The Central Highland Coffee Import, Export and Investment Joint Stock Company used to be a branch of the Vietnam Coffee Corporation in the central highland province of Dak Lak. It was established in September 1995 with the aim of collecting, processing and exporting coffee beans. At that time, the company did not have the circulating capital to expand production. As Vietnam had just begun the Doi Moi (renewal) process the coffee sector faced a lot of difficulties due to price fluctuations. The price of coffee could only reach VND40,000 per kilogramme and then quickly drop to VND4,000 per kilogramme. The fluctuation greatly affected the company’s operation as well as its workers’ lives. If the company did not make a precise calculation it could easily go bankrupt, said Vu Duc Tien, the company director.
Despite a number of difficulties, the company stood firm and became the country’s market leader in coffee purchasing, processing and exporting, contributing to the local and national economic development.
Impressive growth index
In recent years, the company has taken the lead in processing coffee beans for export, accounting for 17-20 percent of the total volume. More than 80 percent of the coffee is of high quality so it always meets high grade orders from foreign partners. The company ranks first in export volume and value among coffee companies across the country. It has established trading relations with partners in 20 countries and territories. The “Vinacafe Buonmathuot” brand name has been regarded as a reputable name on the international market.
During the past 12 years, the company’s profit have constantly increased from VND1.5 billion in 1996 to VND2.5 billion in 1999, VND3.2 billion in 2001, VND16 billion in 2005, VND17 billion in 2006, and to VND56 billion in 2007.
Truong Cong Quy, personnel director said that the company’s development can be divided into three periods:
From 1996-2000, due to its dependent accounting the company exported around 41,000 tonnes of coffee each year for US$43 million to earn US$87,000 in profit.
From 2001-2004, with its independent accounting, it annually exported 1440,000 tonnes for US$77 million to earn US$135,000.
In 2005-2006, it operated under a joint stock model achieving an annual export volume of 158,000 tonnes valued US$162 million in total.
In eight months of this year alone, the company exported 143,000 tonnes, earning US$234 million and profit rose sharply to VND56 billion.
After 12 years, the company has now exported nearly 1.2 million tones of coffee beans, yielding more than US$1 billion, an increase of 32 percent in volume, 31 percent in value and 98 percent in profit. Its products have been presented with high-quality prizes. In 2007 the company received “Hero of Labour” title.
Tactics to gain success
Mr Quy said that the company achieved its success thanks to proper investment. It bought accounting software to manage activities from buying and selling coffee to controlling and improving capital efficiency. It poured large amounts of investment into modern technology and equipment, helping increase labour productivity four times and doubling economic efficiency as well as improving the quality of products.
Nguyen Van Sinh, deputy head of the Dak Lak provincial Department of Agriculture and Rural Development said that one of the reasons that has ensured the quality of coffee for export, traders, roasters and exporters was that a share of the profit has gone to the growers.
Mr Quy said that although the price of coffee may fluctuate the company has devised flexible policies in buying and selling to achieve high efficiency. It has invested VND36 billion in building store systems.
Currently, the company has more than 50 agencies and 100 suppliers in eight provinces of Dak Lak, Dak Nong, Gia Lai, Kon Tum, Lam Dong, Binh Duong and Ho Chi Minh City.
To gain higher profits, the company devised a number of solutions to reduce costs, for example reducing transportation cost from VND1.5 million per tonne to VND500,000 per tonne in 2006. It always pays great attention to human resources training, such as sending officials and staff to Germany, the UK, Sweden and Brazil to study foreign trade, technology and processing technique or inviting foreign experts to train its workers.
Safe coffee
The company is also well known for its VNCoffee ground coffee brand name. Currently, the VNCoffee Company exports around 30 tonnes to the US per year and sells around 5 tonnes in Buon Ma Thuot City.
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