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Posts Tagged ‘Vietnam’
Q&A with Tram Nguyen-Stevenin, author of MDI Betterday Fairtrade Products case study in Vietnam

Tram Nguyen-Stevenin was born and raised in Vietnam. She graduated from ESSEC MBA with a focus in Marketing & Sales, and has 13 years of international management experience acquired in both the association sector and private sector. She effectively managed Sales & Marketing for the largest European and American multinationals operating in Telecommunications and e-commerce & Online Financial Services. For over 2 years, she has been the Executive Director of a Business Organization (European Chamber of Commerce) in the developing and exciting country of Vietnam. She accepted this appointment which is somehow different in her corporate career path as a key opportunity to promote and facilitate trade and investment activities between the EU, her welcome mainland, and Vietnam, her born country. After her term at EuroCham, she is now back to the business world as the Marketing & PR Director at K+, the first media joint-venture ever in Vietnam between the Canal Plus group (Vivendi) and the national broadcaster Vietnamese Television VTV.

MDI is a SME specialized in equitable trade of agricultural products, including coffee, green tea, jasmine tea, snow mountain tea and cashews grown in eight provinces across Vietnam. MDI works in partnership with groups of smallholder farmers, mostly from ethnic minority groups in poorer and remote areas of Vietnam.

To download the MDI Betterday case study from the GIM database, please click here.

What is MDI’s basic value proposition and what makes its financial model sustainable?

MDI works in partnership with groups of smallholder farmers, mostly from ethnic minority groups in poorer and remote areas of Vietnam. The company is committed to the development of the rural sector in Vietnam and believes that the best way to accomplish sustainable development is by doing business in a fair and ethical way with people in the sector: by engaging producers as trading partners, MDI can improve their livelihoods, increase their incomes and assist them in linking with markets on terms that are beneficial for them.

With their motto “Development through pro-poor business” MDI has a “double bottom line” meaning that in addition to being a “for-profit” their success is also measured by the social impact that they can achieve.

What are the main challenges for scaling up the business?

- Physical Infrastructure: in order to grow and reach to new farmer groups, MDI needs to invest and recruit local staff in the mountains to collect and check the quality of the crops.

Besides, in terms of organization, as a small structure with limited human resources, the company has to undertake many tasks, from providing support to farmer groups right through to marketing their products internationally. Furthermore, MDI does not have a big budget for marketing and advertising their brand.

What has the involvement of MDI done for ethnic minorities in the country?

MDI works with farmer groups to help improve quality of production, achieve Fairtrade certification and organic certification. MDI is currently working with around 1000 farmers, representing total household size about 4500-5500 people. All of the farmers they work with live below the international poverty line of US$1 day; most are ethnic minority people; and many live in remote mountainous regions.

Because MDI only started recently, the impact on income is still quite modest. However, the tea farmers were able to double their income from tea this year – tea is about 1/3 of their overall “income” but represents almost all of their cash income.

It can also be noted that the farmers feel more pride in their products and are excited to see that their tea and cashew is being sold in the international market but still retaining the identity of the producer groups.

“We are proud to know that our products are sold in many foreign countries and…I cannot believe that my picture is in fact appearing on tea boxes to many people!” explains a young Mong lady.

For MDI, what were the main benefits of the fair trade certification?

The FAIRTRADE Certification Mark is a registered trademark of Fairtrade Labelling Organizations International (FLO). It certifies that products meet the social, economic and environmental standards set by Fairtrade. The Mark certifies products not companies. It does not cover the companies or organizations selling the products.

For producers Fairtrade uniquely offers four major benefits

  1. Stable Prices
  2. A Fairtrade Premium
  3. Partnership
  4. Empowerment of farmers and workers

What would you say was critical about the actor ecosystem that enabled this business to be successful?

Oxfam Hong Kong has played a critical role in providing contacts, linkages and assistance on international markets to MDI.

Oxfam International is a confederation of 14 like-minded organizations working together and with partners and allies around the world to bring about lasting change. Oxfam International works directly with communities and seeks to influence the powerful to ensure that poor people can improve their lives and livelihoods and have a say in decisions that affect them.

Oxfam Hong Kong helped MDI with the launch of Betterday Fairtrade products into Vietnamese supermarkets in December 2007 and also introduced their products in Hong Kong. In 2008, Oxfam subsidized MDI paying 50% of their trip to exhibit their Fairtrade products at the Hong Kong Food Expo. Oxfam also supported a trip to meet tea farmers in Nghe An, Central Vietnam, where Oxfam has been working for over a decade.

 
Q&A with Tram Nguyen-Stevenin, author of MAI Vietnamese Handicrafts case study in Vietnam

Tram Nguyen-Stevenin was born and raised in Vietnam. She graduated from ESSEC MBA with a focus in Marketing & Sales, and has 13 years of international management experience acquired in both the association sector and private sector. She effectively managed Sales & Marketing for the largest European and American multinationals operating in Telecommunications and e-commerce & Online Financial Services. For over 2 years, she has been the Executive Director of a Business Organization (European Chamber of Commerce) in the developing and exciting country of Vietnam. She accepted this appointment which is somehow different in her corporate career path as a key opportunity to promote and facilitate trade and investment activities between the EU, her welcome mainland, and Vietnam, her born country. After her term at EuroCham, she is now back to the business world as the Marketing & PR Director at K+, the first media joint-venture ever in Vietnam between the Canal Plus group (Vivendi) and the national broadcaster Vietnamese Television VTV.

Mai Vietnamese Handicrafts (MVH), a member of the Worldwide Fair Trade Organization, trades handicrafts produced by a network of artisans (in majority women) in small remote villages.

To download the MAI Vietnamese Handicrafts case study from the GIM database, please click here.

What is MAI Vietnamese’s basic value proposition and what makes its financial model sustainable?

At the origin an income generating and educational project, MVH was established with the objective to generate direct income and promote self-reliance for the poor and the disadvantaged minorities through fair trade. Mai Vietnamese Handicrafts acts as a primary trading agent and reaches out to neglected women in underdeveloped areas and employs them as producers.

In order to make the financial model sustainable, MVH is also actively involved in long term product development, marketing activities and design to offer quality, environmentally friendly and trendy products.

What would you say was critical about the actor ecosystem that enabled this business to be successful?

Organized in the beginning as an association, MVH could benefit from the valuable support of the Ten Thousand Villages and Mennonite Central Committee (MCC). MCC sponsored the participation of MVH at a handicraft fair in Hanoi and a study tour afterwards in Thailand. MCC also sent a marketing consultant to assist the association in trading efforts.

What have been the benefits for the company in partnering with the World Fair Trade Organization?

As a member, MVH fully benefits from the guidance and business tools of the World Fair Trade Organization.

Organized following the Fair Trade standards (transparency on financial results and use of profit, annual general meeting,..), the company was for instance provided with a WFTO software to calculate from the selling price the final net income for the producer, after deduction of the cost of raw material and labor.

Besides,  the company gets access to a platform of information and relevant partners and customers.

What have been the main challenges of decentralizing the business model?

1. The coordination of a decentralized network has a cost in terms of time and logistics as these small groups work from their homes, located in remote areas. On the other hand, mutual benefit is observed in between the 2 parties in terms productivity, loyalty and scale as artisans get more professional and skilled.

“We are aware of the higher evident cost and complexity involved in running a decentralized model compared to a centralized model of production” the founders say. “However this decentralized approach is the very fundamental of our business model, as we aim to reach out to ethnic minorities and isolated villages with traditional savoir-faire in handicrafts.”

2. The quality control and deadline challenges. On a standard basis, the orders are ready for shipping within 3 months: MVH contractually ensures the production is delivered to their warehouse by the producers in 75 days, so that the company can proceed with the quality check and the packaging within 15 days. The most common quality issue lies in the finishing work of the goods.

However, the payment scheme adopted by MHV is designed to favor the producers and encourage respect of quality and deadline: unlike the common practice to pay producers only upon reception of the merchandise by end-clients, MVH settle a prepayment from 30 to 50% at the order, and pays the remainder under 48 hours at reception of the merchandise in their warehouse, right after the immediate quality check. This feature reduces considerably the payment term (as opposed to a standard 30 to 60 day waiting period). As producers are ensured to get paid immediately upon quality check, they can work with a constructive mindset and focus on high quality standards and on time delivery. To end with, Mai also distributes rewards to the groups for on-time delivery and good quality.

What has been your personal experience going through the GIM training and case research process?

Going through the GIM training and case research process has been such an enriching and self-fulfilling experience for me.

On a professional level, I could learn how to lead and structure a research, how to analyze and link these operational businesses to a broader development perspective.

On a personal level, I had the opportunity to meet and exchange with great and insightful people (GIM team, fellow researchers, business owners and case related stakeholders). The interactions and lively discussions I had within the case research process were most rewarding and interesting.