"When you are successful, you must have the responsibility to contribute to the country," Mr. Pham Nhat Vuong answered Vingroup shareholders when asked why he established VinFast - a business that is still making losses.
The annual general meeting of shareholders of Vingroup Corporation (VIC) took place this morning, half a month later than usual. In previous years, this meeting was held at the end of April, along with other member companies in the ecosystem.
This year, the shareholder meeting took place just days after VinFast , Vingroup's industrial unit, announced it would list in the US through a merger.
Therefore, a series of questions were raised by shareholders, from the car production plan, the break-even roadmap, VinFast's competitive problem, to the reason why this company was established. "Why did VinFast switch from producing gasoline cars to electric cars? Will the group stop production in the future like it did with the phone and gasoline car segments before?", a shareholder commented.
At the end of April, Vingroup and Mr. Pham Nhat Vuong announced an additional injection of 2.5 billion USD into VinFast, including a 1.5 billion USD grant, the remaining amount VinFast borrowed over 5 years, to supplement its business capital. Previously, in a prospectus submitted to the US Securities and Exchange Commission (SEC), Vingroup's electric vehicle manufacturing company said it had recorded a cumulative loss of billions of USD after more than 5 years of participating in the market.
The chairman of the meeting, who also directly answered the shareholders' questions, was Chairman of the Board of Directors Pham Nhat Vuong. With his usual style, speaking decisively and not avoiding any questions, Mr. Vuong answered the shareholders as soon as he was asked.
"Many people ask me why Vingroup is doing VinFast. Car manufacturing is too difficult, not to mention Vingroup started from zero," Mr. Vuong began sharing about the reason Vingroup established VinFast. According to him, the reason for starting this project did not come from business purposes, but from the desire to contribute to society.
"If it was for making money, Vingroup's leadership would not be foolish enough to rush into a difficult field like automobile manufacturing. If it were easy, it would not have come to this," said Mr. Vuong. "Vingroup decided to make VinFast out of patriotism, without any calculation. When we have succeeded, we must have the responsibility to contribute to the country, build a high-tech, classy brand that has influence in the international market."
Starting with reasons not originating from business to make money, but he admitted, the "green revolution" has opened up great opportunities for this project. "As the VinFast team becomes stronger, we feel that we truly master technology, inspiration, and creativity. I think in terms of business, VinFast is a potential project, maybe even the best of the group", said the Chairman of Vingroup and believed that VinFast's valuation will not stop at 23 billion USD.
Mr. Pham Nhat Vuong, Chairman of Vingroup Board of Directors, at the 2023 annual meeting, held on the morning of May 17 in Hanoi . Photo: Vingroup
"Why didn't VinFast choose to make electric cars from the beginning instead of gasoline cars?", another shareholder asked. Vingroup's chairman said that at the time Vingroup started building VinFast, electric cars were hardly known to anyone and very few people wanted to use them. At the same time, electric car technology was also very difficult.
"At that time, VinFast was not strong enough, and it was difficult to sell, so we decided to make gasoline cars. VinFast did it so that people would know that we could make cars. Later, when electric cars became a trend, we decided to focus all our efforts," Mr. Vuong shared.
In response to shareholders' concerns about the future of the electric vehicle segment, when Vingroup had previously stopped producing gasoline cars or phones, Vingroup's Chairman said that stopping previous projects was necessary, the group needed to restructure and focus resources on new areas. "What is right and what is necessary must be done. If everyone carefully considers Vingroup's decisions, everyone will understand why the group must do so."
Regarding the market story, especially the emergence of major Chinese electric vehicle brands, the viewpoint of Vingroup and VinFast, according to Mr. Vuong, is "river water does not interfere with well water".
Chinese car brands have their own customer base, VinFast also has its own positioning, no brand can completely dominate 100% of the market.
"Products are not only expensive or cheap, but also suitable or not. I think in Vietnam, many people will support VinFast, as long as the product is good and suitable. Not to mention, Vingroup also has a very good ecosystem. Therefore, we are not worried about the Vietnamese market," said Mr. Vuong.
This year, Vingroup targets net revenue from production and business activities of about VND190,000 billion, an increase of nearly 90% compared to 2022. After-tax profit is expected to reach about VND2,000 billion, equal to last year.
The group said it will continue to promote business activities to strengthen three main pillars, including industry - technology, trade and services, and social charity. Vingroup's goal is to diversify products and services in each vertical, bringing the most attractive and quality products to consumers, thereby diversifying revenue sources.
VinFast aims to develop its sales network in all target markets at home and abroad, speed up sales and product delivery in key markets (USA). In production, the company will accelerate mass production of car models that have been put on sale in 2022 for on-time delivery to customers (VF5, VF8, VF9), prepare to launch production of newly introduced car models (VF6 and VF7), and accelerate the progress of the factory project in North Carolina (USA).
In the residential real estate sector , with the forecast that operations may continue to be affected by the macro economy and policy environment, Vinhomes said it has prepared flexible solutions. The company will take full advantage of its land fund to develop green, smart, fully-equipped urban projects. In the social housing segment, Happy Home will be one of the development focuses, with a commitment to integrating a fully-equipped model.
With industrial park real estate, Vinhomes IZ continues to closely follow FDI investment cash flow, focusing on researching and applying smart industrial real estate models and large-scale specialized ecological industrial parks.
In the retail real estate sector, Vincom Retail plans to open two new shopping malls, increasing its scale to 85 shopping malls in 45/63 provinces and cities. In terms of resort tourism and entertainment, Vinpearl and VinWonders have high expectations for the recovery of the tourism industry, thereby promoting growth.
Previously, in 2022, Vingroup's net revenue reached nearly VND102,000 billion. Pre-tax and after-tax profits reached VND12,756 billion and VND2,044 billion, respectively. After excluding financial expenses from provisioning for exchange rate losses, costs related to the decision to stop producing gasoline vehicles and withdraw from the phone manufacturing sector, Vingroup's after-tax profit reached VND5,278 billion, achieving 88% of the plan. During the year, the group mobilized nearly USD1.1 billion from the international capital market.
Minh Son
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