Construction steel exports become a bright spot in the gloomy picture of
Vietnam's steel industry. According to the data of the Vietnam Steel Association
(VSA), construction steel exports in the first 7 months of the year increased by
38% over the same period last year to more than 1.5 million tons, accounting for
about 20% of the consumption market structure this product.
Construction steel exports increased sharply in the context of falling domestic
demand due to seasonal factors (rainy season) plus the slow disbursement of public
investment. Distributors seek to reduce inventory, purchasing only the quantities
needed to meet customer needs. This leads to high inventories at factories and
fiercer competition for market share. As a result, manufacturing plants shift to
promote exports.
Figure 13.4: Construction steel sales market share in the first 7 months of 2022.
(Source: VSA)
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While the output of the whole industry is flat, in 2022, Hoa Phat will continue
to expand production with the Dung Quat 2 steel plant project. Phase 2 project
covers an area of over 280ha with a design capacity of 5.6 million tons of HRC
hot rolled coil per year.
Also in the production and business report of Hoa Phat in July, 2022, this
enterprise said that the consumption of steel products reached 526,000 tons,
equivalent to the same period in 2021 but has declined in recent months.
Specifically, sales of construction steel reached 372,000 tons, 2% higher than the
same period last year. The export channel is the main growth driver with output
increasing by 81% over the same period, at 147,000 tons, making the main
contribution to the growth momentum of this item.
4. SMART Object
Hoa Phat strives in 2022 to complete the legal papers and invest in partial
construction for the Dung Quat Iron and Steel Complex Project phase 2. The total
investment capital of the project is VND 85,000 billion, in which fixed capital is
70,000 billion, working capital is 15,000 billion, land area is about 284 ha.
Expected capacity of 5.6 million tons of steel per year, including 4.6 million tons
of hot rolled coil (HRC) and 1 million tons of high quality bar and wire steel. After
the project is completed, the total capacity of Hoa Phat Group will be 14 million
tons of steel, including 8.6 million tons of HRC and Dung Quat Complex alone
contributes up to 11 million tons.
Hoa Phat Group is proposing to invest in Bai Gioc seaport project and technical
infrastructure of Hoa Tam industrial park.
In mid-August 2022, the Department of Planning and Investment of Hung Yen
province issued a notice inviting interest to implement the project "Investing in
building housing for low-income people Yen My II Industrial Park" in the area.
Trung Hoa commune and Yen My town, Yen My district, Hung Yen province
Preliminary total project implementation cost (excluding cost of compensation,
resettlement support, land use fee, land rent) estimated at more than 4,830 billion
VND The cost of compensation for site clearance is estimated at 133 billion VND.
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Hoa Phat shook hands with Hop Nghia Investment to build an ecological
residential area of more than VND 5.6 trillion. The project has a land area of 120
hectares, total investment capital of more than 5,284 billion VND; compensation,
support and resettlement costs 338 billion VND. Hoa Phat Group - the leading steel
producer in Southeast Asia - has opened a factory to manufacture air conditioners
and a number of other household appliances. Hoa Phat's new factory has an
investment cost of more than 1 trillion VND (41.8 million USD).
SMART OBJECTIVES
+ Invest in Hop Nghia as an ecological residential area of more
than VND 5.6 trillion.
+ Project of Dung Quat Iron and Steel Production Complex
Phase 2. The total investment capital of the project is VND
85,000 billion, of which fixed capital is 70,000 billion, and
Specific
working capital is 15,000 billion.
+ Invest in building housing for low-income people Yen My
II Industrial Park more than 4830 billion.
+ Hoa Phat's container factory project is located in Ba Ria -
Vung Tau province, with a capacity of 500,000 TEU/year.
+ Increase by 7% domestic steel market share, 15% for export
by completing Dung Quat II factory, expanding exports to
partner countries.
+ Increase sales by 12 million tons/year and reach a revenue
of 220,000 billion.
Measurable + Occupy 3% more galvanized steel market, increase sales by
0.8 million tons/year.
+ Increase the scale of real estate, invest in construction in the
areas of Hung Yen and Phu Yen, becoming the second largest
enterprise in the field of real estate by investing 25,000 billion
in real estate projects.
Market and customer analysis has been done above this report.
Attainable
All data and information is collected and analyzed to help Hoa
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+ Steel pipes: Black steel pipes, Hot-dip galvanized steel pipes, Galvanized steel
pipes, Large steel pipes, Galvanized coils, Other industrial steels.
+ Color coated and galvanized steel sheet: Rusted and oil coated steel sheet, Cold
rolled steel sheet, Galvanized steel sheet.
+ Color coated galvanized steel coil, Aluminum zinc coated steel coil, Color coated
aluminum zinc coated steel sheet.
+ Metal fabrication: Supply of spare parts – Mining equipment, Construction
equipment.
+ Appliances: Air Conditioners, Freezers, Refrigerators.
+ Furniture: Office furniture, buildings, schools, hospitals, household appliances,
decor with tables and chairs of all kinds...
+ Real Estate: Apartment, Office, Trade Center.
About product quality: Hoa Phat has obtained many international standard
certificates for its products such as:
Figure 14.3: Types of certificates Hoa Phat has achieved. (Source: Google)
All production processes are applied modern technology, closed circulation,
controlled and processed from input materials to finished products, ensuring
superior product quality. In addition, the Group applies and develops many
innovative initiatives that contribute to improving the quality of steel products
produced, saving costs and making the operation process more efficient.
For example, the steel mill at Hoa Phat Hai Duong Complex, the factory has
combined with other departments to form a team to implement solutions to
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improve the quality of castings and the results are very encouraging. with a
markedly improved casting quality rate, with the percentage of castings achieving
grade 1 is >98%.
Especially, Hoa Phat Steel is the most historical construction steel in Vietnam
and of course standards such as quality, variety, affordable and stable price,
production technology are always upgraded… Therefore, after many years, Hoa
Phat is still the name chosen by people, investors, and construction contractors for
their works. Because of the trust of customers, Hoa Phat steel is also the most
counterfeited product on the market. Therefore, Hoa Phat also focuses and pays
attention to anti-counterfeiting issues to protect consumers' interests, intellectual
property and brand reputation. Hoa Phat has added details on its products to assess
the real and fake goods and the signs to identify its products. With that, Hoa Phat's
products now have Hoa Phat's logo plus its brand name on each product line to
help customers distinguish Hoa Phat's products from other types of products. It
gives customers peace of mind when using it.
o Example of Hoa Phat Steel Bar
+ Uses: is the core material, has high durability, the foundation in construction
works, and can withstand the impact of the natural environment without rust.
Construction application in large and small projects such as high-rise buildings,
hydroelectric dams or civil houses.
+ Design: mainly used in concrete reinforcement, with a long round tree design
and a surface with floating veins running around the iron trunk to increase the
adhesion between steel and concrete in construction works.
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+ Quality: Hoa Phat's steel bar products have achieved quality standards such
as Jis G3112-1987 (Japan), TCVN 1651-2008 (Vietnam), ASTM A6115/A615M-
08a (USA), in which there are 2 standards that are extremely difficult to obtain,
such as Japan's JIS and American's ASTM.
Product line strategy
After more than 30 years of business and development, Hoa Phat has developed
and expanded into different industries such as furniture, steel, galvanized steel,
refrigeration, and real estate. After a period of time switching to the steel industry,
Hoa Phat's furniture industry has been gradually reduced.
Hoa Phat Steel has 3 main product lines:
+ Construction steel: billet, coil, bar, hot rolled coil, special steel and products
related to the steelmaking process.
o Steel billet: with various sizes such as 130x130x6m, and 130x130x12m, ..
with glossy surface, no cracks, and no air holes. Square cross-section.
Production meets JIS, ASTM, BS, and TCVN standards.
Figure 14.3: Image of Hoa Phat's burning steel billet. (Source: Google).
o Steel coil: with a diameter of about 1.2m, the weight of each roll is about
1000kg - 2100kg. Steel thread has common diameters: ∅6, ∅8, D8 spike,
and ∅10. Shiny coiled steel surface, round cross-section, and small ovality.
Steel is manufactured according to JIS (Japan), ASTM (USA), BS (UK),
TCVN (Vietnam) standards…
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o Rebar steel: also known as ribbed steel, rod, steel with diameter from
D10mm to D55mm. Steel is manufactured according to standards Jis
Figure 14.6: Photo of Hoa Phat's hot rolled coil. (Source: Google)
o Hot rolled steel coil: with dimensions of 1.2m - 1.5m, thickness of 1.2mm
- 14mm, with a weight of 18-25 tons.
o Special steel: 1.2mm - 4.2mm meet ASTM A641, include the following
products.
+ Steel box:
o Black box steel: products rolled up from black corrugated iron, rolled
according to the factory's process and technology, ensuring standards of
TCVN 3783: 1983, ASTM A500, ASTM A53…
Figure 14.7: Picture of Hoa Phat's Black Box Steel. (Source: Google)
o Galvanized steel box: rolled up from galvanized sheet material, the
product complies with ASTM A53/A53M-12, ASTM A500/A500M-13,
BS EN 10255:2004 standards.
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Figure 14.8: Pictures of Hoa Phat's galvanized steel box. (Source: Google)
+ Steel pipe:
o Black steel pipe: is made from black corrugated iron material, the surface
of steel steel is dark blue or black, depending on the raw corrugated iron
coil as well as the rolling process, the material color will be different.
Black steel pipe after being manufactured will be coated with a
preservative oil to prevent material rust. Hoa Phat black steel pipe is
manufactured according to the standards of TCVN 3783: 1983, ASTM
A500, ASTM A53.
+ For galvanized steel sheet: the product belongs to the segment of low-priced
products because when Hoa Phat entered this field, it was mainly to prevent Hoa
Sen Group from hoarding capital to participate in the steel industry, so it hit the
segment. cheap price in order to penetrate and dominate Hoa Sen's galvanized steel
market share.
+ For other products such as furniture, electrical appliances: with products ranging
from low-cost to mid-range because these products are not focused on product
development, products in this field of Hoa Phat does not have too many advantages
compared to the market, so it mainly focuses on the price psychology of
consumers.
+ For the real estate sector: Hoa Phat is gradually targeting the affordable segment
to dominate and expand market share in the real estate industry.
+ With the relatively slow development of the steel industry due to its
competitiveness and saturation, Hoa Phat has promoted other industries to expand
revenue to invest in developing the steel industry. Therefore, other products of Hoa
Phat steel are gradually transformed to target the lower price segment, the products
and real estate projects invested by Hoa Phat this year are in the low-cost segment,
targeting people. Consumers are low-income.
+ Product quality of low-end products: although targeting low-cost customers, Hoa
Phat always meets safety and quality standards, meeting domestic and foreign
standards on product quality.
+ The common psychology of customers is to always choose products of "smooth"
brands instead of other competitors. Therefore, in order to satisfy customers as
well as gain the trust of consumers, Hoa Phat has expanded its product line to meet
all segments and needs of customers.
1.2 Classification of Hoa Phat's products
Hoa Phat's products are divided into many different products, making it easy
for customers to choose without much consideration. And can choose through in
terms of durability, tangibles, usage...
+ In terms of durability and tangibility: durable goods - Tangible goods: Lasts
through many uses, have high durability, long life. Many services, and diversified
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products, are provided everywhere, with high-profit margins, the company ensures
product quality and multi-modal advertising...
+ Classification of consumables: Shop for goods, and compare on criteria such
as relevance, quality, price, and style. Buy instantly, and identify the brand on the
product.
+ Classification of industrial goods: Business supplies and services: Long-term
goods and services that facilitate the development or management of finished
products. Construction materials and spare parts are manufactured into finished
products and sold to the market. Business services include maintenance and repair
services and product preservation consulting services.
1.3 Features of Hoa Phat's products
Steel coils: widely used in civil works and road and bridge works,
infrastructure such as the National Assembly building, Samsung Thai
Nguyen project...
Rebar steel: has high strength, withstands the impact of the natural
environment and does not rust. Construction application in large and small
projects such as high-rise buildings, hydroelectric dams or civil houses.
Steel billet: used in the production of common hot-rolled steels.
Black box steel: used in construction works, difficult mechanical
processing, making art products, making fences, box iron gates ...
Galvanized steel box: the application of the product is quite common such
as used to make roof frames, and applications in the production of
household appliances, and furniture…
Black steel pipe: very popular application from the construction industry,
technical industry, in daily life with high aesthetic value to the building
use...
Galvanized steel pipe: is a product with good rust resistance, so it is often
used to make traffic light poles, civil construction, fences, car frames,
motorbikes, bicycles, and transmission towers. bars, antennas, lighting
poles, ultrasonic poles...
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Hot-dip galvanized steel pipe: This product line of Hoa Phat has the most
excellent anti-rust ability. Therefore, the product is widely used in waste,
clean water, food processing industry, fire prevention.
1.4 Benefits of Hoa Phat's products
+ Hoa Phat Steel has mechanical strength, high aesthetics and high diversity.
+ Steel always ensures strict requirements on yield limit, strength limit,
elongation limit.
+ Hoa Phat's products always meet strict standards and reasonable prices. Hot-
dip galvanizing is a high technology, but the cost is relatively cheaper compared
to the product's capabilities and longevity.
+ With quite a lot of customers trusting Hoa Phat Group's Steel, with a
pioneering brand, leading in quality as well as products, is the bright spot of
Vietnam's steel industry, choosing Hoa Phat Steel's products Phat to build the
works will be guaranteed the most solid durability for the project.
+ Extended service life: Steel products are always covered with a protective
layer of hot-dip galvanized outside, so the product will have better resistance to
abrasion. At the same time, acid agents, seawater, and steam do not cause chemical
reactions to form a layer of rust on the surface of the material.
+ Easy to transport and install: the process of transporting Hoa Phat's
galvanized steel is relatively simple, and when installing, customers do not have
to worry much because the product has been completed.
+ Always gain consumer confidence when meeting ISO 9001:2000 (BVQI)
standards. In addition, the laboratory also meets the advanced standards of Vilas
109 and Vilas 472.
1.5 Hoa Phat's brand building
Hoa Phat's steel brand maintained its leading position in the construction
industry throughout the ranking periods and especially ranked in the list of 50
leading brands with its value constantly increasing over the years.
With the motto of Chairman of the Board of Directors Tran Dinh Long said "For
Hoa Phat, sustainability is important", paying attention to and improving the
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quality of products, providing leading products to gain the trust of Hoa Phat. ideas
of customers, enhance the brand of the Group.
For many years, Hoa Phat has also been selected as a National Brand (chaired
by the Ministry of Industry and Trade) and honored in prestigious rankings such
as Famous Trademarks, Vietnam Gold Star, etc. The company has persistently
built its brand name for many years and has become a reputable supplier of
products and services in Vietnam.
Figure 14.13: Products printed with logo by Hoa Phat. (Source: Google)
1.6 Product identification of Hoa Phat
All types of pipes are printed with the logo of Hoa Phat Steel Corporation on
the pipe wall. If you notice, you will see the logo with 3 triangles with the word
Hoa Phat below.
Steel head stamp: shows full product information such as specifications, quality,
standards, dimensions, quality control person, size, production shift, quantity.
Product surface: shiny, uniform, prominent zinc flower, standard size and
angle.
1.7 Hoa Phat's packaging
Hose band and buckle: the hose band is blue or white steel, with a width of
25mm. Pipe end stopper: for round pipes, there is usually a protective button on
both ends to avoid flattening, distortion, blue button, printed with the corporation's
logo.
Preservation of iron and steel plates: stay away from locations with chemicals
such as acids, containing bases that can cause material corrosion, do not place
iron on the floor, instead use wooden or concrete slabs below, the thickness
of the plate from 10cm or more to avoid water infiltration causing rust.
Preservation of I-shaped iron and steel: firmly fixed, piled on both sides, and
at the same time, avoid placing near the location of easy-to-stick chemicals
that accelerate the oxidation of the material.
Preservation of V-shaped iron and steel: it is recommended to use wooden or
concrete slabs underneath to avoid moisture or water, the panels can be
stacked together so as not to take up a lot of usable area.
Preservation of round and square steel: with the size not too large, priority
should be given to storage in the warehouse, which can be stacked under the
liner carefully. to control the quantity.
2. Price
2.1 The pricing strategy that Hoa Phat uses
Product line pricing strategy
Currently, Vietnam is on the trend of urbanization, the urban population is
gradually increasing and the living standard is improving. Realizing that
consumers are very price sensitive, Hoa Phat has been building a pricing strategy,
cutting production costs (closing some factories using blast furnace technology) to
offer stable prices. in volatile financial markets.
According to some research experts, just changing, and improving the price
factor by 1% will increase profits by 6%. This has more impact than either a 1%
reduction in variable costs (which increases profits by 3.8%) or a reduction in fixed
costs (which increases profits by 1.1%).
Hoa Phat has applied a pricing strategy by product line. Product line pricing is
a strategy that businesses use to separate their products and services into multiple
prices, the purpose is for consumers to form a different perception of the quality
of each product. product. Simply put, this is the process of grouping similar
products together and offering different prices, for each version are added features,
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in order to entice consumers to choose the product that the business wants would
like.
Realizing that the steel industry has the peculiarity of having many products but
different sizes and materials, Hoa Phat has offered an appropriate price for each of
its products.
Table 14.4: Price list of Hoa Phat large black box steel.
Market penetration pricing strategy
Besides, Hoa Phat continues to implement the market penetration pricing
strategy: in case the market is considered saturated, it means that it will be difficult
for businesses to develop and grow revenue. To bring its goods and products to the
hands of many consumers in the face of increasingly fierce competition in the steel
industry, Hoa Phat has continued to implement a penetration pricing strategy to
expand and gradually gnaw market share of the steel industry. Although Hoa Phat's
market share is leading in the industry with more than 36%, it is still not subjective
in keeping and gaining market share.
In addition, to deal with a potential competitor, Hoa Sen, Hoa Phat implemented
a market penetration pricing strategy for coated steel products to make it difficult
for Hoa Sen to hoard finance and jump into the market. The steel market has put
Hoa Sen in a difficult situation and is in danger of losing its market share. It can
be said that Hoa Phat's price penetration strategy has been very successful in
capturing the steel market share, penetrating other markets such as agriculture,
refrigeration and preventing potential competitor Hoa Sen from entering the
industry.
Because of the characteristics of the industry, the price of steel products is
mainly fluctuated by imports from other countries, and there is no price war
between steel brands, especially for Hoa Phat steel because of the quality segment.
High-quality, mid-range prices exist only in Hoa Phat.
Prices are changed based on market conditions: the difference in Hoa Phat steel
prices between regions is due to market fluctuations. On the market today, there
are many famous iron and steel corporations leading to an increase in steel
production of all kinds. This has caused steel prices to fluctuate but not too much.
Because at present, Hoa Phat has factories in key areas in the North Central South
region, thereby reducing transportation costs, and helping the price of products to
consumers not fluctuate too much from year to year. That wins the trust of
consumers. In addition, Hoa Phat also has preferential policies, discounts, and
discounts for large orders so that other businesses, wholesalers, and retailers can
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o For online and offline customers: Small and retail orders: Pay
tightening as well as pushing goods and increasing revenue at the end of the year,
prices are affected even more.
+ Product production costs: decisive to the formation and price changes of the
product, if the cost is high, the price of the product cannot be low and it is easy to
bring the product to the consumer. As well as affecting the product pricing of Hoa
Phat.
+ Customer relationship: the closer customers and big customers always get
incentives from Hoa Phat such as discounts, discounts, free shipping…
External factors
+ General market demand: predicting the movement of market demand, thereby
helping businesses build appropriate pricing strategies to increase revenue. In the
difficult business situation in 2022, the state increases the loan interest rate, making
the demand for construction steel in the market decrease, the quantity of steel
supplied in the market exceeds the demand, increasing competition. Besides,
competitors also continuously lowered prices this year, making steel prices on the
downward trend to attract consumers and increase demand in the market,
especially at the end of the year.
+ Competitiveness of similar products in the market: the construction steel
market is said to be saturated, but Hoa Phat's goal is to increase its domestic market
share, the industry's competitiveness is increasing in the market. At the end of the
year, every business wants to increase sales and reduce inventory.
+ The overall factors in the business environment: are the factors of population,
natural conditions, technology level, ... Currently, Hoa Phat company is confident
to lead the steel industry in terms of technology level. Hoa Phat has mastered the
closed blast furnace technology, owns the most advanced technology in the world
with production lines imported from Italy, Australia and G7 countries. In addition,
natural conditions are also utilized by Hoa Phat with factories and steel mining
areas located in areas with rich resource mines.
Company valuation techniques
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+ Quoted and actual prices: the company provides price lists for products.
However, the actual price is still affected by the geographical area, the dealer will
have different price.
+ Bidding: for large projects, the company must participate in the bidding to
become a supplier of building materials. After receiving the invitation to bid, the
company will submit a document providing specific product prices. The
reasonable pricing has contributed to creating favorable conditions for Hoa Phat
Steel to become the leading steel supplier in the country.
3. Place
3.1 Wide distribution strategy
Currently, Hoa Phat's product distribution channels are present in 3 regions of
Vietnam:
+ South: 17 provinces/cities - while Hoa Phat has been present in 8
districts/districts in Ho Chi Minh City - more than 20 distribution agents.
+ North: 25 provinces/cities - present in 20 districts/districts in Hanoi - more
than 30 distribution agents.
+ Central: 21 provinces/cities - more than 40 distribution agents.
With the implementation of a widespread distribution strategy, after many years
of operation, Hoa Phat has a nationwide distribution system, covering 63 provinces
and cities with more than 90 distribution agents. This distribution strategy requires
great effort and investment, requiring businesses to have strong financial
resources. Besides Hoa Phat, there are very few large companies in the market that
implement this strategy. The successful implementation of this distribution
strategy with more than 90 agents across the country has helped Hoa Phat assert
its brand in the market, raise product awareness, create buzz, and help attract
potential customers gradually usurping domestic market share.
3.2 Intensive distribution strategy
Besides wide distribution, Hoa Phat also implements intensive strategies:
Hoa Phat and many partners, suppliers and agents of the Group also highly
appreciate the qualities of Hoa Phat people. They all have the same opinion that
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the relationship between Hoa Phat and its partners is not only a business
relationship but also a trusted and confidant of each other.
The link between the parent company and its subsidiaries and all building
material agents across Vietnam is how Hoa Phat markets its steel products. Or we
can say, the business philosophy of "Harmony for development" of the corporation
- is the intensive distribution strategy that Hoa Phat has chosen to develop over the
years.
Hoa Phat
Tier 2 agents
Consumers Consumers
Figure 14.20: Hoa Phat freezer on Dien May Xanh's online sales channel.
(Source: Google)
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Currently, in addition to the traditional distribution channel, Hoa Phat has also
started using a modern distribution channel that can deliver goods throughout
Vietnam with large and small orders that can be transacted. In addition, the website
can also help customers and consumers to pre-order iron and steel products in
urgent situations to complete the work or project, customers can make a
reservation on the website to have can be delivered immediately to the construction
site, or when customers come to the agent, they can receive goods immediately
without having to wait.
(Source: Google)
Hoa Phat Shipping Company directly owns a fleet of 3 Kamsarmax series ships
with a capacity of 80,000-90,000 tons transporting bulk cargo, serving part of the
demand for transporting coal and ore materials for Hoa Phat Group.
3.4 Logistic
Hoa Phat Logistics is honored to be considered as a leading reliable partner of
many big brands such as: Toll, Gemardep, Taisun, Tan A, Vigracera, Habeco,
Carlsberg, Linfox, C.P Group, Thach Ban, Lam Thao, Tisco, Vina Agri, Japfa,
Thach Ban...
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Currently, Hoa Phat Logistics we provide all services in the field of Logistic in
order to maintain professionalism, diversity and constantly improve the quality of
customer service.
Figure 14.23: Image of Hoa Phat's logistics vehicle system. (Source: Google)
Services of Hoa Phat Logistics Company includes:
+ Transport of goods by sea.
+ Transport of goods by road in the country and in transit.
+ Transporting super-long and super-heavy goods.
+ Transporting goods to participate in trade fairs and exhibitions.
+ Customs clearance service for import and export goods.
+ Warehousing services, distribution agents, forwarding, consigning goods
and general commercial business.
Sea - river transport:
Sea and river transport in our country is very developed thanks to the
outstanding advantages of this type of transport: low cost, stable transit time, good
service quality. Therefore, now many types of goods have switched to using this
form of transportation.
Sea transportation services that Hoa Phat provides:
+ Full container shipping service, retail cargo (FCL/LCL).
+ Combined sea and inland transportation services.
+ Combined air and sea freight services.
+ Pickup/Delivery Service.
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warehouse system, have established logistics centers, the largest of which are
located in Hanoi, Nghe An.
Loading services includes:
+ Service of loading and unloading construction materials and equipment.
+ Service of loading and unloading agricultural products and seafood.
+ Service of loading and unloading supermarket goods, technological
equipment.
+ Service of loading and unloading warehouses, factories.
+ Service of loading and unloading goods, production materials and finished
goods.
+ Loading and unloading services for tourists at airports and ports...
4. Promotion
Hoa Phat is a famous steel brand and has become so familiar to all customers.
Almost, families who have a need to use iron and steel use products from Hoa
Phat. Currently, although there are many other brands in the market, Hoa Phat still
retains the trust of customers. With diverse communication strategies such as
advertising strategy, promotion strategy, public relations communication strategy,
direct marketing communication strategy, personal selling strategy, direct
marketing communication strategy, etc. continue as follows:
4.1 Advertising strategy
Advertising is an important method of mass promotion in which a single
message can reach alarge number of people. This is a tool that has the power to
convince, to impress customers. Hoa Phat will use the following advertising too.
Official website
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Newspapers/Magazines:
Articles about promotions, monthly product discounts on famous magazines
and newspapers such as Zing, kenh14.vn, Tuoi Tre, or on the company's own
media page. It can attract many readers and it is a reputable way to advertise and
promote a particular image through print.
Figure 14.25: Pictures of newspaper pages written about Hoa Phat. (Source: Google)
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TVC
The trend of advertising through MV is emerging and becoming popular in the
Vietnamese market. Brands from small to large all follow this trend to promote
their image such as Lazada, Honda, Baemin, Tiki, Biti's... That's why on October
20, 2020, Hoa Phat's Marketing Strategy also announced join in with the MV
"Choose fish choose soup" performed by Bich Phuong. After its debut until now,
the MV has gained more than 10 million views and received a lot of positive
comments from the online community.
Figure 14.26: The image of Hoa Phat's TVC is recorded. (Source: Google)
In addition, last year, Hoa Phat also invited the couple Duc Thinh - Thanh Thuy
to film a TVC about Hoa Phat Steel, which was widely spread on all TV channels.
Besides, on the occasion of 30 years of the establishment of the Group, the
Group has released a TVC to celebrate, TVC conveys the meaning through the
message "Toi ben bi - nen chat Thep".
Figure 14.27: Picture of Hoa Phat's 30th anniversary TVC. (Source: Google)
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Social Networks
Social networks are the fastest and most convenient means of bringing
information to customers today. Hoa Phat is also absorbing the advertising trend
through social networks, especially famous websites such as Facebook, Tiktok,
Youtube, etc. Besides, Hoa Phat also promotes through Google search with
keywords: steel, Hoa Phat steel, building houses…
Exhibition
Exhibition activities are also paid special attention by Hoa Phat, this is an
opportunity for Hoa Phat to bring its products to introduce domestic and foreign
enterprises and investors, through each exhibition participation activity, Hoa Phat
has more quality medals to affirm its position as well as its products in the market.
+ Hoa Phat participates in international exhibitions on manufacturing and
supporting industries.
The Vietnam-Soviet Friendship Cultural Palace - Hanoi, and at the same time
held the opening ceremony of 3 major international exhibitions, including
"Supporting Industry Exhibition". supporting Vietnam - Japan for the 6th time.
Hoa Phat Steel is one of two representatives of the Vietnam Steel Association
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(VSA) participating in promoting the image at these exhibitions. More than 200
brands from 20 countries and 4 international pavilions from India, Japan, Taiwan,
Singapore, Malaysia and Thailand participated in introducing booths at these
exhibitions.
Vietnam Steel Association (VSA) selected Hoa Phat Steel to represent the
association to participation in the exhibition as the current leading steel producer
in Vietnam, both in terms of production and market share with about 36.2%. Hoa
Phat is applying blast furnace technology, producing steel from iron ore, so the
quality is good and stable, and the product price is highly competitive. These 3
events held concurrently in Hanoi will be an effective bridge to help Vietnamese
businesses and international businesses operating in the supporting industry and
manufacturing industries have the opportunity to meet and communicate.
translation, business cooperation and long-term investment.
+ Hoa Phat steel pipe participates in international exhibitions in Thailand
At the center of Bangkok - Thailand International Exhibition Fair (BITEC) took
place the International Exhibition of manufacturing, manufacturing wire, electric
cable, pipe and steel pipe in Southeast Asia. With more than 337 units from
countries such as Germany, USA, Korea, China...
Figure 14.29: Hoa Phat employees are displaying products at the exhibition.
(Source: Google)
The delegation of Hoa Phat Steel Pipe Company and the Head of the delegation
and the Director of Hoa Phat Binh Duong Steel Pipe Company and its affiliated
factories attended the seminar, displayed pipe products of all kinds, and learned
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about new technologies in the industry. manufactures pipes and steel pipes.
Attending this international exhibition is an opportunity to bring products to the
international market, exchange technology, research on new products to apply to
production in the near future.
4.2 Promotion strategy
Hoa Phat Group conducts many promotions and customer care programs to
agents nationwide. A series of promotions for the Golden Buffalo carrying the
early spring, Special Promotion, Promotion for new product C135 chair have been
implemented in various forms: gift giving on purchase, percentage discount for the
total amount. standard item value.
The annual sales promotion policy has also been issued with many awards such
as Excellent Diamond Customer, Diamond Customer, Jade Customer, Gold
Customer, Platinum Customer...
Especially, on International Women's Day 8/3, gifts with great spiritual
meaning were given to female customers by Hoa Phat. Many flowers and greeting
cards were given to female agents of the Company across the country. Some agents
in the Hanoi area are also given tickets to enjoy the music night "Ru love of
musician Trinh Cong Son". It is difficult to describe the feelings of female
customers when receiving the attention and care of the Company, especially
women in remote provinces or the Central and Southern regions where the
Company organizes this program for the first time. firstly.
With Hoa Phat's strategies on promotion as well as such enthusiastic customer
care, this brand has become very close to customers. This is the point that makes
the company build a name in the potential domestic market.
4.3 Event marketing
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Hoa Phat also sponsors television programs to increase brand awareness and
enhance the company's image. For example, the Hoa Phat brand logo appeared at
the judges table of the program "Excellent duet -" Golden couple" All Star version
of Vinh Long TV channel.
Figure 14.30: Hoa Phat logo appears on television as a sponsor. (Source: Google)
The company's charity and sponsorship activities are also very focused to
enhance the company's image, create experiences, arouse customers' emotions, and
commit to the community. Conveying the message is not only a number one steel-
selling business but also a business full of love and always helping people.
+ “Hoa Phat cung em toi truong”
“Hoa Phat cung em toi truong” carries the practical meaning of Hoa Phat Group,
aiming to modernize the educational infrastructure and improve the quality of
teaching and learning in localities across the country.
Hoa Development Group launched the donation of bunk beds to boarding
schools for ethnic minorities in Chien Pho and Ho Thau, Hoang Su Phi district, Ha
Giang through the Hope fund (VnExpress), helping the children always feel
comfortable. fun in learning and living.
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Figure 14.32: Hoa Phat's staff distributes gifts to people. (Source: Google)
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employees to participate in large numbers with the spirit of "good leaves cover
torn leaves", sharing with difficult circumstances in order to bring a warm and
meaningful Tet to the people.
+ Hoa Phat sponsors 5 billion VND to upgrade schools and medical stations
in Quang Ngai.
Hoa Phat sponsored the construction of 4 new classrooms at campus 2 of the
school. At the same time, the Company invested in repairing the fence system,
classrooms and equipped with a series of tables and chairs, equipment to serve the
needs of teaching and learning at schools.
Figure 14.33: The ceremony to donate facilities and equipment to the school in
Binh Dong commune. (Source: Google)
Since Hoa Phat Dung Quat Iron and Steel Production Complex was built until
now, Hoa Phat has spent more than 55 billion VND to carry out social security
activities in the area. The budget as well as social security programs implemented
by Hoa Phat in Quang Ngai are constantly increasing year by year.
4.4 Direct sales
Personal selling is an important component of Hoa Phat Steel's marketing
strategy. Therefore, sales staff are trained to bring customers trust, peace of mind,
and satisfaction based on the philosophy of "Harmony with partners and
customers".
166
Sales staff of Hoa Phat Steel is divided to manage by many areas, in which 3
main areas correspond to 3 agent offices of Hoa Phat Steel Vietnam: Hanoi, Ho
Chi Minh, Da Nang.
With staff requirements: age from 27-35 years old, must have a university
degree majoring in economics, must communicate well, be agile, honest, have the
ability to analyze and synthesize problems, have spirit of striving, responsibility at
work.
Personal offers follow a process:
5. Conclusion
Finally, talking about the Steel market, Hoa Phat still holds the top positions in
the industry in terms of quality, product technology and price. Hoa Phat is trying
day by day to reach out from the domestic market and become the chosen brand of
major foreign partners. Thanks to Hoa Phat's marketing strategies, it has brought
the company a lot of reputation along with the revenue that is always on the rise
year by year. In addition, to ensure the satisfaction of institutional customers, after
each transaction, the company will collect customer information, evaluate the size
of the company, the number of purchases, call each business to inquire. , evaluate
the product, service process of the staff is up to standard and the elements are still
lacking to overcome.
+ Brand positioning: on the basis of understanding the behavior and
characteristics of the main customer groups, correctly identifying the factors of
customer interest in product quality, production techniques to have brand
positioning exactly.
+ In terms of product strategy: capturing demand, expanding product portfolio
along with research and technology development, quality improvement as well as
accompanying services to meet diverse needs of customers.
+ About the price strategy: choosing a reasonable price, a preferential discount
rate, bringing satisfaction to customers in terms of price compared to quality.
168
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