Sweet fruit will come from days of burning out with passion

Businessman Le Hoang Khanh Nhut, General Director of Danang Rubber: Sweet fruit will come from days of burning out with passion

For Captain Le Hoang Khanh Nhut of Danang Rubber Joint Stock Company, the opportunity is ripe for further plans, entering difficult markets.

Step into the US market

At the end of October 2023, in an area of over 2 million square feet, equivalent to 26 standard football fields, in Las Vegas City (Nevada, USA), the booth of Danang Rubber Joint Stock Company (DRC) was like a small dot, next to more than 2,600 car manufacturers, car tuning companies, manufacturers and distributors of tires, tubes, and auto parts/components.

Mr. Le Hoang Khanh Nhut still remembers the excitement of his first time attending the SEMA Show - one of the world's largest auto exhibitions - as an insider.

“Of the more than 160,000 visitors to the 2023 SEMA Show, I don’t know how many stopped by our booth, but we were very busy welcoming them. They asked about the products, about ‘Made in Vietnam’. Since the New Year, our schedule of receiving customers from the US market has been very busy,” Mr. Nhut shared, with high expectations. The possibility of DRC continuing to make a breakthrough thanks to the increase in market share in the US is present.

It must also be said that DRC tire exports to the US are a bright spot in the overall gloomy picture of 2023. While the country's export turnover decreased by 4.4%, the number DRC achieved in the US market was up to 22%. This is the growth driver of Danang Rubber in a year that, according to the DRC captain, was "too challenging".

Previously, in the first quarter of 2023, DRC faced a "double" challenge from the market when Brazil - DRC's largest export destination - imposed a tire import tax from 0% to 16%, while the domestic market declined sharply due to the lack of strong recovery of the Vietnamese economy . Not to mention fierce competition from foreign direct investment (FDI) enterprises.

Recalling this moment, Mr. Nhut still believes that the key to solving the problem is something that seems very theoretical, but is very effective. That is flexibility in price, in cooperation mechanisms with distributors. In particular, people are always the root of success.

“We ‘live’ on products, so human resources are the core. Along with that, persistently pursuing the quality goal for nearly 50 years has created DRC’s reputation and brand, helping the Company not to depend entirely on the strategy of lowering product prices,” Mr. Nhat shared.

Ten years ago, the first tires of Danang Rubber rolled on American soil. In 2019, the strategy to push into this market officially started. Thanks to the quality of the products after a long process of market research, building suitable product types and lines, DRC's tires and tubes have convinced American customers through their efficiency when comparing tire and tube products at the same price.

In 2021, DRC selected its first partner in the US to do business. By 2023, the company had 3-4 major trading partners, along with a rapidly expanding system of subordinate partners in the distribution chain.

Things became even more favorable when in September 2023, the leaders of the United States and Vietnam announced upgrading their relationship to a comprehensive strategic partnership.

“This decision also ‘upgrades’ the thinking of consumers in this country about Vietnamese goods. Moreover, in difficult economic conditions, consumers have shifted from products of ‘big guys’ such as Michelin, Bridgestone… to products from developing countries,” Mr. Nhut analyzed. In addition, truck and bus tires (TBR) imported from Thailand - the largest TBR exporter to the US - are at risk of being subject to anti-dumping taxes…

The opportunity was ripe, DRC was present at the SEMA Show, increased production, and captured the market.

Ready from accumulated foundations

In 2024, DRC's target will be sales with a planned level of about 5,400 billion VND. This is a challenging number, but it is possible to achieve well. Opportunities to increase output come not only from potential markets, but also through key product lines.

After 5 years of launching PCR tires in the light truck and passenger car segment, the consumption of this tire line has increased sharply in the last quarters of 2023 thanks to the company finding new customers in Brazil. In the product line with a market size many times larger than trucks, the Company has also planned to launch sales in the domestic market in 2024.

Production capacity is also ready when the first radial tire from the production line of the Investment Project, expanding the Radial Truck Tire Factory to increase capacity to 1 million tires/year, was officially produced in the last days of 2023. The project will be finalized in 2024. However, the CEO of Da Nang Rubber Company said that from now on, some stages such as forming and vulcanization have been put into operation at 100% capacity.

The completion of the investment for the Project to expand the capacity of the Radial Tire Factory from 600,000 tires/year to 1 million tires/year was carried out in parallel in the context of many difficulties in production and business activities. This was also a challenge for DRC in the past year, when cash flow had to be allocated to both activities.

However, in danger there is opportunity, investment costs are significantly reduced, up to nearly 40% of the total investment of 900 billion VND initially planned. Mr. Nhut called this "the best point in investment work", when the supplier himself had to lower the price of equipment to boost output. Even analysts from Vietcombank Securities Company calculated that the gross profit margin of Radial products could increase by 2 - 3% thanks to lower investment rates than the previous 2 phases, in addition to the new design capacity ready for the goal of increasing output.

At present, DRC is ready to implement the Extended Producer Responsibility (EPR) as stipulated in Decree No. 08/2022/ND-CP, effective from 2024. Accordingly, the mandatory recycling rate of tire products is 5%, applied for the first 3 years. At DRC, the tire retreading capacity for recycling is 110,000 tires out of a total capacity of 1 million tires (after upgrading).

“Not now, but since 2019 and early 2020, as a direct manager of this area, I have started to build a collection and recycling method and participated with the group in drafting the regulations on social responsibility. DRC has prepared very early, very long ago. The company will not be negatively affected, and will even have more conditions to collect old tires, as input for recycling activities,” Mr. Nhut shared.

At DRC, green production does not stop there. The Company has long focused on promoting renewable energy, prioritizing high-pressure boilers to switch from burning oil to burning biomass. Rooftop solar energy currently contributes up to 40% of the electricity supply during sunny periods and strives to reach 100% in the long term.

To meet the greenhouse gas inventory regulations, DRC has also established a department to interact with the natural resources and environment agency and related organizations and has now publicly disclosed many figures.

“Always be prepared” is what the captain of Danang Rubber believes in. This is not only reflected in complying with increasingly strict market requirements, but also in being proactive and flexible in an uncertain and constantly changing global business environment.

“I follow my passion for work”

20 years ago, there was an article referring to you as “the guy worth 20 billion VND” because of your innovations in machinery and equipment to reduce the difficulties for the factory. What did you think at that time?

I do my job with passion, so I don't think much.

Focusing on work sometimes makes you lose time for yourself and your family. Have you ever felt regretful?

Actually, it was only because of that day that I am who I am today. It was because of that day of passion, dedication to work, to be effective and to be recognized and evaluated that I am who I am today.

Many young people today give more priority to themselves and work-life balance. What do you think about this?

As people often say, one skill is mastered, one life is honored. When we have something in hand, we can control ourselves, both the desire to invest and the desire to go along. Then, our voice and reputation will be much better.

I think that if you only care about yourself, especially being indifferent to your career and expertise, the opportunity to develop as well as define yourself will be difficult.

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