Tan Hiep Phat (THP) are not ‘tasting the feeling’ the true ‘David and Goliath’ story of how THP a Vietnamese Green Tea Company said no to Coca-Cola’s $2.5bn offer and flourished into a billion-dollar business.
It is a modern ‘David vs Goliath’ story and tells how Coca-Cola came knocking at THP’s door with a lucrative $2.5 billion offer in 2012. If Dr Thanh agreed, it could have been the largest merger and acquisition deal in Vietnam’s history.
Instead, Dr. Thanh and Madam Nu said no. They stood up to the global multinational, rejected the money and continued to build their business. For THP, without business mission and vision alignment, there can be no business partnership. Fascinated by the story, I asked Phuong to share further insight into their success and started with the obvious question of why THP had turned down Coca-Cola’s offer. Interestingly, Coca-Cola wanted THP to stop focusing on product development and focus instead on building existing business in Laos, Cambodia and Vietnam. Taking them up on their lucrative offer would have also limited the long-term vision of THP to serve global consumers. It might have been flattering to have been approached by one of the largest global, multinational players but such singularity of belief and vision is admirable:
“It was enormously flattering when Coca-Cola approached THP, and we saw that there was a great opportunity, especially if we can find strategy partners which can help us to achieve [our] vision faster. It means that we can still (and have been) successful without a partner such as Coca-Cola – we don’t want on our success to be reliant upon a ‘global giant’”.
Today THP is Vietnam’s largest privately-owned FMCG (fast-moving consumer goods) company and sells over 1.5 billion bottles of herbal tea, green tea, water, soya milk and energy drinks a year to 16 countries around the world so the decision not to accept Coca-Cola’s offer has not adversely affected the fortune of THP.
THP’s key strengths lie in its intimate understanding of local markets and leveraging its local knowledge and expertise. Localisation helped THP achieve a 50 percent market share, making it attractive to Coca-Cola.
THP’s carefully cultivated values-based business culture, international standards of best practice, utilisation of the best technology available and state-of-the-art systems and processes are also part of its winning formula. Expansion beyond Vietnam has been identified by THP as critical to the next phase of the company’s development yet Phoung recognises they must remain true to their core values whilst creating very aggressive plan to grow the business and increase revenue (to $3billion in the next 10 years) which has been fundamental to their success to date:
“Our strength lies in the desire to always improve and develop, and this is something we will take to new markets. But also, as a business we take time to look at our areas of weakness – we always want to improve, to be better, this is something we will replicate globally. We are also very aware that by moving internationally, we need to be more adaptable, flexible to new cultures and ways of doing business – but equally staying true to those elements that have made the business what it is today.”
- Expectation of Achievement and Rejection of Entitlement: Clear standards of behaviour and achievement, and acknowledgement that joining the family business is not a right, but something to be earned.
- Respect for Elders: An Asian value that’s key to business success in any culture. Culture comes from the top and the senior members are responsible for its tone.
- Understanding the Second Generation: Second generation individuals have grown up in different circumstances to the first, so it’s important that the first generation understands what motivates them.
- Respect for Stories: Stories are how successful companies communicate their core values and mission. They create provenance in business, while also helping family members understand and remember what makes their family unique.
“So as our philosophy, inheritance is to receive the wealth of the previous generation to pass through the next generation with interest. So what I would love to give to my next generation is their freedom to choose what they would like to do in life. And to have the desire to impact other people’s lives in a positive way. What I wish for my children is that they have the belief that they can become leaders and live their lives full of freedom.”