Mr Kumar Narasimhan, CEO of Zamil Steel Vietnam (ZSV), tells VET about the company's business performance in 2013 and its strategies for the years to come.
Zamil Steel Vietnam (ZSV) has just held an opening ceremony for its head office in the Keangnam Landmark Tower in Hanoi. What importance does the new head office have for ZSV?
A few years ago ZSV planned to move its head office to Hanoi as part of our restructuring programme. Strategically, being in the centre of Hanoi gives us the opportunity to develop our staff’s professional skills and abilities. While our Hanoi sales office (previously located in the Deaha Center and recently moved to Indochina Plaza) is operating efficiently we felt the need for other staff, especially our engineering team, to expose themselves to a more competitive and professional business environment.
ZSV’s many years in Noi Bai meant that our employees had adapted to a “factory working style” with limited external interaction, due to the isolation of the industrial zone from other regions. Moving to Keangnam has exposed them to a more dynamic environment, where they need to constantly develop themselves in order to not fall behind. ZSV considers employees its most important asset and their development as a continual strategy.
Moreover, moving to the centre of Hanoi has also increased our business opportunities since we are closer to our customers and partners. From here we can constantly extend support to our sales staff in order to meet customers’ immediate requirements. We believe that not only ZSV staff but also our customers are pleased with our decision to open the new head office.
How did ZSV perform in 2013 and what are your plans and targets for 2014?
ZSV always tries to be dynamic and proactive in every situation, not only in Vietnam but also across Southeast Asia, since this is our strategic market. Looking at the latest figures I think we did very well in 2013. We were able to retain market share while continuing to increase revenue and profits, thanks to a series of substantial projects entrusted to us by our key customers, who occupy dominant positions in construction markets all over the world.
In terms of performance, we developed a professional management team that played an important part in making strategic decisions and shaping ZSV’s business strategies over the years. As a manufacturing company, considering the market, I can say that 2013 was a successful year for us.
Regarding our plans and targets for 2014, right now we are aiming to increase our market share in the steel building industry, mainly for pre-engineered buildings and structural steel. We are confident in the capacity of our manufacturing facilities and we will do our best to maintain our Number One position in the Asia Pacific market, then we’ll look at the potential for diversification into other sectors.
What are the challenges for ZSV amid the difficult economic climate?
When we look at challenges I think the most fundamental impact is the changing economic situation, which we can observe on a daily basis. On a macro level these are changes in economic policies, rising inflation, and the most critical - the decline in foreign direct investment (FDI) in Vietnam. On a micro level it is the rising competition in the market. Vietnam is attracting many players to its steel building industry, including big names and small companies that are willing to supply at any price, regardless of quality. For us, quality has been a key strength over the past 15 years, but nowadays some customers are more concerned with price and other factors. However, I maintain a positive attitude with regard to this trend and I believe that in the end these customers will come back to us. After all, ZSV has built its reputation on the quality of the services and products we provide to our customers.
“Going green” is part of modern business these days. What has ZSV done in this regard?
Going green is becoming a popular trend in modern business, especially in the manufacturing sector, due to its direct influence on the environment. Southeast Asia is a developing area with a large amount of manufacturing, making the negative impacts on the environment higher than in other regions. As a manufacturing company we acknowledge the importance of environmental protection and have been adhering to ISO:14001 and OHSAS:18001standards for many years.
ZSV also has a special environment team whose task is to monitor our own “green” programme. The team’s duty also includes educating our employees about the importance of environmental protection and possible environmental hazards and how to prevent them during production. At ZSV we always pay special attention to waste treatment and recycling materials while encouraging our employees to turn off the electricity when not in use, utilise reusable paper, keep the working area clean, etc. We also have an annual event called the “Cleanup Hour”, when our employees join together to clean up the factory or surrounding areas. These might sound like trivial things but they are part of our culture, in which we believe that little things do make a big difference. At ZSV we have aimed and will always aim to “stay green”.
What did ZSV do to support the local community in 2013?
ZSV considers corporate social responsibility as not only part of our strategic development programme but also part of our corporate culture. This means we have engaged in community involvement and ethical practices through many annual charitable and volunteer activities. In 2013 some of our activities included visiting and donating to orphanages in Lang Son city, delivering free milk to patients at the K2 Oncology Hospital Hanoi, cooking soup for patients in the Hospital for Burns, supporting the Soc Son School for the Handicapped, and more. We also helped victims of the storm “Nari” in the central region by donating money and clothes. In November, together with 5,500 other participants from many companies, ZSV participated in the “Terry Fox Run for Children” in Hanoi to raise funds for the treatment of underprivileged children with cancer and congenital heart disease. At ZSV we also have a small team called T8 (Thrust Team No 8) to extend support to our own employees experiencing difficulties. All of these activities are highly appreciated by our staff and have created a unique “sharing and giving” culture inside the ZSV community, which I personally think is very valuable considering the decline of moral values in many regions of the world. After all, as I mentioned previously, little things do make a big difference and we believe we are making the local community around us better.
How has ZSV prepared for further development over the coming years?
As a major player in Southeast Asia’s steel building industry, ZSV is able to serve both the local and export markets. Our strategic management team operates with great flexibility, constantly reviewing our game plans to quickly respond to the changing needs of all of our markets.
In the next few years Vietnam’s economy is expected to recover and experience further growth. ZSV sees Vietnam as a potential market for exploration of the right human resources and machinery combinations for steel buildings manufacturing. We operate two factories, strategically located in the north and south of the country, with a strong workforce that meets the increasing demands from customers regarding optimum lead time and services. We have also entered into a joint venture with MITSUI Corp and together we aim to become a preferred supplier of steel buildings with strong commitments to timeliness and quality.
What are your forecasts for 2014 with regard to the pre-engineered steel building industry?
I think that 2014 will be a good year, considering the amount of FDI inflows to Vietnam, especially from Japanese and South Korean investors. Political stability and falling interest rates will help Vietnam to attract more FDI in 2014. Moreover, EU companies are considering Vietnam and Southeast Asia as potential markets due to solid purchasing power, low labour costs and the availability of raw materials. These are important factors in attracting manufacturing companies to Vietnam over the next few years and this area definitely has the potential to become an international workshop for providing offshore manufacturing to a variety of industries. For the steel buildings industry in general, this simply means that more and better opportunities will be available to us.
What should the government and authorities do to facilitate growth in the steel and pre-engineered steel sectors in the years to come?
ZSV has been here for more than 20 years and we can say that we are one of the most successful players in the market. However, we would expect the government and authorities to open up more for foreign-invested companies similar to our own. Helpful actions would include simplifying investment regulations, tax laws and banking policies, etc. I believe that if these changes are made we will perform better and be in a position to contribute more to Vietnam’s economy.