Mr. Le Phuoc Vu went from having just 0.24 ounces of gold in his pocket when he opened his first steel outlet to being the major player in Vietnam's steel market, becoming a billionaire along the way.
It was no simple matter that Mr. Le Phuoc Vu, Chairman of the Hoa Sen Group (HSG), was chosen to represent Vietnam’s entrepreneur community in attending the EY - World Entrepreneur of the Year Award 2015, which will be held in Monaco in June. The recognition is the result of his ceaseless endeavors in leading HSG with both his heart and his faith.
Mr. Vu has long been known as one of the richest businessman in the stock market, with a leading position in Vietnam’s corrugated iron and steel sheet market. The story of his career can help us understand how HSG grew spectacularly under his leadership.
A mere 0.24 ounces
More than two decades ago Mr. Vu left his birthplace of south-central Binh Dinh province, wandering from Tay Ninh in the southeast to Buon Me Thuot in the central highlands and then to Ho Chi Minh City. He took on a number of jobs, such as a driver and a manager of a construction materials store in Ho Chi Minh City’s Go Vap district, in the hope of somehow changing his life.
After a difficult beginning, his career really started in 1994 when a steel sheet rolling joint venture company asked him to become its agent, with the stock of VND50 million ($4,761) being provided on a deferred payment basis. “It was a windfall for me,” he recalled. “I had only 0.24 ounces of gold and VND200,000 (equal to VND1.2 million, or $114) and that wasn’t even enough to put a deposit down on renting a shop. I had to ask a manager at Duc Thanh Wood to lend me VND5 million ($476), which would be deducted later on the roofing steel sheet for his workshop. On the first day of opening I earned VND650,000 ($62) in profit, which brought tears of joy.”
The business met with many difficulties during those early days because he lacked capital. He couldn’t purchase products directly from steel corporations or buy in bulk because no one could or would lend him money. So he worked hard day and night to sell more and more products in order to be extended deferred payments.
In the last few years of the 1990s, along with Vietnam’s stronger economic development, Mr. Vu’s business kept growing and he opened a chain of stores. In 2001 he established the Hoa Sen Steel Sheet JSC, with capital of VND30 billion ($2 million) and 22 staff at the Song Than Industrial Park in Di An district, southern Binh Duong province. The company specialized in producing metal roofing, color coating steel sheet, galvanized steel sheet, and other construction materials.
There was fierce competition, however, with his competitors being stronger in terms of experience and finance. The company produced high-quality corrugated steel sheets but had problems in distributing them to a large number of customers.
Facing such challenges from competition and the risk of bankruptcy, Mr. Vu decided that building an effective distribution network was the way out of the problems.
To realize that vision he focused on a strategy based on quality and developing a direct distribution network to customers with the motto “Buy directly from suppliers; sell directly to end-users”. This helped HSG gradually overcome difficulties and the competition, affirming its brand name and its leading position in Vietnam’s steel market.
Reaching the trillion mark
Starting from $114, 20 years ago, HSG’s revenue grew to some VND15 trillion ($706 million), with after tax profit of VND410 billion ($19.3 million) and total assets of more than VND10 trillion ($484 million) as at September 30, 2014.
During the dark period of the global financial crisis, which erupted in 2008, with business acumen and a positive outlook about Vietnam’s economic growth Mr. Vu identified an opportunity to invest in the Hoa Sen Phu My Steel Sheet Plant project, which had a capacity three-times greater than the capacity of the entire Group. The factory, equipped with hot-dip galvanizing lines using NOF technology, was the first of its kind in Southeast Asia. It was in a record time of ten months, from May 2009 to March 2010, that the first production line of the project delivered quality products to the market, generated revenue, and helped the Group overcome the effects of the global economic crisis and seize the opportunities as the economy recovered.
Over recent years the construction materials market has met even more difficulties due to the country’s frozen real estate market. HSG, though, came shining through. Turnover grew impressively, from VND3 billion ($286,000) in 2001 to VND10 trillion ($484 million) in 2012, before reaching VND11.7 trillion ($559 million) in 2013 and VND15 trillion ($705 million) in 2014. This year it targets revenue of VND16.5 trillion ($760 million).
Mr. Vu boosted exports to many countries in 2009 and 2010, making HSG one of Vietnam’s leading exporters in industrial products. From 2008 to 2014 the CAGR of its export turnover reached 93 per cent. “We have exported to 52 countries, including high-demand markets such as Australia, Dubai, and South Africa, to name just a few,” he said. “We are now exploring Panama and are planning to export products to the US, Mexico and Canada to take advantage of the TPP.”
Mr. Vu is a man who dares to think, dares to act, and dares to make changes. Based on his strategic vision, his investment decisions are all highly effective, contributing greatly to the Group’s rapid and sustainable development over the past years. HSG has also attracted attention and investments from international financial institutions such as Red River Holding, Deutsche Bank, STIC Investments, Dragon Capital, and KITMC.
In the long term, Mr. Vu has determined that the domestic market is the priority because of its potential to develop. To expand the domestic business he built the Hoa Sen Steel Sheet Plant at the Nam Cam Industrial Park in Nghi Loc district, north-central Nghe An province, and launched the Hoa Sen Binh Dinh Steel Pipe Factory in his homeland of Binh Dinh province. The Nghe An plant is a new facility of HSG in the north-central region, with an annual production capacity of 100,000 tons steel pipe, 150,000 tons color-coated steel sheet, and 400,000 tons of galvanized/galvalum steel sheet.
Turnover is targeted at $1 billion in 2017, with HSG’s distribution network to be expanded from 150 to 300 branches by that time, at an average of 50 new branches each year.
Changing views on Vietnam
Mr. Vu has long been known as a Buddhist businessman and a vegan. “Buddhist teaching has been my biggest spiritual encouragement,” he explained. “After many years as a vegan, bringing Buddhist teachings into my life and work, I have realized that spiritual values help me to overcome challenges in life and not be pessimistic when facing failure. Every day I work 12 to 16 hours to make money not for myself but for the country’s overall wealth and for the community.”
The bigger achievement of HSG is that when people refer to Hoa Sen they think about coated steel sheet. They also think about the several social activities organized by the Group. For example, it invited Nick Vuicijic - the well-known limbless motivational speaker - to Vietnam to inspire and encourage the spirit to overcome fate and difficulties. Mr. Vu has built up the Hoa Sen brand as a strong, friendly and community-oriented brand.
For his contribution to the national economy and society over the years, Mr. Vu has been honored with a number of awards both in Vietnam and overseas. And the EY award is also in recognition of his endeavors. With first place at the EY award, he will represent Vietnam’s entrepreneur community at the EY - World Entrepreneur of the Year Award 2015, which will be held in Monaco in June.
Mr. Vu told VET that: “For me, this is a reputable award. Among the 18 entrepreneurs honored, each has their own level of excellence so I feel very happy and honored to be the winner. I just want to say that people in the world always admire Vietnam and Vietnamese people for our strong will. Therefore, we must make the world respect Vietnam. I believe that the world will respect Vietnam and view Vietnam with admiration in the near future.”