In 1997, Binh Minh Plastics Joint Stock Company (BMP) was formed. After 10 years of its operation, BMP is in a position as the leader in the sales and distribution of plastic products in Vietnam.
The purpose of the company is to take advantage of the latest technology as well as the skilled workforce to provide customers with high-quality products at a reasonable price.
In 2008, BMP reached approximately VND 821 billion of revenue, more than 21 % compared to 2007 and profit after tax is VND 96 billion, up14% in comparison with the planned target (Huong T.K 2009). According to Viet Capital Securities (2009), the financial performance of BMP will continue to growth in 2009 with the revenue reaching VND 906 billion and the profit after tax increasing by 15% compared to the previous year.
With the aim of manufacturing high-quality products in accordance with international standards, BMP have bought modern assembly lines from America, Australia and Germany and effectively applied the quality management system ISO 9001: 2002 as well. By that way, Binh Minh products have taken customer trust in domestic market and in abroad and have been selected as “The Vietnam high quality products”consecutively from 1998 up to now.
As Vietnam joins in WTO, many opportunities and challengers will open up to Binh Minh Company. It is expected that BMP will take full the advantage of highly-skilled workforce as well as the modern technology to develop and expand in the future.
INTRODUCTION OF THE COMPANY
* Current business
BMP is a diversification business operating in the following fields:
– Manufacture plastic products for house hold and construction
– Assemble and merchandise machinery and equipment for interior designs
– Provide consultancy service for sewage system projects
* Current products
Main products which the company offers are:
– Plastic pipes & Pipe accessories
– Insecticide sprayers
– Labor safety helmets
* Target markets
BMP considers the domestic market as the main target and decides to expand its local distribution network by a fifth in the first quarter of this year (Yen 2009). According to Nguyen Thi Kim Yen, the firm’s deputy director, due to the decline in economic growth of the U.S and Japan, the biggest export markets of BMP, the export sales of this company show signs of slowing down. Therefore, developing the domestic market is not only a way to cope with falling exports but also a long term strategy to balance domestic and overseas sales. Furthermore, as the demand for plastic products in Vietnam increases sharply by 15% on average (Hai 2008), the potentials of domestic market, especially the North is great and thus BMP should fully grasp this opportunity by expanding national market share.
* Current situation of the business
Currently, BMP becomes the leading producer of plastic products (owning about 25 % the nation market share of plastic pipes) (Vietstock 2006). With applying effectively the most modern equipment into manufacture, BMP products are famous for high- quality, various designs and reasonable prices. As a result, Binh Minh has won many land and international prices (e.g.: The Gold Star Award, The Viet Nam high quality products…)
> Financial Status
– BMP has maintained a high growth rate in recent years despite difficulties due to the economic recession.
– In 2008, gross sale revenues of BMP increases significantly to VND 821 billion, more than 21 % compared to 2007. The profit after tax also rises by 14% compared with the planned target (Huong T.K 2009)
– In Q2/ 20009, gross sale revenues of BMP was VND 302 billion, 33 % higher than Q2/ 2008 and comprise 31 % the planed target. The profit after tax reached VND 88 billion, up 54.4% compared to the same period. Thus, the financial performance of BMP currently shows positive signs and it is estimated that the company will achieve its plan for 2009 (Huy T.N 2009).
– BMP is the leader in producing plastic products, especially PVC pipes (owning about 25% the nation market share) (Vietstock 2006). Thus, this company has a considerable impact on the domestic market.
– With the pattern of about 60.000 m areas and the most modern equipment from Germany, Italy, Australia and Canada, BMP has continuously increased the capacity of the company in recent years. For example, in 2007, BMP can produce about 29,000 tones, up 20 % compared to 2006. This capacity continues to rise significantly and reached 35,000 tones in 2008 (Hai 2008)
– Recently, BMP has already set up a wide distribution network over the country with 360 stores and major gathered in HCM city, Can Tho, Vung Tau, Binh Duong, Dong Nai. This company also exports products to international market such as Japan, the U.S, Singapore, Denmark and France (Yen 2009).
– By taking full the advantage of the modern technology and highly-skilled workforce, BMP can offer a wide range of high- quality products in accordance with international standards of ISO 9001: 2002.
– The financial capacity of BMP is relative high and stable with the significant growth of revenues per year (Huy T.N 2009).
– Currently, BMP can not manufacture PPR pipes which require advanced technology and have innovative characteristics compared to traditional pipes.
– The plan to expand the market in the North is still ineffective (The North Binh Minh factory is estimated to suffer a loss of VND 15 billion in 2009) (Viet Capital Securities 2009).
– In previous years, the price of Binh Minh products is always higher than its competitors from 10% to 20% because of the expense on buying modern equipments and the increase in the cost of raw materials (Yen 2009).
– The distribution network of BMP in the international market is still small.
– As Vietnam joins in WTO, BMP has many chances to expand its overseas market and attracts more foreign investors.
– The Dung Quat Oil refinery which came into operation in 2009 will produce 150,000 tones of PVC per year (Giang 2006). As a result, the plastic industry in general and BMP in particular will less depend on imported materials.
– As the demand for plastic products in Vietnam increases sharply by 15 % on average (Hai 2008), the potentials of domestic market, especially the North is great.
– Over a half of plastic materials of BMP is exported. As a result, any changes in the international market will also affect directly the price of plastic materials as well as the profit of BMP.
– When Vietnam joins in WTO, the tax on imported plastic products will decline sharply and thus domestic plastic firms have to face the fierce competition from foreign manufactures.
– Recently, many products of BMP are imitated on the market, which affect negatively the prestige of the company.
CONCLUSION AND RECOMMENDATIONS
Based on the above findings, the financial performance of BMP currently shows positive signs with the rapid increase in profits annually. However, this company currently has to face great business risk factors including high cost of materials and fierce competition from domestic and international manufacturers. In order to help BMP overcome the problems, some solutions are suggested as follows:
– Firstly, BMP need collect accurate information about the price of plastic materials and analyze the data carefully to import materials appropriately. Moreover, the company should concern about making plastic supply more plentiful by buying modern equipment for producing plastics and using recycling materials. Such solutions not only help BMP decrease the cost of products but also reduce the dependency on imported materials.
– Secondly, BMP should invest into other business sectors besides the plastic industry, such as construction or rented buildings to exploit fully estates of the company and to minimize financial risks.
– Thirdly, BMP has to develop diversified products requiring high technology such as PPR pipes or packaging for the processing industry to reduce competitive pressure in plastic industry. Furthermore, BMP need set up representative offices in South- East Asia to increase consumer expenditure.
– Last but not least, the company should pay more attention to human resource development. For example, BMP can employ foreign professionals to train the latest technology for workers so that they can use modern equipment more effectively. Besides, the company ought to give the labor stable incomes which motivate them to work harder.
APPENDIX AND REFERENCE
Giang 2006, ‘PetroVietnam plans JV to develop US$3-bil petrochemical complex’, [online]. Available at URL: http://english.vietnamnet.vn/biz/2006/06/583289/
(Accessed September 25, 2009).
Hai, 2008, ‘Nhua Tin Phong v Nhua Bnh Minh: Nhung di thu ngang ti’, [online]. Available at URL: http://vietcuongvungtau.vn/default.aspx?opt=news&id=15 (Accessed September 25, 2009)
Huong T.K, 2009, ‘BMP phn du loi nhuan bang nam ngoi’, [online]. Available at URL: http://www.baomoi.com/Home/ChungKhoan/www.tinnhanhchungkhoan.com.
Huy T.N, 2009, ‘BMP – Cng ty c phn nhua Bnh Minh’, [online]. Available at URL: http://www.cophieu68.com/incomestatementq.php?id=BMP¤t Page=1&lang=en
(Accessed September 25, 2009).
Viet Capital Securities, 2009, ‘Binh Minh plastic js company (BMP) – Update’, [online]. Available at URL: http://www.stox.vn/stox/download.asp?id=1763
(Accessed September 25, 2009).
Vietstock, 2006, ‘Mot s nt chnh v CTCP Nhua Bnh Minh (BMPLASCO)’, [online].
Available at URL: http://www.vietstock.com.vn/tianyon/Indexaspx?ArticleID. =27152&ChannelID=36(Accessed September 25, 2009).
Yen, 2009, ‘Firms switch focus to domestic market, find going good’, [online]. Available at URL: http://tbic.org.vn/english/78/tbic_details.aspx? DataID=14288 (Accessed September 25, 2009).