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Leading Innovation

Tu Giang
Thursday,  Sep 21,2017,18:05 (GMT+7)
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Leading Innovation

Tu Giang

In the following interview, Mr. Omar Channawi, Vice President of Procter & Gamble (P&G) Asia Pacific, briefed the Weekly on why and how P&G can help develop the local communities of small and medium enterprises (SMEs) and startups in line with its global innovative vision

"Every brand at P&G is like its own company and has its own DNA. Big brands operate like a big company and small brands operate like an SME.

Omar Channawi, Vice President of Procter & Gamble (P&G) Asia Pacific

The Ministry of Planning and Investment (MPI) has recently hosted a leadership workshop for small and medium enterprises (SMEs). Why was P&G chosen by the MPI as the partner for organizing this workshop and why did P&G focus on supporting SMEs?

Firstly, I want to recognize and appreciate the Vietnamese Government’s vision to prioritize the development of SMEs, which makes up about 60% of GDP in Vietnam. So, a considerable part of the value created in Vietnam comes from SMEs.

We are known as the leading FMCG company in the world and we spend around US$2 billion on research and development annually. This can address your question why MPI trusted and chose P&G to be its partner in organizing the SME workshop. People may think of P&G as a mega company. Yes, we are. We have 21 brands with over US$1 billion in annual sales, and another 11 brands generating about US$500 million or more in annual sales. The rest of our revenues has been generated by smaller brands.

The way we manage small brands is similar to how an SME is managed. Take the example of our e-commerce businesses in some countries. We set up small teams of young people—those starving for new knowledge and new skills and starving to succeed—to manage two to three customers. We allow them to test, to fail and to grow, sometimes slowly, but we let them manage their operations like an SME. So, we understand the situation of SMEs around the region.

Every brand at P&G is like its own company and has its own DNA. Big brands operate like a big company and small brands operate like an SME.

Can you please share your advice for Vietnamese SMEs/startups, whose business scale and capital are small?

My advice to them is very simple: what you need to be successful is similar, regardless of whether your company is big or small. In addition to having a clear vision and strategies, which is required of any business, the following three things are more important than the others as an SME/startup:

The first thing is your ability to learn fast—you learn, and you also need to test and pivot. You must be able to pivot quickly when something doesn’t work.

The second thing is that you need to create the point of difference. There will be game-changing innovations, such as the iPhone, and there will be copies. In any case, you need to find out what your consumers need, and innovate your own point of difference—what makes you unique in that area or industry. Your point of difference can be better cost management resulting in lower prices, better quality or fast production, and the like.

And most importantly, you must have your own core values. Our successful partners and entrepreneurs also talked about this at the launch event today. You cannot cut corners or compromise your product quality for short-term results. You should strongly establish your core values and establish them at the onset. If you don’t have those values when you start your business, you will never have them.

What do you think about the possibility of Vietnamese SMEs or startups of winning a project under the Signal Accelerator program, which has just launched in the SME workshop?

In Asia, Signal Accelerator was launched in Singapore and has recently been launched in Vietnam. The latest update is that there are a total of a hundred submissions for the business challenge on the platform, out of which are 20 from Singaporean startups. It tells me that we have enough materials, brain power and entrepreneurs that can address our business challenges in our region.

I have no doubt about Vietnamese SMEs and startups’ innovation capability and their ability to win. I hope that there will be more SME workshops in the coming years to help Vietnamese SMEs improve their ability to innovate and to win projects under the Signal Accelerator platform.

We have many Vietnam-related business questions on the platform that can potentially give Vietnamese SMEs and startups an advantage because they know the market and the context better than others. I am looking forward to seeing more innovative ideas from Vietnamese startups that can address our business challenges and reap opportunities.

You’re in charge of four markets in Asia. How do you compare Vietnam’s market with other markets under your lead?

There are two markets that are growing fast in APAC: the Philippines and Vietnam. We miss opportunities if we don’t meet or outperform the market’s growth rate. Vietnam is a fast-growing economy, with increasing GDP and consumption power. It is a market of great potential, which requires companies to have effective business and investment plans to be able to grow. As you know, only about 30% of the production from the three plants we have built in Vietnam caters to the local market, and the rest is exported to other markets including Japan, Korea, Australia, Thailand, Malaysia, Singapore, etc. The fact that these local products meet export standards demonstrates the high quality of manufacturing, the engineers and the technicians in Vietnam. We believe that the quality of the labor force as well as the Government’s strategy in promoting investment and manufacturing and efforts to improve the legal framework are offering good opportunities for us to do more in this area.

The ASEAN Free Trade Area (AFTA) will remove import tax and how it will impact P&G’s business in Vietnam?

We advocate free trade. It’s up to us to reduce our costs while maintaining the quality of people and products. I would say it again that we cannot produce goods that can be sold in Japan, South Korea, Singapore or other developed countries without high quality engineers and technicians in the country. These are the most important things that we need to maintain.

This would further explain why we are supporting local SMEs. Strong SMEs will enable us to localize a considerable part of our raw material production whilst staying focused on the most important processes.
Having raw materials supplied to our production from the plant next door to P&G Vietnam brings benefits such as lower transportation, duty and clearance costs. It also minimizes the waste generated from the supply chain. Having great SMEs is a way of cutting waste from the system as SMEs can close the loop.

Can you share P&G business strategy in the context of high competition?

Our aspiration is to be the number one FMCG company in Vietnam and we will be.

There are three reasons for that. The first reason is that we have great products. We have strong brands and consumer-meaningful product technologies. We are the leader in the majority of our product categories and number two in the rest. The second reason is that we have great people. And the third reason is, we only have 10 of our 65 brands globally in Vietnam, and therefore, there is a great potential to expand and bring other brands to Vietnam. Our strategy is to increase the penetration of our products, both in the number of consumers and households using our products. And this is something we need to work on.

Our approach to drive penetration is the continuous investment in both manufacturing and commercial aspects including marketing and promotion, to convince and get consumers to try and be loyal to our products.

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