The Saigon Times Daily: The volatile oil price and worldwide uncertainties since the global financial crisis have made business really tough to do. How have these unfavorable factors affected Total’s operations in Vietnam?
- Jean Nehlil: Well, it is not only the changing oil price but all prices those that have placed a big impact on the business community. In Vietnam, sources said that the consumer price index (CPI) rose 16.89% (in the first seven months of this year compared to the same period last year), and inflation may reach 19% by the end of this year. This rate is more than double last year, and poses a huge challenge for companies. I would say credit tightening is necessary to curb inflation in the country, but this has turned out to cause difficulties to our customers and partners. In the current difficult situation, we have decided to take action.
What action has Total taken?
- After a series of supports given to our distributors, for the first time in the last two years in Vietnam we have decided to reduce selling prices of our lubricant products by VND1,000 per liter from this week. We predict that this price reduction will cost us more than VND2 billion per month. This is our voluntary action and commitment to contribute a small part to the efforts of our partners and consumers in coping with higher prices. Of course, we know that people are expecting prices to go down, and if prices decrease, we will adjust our selling prices according to our costs and economic growth.
Vietnam’s lubricant market is expanding 3-4% every year and the quality of products is improving in this market. Total is developing new products to meet the demand here.
Total acquired the ExxonMobil lubricant business, including a lubricant plant in Dong Nai Province in 2009. How has the company been since the acquisition?
- Actually, the lubricant business was a challenge because we purchased a company with the people and facilities and also linked to a well-known brand. So, our efforts were to convert the business into the model and standards of Total, and we have nearly completed the conversion. I would say that more than 80% of ExxonMobil products here have been converted into Total products. We have convinced the consumers with our products and won their trust and confidence.
The acquisition unveiled Total’s ambition for Vietnam. Could you share something about the company’s development strategy for this market?
- Total always has appropriate focuses for different markets. In Asia, we have selected main countries, with China in the first and Vietnam coming second. We have decided to invest in these countries, particularly in Vietnam which is the market we have been investing for the last 20 years. Our investment in this country is not completed yet, and I would say that it is just the beginning. We want to grow with the market and through new acquisitions, and we may take every opportunity in the business fields we are operating in here.
Total will look to acquire more companies and integrate them into the organization. We have already done several times successfully and will continue that way. We see much potential for our strong growth in Vietnam, including through partnerships. We are studying many projects to take advantage of opportunities the country offers.
Do you mind talking about Total’s major targets for the Vietnamese market?
- It is not easy to tell our precise future targets, but I would say we will purchase more companies if the opportunity comes. We are now in sustained growth. We anticipate that our production volumes will double in the next five years, and acquisitions will help us achieve this target. We now have 600 employees in Vietnam, and we will not stop but will hire many more depending on how fast we grow and the opportunities we have. Certainly, a number of companies are suffering the current economic woes, but Total is big enough and has ample liquidity to make acquisitions. Therefore, we see the tough time also a chance to grow and to increase our market share significantly in this market.
Total has also involved in oil and gas exploration and production as well as distributed liquefied petroleum gas (LPG) in Vietnam. How are Total businesses in these sectors going?
- Total has expanded presence in different business scopes, including lubricants and LPG in Vietnam. We hold a market share of 11% in the lubricant and LPG market segments, which is significant but is not enough for us. We are looking to 20% and want to grow faster. I can say Vietnam is now in a very interesting stage with fast economic growth, infrastructure development and a lot of changes. Now is the right moment to expand and we have been well positioned to capitalize on arising opportunities.
Do you mean Total is ready for a new era of business development in Vietnam?
- Definitely, we are in a new development phase of business activities, new products and innovations. A large business group like Total can bring the latest technology to this market and this is very profitable, as it helps us reduce costs and also impact of our operations on the environment at a time when more consumers demand environment-friendly products. You see competition in Vietnam’s lubricant market is fierce but pretty fair, and Total has quality products and expertise to progress in the market.
Reported by Binh NguyenBusiness & Investment Opportunities
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