Vietnam - Selling brands to foreigners and the great lessons

VietNamNet Bridge – Da Lan (toothpaste), Viettronic (electronics) and many other brands were once the Vietnamese pride in late 20th century. However, they have disappeared after wrong investment moves, giving grief to Vietnamese people.

In early 1990s, Da Lan toothpaste brand of Son Hai Cosmetics Company, developed by Trinh Thanh Nhon, became well-known throughout the country.

Da Lan toothpaste products first came out in 1988, which was the result of the cooperation between Son Hai workshop (the forerunner of Son Hai Cosmetics Company) and Luu Trung Nghia, Deputy Technical Director of P/S Toothpaste Company, which was then a state owned enterprise, who was then considered the leading expert in the field.

Like many other products, Da Lan toothpaste products were sold very slowly when they first hit the market. Therefore, Son Hai had to launch impressive sales promotion campaigns to attract the attention of the public to the products. Customers had the chances to get valuable gifts, which could be cash or TVs.

With the noisy sales promotion campaign, Da Lan successfully won the hearts of customers in the central region and in the north.

With the increasingly high quality of the products, and the prices fitting the pockets of the majority of consumers, Da Lan toothpaste with the image of a old man showing off a fine set of teeth on the pack became famous to everyone.

Recalling the golden days of Da Lan, Nhon said at that time, there were some other toothpaste brands, including private run Nhu Ngoc and Rang Dong (Rado), P/S in HCM City, and Ngoc Lan in Hanoi. However, Nhu Ngoc and Rado could not compete with Da Lan after Da Lan products hit the market.

Da Lan products also dislodged Chinese toothpaste products, which had been flooding the domestic market, from the Vietnamese market. Especially, Da Lan products were also exported to China.

In the years from 1990 to 1995, Da Lan emerged as a strong Vietnamese brand, which held up to 30 percent of the market share.

However, Da Lan then disappeared from the market after 10 years of existing.

A breakthrough came with Da Lan in 1995, when Colgate Group, a US reckless producer, attempted to penetrate the Vietnamese cosmetics market.

Colgate then conducted negotiations with Son Hai and successfully bought Da Lan brand at the low price of 3 million dollars, while the brand was valuated at 20 million dollars.

When joining hands with Colgate, the owner of Da Lan hoped that the leading cosmetics group in the world help upgrade the product quality and help make Da Lan more valuable.

However, this never happens.

Analysts said at that time, Colgate had to buy Da Lan because the laws stipulated that foreigners were not allowed to set up 100 percent foreign invested enterprises. This meant that Colgate needs to join forces with a partner to set up a joint venture, if it wanted to conquer the Vietnamese market.

They also said that Da Lan, which then held 30 percent of the market share, was a good choice for Colgate. The US group just had to spend 3 million dollars to obtain the chance to own 30 percent of the market share, which was really a good bargain.

If Colgate had bought another brand, it would have had to confront Da Lan, a redoubtable rival on the market.

The joint venture had taken profits in many consecutive years before it was sold to Colgate in 1998, the affair that put an end to the Colgate-Son Hai joint venture.

The buyer later gave up Da Lan brand and gathered its strength to develop Colgate brand and conquer the Vietnamese toothpaste market. Da Lan then disappeared from the market.

Nhon has admitted that he only realized the value of brand later, after selling Da Lan to Colgate. However, it was too late for him. Nhon has been trying to bring Da Lan back to the market. However, in order to have one percent more of the market share, manufacturer would need multi million dollars for marketing.

Tran Thuy

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