Mr Dien Quang Hiep, Chairman and Director of Mifaco
Mifaco’s business philosophy for success is simple with only two rules: Market and management. “Anyone who can solve these two points will see good outcomes,” Mr Dien Quang Hiep, Chairman and Director of Mifaco, said.
Mifaco chooses its customers very carefully, offering design and production support for those whose business values are aligned—that is, investing in long-term relationships. It is one of the reasons why they were able to ride through the economic recession.
The company has only a few customers, but it is enough to sustain business. In fact, they are the number one vendor for a U.S.-based company for the second year running.
“I understand that businesses have to earn a profit, but they also have to understand the way I work. This is the reason why I don’t have many customers, I am more concerned with lasting relationships,” Mr Hiep explained.
Mifaco produces wooden furniture, but has also started a new department for sofas and fabric. Seventy per cent of all products are exported to the U.S., and 30 per cent to the U.K. and Korea. It wants to sell to more countries, but that would depend on how “lucky” they are, according to Mr Hiep.
The company is also looking to reach out to the markets in their backyard—Vietnam and Asia where living standards are gradually increasing.
Currently, its furniture lies in the mid high-end range. Mr Hiep wishes to produce more high-end furniture but that has to be properly managed.
“If you produce low-end today, middle-end tomorrow and high-end the day after, it is very risky for production. The workers cannot tell the difference. So we have to focus on one or two levels and these levels cannot be too different,” Mr Hiep said.
Dining sets in production
It buys huge amounts of local species such as rubber wood and acacia, which Mr Hiep says is more of an economic decision rather than demand driven. However, he acknowledges that wood supply is becoming more limited and the issue now is how to manage forests sustainably for future generations.
Here, he highlights the role of the government, “If the government is committed to planting forests, it will [not only] provide enough material for the industry, it will also mean fresh air for the people. The wood resources issue can be resolved if the government invests and forms policies and strategies for developing forests. Specifically, the government needs to create appropriate forest development plans based on scientific research on land, soil and plant varieties, such as rubber and acacia. In addition, there should be policies to support foresty workers so that they can better develop plantations to supply the wood and processing industry. In this way, we can calculate the demand of wood and plan planting accordingly.”
Mifaco workers’ salaries are way higher than the state’s stipulation. Although this makes workers happy, it also means cost goes up every year. The company has to increase expenditure on automatic and efficient machines to reduce cost in other areas, such as material wastage.
Mifaco buys in local species, a decision that is economic rather than demand driven
“I hope to double production in the next few years,” Mr Hiep said. “And if we can actually have a fair here in Binh Duong, it would only take 20 minutes for our production managers and technicians to visit. In the future, other furniture companies may also establish their businesses here. They can grow in Binh Duong and lend their expertise to other companies in the province.”
Because salaries in Mifaco are higher, the company has had to increase its budget for automatic and efficient machinery to lower costs in other areas
“We still need to catch up with how the developed countries think and work. We and our government need to understand and follow a long-term plan. If we have the right mindset, we can understand the future.”