The AIBP ASEAN b2b growth podcast is a series of fireside chats with business leaders in Southeast Asia focused on growth in the region. Topics discussed include business strategy, sales and marketing, enterprise technology and innovation.
In this episode, AIBP ASEAN b2b discuss with Mr David John Whitehead, Chairman of Mavin Group's who has grown from one feed mill to a top-10 agribusiness in Vietnam, Mr David also talked about why digital transformation was a necessary step for growth of Mavin Group.
Link to the full podcast can be found HERE.
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TRANSCRIPT:
The AIBP ASEAN b2b growth podcast is a series of fireside chats with business leaders in Southeast Asia focused on growth in the region. Topics discussed include business strategy, sales and marketing, enterprise technology and innovation.
Irza - AIBP: 0:24
Hello, and welcome to the AIBP ASEAN B2B growth podcast where we sit down with individuals responsible for driving growth of their businesses, especially here within the Southeast Asian region. My name is Irza, and I'll be your host today. And we have today with us, David Whitehead, from Mavin group, David is the Chairman of the Board of Directors of the group. And his company was recently a winner of the ASEAN enterprise Innovation Award. I will leave David to introduce himself because I'm sure he is more capable of introducing himself and his company better than I am. So David, why don't you give us an introduction about yourself as well, where you sit, as well as about the group as a whole?
David - Mavin Group: 1:04
Sure, thank you, as it's my pleasure to be here. And yes, we are very honored and very pleased to have been a winner in the AIBP Awards this year. Marvin group is it's a wonderful story. And I love to talk about because we started in 2004, as a very small feed Miller, located in the north of Vietnam. And we have grown from that position to now be one of the top 10 agri businesses in Vietnam. And, you know, we have quite large ambitions for growth, not only in Vietnam, but around the world, you know, we want to be in the top 30 pork producers in the world. We want to be recognized as a leader in our field. And our field is quite broad because we operate from farm to table. So we have farming operations for pigs, chicken, duck and fish. We have veterinary medicine operations where we make animal medicine, you know, that's equivalent to its European counterparts, but of course, much cheaper, or the Asian market. We have a food processing plant where we manufacture sausages, hands, cold cuts and other things. And we also have five state of the art feed mills throughout the country. So we are a true farm to table operation. And we are growing in each of those business lines every year. We found if I can just talk a little
Oh, let me talk about me first. And I'm, I'm, as I said, I'm David Whitehead, I come from Australia. I've been living in working in Vietnam since 2005. Right at the beginning of the establishment of Mavin. And prior to that I worked in Australia in a couple of fields. I was a ministerial adviser in the federal government sector. I worked in the university sector for some years and a couple of major universities providing educational advice and support. And most recently operated in the vocational training sector in Australia, in marketing and a range of other things before coming to Vietnam. And when I first came here, my intention was to work in education, because that was where I thought my strengths were but but then I met a couple of young Vietnamese who were very keen to establish a business with a vision to become exactly what we are now.
So we really talked about how we could develop what was initially called us to feed Vietnam, into what is now Mavin group. And it's been a terrific journey. And we've had to deal with things like African swine fever, coming into Vietnam. And most recently, of course, we've had to deal with COVID. And I'm happy to say that during African swine fever, we had none of our farms that were directly affected by ASF. So we did lose any pigs, we didn't lose any sowa through that process. Because we had some very strong biosecurity and biohazard management systems in place. And in regard to COVID, we haven't had to lay off any staff or reduce salaries or reduce our types of operations. We've just needed to be a bit more careful and frugal about how we've done it. But we've been able to maintain our operations right through this time. So so that's the story about me and Mavin. And, as I say, we're very pleased to receive the award from BP. And we are two years down now, or three years nearly down our five year digital transform. program, which is an SAP Microsoft based ERP system. And it's proved significantly beneficial for us already. And we have a couple of years to go. So that's where we are.
Irza - AIBP: 5:15
Thank you, David, I think we'll touch on the five year digital transformation program. A bit later, you mentioned something about COVID. And especially, especially the African swine flu, we've heard from a lot of agriculture players in this part of the world that you know, COVID was nothing new to them, because in the food industry, you you come across some kind of pandemic at once every few years. Right. But I think one thing that I'd like to touch on would be how COVID and impacted because being based out of Vietnam, you know, I think Vietnam had one of the most stringent border lock downs over the last two and a half years. Walk me through the process. So when you look at Marvin Group's business, how important is export to you, and especially within the supply chains locally as well, what troubles or what problems did you face because of the lock downs? Or, you know, restriction with regards to movements? Both both domestically as well as internationally?
David - Mavin Group: 6:12
Okay. Yeah, look, you're quite right. You know, in this business, we do need to face you know, disease management issues on a regular basis. If it's not African swine fever, it's other diseases called Blue ear, it's Asian bird flu. I mean, it's a range of different things. So and we have protocols in place about addressing those things. So when COVID came along, it was just about, you know, hunkering down. And using the same sort of protocols that we had before, with the pandemics that we needed to address. So what the big effect was, firstly, we weren't able to continue with our export program to the extent that we wanted to. And that was mostly because of the changes in logistics management, and the restriction on the movement of goods across national borders. And the time it took to get things cleared. And even traveling on the roads was difficult, because drivers were stopped every so often to be checked. And the whole supply chain really lengthened, and became unmanageable from the export point of view. So we, we turn our attentions domestically, and even that had some problems with logistics as well, in regard to trucking and transport. But we soon realized that the answer to all of that was to have shorter supply chains and concentrate on local markets. So and because we're fortunate to be well represented throughout the country. So we're able to, to divide our operations up into regional hubs, and to be able to service our customer base that way, without too much disruption from the logistics effects of COVID. So the other thing was, we have, as I say, five large feed mills, and over 100 farms that are either contracted, or we own them, and the people who are operating there, we gave them the option of living on the facility. So we provided bedding, sharing facilities, you know, sort of canteen operation so that people could stay on our operating facilities, and stay there without moving off. So they didn't have to go through all the quarantine and the other stringent requirements to go on and off, particularly our farms. So, and fortunately, because our operations are in the countryside, most of the people we employ there, we employ family groups. So we have husband and wife and maybe a child or a cousin. And they all know each other very well. So it's very easy for them to sort of just move and leave it on our on the feed mill, for example, or in the farming operation or somewhere else. And that just meant that we're able to continue our operations with little disruption.
The other issues about COVID for our supply chain, we're that a number of our customers really suffered with with their credit arrangements, and we had to arrange extended credit for a number of our customers. And although that was a bit, you know, it was difficult times for us to do we believe that it was a very important step in developing ongoing customer loyalty. Because these were people who if we hadn't extended credit terms to them, they wouldn't have been able to continue their operations and would have affected their livelihood and their business. So we're, we're happy that we're able to do that. And now we have developed a strong loyal customer base from just that one application. So, so yeah, you know, it's we're moving out of the, at the COVID pandemic effect now, it's become more positive, where we've had a number of inquiries for our product overseas. So we're looking at export again, and our domestic market is growing.
Irza - AIBP: 10:22
Perfect. That brings me to my next question. So if you can give me a sense, you mentioned the different parts of the business that you had just now, if you can give me a sense about the segmentation of your business, or how you group your different business units, as well, as you know, you can talk in terms of imports and exports, domestic demand versus export demand, which parts of your businesses do you see growing the fastest? You know, you can talk about pre COVID, as well as post COVID as well.
David - Mavin Group: 10:52
Okay, well, we have six discrete business lines. And they are our farming operation, our food operation, our feed operation, our veterinary health, which is the medicine development, we have our equipment operation, as well, is that five or six -
Irza - AIBP: 11:12
That five - farming, food, feed, vet and equipment
David - Mavin Group: 11:17
Equipment, yeah, five business lines. And, and we, we separate up aquaculture as a separate business line. Although it is sensibly farming, it's a specialized farming operation. So that is a six to business line. Now, the first three that I mentioned, farm, feed, and food are our three largest business lines, and they're the ones that we concentrate on, the feed business probably generates the most revenue for us. Because it's where we started, our very first business was to produce animal feed for pets. And we've continued to do that. And we have long relationships with customers and distributors. And that has continued to operate very well. Our farm business is growing and we, we import genetics for our pigs, chicken and duck. So we have very, very high quality produce, that is very well regarded in the market. So the farming is doing well, the feed is doing well in our food business, although it took a while to establish its its presence in the market. Now, we've identified our appropriate channels of distribution, and that's growing well, too. So the other three sort of are smaller, but operationally developing. So in regard to export, we already export some animal feed from our large feed mill in the stuff in Vietnam, to Cambodia. And we do that by river using the Mekong River as and the barge system there. So we delivered directly into Cambodia from there. And the other product for export, we had just prior to COVID, delivered a container load of pork to Myanmar. And that was the first legally approved government-sanctioned port export. And we have already some contractual arrangements about fish fillets into Eastern Europe. So we have, we have export processes on the go, that were a bit low, sort of put a lot of effort into those at the moment until we are sure of the supply chain management. Because when you're dealing with, you know, fish and pork and other things, you're going to be very careful about spoil products. And if it's sitting in a truck, for weeks held up at a port, it's not good for anybody. So we want to make sure that when we actually start out export management again, that we have good strong control over our supply chain, and logistics.
Irza - AIBP: 14:08
I think what you brought up about supply chain, I think that's been a very big issue, not just for the agriculture business, but to a lot of businesses in this part of the world. You mentioned just now a little bit about doing COVID. What you managed to do was you managed to shorten your supply chain. Obviously, when you talk about global operations, exporting into different countries with different regulation that makes it a lot harder as well. Which brings me into the digital transformation plan that you were you were mentioning earlier. Can you just give everybody an overview about your five year digital transformation plan? And I understand that started in 2019. It's a plan from 2019 to 2023. If I'm not wrong, yeah, just just give us an introduction into that as well as where you are along the journey.
David - Mavin Group: 14:55
Okay, well, we realized in 2019 that our company had grown much faster must faster than we realize. We started in 2004. And I remember in 2005, I knew everybody in the company, there were about 50 or 60 people, I knew them all by name. Now we have 2600 people. And I can say, I don't know them all by name. But in 2019, we realized we needed something to help us to manage our operation, it was almost too big for us to get a handle on. And we saw that digital transformation was the answer for us. Because the plan was that it would give us real time information, it would give us reporting that we could adjust and manipulate, it would give us access to information that we didn't have before. So and as I, as you said, and I've said before, it gave us the opportunity to know more about ourselves, I mean, where we were, where we were putting our effort, where we're getting the best return for the effort we're putting in. So all of that was really important for us. So and we weren't sure I mean, when when we talk to SAP and to Microsoft about this, and we looked at a number of other solutions as well, until we made that decision to go with SAP Microsoft, ERP. You know, we had the plan, we had lots of discussions, the discussions went right from the it operational people right up through senior management, had me involved in presentations and discussion. So we all knew exactly what to expect. But really, you don't know until you begin. So then we started and we started one business line at a time, because we wanted to see isolate what we were doing. So we started with our fee business, because that's probably the biggest and the most important for us. So we wanted to get that right. So. So we did that within the timeframe within the budget with the within the allocated resources all around. And we, we had our go live and everything worked really well. So that was terrific. And that gave us a great sense of achievement, that also gave us the confidence to move on then with our other business lines. And we've moved down another couple now through through feed and farming bit, and we're moving through all. So as you say, we've got two years to go. And we have already seen significant benefit, just in the information flow and the reporting and the understanding of where we are and what we're doing, where we spend our money on resources, and where we're getting the most benefit. So this has been just a great transformation, you know, not only digitally, but as far as our operational management is concerned. And the quality of the reports and the information flow that goes around the information is just extremely valuable for us now. And as I say we're at the stage where we were losing the handle on the business, it was growing too fast for us. And now we've caught up with that. And we're actually in front of the game. And we're understanding what we're doing, how we do it, when we need to make adjustments and where we go.
Irza - AIBP: 18:34
I think that's extremely important, right? Not just within the agriculture business. But for any business. As you look to scale, you need to scale from a platform which is sustainable, which can support your growth. For for those of our listeners, most of our listeners actually outside of Southeast Asia. David, can you just walk us through the the way Marvin group is structured and the stakeholders that were present in being part of this digital transformation plan that you embarked on in 2019?
David - Mavin Group: 19:02
Sure, well, we are a we're a joint stock company, which in Vietnam means you have a number of shareholders. And they basically manage and bring the funding into the business. And then and the way we run it is we have a small board of directors on the chair and we have our CEO and our two deputy CEOs who are the four founding members of the company, but also the the hub of the directing board. And then we have a number of management teams that cascade down from the board and provide information reporting up to the board. We divide the business into those six business lines and they're they're separate to the extent that they have their own financial management services systems. They had their own IT services systems, and they report out through a management team that meets regularly, and provides information to the board. So we made a conscious decision to keep the board of directors small, so that if there were strategic or important, positional decisions to be made, we could just walk around and talk to each other very quickly and get it done. We didn't want to be held up with process. So it's worked really well for us. Since we've grown to the size we are now we've had a number of organizations come to us offering financial solutions in a number of different ways, either is direct shareholding, or in you know, debt and equity management in a range of other things. So, we're at the, at the moment, we're considering options about that. I mean, we would like in the next five years to work towards IPO, for example, but there's a number of things we need to do before he can get onto that, that stairway so and that includes, you know, considering who appropriate partners will be who appropriate shareholders would be coming into the business, how we would extend and expand our decision making process and our board, which would really affect I think it would really affect the way we do business. And we'd have to really look very closely at how we're structured at the top end in particular. But, you know, that's, that's the way you know, large businesses operate, you know, you started off as sort of a, you know, a personal almost family style business, and then you suddenly look in the mirror, and you find you're much bigger than you thought you were and and we have realized now that we are competing with some very big players, international players, from Thailand, America and all over the world. So we really need to step into the big shoes and, and to look at how we can effectively play in that space.
Irza - AIBP: 22:04
Thank you, David, quick question around the way you view how technology is a key part of the business? Because I think the standard metric now that's going around is a lot of companies, large companies are pegging their technology spend to either revenues or net profit. And I understand as part of the digital transformation journey that you did you actually put a number to it as well, the amount that you were willing to spend on this digital transformation. How will that change going forward? You know, because once you start down the path of digital transformation, how do you manage financial metrics with regards to the cost of technology, as well as to the perceived benefits? You mentioned quite a few benefits just now, around reporting? Do you quantify it? Do you? How do you look at it?
David - Mavin Group: 22:56
Look, I think the way we see it, is yes, we did put a finger around with the beginning. And we talked to SAP and to Microsoft about that. And we said this is what our budget should be given what you've told us, and it's going to be over this timeframe. But then we realized that this is just the beginning of our journey, although it's a five year program, it really is just the beginning. Because in 2023, things will have changed a lot from when we started in 2019. So, you know, we'll be looking at a whole new array of requirements and needs within the organization that are not only digital and not only financial, but in a number of other ways about how we manage people. I mean, COVID has taught us that you have to be adaptable, you've got to be agile, and you've got to be resilient to change and be ready to change at any time. So the systems that we need to have in place have to be those that are flexible. So we've got to build flexibility into our operations and be able to even move our structure to suit an environment that's forever changing. We've got to look at ways of allowing our people to work in ways that suit them as well. And this has come out of you know people, some people comfortable working at home some people having flexible, flexible and hybrid working arrangements, and those are things that we have to consider as well. So So what's come out of this for us and and what are digital transformations mean is digitalization and digital transformation is only one of the steps that we need to consider and take and there are many others that go around it. And as far as cost is concerned, well we're forever sort of balancing, you know, our costs against that benefit. So and that's why we put a finger around our ERP program. So the end of the day in 2023 We can look I can say, well, this is what it costs. This is what we got out of it. Was there value in that? And if so, how much are we prepared to continue to put into this program and in what areas more specifically. So that's what I said about this program, after five years, it's just going to be the start of something else, where we can really tailor our organization and take it where it needs to go, given the environment ever changing.
Irza - AIBP: 25:30
Thanks, David. You when when you mentioned the digital transformation journey, you you mentioned that, you know, you you needed to find out a little bit more about yourself as a group, and processes that you have in place, I'm sure, by implementing SAP solutions, as well as Microsoft, you have a lot more visibility with regards to the way you are doing business. And as you mentioned it, there is some efficiency with regards to where you choose to put capital because you're not in the dark anymore. Right. And that brings me to my next point around and you also mentioned the potential of doing an IPO in the future. So there, there are all these conversations around, especially when it comes to supply chains, and the sustainability of supply chains. I think a lot of companies in Southeast Asia are grappling with how to make their supply chains sustainable, how to do this. And right now, with regards to ESG, metrics, financial metrics, in order to get investments as public companies, you need to meet some certain certain criteria as well. Is the sustainability portion, something you've already started to look at? What are your plans around that?
David - Mavin Group: 26:38
Yeah, sure. Sustainability is something that's in most of our marketing material, when we refer to that terminology all the time. And the reason we we refer to it is not only for the market to understand that we are and we want to become more sustainable, but it's also for our own staff to understand that we're working towards sustainability of the organization into the long term. I mean, when I talk to provincial leaders, and ministerial leaders about agri business generally and about our company in particular, you know, I talked to them about us being around for a long time, we are potentially a long term player in this business. And we will be here. You know, our plans are quite long, like we have 10-year strategic plans, for example, and they're rolling plans. So we move forward. And, you know, we believe that we'll be here for a long, long time, and we sustainable in regard to our operations, but also in regard to our financial stability, and the management of about people, which is extremely important. But also, you know, sustainability to us is not just our own organization, but it's the partners and the people with whom we work. For example, we work with World Vision, and we work on sustainable programs with them, for people in poverty. So we understand what sustainability means and how to develop sustainable lifestyles and sustainable operations. So, you know, it becomes part of our DNA over time that we know that we use the term a lot, but it becomes the thing that sort of drives everything we do, you know, we're looking way down the track, we're not just jumping over hurdles, hurdles as they present themselves.
Irza - AIBP: 28:40
Perfect. I think it goes back to what you mentioned just now around when COVID struggle, and you had to provide some form of credit lines to some of your customers that has a long term benefit. Obviously, there's short term pain in with regards to financing within the short term, but I think sometimes we have to sacrifice the short for the long term. Right. And speaking of which, David, we are I've taken quite a lot of your time, coming to the end of this podcast, certain questions that I like to ask most of my guests. You've been in Vietnam for the past, what, 17 years now. So in years, so you're practically local. What are the areas in Vietnam? You know, you can speak in terms of your businesses, the agriculture, business or anything at all? What excites you most about developments in Vietnam or growth within Vietnam?
David - Mavin Group: 29:33
Yeah, like Vietnam succeeds almost despite itself. There's a lot of things about Vietnam that people shake their head and say, how do they move forward as they do? I mean, Vietnam has been unbelievably successful, compared to other ASEAN Asian countries. I mean, the financial management the stability of the currency, the attraction of FDI the moving people out of poverty, the infrastructure development at all, moving forward and has moved forward as long as I've been here. I mean, I remember when I first came, and we went through the global financial crisis not long after, and we've been through a number of difficult times in Vietnam, as other countries have. But Vietnam says you have to recover quickly, they just sort of get on with it, you know, so even the management of of COVID, by the government was very strong, very quick to react, made hard decisions early. And, and that's been seen by other countries around the world as a very good model, you know, something that was able to be done quickly and effectively. And, you know, Vietnamese people follow the rules, too, you know, like, when the government said, You've got to wear a mask, this is the social distancing hand sanitizers, there's going to be quarantine that's gonna read isolations and be locked down. And people should, okay, that's it, and they get done with it, you know, there's no protests in the street, there's so you know, knocking down the parliament building, it's just people move along. So, and that has helped with managing in this sort of crisis. So, you know, Vietnam will move forward and move forward quickly. And, you know, Vietnamese government has very strong strategic objectives for where Vietnam wants to be placed in Asia in the next 10 or 20 years. And they've taken some really tough decisions about carbon neutral stance, for example, in regard to environment about a number of other things. And they've been, you know, highly regarded around the world. And people see Vietnam as a safe place to invest. I mean, when you look at other countries around us, you know, some are up and down there, you know, but Vietnam has been very safe and secure and stable for a long period of time, and is an attractive investment option for so it's like, I'm, I've been surprised, I must say, things that have happened here, but all in all, the country is moving forward, and it has its eye right on the game. And, and the government is, is really clear on what its objectives are. So it's a very interesting time to be in Vietnam.
Irza - AIBP: 32:23
Perfect. It's perfect to say that because when we speak to people outside of ASEAN or Southeast Asia, looking into ASEAN markets, the two markets they always mentioned would be Indonesia, and Vietnam, right. And I think there's a lot of interest in this part of the world now, especially with all the large unicorns and deca-corns are being listed in the US as well. So we look forward to hearing more about Vietnam as well. And, David, with your experience on the ground over the last 18 years, I'm sure you'll provide a lot of insights into that. With that, thank you very much, David, for for taking the time to be with us today. It was a pleasure speaking with you, and I wish all the best for Marvin group as you charge the next 10 years of your future.
David - Mavin Group: 33:06
Thank you very much. As I said, I'm always very happy to speak about mommy group. I'm very, very happy to speak about our successes. And you know, it's a great story to tell. So I enjoyed telling you, and I'm very, very happy to be a part of it. So thank you for the opportunity to talk with you. And I hope people found it interesting. Thank you.
Unknown: 33:30
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